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PTO Collaborates With UK Counterpart to Address Standard-Essential Patents

by Thomas DaMario | Jun 13, 2024 | Patents

On June 3, 2024, Under Secretary of Commerce for Intellectual Property and US Patent & Trademark Office (PTO) Director Kathi Vidal and Chief Executive Officer of the UK Intellectual Property Office (IPO) Adam Williams signed a memorandum of understanding (MOU) designed to tackle various issues related to standard-essential patents (SEPs).

SEPs are patents that have been declared essential to a particular technical standard. Common examples of technical standards with active SEP bases include cellular communication and other wireless standards, such as LTE, 5G and Wi-Fi. Standards are typically adopted by Standard Setting Organizations (SSOs). To have input on standard adoption, many SSOs require participants agree to license any patents that result from discussions with potential licensees on Fair, Reasonable and Non-Discriminatory (FRAND) terms (See e.g., ETSI Intellectual Property Rights Policy).

But what are FRAND terms, and who gets to decide whether they issue? While individual patents are territorial (e.g., a US-issued patent is only enforceable in the United States), patent owners often obtain patent coverage in multiple jurisdictions. This can lead to challenges wherein a court in one jurisdiction may determine FRAND terms for a patent in that jurisdiction, which may then set or significantly influence the FRAND rate for the patent owner’s corresponding patents in other jurisdictions.

While the MOU is not public at this time, the PTO indicated that the MOU sets forth a framework for the following action items:

Cooperate on activities to facilitate collaboration and exchange of information on policy matters concerning SEPs to better ensure a balanced standards ecosystem.
Explore means to educate small- and medium-sized enterprises seeking to implement or contribute to the development of technical interoperability standards on FRAND terms.
Examine ways of improving transparency in the FRAND licensing of technical interoperability standards.
Engage in outreach to stakeholders to raise awareness of issues related to SEPs.
Discuss means to incorporate additional jurisdictions into the PTO and IPO’s activities concerning SEPs, including exploring a venue for broader discussions.

The agreement remains in place through June 3, 2029. PTO Director Vidal emphasized that “[t]his important collaboration with UKIPO will help us work together toward a fair and balanced international standard essential patent ecosystem that benefits all businesses in our two countries, including small and medium-sized enterprises and new market entrants.”

Section 337 Doesn’t Require Article III Standing for Claimant but Claimant Must Be “Patentee”

by Alexander P. Ott | May 30, 2024 | Patents

Addressing an initial determination by an administrative law judge (ALJ) granting summary determination and terminating a Section 337 investigation for lack of Article III standing, the US International Trade Commission reversed and held that Section 337 does not require claimants to have Article III standing. Certain Active Matrix Organic Light-Emitting Diode Display Panels and Modules for Mobile Devices, and Components Thereof, Inv. No. 337-TA-1351, Commission Opinion (May 15, 2024).

In late 2022, Samsung Display filed a complaint seeking to institute a Section 337 investigation based on its infringement allegations regarding four patents and seeking an exclusion order against replacement displays sold by various companies. In late 2023, on the eve of the evidentiary hearing, the ALJ granted the respondents’ motion for summary determination that the complainant lacked constitutional standing because Samsung Display had granted its parent company, Samsung Electronics Co., an implied license to the asserted patents with an unrestricted right to sublicense. Samsung Display petitioned for Commission review. On review, the Commission reversed.

The Commission first noted that because it’s an administrative tribunal and not an Article III court, the “case or controversy” requirement does not apply to parties before it and standing is instead based on its governing statute. The Commission acknowledged its previous decisions where it had applied a constitutional standing requirement and expressly overruled those decisions. It further noted that its statute does not include the “patentee” requirement of 35 U.S.C. § 281 that applies to plaintiffs in district court actions but reiterated its long-standing practice of requiring a complainant be the owner or exclusive licensee of the asserted patent(s) at the time of filing the complaint.

The Commission held that there were genuine issues of material fact as to whether Samsung Display was a “patentee” when it filed the complaint. The Commission found there was an open question as to whether Samsung Electronics actually had a right to sublicense without Samsung Display’s explicit or implicit authorization. The Commission thus remanded the investigation to the ALJ to conduct further proceedings to develop the factual record.

Patent Thicket Avoidance: PTO Proposes Changes to Terminal Disclaimer Practice

by Peter Brunovskis, PhD | May 23, 2024 | Patents

On May 10, 2024, the US Patent & Trademark Office (PTO) issued a notice of proposed rulemaking (Notice) concerning major changes to the terminal disclaimer (TD) practice, which may lead to a sea change in patent prosecution strategies. The proposed change would require a TD to include an agreement from the patent owner that the patent will be unenforceable if it’s tied directly or indirectly to another patent having any patent claim invalidated or canceled based on prior art. 89 Fed. Reg. 40439 (May 10, 2024).

The rule change is a potential boon for patent challengers and is intended to promote innovation and competition by allowing a competitor to avoid enforcement of patents tied by TDs to patents with claims finally held unpatentable or invalid. Under current practice, invalidation of a patent tied to another patent by a TD does not directly affect the patentability of the other patent. Under the new rule, a competitor could target a single patent in a validity dispute in a post-grant challenge without the need to seek review and invalidation of other related patents. As a result, invalidating one claim in a patent tied to other patents by TDs would render all other tied patents unenforceable.

According to the Notice, the proposed change aligns with the US government’s intent to reduce drug costs and promote competition by reducing barriers to market entry in accordance with President Biden’s Executive Order 14036 on “Promoting Competition in the American Economy.” Part of the reduced costs are said to come from bringing down the cost of challenging large “patent thickets” of multiple patents covering a single product or minor variations of the product tied by TDs.

The proposed rule change would represent a paradigm shift for TD practice. Current TD practice under 37 CFR 1.321(c) or (d) allows applicants to file multiple patents with claims varying in only minor ways from one another by filing TDs to obviate obviousness-type double patenting (ODP) rejections over closely related patent claims issued or pending in applications commonly owned or commonly owned on the basis of a joint research agreement. In filing a TD, the applicant agrees to disclaim any patent term extending beyond the term of the prior patent having similar patent claims.

The proposed rule seeks “to revise 37 CFR 1.321 (c) and (d) to require that a terminal disclaimer filed to obviate nonstatutory double patenting include an agreement by the disclaimant that the subject patent or any patent granted on the subject application shall be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting in which:

(1) any claim has been finally held unpatentable or invalid under 35 U.S.C. 102 or 103 . . . by a Federal court in a civil action or by the PTO, and all appeal rights have been exhausted; or

(2) a [...]

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Prime Delivery: Amazon Program Now Offers Personal Jurisdiction to Patent Holders

by Courtney Seams | May 16, 2024 | Patents

Addressing the issue of personal jurisdiction in the context of a declaratory judgment case involving a program for resolving patent infringement claims, the US Court of Appeals for the Federal Circuit concluded that a patent owner has personal jurisdiction in the forum of an alleged infringer when it files a program claim against the alleged infringer. SnapRays, dba SnapPower v. Lighting Defense Group, Case No. 23-1184 (Fed. Cir. May 2, 2024) (Moore, CJ. Lourie, Dyk, JJ.)

The Amazon Patent Evaluation Express (APEX) program helps resolve patent infringement claims against sellers on Amazon. Under APEX, a patent owner submits an APEX Agreement to Amazon that identifies the allegedly infringed patent claim and the Amazon listings with the alleged infringing products. Amazon then sends this APEX Agreement to the seller, who can do one of the following to avoid removal of their accused listings:

Opt into APEX and let a third party determine whether their product likely infringes
Resolve the claim directly with the patent owner
File a lawsuit for declaratory judgment of noninfringement. If the seller does nothing, its listings are automatically removed from Amazon within three weeks of receipt of the APEX Agreement.

Lighting Defense Group (LDG), a Delaware company whose principal place of business is in Arizona, submitted an APEX Agreement alleging that SnapPower’s Amazon products (electrical outlet covers with integrated technology) infringed one of its patents. SnapPower, a Utah company whose principal place of business is in Utah, then filed a declaratory judgment action against LDG in Utah. LDG then filed a motion to dismiss for lack of personal jurisdiction. The district court granted the motion, finding that SnapPower did not demonstrate that LDG purposefully directed activities at SnapPower in Utah and that there was no evidence that LDG reached out to Utah other than through responses to SnapPower’s communications. SnapPower appealed.

The Federal Circuit reversed, finding that LDG was subject to personal jurisdiction under the Court’s three-prong test because (1) LDG purposefully directed its activities at SnapPower in Utah, (2) LDG’s submission of the APEX Agreement was directed to SnapPower in Utah and aimed to affect activities in Utah and (3) it would not be unreasonable to find personal jurisdiction over LDG in Utah.

In assessing the first prong, the Federal Circuit found that LDG knew, via APEX’s terms, that Amazon would notify SnapPower of the APEX Agreement and that the options available to SnapPower included a claim for declaratory judgment. Further, the Court found that the APEX Agreement had more power than cease and desist letters because of the automatic removal of the listings after three weeks, which would affect sales and activities in Utah.

In assessing the second prong, the Federal Circuit found that personal jurisdiction comported with due process because LDG’s actions aimed to affect marketing, sales and other activities in Utah and because the suit arose out of LDG’s activities in the forum.

In assessing the final prong, the Federal Circuit rejected LDG’s argument that allowing personal jurisdiction would “open the [...]

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Stud-y Harder: Domestic Industry Must Be Established for Each Asserted Patent

by Alexander P. Ott | May 16, 2024 | Patents

Addressing a final determination by the US International Trade Commission of no violation of § 337, the US Court of Appeals for the Federal Circuit affirmed that the complainant had not satisfied the economic prong of the domestic industry requirement because it relied on aggregated evidence of investments across different products protected by different patents. Zircon Corp. v. ITC, Case No. 22-1649 (Fed. Cir. May 8, 2024) (Lourie, Bryson, Stark, JJ.)

In 2020, Zircon filed a complaint seeking a § 337 investigation based on alleged infringement of four patents covering electronic stud finders. The Commission instituted an investigation, naming Stanley Black & Decker as the respondent. Zircon withdrew one patent during the investigation and, in late 2021, the administrative law judge (ALJ) issued an initial determination finding no violation of § 337. The ALJ found some claims of one of the three patents to be valid and infringed but held that Zircon had failed to establish the economic prong of the domestic industry requirement because it had aggregated its investments across all 53 of its practicing products, of which only 14 practiced all three patents. On review, the Commission affirmed the finding of no violation, holding that all claims were either invalid or not infringed. The Commission also affirmed the domestic industry finding, holding that the aggregation prevented it from evaluating the significance of Zircon’s investments with respect to each of the three asserted patents. Zircon appealed.

The Federal Circuit affirmed on the basis that Zircon failed to meet the second prong of the domestic industry requirement. The Court explained that where different groups of products practice different patents, the complainant must separately establish a domestic industry for each group of products. The Court agreed with Zircon that such a showing might not necessarily require breaking out investments on a per-patent basis but concluded that the complainant must ultimately show that the domestic industry requirement is met for each asserted patent. Because the Federal Circuit upheld the finding of no domestic industry, it found it unnecessary to reach the infringement and invalidity rulings.

Say What? Recitation Entitled to Patentable Weight When Not “Communicative Content”

by Connor M. Larson | May 16, 2024 | Patents

Addressing when claimed printed matter is entitled to patentable weight, the US Court of Appeals for the Federal Circuit reversed the Patent Trial & Appeal Board’s ruling involving the printed matter doctrine, explaining that the claimed subject matter was not communicative content. IOEngine, LLC v. Ingenico Inc., Case No. 21-1227 (Fed. Cir. May 3, 2024) (Lourie, Chen, Stoll, JJ.)

Financial technology company Ingenico filed three petitions for inter partes review (IPR) of certain claims from three patents owned by IOEngine, all of which shared the same title and written description. The patents, titled “Apparatus, Method and System for a Tunneling Client Access Point,” claimed a “portable device” that was “configured to communicate with a terminal.” The challenged claims recited a memory that contained program code “configured in various ways to facilitate communication … with a communications network node.”

The Board issued final written decisions, which found the challenged claims to be unpatentable for obviousness or anticipation. The Board also found several claims to be anticipated after giving no patentable weight to certain claim recitations by application of the printed matter doctrine. The Board found that the terms “encrypted communications” and “program code” claim “only communicative content” (i.e., printed matter) and that these recitations were not entitled to patentable weight.

The Board concluded that the recitation of “encrypted communications” was subject to the printed matter doctrine because “nothing in the claim … requires anything beyond sending and receiving data, even if the data is in an encrypted form.” Similarly, the Board found that the recitation “program code” was subject to the printed matter doctrine because the “recital of ‘downloading’ of program code was limited to downloading (sending or transmitting) the code, which is a communication, and no other function is recited in the claim.”

IOEngine appealed, arguing that the Board erroneously construed the term “interactive user interface,” erred in its application of the printed matter doctrine, and erred in its anticipation and obviousness analysis.

The Federal Circuit affirmed the Board’s claim construction, finding IOEngine had forfeited its proposed construction because it did not present it to the Board during the IPR proceeding. Likewise, the Court affirmed the Board’s unpatentability determination of anticipation and obviousness for those claims where the Board did not invoke the printed matter doctrine.

However, the Federal Circuit reversed the Board’s determination that the recitations “encrypted communications” and “program code” were entitled to no weight under the printed matter doctrine.

The Federal Circuit explained that courts use a two-step test to determine whether a recitation should be accorded patentable weight under the printed matter doctrine. First, a court should determine “whether the limitation in question is directed toward printed matter.” Under step one, a limitation should be considered printed matter when the limitation “claims the content of information,” meaning that “the matter [is] claimed for what it communicates.” Only if the first step is met should the court proceed to step two. In the second step, the court considers “whether the printed matter nevertheless should be given patentable [...]

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Patent Venue: VENUE Act Would Expand Scope of Venue

by Christopher M. Bruno | May 2, 2024 | Patents

As part of proposed legislation intended to address several procedural issues related to judicial proceedings, a recent section titled the Venue Equity and Non-Uniformity Elimination Act of 2024 (VENUE Act) seeks to expand the number of jurisdictions in which a patent infringement suit can be brought under 28 U.S.C. § 1404(b). The bill, S 4095, is almost identical to a 2016 bill introduced by then-Senator Jeff Flake.

The VENUE Act seeks to legislatively overrule the 2017 Supreme Court ruling in TC Heartland v. Kraft Foods Group Brands by significantly broadening the number of venues in which a suit can be brought. Under the current state of the law, venue for a patent suit is appropriate under 28 U.S.C. § 1400(b) only where a defendant resides (i.e., for a business, its state of incorporation) or where the defendant has infringed the patent and maintains a regular and established place of business. In the wake of TC Heartland, venue has become a contested preliminary issue in many patent litigations.

In addition to the already established venues for patent suits, the VENUE Act would include jurisdictions where an inventor conducted research or development underlying the patent-in-suit. It would also allow venue where the defendant business conducted research and development for the asserted patent, manufactures a product or performs a manufacturing process purportedly embodied by the asserted patent. The VENUE Act would limit a “regular and established place of business” to a “physical facility,” excluding the homes of a business’s teleworking employees.

Procedurally, the VENUE Act would codify – and potentially strengthen – the existing practice of challenging district court venue determinations by mandamus petitions. By statute, a court’s “clearly and indisputably erroneous” denial of a venue transfer or dismissal motion would constitute “irremediable interim harm,” which would have the effect of requiring the US Court of Appeals for the Federal Circuit to grant such petitions when warranted.

If enacted, the VENUE Act would create new statutory interpretation issues in its significant expansion of the number of districts in which venue may be sought. At the same time, however, the expansion might be significant enough that venue challenges would return to the rarity they once enjoyed.

Virtually Done: Computer Visualization Patents Are Ineligible for Protection

by Courtney Seams | Apr 18, 2024 | Patents

Addressing subject matter eligibility under 35 U.S.C. § 101, the US Court of Appeals for the Federal Circuit upheld the district court’s finding that patents related to computer visualizations of medical scans were patent ineligible. AI Visualize, Inc. v. Nuance Communications, Inc., Case No. 22-2019 (Fed. Cir. Apr. 4, 2024) (Moore, Reyna, Hughes, JJ.)

AI Visualize asserted four related patents, each having a substantially similar specification and the same title, against Nuance Communications. The patents are generally directed at systems and methods for users to virtually view a volume visualization dataset (a three-dimensional collection of data representing the scanned area of an MRI) on a computer without having to transmit or locally store the entirety of the dataset.

Nuance moved to dismiss the case, asserting that the claims were directed to patent-ineligible subject matter and invalid under § 101. The district court applied the two-step Alice inquiry to the claims, which the parties had grouped into three representative claims:

Claims where a web application directs the server to check what frames of a virtual view are stored locally and creates any additional frames necessary to create and display the virtual view of the medical image.
Claims with the further requirement that any previously requested virtual view be given a unique key, which the server checks for (and displays if the key exists) prior to completing the steps of the independent claim.
Claims without the requirement of checking to see if any images are stored locally.

In applying part one of Alice, the district court concluded that the asserted claims were directed to the abstract idea of “retrieving user-requested, remotely stored information” and not, as AI Visualize argued, to improvements in computer functionality. The district court then applied Alice step two and considered each of the three representative claims. The district court concluded that none of the claim limitations transformed the claims into patent-eligible applications of an abstract idea. Ultimately, the district court determined that all asserted claims were patent ineligible under § 101. AI Visualize appealed.

The Federal Circuit also applied the Alice analytical framework. Applying Alice step one, the Court considered whether the focus of the claimed advance was on an improvement in computer technologies, rather than the use of computers, and whether the claim limitations described a claimed advance over the prior art. The Court upheld the district court’s finding under Alice step one (i.e., that all three types of asserted claims were directed to an abstract idea) because the steps of obtaining, manipulating and displaying data, when claimed at a high level of generality, constitute an abstract concept. The Court did not agree with AI Visualize’s arguments that the creation of the virtual views is a technical solution to a technical problem because it requires the creation of “on the fly” virtual views at the client computer. In doing so, the Court refused to import details from the specification into the claims.

Applying Alice step two, the Federal Circuit upheld the district court’s finding that [...]

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ITC Shines Light on DI: Complainant Can’t Aggregate Investments Across Patents, Prongs

by Alexander P. Ott | Apr 11, 2024 | Patents

Addressing a determination by its chief administrative law judge (CALJ) finding a violation of § 337, the US International Trade Commission reversed and held that the complainant had not satisfied the economic prong of the domestic industry (DI) requirement by aggregating its investment across multiple asserted patents. Certain Replacement Automotive Lamps (II), Case No. 337-TA-1292 (USITC Mar. 22, 2024).

In late 2021, Hyundai filed a complaint seeking an investigation under 19 U.S.C. § 337 based on alleged infringement of 21 design patents, each covering a different automotive headlamp or taillamp. In response, two of the proposed respondents filed a request seeking early disposition of the economic prong of the domestic industry under the Commission’s 100-day program. Hyundai filed a response opposing the 100-day program request based on the complexity of the issues. The Commission instituted the investigation and denied the 100-day program request, but when setting the procedural schedule, the CALJ scheduled an early evidentiary hearing on the economic prong of the domestic industry pursuant to the Commission’s pilot program for interim initial determinations. Following that initial hearing, the CALJ issued an interim initial determination finding that Hyundai had satisfied the economic prong of the domestic industry requirement. After the full evidentiary hearing, the CALJ issued a final initial determination finding a violation of § 337 by the respondents based on infringement of all asserted patents. The Commission decided to review both the initial and final determinations.

On review, the Commission reversed the finding that the complainant had satisfied the economic prong of the domestic industry requirement. As the Commission explained, where DI products do not have overlapping protection across common asserted patents, a complainant must treat each product as requiring a separate DI showing. The Commission cannot aggregate investments in articles covered by one patent with investments in articles only covered by a different patent. Here, because each DI product practiced only one of the asserted design patents, to satisfy the economic prong Hyundai was required to demonstrate that the investments in each product were independently significant. The Commission also held that investments in plant and equipment (§ 1337(a)(3)(A)) cannot be combined with employment of labor or capital (§ 1337(a)(3)(B)) and concluded that Hyundai had mistakenly aggregated its investments from both prongs.

Commissioner Schmidtlein filed an opinion concurring with the outcome but declining to join the majority opinion based on her view that it went beyond what was necessary to dispose of the investigation.

PTO Stands by Patent Fee Increases

by Amol Parikh | Apr 11, 2024 | Patents

The US Patent & Trademark Office (PTO) issued a notice of rulemaking announcing proposed patent fee increases beginning next year. 89 Fed. Reg. 23226 (April 3, 2024). The proposed increases are generally consistent with the PTO’s May 2023 proposal.

The Notice states that the PTO needs the proposed fee adjustments to provide sufficient revenue to recover costs of patent operations in future years. To that end, the PTO proposes to set or adjust 455 patent fees, including 73 new fees. Complete information about the fee adjustments, including the Notice, is available on the PTO’s website.

The fee increases include higher amounts for routine fees necessary to obtain a patent, including filing, search, examination and issue fees. Excess claim fees will also increase to $200 for each claim over 20 and $600 for each independent claim over three. There will also be an escalating fee structure for terminal disclaimers, ranging from $200 if filed before the first office action to $1,400 if filed after the PTO grants the patent. The fees for filing requests for continued examination (RCE) will now use a tiered fee structure and will increase to $1,500 for the first RCE, $2,500 for the second RCE and $3,600 for the third RCE. Patent Trial & Appeal Board fees will increase by about 25%, and a new fee of $400 will be required for a Request for Director Review of a Board decision.

Written comments on proposed patent fees must be submitted by June 3, 2024, through the Federal eRulemaking Portal.