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Transfer Motions Take Priority Regardless of Target District

by Jodi Benassi | Mar 16, 2023 | Patents

The US Court of Appeals for the Federal Circuit granted a writ of mandamus and ordered the district court to decide a motion for intra-district transfer before proceeding to further substantive matters, explaining that both intra-district and inter-district transfer motions must be prioritized. In re: Apple Inc., Case No. 23-120 (Fed. Cir. Mar. 6, 2023) (per curiam) (nonprecedential).

SpaceTime3D sued Apple for patent infringement in February 2022 in the Western District of Texas, Waco Division. In July 2022, Apple moved to transfer the action within the Western District to Austin. The motion was fully briefed by the parties on November 7, 2022. The claim construction hearing was scheduled for November 17, 2022, based on an agreement between the parties. The day before the hearing, Apple moved to stay the hearing and all other proceedings until the district court ruled on Apple’s pending motion to transfer. The district court deferred claim construction, then denied Apple’s stay motion. The district court acknowledged that it was required to prioritize a motion for inter-district transfer but stated that “it does not have to stay the proceedings or decide whether to transfer the case intra-district until closer to trial.” Apple filed a writ of mandamus with the Federal Circuit.

The Federal Circuit noted that although the remedy of mandamus is drastic and should be invoked only in extraordinary situations, it has previously granted mandamus “to correct a clearly arbitrary refusal to act on a longstanding pending transfer motion.” The Federal Circuit stated that under Fifth Circuit law, precedent entitles parties to have their transfer motions prioritized. The Federal Circuit was not swayed by the trial court’s reliance on a statement in an unpublished, nonprecedential Fifth Circuit decision in Sundell v. Cisco Systems, Inc., because the Fifth Circuit did not suggest any discretion in the prioritization of transfer motions based on the type of transfer. The Federal Circuit explained that the Fifth Circuit does not require that inter-district transfer motions be prioritized to the exclusion of intra-district transfer motions. The Federal Circuit granted Apple’s petition for mandamus and ordered the district court to timely decide the transfer motion before proceeding with further substantive matters beyond the claim construction hearing.

A Maze-Like Path and Laundry List Don’t Provide Written Description

by Cecilia Choy, PhD | Mar 16, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision that there was insufficient written description in the asserted priority applications to support a genus claim because of a lack of ipsis verbis disclosure and insufficient blaze marks. The Court concluded that the priority applications did not support an early priority date. Regents of the University of Minnesota v. Gilead Sciences, Inc., Case No. 21-2168 (Fed. Cir. March 6, 2023) (Lourie, Dyk, Stoll, JJ.)

Gilead filed a petition for inter partes review (IPR) challenging Minnesota’s patent directed to phosphoramidate prodrugs preventing virus reproduction or cancerous tumor growth. Gilead’s US Food & Drug Administration-approved drug, sofosbuvir, is marketed by Gilead to treat chronic hepatitis C infections and falls within claim 1 of the patent.

The 2014 application that issued as the challenged patent claimed priority to four applications. In the IPR, Gilead argued that the claims were anticipated by a Gilead-owned patent publication (Sofia). The publications used in the decision are as follows:

NP3 and NP2 have the same disclosure. NP2 and P1 contain similar disclosures, which the Board called NP2-P1. The broader claim in NP2-P1 has a relationship of genus to the narrower subgenus claims in the patent at issue. There was no dispute that Sofia disclosed every limitation of each challenged claim. The Board held that NP2-P1 failed to provide a sufficient written description to support the asserted priority date of the challenged claims, which were therefore found to be anticipated by Sofia. Minnesota appealed.

Minnesota argued the following to the Federal Circuit:

The Board erred in holding that the NP2-P1 applications have insufficient written description.
The Board ran afoul of Administrative Procedure Act (APA) requirements.
Minnesota is a sovereign state entity immune from IPR.

35 U.S.C. § 120 sets forth requirements for a patent application to benefit from a filing date of an earlier application. Minnesota asserted that the NP2-P1 priority applications literally described or provided blaze marks to the challenged subgenus claims. The Federal Circuit disagreed, explaining that written description for a genus claim of chemical compounds raises “particular issues,” requiring a description of the outer limits of the genus and either a representative number of members or structural features common to the members of the genus. The Court found that the asserted priority applications (NP2-P1) did not provide such description and the challenged claims were not entitled to the filing dates of those applications.

The Federal Circuit found that the asserted priority applications did not provide ipsis verbis disclosure of the challenged subgenus claim. The Court quoted an oft-noted saying associated with Yogi Berra, a catcher for the New York Yankees some 50 years ago, about a notable failure to provide direction: “when one comes to a fork in the road, take it.” The Court also cited its 1996 decision in [...]

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Charter Schools Aren’t Immune from Trademark Suits

by Amol Parikh | Mar 16, 2023 | Trademarks

The US Court of Appeals for the Fifth Circuit affirmed a district court’s dismissal of a trademark suit against a charter school operator and public school district in Texas but explained that the charter school was not automatically immune from lawsuits based on sovereign immunity. Springboards to Education, Inc. v. McAllen Indep. School District, Case Nos. 21-40333; -40334 (5th Cir. Mar. 8, 2023) (Smith, Duncan, JJ.) (Oldham, J., concurring).

Springboards sells products to school districts in connection with its Read a Million Words Campaign. The campaign incentivizes school children to read books through promises of induction into the Millionaires’ Reading Club and access to rewards such as t-shirts, backpacks and fake money. Springboards’s goods typically bear any combination of trademarks that the company registered with the US Patent & Trademark Office, including “Read a Million Words,” “Million Dollar Reader,” “Millionaire Reader” and “Millionaires’ Reading Club.”

Springboards filed a complaint for trademark infringement, trademark counterfeiting and false designation of origin against McAllen Independent School District (MISD), a public school district in Texas, and IDEA Public Schools, a nonprofit organization operating charter schools in Texas. Both MISD an IDEA moved to dismiss for lack of subject matter jurisdiction, arguing that they were arms of the state and thus entitled to sovereign immunity. They also moved for summary judgment for lack of infringement. The district court ruled that only IDEA enjoyed sovereign immunity and accordingly granted IDEA’s motion to dismiss but denied MISD’s. The district court granted MISD’s motion for summary judgment after concluding that Springboards could not establish that MISD’s program was likely to cause confusion with Springboards’s trademarks. Springboards appealed.

The Fifth Circuit began with the jurisdictional issue of whether IDEA and MISD enjoyed sovereign immunity. The Court explained that determining whether an entity is an arm of the state is governed by the Clark factors, which were set forth in the Fifth Circuit’s 1986 decision in Clark v. Tarrant County. Those factors are as follows:

Whether state statutes and case law view the entity as an arm of the state
The source of the entity’s funding
The entity’s degree of local autonomy
Whether the entity is concerned primarily with local, as opposed to statewide, problems
Whether the entity has the authority to sue and be sued in its own name
Whether the entity has the right to hold and use property.

The Fifth Circuit analyzed each of the factors and concluded that IDEA was not an arm of the state. The Court found that factors 1 and 3 favored sovereign immunity while factors 2, 4, 5 and 6 did not. The Court’s decision focused heavily on factor 2, explaining that the inquiry under factor 2 has two parts: the state’s liability in the event there is a judgment against the defendant, and the state’s liability for the defendant’s general debts and obligations. The district court had concluded that factor 2 weighed in favor of immunity because 94% of IDEA’s funding came from the state and federal sources. The [...]

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Compelling Clarity: PTO Director Explains Compelling Merits Test

by Alexander Piala, PhD | Mar 9, 2023 | Patents

US Patent & Trademark Office (PTO) Director Katherine K. Vidal issued a precedential opinion clarifying the standard under which the Patent Trial & Appeal Board (Board) can institute on an inter partes review (IPR) petition despite the Fintiv factors militating toward denial. CommScope Techs. LLC v. Dali Wireless, Inc., IPR2022-01242 (PTO Feb. 27, 2023) (Vidal, Dir.) (precedential).

This opinion follows the Director’s Interim Procedure for Discretionary Denials memorandum (Guidance Memo) and her opinion in OpenSky Indus. v. VLSI Tech. In the guidance memo, the Director explained that when there is “compelling evidence of unpatentability,” the Board may decline to exercise its discretion to deny IPR institution.

In this case, Dali Wireless sued CommScope in the district court, alleging infringement of its patent. CommScope filed a petition to institute an IPR proceeding against the asserted patent. The Board granted the petition and instituted an IPR proceeding while the district court litigation was ongoing.

In granting the petition, the Board acknowledged that it would normally perform a Fintiv analysis to determine whether it should deny the petition in light of the parallel district court proceeding. However, considering the Guidance Memo and the “compelling invalidity challenge” presented by the petitioner, the Board skipped the Fintiv analysis and instituted on the petition. The Director instituted sua sponte review.

Recognizing some ambiguity in both OpenSky and the guidance memo, the Director made her decision precedential to clarify:

My Guidance Memo states that “the PTAB will not deny institution based on Fintiv if there is compelling evidence of unpatentability.” Although I now recognize that this instruction could be read to allow for a compelling merits determination as a substitute for a Fintiv analysis, that was not my intent. By that instruction, I intended for PTAB panels to only consider compelling merits if they first determined that Fintiv factors 1–5 favored a discretionary denial . . . . In circumstances where . . . the Board’s analysis of Fintiv factors 1–5 favors denial of institution; the Board shall then assess compelling merits. In doing so, the Board must provide reasoning sufficient to allow the parties to challenge that finding and sufficient to allow for review of the Board’s decision.

A determination of whether the petition presents a compelling merits case for invalidity requires a merits case that meets a higher standard than the “reasonable likelihood” test required by 35 U.S.C. § 314(a).

The Director found that the Board’s decision was deficient in both parts of the analysis. The Board did not perform any analysis of the Fintiv factors but instead went straight to a determination of whether the petition presented a compelling invalidity challenge. In connection with that determination, the Board failed to provide any reasoning that explained why it found the merits case presented in the petition compelling.

Finding that the Board’s reasoning was conclusory, the Director vacated the Board’s decision to institute IPR review and remanded for further proceedings consistent with her decision.

Practice Note: Less [...]

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Little Weight Given to Conclusory Expert Declaration That Repeats IPR Petition Verbatim

by Amol Parikh | Mar 2, 2023 | Patents

The US Patent & Trademark Office Director affirmed and designated as precedential a Patent Trial & Appeal Board (Board) decision denying institution of an inter partes review (IPR) petition where the expert declaration presented conclusory assertions without underlying factual support and repeated verbatim the petitioner’s argument. Xerox Corp. v. Bytemark, Inc., IPR2022-00624 (PTAB Aug. 24, 2022) (Wood, Grossman, Tartal, APJs); Xerox Corp. v. Bytemark, Inc., IPR2022-00624 (Feb 10, 2023) (Vidal, Dir.)

Bytemark owns a patent directed to a method and system for distributing electronic tickets. According to the patent, a user can procure and store an electronic ticket on a device such as a mobile phone, and when the user presents the ticket, the ticket taker can verify the ticket by inspecting a visual object that a human can perceive without a machine scan. In addition to using a validating visual object, the patent teaches data integrity checking to ensure that the ticket data and the software managing that ticket data on the user’s device has not been altered improperly. As to the data integrity concept, the claims of the patent recite a server that is configured to “store in a data record associated with the user account a data value indicating the fraudulent activity” (fraud limitation).

Xerox filed an IPR petition challenging certain claims of the patent as obvious over the Terrell prior art reference in combination with various secondary references. Xerox argued that Terrell disclosed that after fraudulent activity is detected, “the purchaser of the ticket could be blocked from further use of the system or pursued in respect of their potential fraud.” Xerox asserted that a skilled artisan would understand that such blocking would require recording the blocking in a data record associated with that user’s account, and would find it obvious that blocking the account of the purchaser from further use of the system would include storing a data value indicating the fraudulent activity in a data record associated with the user account.

Bytemark responded that Terrell, at most, taught blocking a ticket purchaser from further use of the Terrell system based on potential fraud, but nowhere indicated that this would be achieved by using a data value indicating fraudulent activity, as opposed to some other manner of blocking a user, such as deleting the user’s account or reporting the user for fraud. Bytemark further argued that Xerox’s argument that a skilled artisan would find the fraud limitation obvious was conclusory and an improper attempt to use a skilled artisan’s common knowledge to supply a wholly missing claim limitation without evidentiary support.

The Board agreed with Bytemark, finding that Xerox did not provide sufficient evidence or persuasive reasoning to support either of Xerox’s arguments. The Board explained that Terrell taught blocking the purchaser rather than the account of the purchaser and that it was far from clear that blocking the purchaser would “require” recording the blocking in a record in the purchaser’s account, as opposed to deleting the purchaser’s account altogether. The Board noted that the [...]

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PTO Introduces Trademark Decisions and Proceedings Search Tool

by Amol Parikh | Mar 2, 2023 | Trademarks

On February 17, 2023, the US Patent & Trademark Office (PTO) announced the launch of the new Trademark Decisions and Proceedings Search Tool. This tool allows users to filter and search expungement and reexamination proceedings, administrative orders and sanctions, and precedential director decisions. Under the Expungement and Reexamination Proceedings tab, users can find all petitions filed by third parties requesting expungement or reexamination, as well as director-initiated proceedings and reexaminations. The Administrative Orders and Sanctions tab includes administrative and sanctions orders issued under the authority of the PTO Director against parties found to violate PTO trademark rules of practice or terms of use for PTO websites and filing systems. Decisions on petitions to the PTO Director will be added to the search tool later in 2023.

The Trademark Decisions and Proceedings Search Tool can be found here.

The Alice Eligibility Two-Step Dance Continues

by Kavya Rallabhandi | Mar 2, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s dismissal of a Fed. R. Civ. P. 12(b)(6) motion, holding that patent claims directed to abstract ideas and lacking inventive steps that transform abstract ideas into patent-eligible inventions fail the Alice two-step test and are not patent eligible under 35 U.S.C. § 101. Hawk Tech. Sys., LLC v. Castle Retail, LLC, Case No. 22-1222 (Fed. Cir. Feb. 17, 2023) (Reyna, Hughes, Cunningham, JJ.)

35 U.S.C. § 101 states that laws of nature, natural phenomena and abstract ideas are not patentable. The Supreme Court of the United States in Alice v. CLS Bank Int’l (2014) articulated a two-step test for examining patent eligibility: a patent claim falls outside § 101 if it is directed to a patent-ineligible concept such as an abstract idea and lacks elements sufficient to transform the claim into a patent-eligible application.

Hawk Technology sued Castle Retail alleging infringement of its patent directed to security surveillance video operations in Castle Retail’s grocery stores. The patent relates to a method of viewing multiple simultaneously displayed and stored video images on a remote viewing device of a video surveillance system using result-based functional language. Castle Retail moved to dismiss on the basis that the claims were not patent eligible under § 101. After conducting a technology briefing, the district court granted the motion. The district court ruled that the claims were abstract because surveillance monitoring is a common business practice and the claims recited little more than taking video surveillance and digitizing it for display and storage in a conventional computer system, and the claims did not limit the abstract idea to a new technological improvement in video storage/display that could transform the abstract idea into a patent-eligible invention. Hawk Technology appealed.

The Federal Circuit, reviewing de novo, affirmed. Addressing Alice step one, the Court found that the patent’s required functional results of receiving/digitizing video images, converting images to selected format and storing/displaying/transmitting the images were similar to claims that the Court previously ruled as abstract. The results-oriented claim language failed to concretely recite how the claimed invention improved the functionality of video surveillance systems and was therefore abstract. Regarding Alice step two, the Court analyzed the claim elements, both individually and as an ordered combination in light of the specification, for transformative elements. The Court explained that although the claims recited the purported inventive solution and referenced specific tools/parameters, they neither showed how monitoring and storage was improved nor required anything other than off-the-shelf, conventional computer, network and display technology for gathering, sending and presenting the specified information.

Procedurally, the Federal Circuit found that the motion to dismiss was not decided prematurely because the technology briefing was purely a procedural step conducted in each patent case and there was no evidence that the district court’s decision hinged on new facts constituting matters beyond the pleadings. Hawk had argued that because the district court considered Castle’s testimony and evidence, it was required to convert the [...]

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PTO Seeks Comments on Role of Artificial Intelligence in Inventorship

by Amol Parikh | Mar 2, 2023 | Patents

The US Patent & Trademark Office (PTO) published a Request for Comments Regarding Artificial Intelligence and Inventorship seeking input from stakeholders on inventorship issues that may arise as artificial intelligence (AI) and emerging technologies play a greater role in the innovation process. The deadline to submit comments is May 15, 2023.

As background, the PTO held its inaugural AI and Emerging Technologies Partnership meeting, during which panelists discussed AI’s increasing role in innovation, in June 2022. Although there appeared to be consensus that AI cannot “conceive” of inventions, some panelists contended that AI is merely a tool like any other tool used in the inventive process, while others pointed to situations in which AI systems can output patentable inventions or contribute at the level of a joint inventor. While the PTO has been exploring the contours of inventorship law with respect to AI-generated inventions, in August 2022, the US Court of Appeals for the Federal Circuit issued its decision in Thaler v. Vidal, finding that inventorship is limited to natural persons. The Court explained, however, that it was not confronted with “the question of whether inventions made by human beings with the assistance of AI are eligible for patent protection.”

Recognizing the uncertainty surrounding the role of AI inventorship in the wake of the Thaler decision, the PTO seeks public comment on several questions, including the following:

1. How is AI, including machine learning, currently being used in the invention creation process?

2. How does the use of an AI system in the invention creation process differ from the use of other technical tools?

3. If an AI system contributes to an invention at the same level as a human who would be considered a joint inventor, is the invention patentable under current patent laws?

4. Do inventions in which an AI system contributed at the same level as a joint inventor raise any significant ownership issues?

5. Is there a need for the PTO to expand its current guidance on inventorship to address situations in which AI significantly contributes to an invention? How should the significance of a contribution be assessed?

6. Should the PTO require applicants to provide an explanation of contributions AI systems made to inventions claimed in patent applications? If so, how should that be implemented, and what level of contributions should be disclosed? Should contributions to inventions made by AI systems be treated differently from contributions made by other (e., non-AI) computer systems?

7. What additional steps, if any, should the PTO take to further incentivize AI-enabled innovation (e.g., innovation in which machine learning or other computational techniques play a significant role in the invention creation process)?

8. What statutory changes, if any, should be considered as to US inventorship law, and what consequences do you foresee for those statutory changes?

Are You Ready for the UPC? Act Now to Prepare for its Opening on June 1

by Dr. Henrik Holzapfel, Charles Larsen and Diana Pisani | Mar 1, 2023 | EU Update, Patents

On February 17, 2023, Germany ratified the Agreement on the Unified Patent Court (UPC) and triggered the UPC’s entry into force on June 1, 2023. The UPC will revolutionize patent enforcement across Europe and impact companies around the world that hold European patents or conduct business in Europe.

Owners of existing European patents or pending applications can “opt out” of the UPC’s jurisdiction for an initial transitional period of at least seven years. Companies must act now if they want to opt out before the court officially opens.

Understanding the UPC

The UPC will have exclusive jurisdiction over patent infringement and invalidity actions in its member states for patents granted by the European Patent Office (EPO), including existing European patents and new European patents with unitary effect (unitary patents). There are currently 17 EU Member States participating in the UPC (Germany, France, Belgium, Bulgaria, Denmark, Estonia, Finland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Sweden and Slovenia). Additional EU Member States may join the UPC in the future.

The UPC will have local and regional divisions in its member states, with a central division in Paris and Munich and a Court of Appeal in Luxembourg.

As a streamlined patent enforcement venue, the UPC will provide several new benefits to patent owners, including faster decisions with limited discovery and lower cost, and the possibility of injunctive relief throughout the member states. At the same time, the UPC will allow revocation of a patent in a single action with effect for all member states, alongside the possibility to oppose a European patent before the EPO.

European Freedom to Operate

Because of the UPC’s structure and incentives, patent litigation will likely increase in Europe, which will heighten the intellectual property (IP) infringement risk for companies doing business in Europe. If a company has not already done so, it should promptly review its competitors’ European patent estates to assess the potential risks and develop a defense strategy to avoid a surprise attack from a competitor after June 1, 2023.

European Enforcement Actions

Although the UPC is new and untried, it has the incentive to provide strong relief for those who trust it. If a company needs to bring a patent infringement action against a competitor and would like to do so in a fast, cost-effective manner, with the possibility of significant remedies, the UPC should be considered as a potential venue. The company should review its portfolio and infringement evidence to assess its opportunities.

Deciding Whether to Opt Out

The right to opt out European patent filings from the UPC’s jurisdiction will be available for an initial transitional period of seven years, which may extend to 14 years. It will be possible to reverse an opt-out, but not if the patent has been enforced or attacked in national court.

McDermott’s UPC Resource Center explores the various advantages and disadvantages of both staying in and opting out of the UPC.

When It Comes to Claim Construction, Prosecution History and Specification Rule

by Thomas DaMario | Feb 23, 2023 | Patents

Addressing claim constructions across two patents that ultimately led to noninfringement findings by a district court, the US Court of Appeals for the Federal Circuit affirmed one construction because it was supported by the prosecution history but reversed another because it was unsupported by the specification. SSI Techs., LLC v. Dongguan Zhengyang Elec. Mech. Ltd., Case Nos. 21-2345, 22-1039 (Fed. Cir. Feb. 13, 2023) (Reyna, Bryson, Cunningham, JJ.)

SSI owns two patents directed to sensors for determining the characteristics of fluid in a container such as a fuel tank. One patent, referred to as the transducer patent, describes an exemplary sensor system containing a “level” transducer and a “quality” transducer. The two transducers use ultrasonic sound waves and time of flight to determine both a level of fluid in a given tank and a quality (i.e., concentration of diesel exhaust fluid). The other patent, referred to as the filter patent, describes a similar system but attempts to address the problem of erratic measurement results that may occur because of air bubbles embedded in the fluid. This patent claims a “filter” covering the sensing area that substantially prohibits gas bubbles from entering the sensing area.

Dongguan Zhengyang Electronic Mechanical (DZEM) produces systems that determine the quality and volume of diesel exhaust fluid that are used in emission-reduction systems for diesel truck engines. SSI accused DZEM of infringing both patents. In the district court action, DZEM brought a motion for summary judgment of noninfringement based on the court’s construction of certain terms that appear in the asserted claims. With reference to the transducer patent, the claims recite the need to “determine whether a contaminant exists in the fluid based on . . . a dilution of the fluid [] detected while the measured volume of the fluid decreases.” The district court determined that this claim element required that the contaminant determination actually consider the measured volume of the fluid. The district court predicated its determination on the prosecution history, having found that this term was amended to include the disputed term and that the applicant’s intention was to incorporate the specific error-detection capability recited in the specification. The parties had previously agreed that the DZEM products did not base the contamination determination on any consideration of the measured volume. As a result, the district court granted DZEM’s motion for summary judgment of noninfringement on the transducer patent.

Regarding the filter patent, the district court adopted DZEM’s construction of the term “filter,” which was “a porous structure defining openings, and configured to remove impurities larger than said openings from a liquid or gas passing through the structure.” DZEM’s accused sensors includes a rubber cover with four apertures. The district court found that the rubber cover was not “porous” because the apertures were “relatively large” when compared with the disclosed embodiments in the specification. As a result, the court granted DZEM’s motion for summary judgment of noninfringement on the filter patent. SSI appealed.

SSI challenged both constructions. Regarding the transducer patent, SSI argued that [...]

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