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Count On It, Plural Term Means More Than One

by Yoshiko Ito | Mar 17, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed Patent Trial & Appeal Board (Board) patentability decisions after determining that the Board did not err in construing multiple terms within the challenged patents. Apple Inc. v. MPH Technologies Oy, Case Nos. 21-1532; -1533; -1534 (Fed. Cir. Mar. 9, 2022) (Moore, C.J.; Prost, Taranto, JJ.)

MPH owns three patents related to a method for forwarding a message from a first computer to a second computer via an intermediate computer via a network and provides secure message forwarding without relying on any extra encapsulation overhead. Apple petitioned for inter partes review (IPR) of MPH’s patents, challenging the claims in the three patents as obvious over a combination of non-patent literature (RFC3104) and a US patent (Grabelsky). During the proceedings, a series of claim construction disputes were raised. The Board issued final written decisions, finding that Apple failed to show that some claims would have been obvious over the combination of RFC3104 and Grabelsky. Apple appealed.

In seeking to overturn the Board’s decision, Apple raised four claim construction disputes. First, Apple argued that the Board erred in finding that the claim limitation “information fields” requires “two or more fields.” Apple argued that “a plural term covers one or more items” and thus the claim limitation was taught by Grabelsky, which uses a single field. Apple further argued that a word such as “plurality” must be used to clarify that the limitation requires more than one item. The Federal Circuit rejected Apple’s argument, explaining that common English usage presumes that a plural term refers to two or more items. The Court found that the Board did not err in construing the claim limitation because the term “information fields” is plural, thus requiring more than one field, and nothing in the claim language or written description suggested otherwise.

Second, Apple argued that the Board’s interpretation that the message was sent from the mobile computer directly to the first address was inconsistent with the claim limitation “intermediate computer configured to receive from a mobile computer a secure message sent to the first network address” in one of MPH’s patents. Apple argued that the passive language of the claim limitation suggested that “the mobile computer need not send the message to the first network address so long as the message is sent there eventually,” and thus the claim limitation was taught by RFC3104, in which a message sent to a first network address is received at another address before being forwarded to the first network address. The Federal Circuit rejected Apple’s arguments, finding that the Board did not err in construing the claim limitation because the plain language established direct sending of the message from the mobile computer to the first address, and nothing in the remainder of the claims or written description suggested otherwise.

Third, Apple argued that the Board erred in construing the term “substitute” in the claim limitation “substitute the unique identity read from the secure message with another unique identity prior to [...]

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Dude, Where’s My Venue? Texas Car Dealerships Aren’t Distributor Agents

by Paul Devinsky | Mar 17, 2022 | Patents

The US Court of Appeals for the Federal Circuit vacated a district court’s denial of motions made by two car distributors to transfer cases out of the Western District of Texas for improper venue, finding that the patent owner failed to establish that franchised car dealerships in the judicial district were agents of the manufacturers for venue purposes under § 1400(b). In re Volkswagen Grp. of Am., Inc., Case Nos. 22-108; -109 (Fed. Cir. Mar. 9, 2022) (Dyk, Reyna, Chen, JJ.) (per curiam).

StratosAudio filed complaints in the Western District of Texas against Volkswagen and Hyundai, asserting infringement of infotainment-related patents. Volkswagen and Hyundai are car distributors incorporated in New Jersey and California, respectively. Both distributors moved to dismiss or transfer their cases for improper venue under § 1406(a). The district court denied the motions, concluding that venue was proper because independently owned Volkswagen and Hyundai car dealerships operated in the district. The district court found that franchise agreements gave the car distributors sufficient control over their respective dealerships such that they constituted regular and established places of business in the district. The district court reached this finding despite the fact that Texas law prohibited direct or indirect operation or control of a franchise by a car manufacturer or distributor. Volkswagen and Hyundai petitioned the Federal Circuit for writ of mandamus to vacate the district court’s order or transfer for improper venue.

The Federal Circuit first considered whether mandamus review was appropriate. The Court explained that it may only issue a writ if the petitioner has no other means adequate to attain the desired relief. In contrast to a motion to transfer to a more convenient venue under § 1404(a), denial of a motion to dismiss or transfer for improper venue under § 1406(a) can be remedied on appeal from final judgment. The Court explained that mandamus relief is therefore only available for a ruling on a § 1406(a) motion where the issue presented doing so is important to “proper judicial administration.” Citing to its ruling in In re. Google LLC, the Court explained that this condition may be met when there are a significant number of district court decisions that adopt conflicting views on a basic legal issue. The Court described the disagreement among district courts over whether independent car dealerships establish venue over vehicle manufacturer and distributors and determined that the situation warranted immediate review.

The Federal Circuit turned to the merits to analyze the factors for determining whether a defendant has a “regular and established place of business” for the purposes of establishing proper venue under 28 U.S.C. § 1400(b). There was no dispute that the car dealerships were physically located in the Western District of Texas, and that the defendants did not have any employees at these locations. The Court thus identified the three operative statutory requirements that StratosAudio had the burden of establishing:

Whether the dealerships were the agents of the defendants
Whether the dealerships conducted the defendants’ [...]

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California, I’m Coming Home: Transfer to Venue Where Products Were Designed Is Appropriate

by Paul Devinsky | Mar 10, 2022 | Patents

The US Court of Appeals for the Federal Circuit denied a patent owner’s petition for writ of mandamus, finding that the district court properly transferred a case from the Eastern District of Virginia to the Northern District of California because the center of the alleged infringing activities occurred in California. In re: SunStone Information Defense, Inc., Case No. 2022-121 (Fed. Cir. Feb. 11, 2022) (Moore, Dyk, Stoll, JJ). (non-precedential).

SunStone filed a patent infringement suit against F5 Networks and one of its customers in the Eastern District of Virginia. F5 Networks moved to transfer the case to the Northern District of California pursuant to 28 U.S.C. § 1404(a), arguing that at the time of filing, SunStone was headquartered in Northern California, and the F5 Networks subsidiary that designed and developed the accused products was also located in the area. F5 Networks also noted that essentially all of the relevant documents and knowledgeable employees were in Northern California.

The district court granted F5 Networks’ motion, explaining that F5 Networks satisfied its burden of proving that transfer was warranted based on convenience of the parties and witnesses and because California was the “center of the alleged infringing activities.” The district court also noted that neither party disputed that the action “might have been brought” in the Northern District of California. SunStone petitioned for writ of mandamus.

The Federal Circuit applied the law of the regional circuit (the Fourth Circuit), which requires finding a clear abuse of discretion in order to overturn a district court’s transfer decision. The Court found that SunStone failed to meet this “stringent standard.” The Court also found that SunStone’s choice of forum was not entitled to significant weight because it was not SunStone’s home forum and had no specific connection to the infringement claims. The Court therefore denied SunStone’s petition.

Practice Note: This is another decision in a long line of recent Federal Circuit rulings relating to venue, which are summarized in an article related to a string of transfer denials in the Western District of Texas and our 2022 IP Outlook Report: The Developments Shaping Patent Law.

What Preclusion? Post-IPR Reexam Moves Forward

by Tim Dunker | Mar 10, 2022 | Patents

The US Court of Appeals for the Federal Circuit revived a petitioner’s validity challenge seeking ex parte review at the US Patent & Trademark Office (PTO), reversing a district court decision dismissing its complaint seeking Administrative Procedures Act (APA) review of the PTO Director’s vacatur decision. The Federal Circuit concluded that the petitioner was not subject to inter partes review (IPR) estoppel from pursuing reexamination after receiving IPR final written decisions concerning the same claims of the same patents. Alarm.com Inc. v. Hirshfeld, Case No. 21-2102 (Fed Cir, Feb 24, 2022) (Taranto, Chen, Cunningham, JJ.)

This case explores the tension between the ex parte reexam statute and the IPR estoppel statute. Under 35 U.S.C. § 302, “any person at any time may file a request for reexamination . . . of any claim of a patent on the basis of any prior art cited under [§ 301].” If the PTO Director determines “pursuant to [§ 303(a)] that no substantial new question of patentability is raised,” that determination “will be final and nonappealable.” § 303(c). If a substantial new question is deemed to have been raised, “the determination will include an order for reexamination of the patent for resolution of the question.” § 304. Under § 315(e)(1), a petitioner in an IPR that results in a final written decision is estopped from requesting or maintaining a proceeding before the PTO “with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”

Alarm.com filed several IPR petitions that resulted in three final written decisions holding that Alarm.com had not carried its burden of proving that the challenged claims at issue were unpatentable. The Federal Circuit affirmed all three decisions in its 2018 ruling in Vivint, Inc. v. Alarm.com. Alarm.com subsequently filed three requests for ex parte reexamination of the same claims under 35 U.S.C. § 302 and 37 C.F.R. § 1.510, presenting different grounds than were presented in the IPRs. Instead of rendering a § 303(a) decision on the issue of whether petitioner presented a substantial new questions of patentability, the Director vacated the requests, finding that Alarm.com reasonably could have raised its reexamination grounds in the IPRs and, therefore, was estopped under § 315(e)(1) from submitting the requests. Alarm.com filed a complaint in the Eastern District of Virginia against the Director and the PTO under 5 U.S.C. § 702, stating that the Director’s actions were arbitrary and capricious. Following dismissal of the complaint, Alarm.com appealed.

The PTO argued that the overall ex parte reexamination scheme precluded judicial review of the Director’s vacatur decision based on § 315(e)(1) estoppel, which brought Alarm.com’s challenge within the exception to APA review, i.e., where “statutes preclude judicial review.” 5 U.S.C. § 701(a)(1). The PTO did not raise any other arguments as to why judicial review would not be available under the APA.

The Federal Circuit explained that “[t]he only portion of the ex parte reexamination statutory scheme that expressly precludes judicial review is § [...]

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“TRUMP TOO SMALL” Trademark Decision Leaves Big Questions

by Sarah Bro | Mar 10, 2022 | Trademarks

Revisiting jurisprudence touching on the Lanham Act and the First Amendment from the Supreme Court’s decisions in Matal v. Tam and Iancu v. Brunetti, the US Court of Appeals for the Federal Circuit held that applying Sec. 2(c) of the Lanham Act (which bars registration of a trademark that consists of or comprises a name of a particular living individual without their written consent) may, in certain instances, unconstitutionally restrict free speech in violation of the First Amendment. In this instance, the Federal Circuit found that the Trademark Trial & Appeal Board’s (Board) refusal to register the trademark “TRUMP TOO SMALL” for use on t-shirts involved content-based discrimination that was not justified by a compelling or substantial government interest. In re: Steve Elster, Case No. 20-2205 (Fed. Cir. Feb. 24, 2022) (Dyk, Taranto, Chen, JJ.)

Steve Elster filed a US trademark application in 2018 for the mark “TRUMP TOO SMALL” (a reference to a 2016 Republican presidential primary debate exchange between then- candidate Donald Trump and Senator Marco Rubio (R-FL)) for use on shirts. The US Patent & Trademark Office (PTO) examining attorney, and subsequently the Board, refused registration of the mark on grounds that it clearly referred to former President Trump, and that Elster did not have written consent to use former President Trump’s name in violation of Sec. 2(c) of the Lanham Act. Sec. 2(c) requires such consent when a trademark identifies a “particular living individual.” Elster argued that his trademark aimed to convey that some features of former President Trump and his policies were diminutive and appealed the Board’s holding that Sec. 2(c) is narrowly tailored to advance two compelling government interests, namely, protecting an individual’s rights of privacy and publicity and protecting consumers against source deception.

The Federal Circuit started with a brief primer on relatively recent decisions in which the Supreme Court found certain provisions of Sec. 2(a) to be improper viewpoint discrimination because they barred registration of trademarks that were disparaging or comprised of immoral or scandalous matter. The Federal Circuit found that while neither Tam nor Brunetti resolved Elster’s appeal pertaining to Sec. 2(c), the cases did establish that a trademark represents private, not government, speech entitled to some form of First Amendment protection, and that denying a trademark registration is akin to the government disfavoring the speech being regulated. The Court then examined whether Sec. 2(c) could legally disadvantage the specific “TRUMP TOO SMALL” speech at issue in Elster’s case, and whether the government has an interest in limiting speech on privacy or publicity grounds if that speech involves criticism of government officials.

The Federal Circuit did not decide the matter on whether a trademark is a government subsidy, avoiding the somewhat varying opinions of the Supreme Court on that issue. Instead, the Federal Circuit found that Elster’s mark constituted speech by a private party for which the registration restriction must be tested by the First Amendment. Regardless of whether strict or intermediate scrutiny is applied [...]

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Supplier Can’t Complain when SEP Holder Refuses to License

by Amol Parikh | Mar 3, 2022 | Patents

The US Court of Appeals for the Fifth Circuit determined that an automotive parts supplier did not have constitutional standing to pursue an antitrust lawsuit against standard essential patent (SEP) owners that refused to directly license SEPs to the supplier on fair, reasonable and nondiscriminatory (FRAND) terms. Continental Automotive Systems, Inc. v. Avanci, LLC et al., Case No. 20-11032 (5th Cir. Feb. 28, 2022) (Stewart, Ho, Engelhardt, JJ.)

Continental supplies telematic control units that are embedded in connected cars. The telematic control units provide wireless connectivity using 2G, 3G and 4G cellular standards, allowing users to stream music, navigate to destinations and call for emergency assistance directly from cars. Nokia, PanOptis, and Sharp all claim to own or license SEPs essential to the 2G, 3G, and 4G cellular standards set by standard-setting organizations (SSO). In order to facilitate patent licensing, these individual patent holders (along with many others) entered into an agreement with Avanci, which acts as a licensing agent for the patent holders. Under the agreement, Avanci may sell patent licenses only to car manufacturers or original equipment manufacturers (OEMs), both of which are downstream from Continental in the supply chain. The agreement permits the patent holders to individually license their SEPs to suppliers such as Continental at FRAND rates.

Continental unsuccessfully sought a license from Avanci at FRAND rates. According to Avanci, licenses were available to Continental on FRAND terms from individual SEP holders, and Continental did not need SEP licenses since Avanci sells licenses to OEMs that incorporate Continental’s products. Continental sued Avanci and the individual patent holders, arguing that Avanci’s refusal to sell a license to Continental on FRAND terms constituted anticompetitive conduct in violation of the Sherman Antitrust Act.

Avanci moved to dismiss the complaint. As to the threshold issue of constitutional standing, Continental presented two theories of injury that it asserted conferred standing. Continental’s first theory of injury was that if Avanci and the individual patent holders succeeded in licensing the OEMs at non-FRAND rates, the royalties owed on those licenses might be passed through to Continental via indemnity agreements. Continental’s second theory of injury was that Avanci and the individual patent holders declined to provide Continental with a license on FRAND terms, and this denial of property was sufficient injury to establish standing. The district court rejected Continental’s first theory but accepted the second theory, finding that Continental’s unsuccessful attempts to obtain licenses on FRAND terms was an injury that conferred constitutional standing. Even though the district court found that Continental had constitutional standing, it dismissed Continental’s Sherman Act claims for lack of antitrust standing and for failure to plausibly plead certain elements. Continental appealed.

The Fifth Circuit concluded that neither of Continental’s theories of injury were sufficient to confer constitutional standing. As to the first alleged injury, the Court agreed with the district court and found that was too speculative since it depended on several layers of decisions by the OEMs—namely, decisions to accept non-FRAND licenses and then invoke indemnification rights against [...]

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Federal Circuit Issues Errata: IPR Estoppel Applies Only to Challenged Claims

by Paul Devinsky | Mar 3, 2022 | Patents

The US Court of Appeals for the Federal Circuit issued an errata to its opinion in California Institute of Technology v. Broadcom Limited, clarifying that inter partes review (IPR) estoppel under 35 USC § 315(e) does not apply to unasserted claims. California Institute of Technology v. Broadcom Limited, Case Nos. 20-2222; 21-1527 (Fed. Cir. Feb. 22, 2022).

In its original opinion, the Court stated that estoppel applies “to all claims and grounds not stated in the IPR but which reasonably could have been included in the petition” (emphasis added). The “claims” portion of this statement appeared to be at odds with the scope of § 315(e), which only applies to patent claims subject to a final written decision (i.e., it does not apply to patent claims that were not subject to the IPR proceeding). To quell any confusion, the Court modified its opinion by deleting the term “claims” from the statement. The Court also made this point clear in its follow-on IPR estoppel decision in Intuitive Surgical, Inc. v. Ethicon LLC, in which the Court advised that a petitioner could file separate petitions on a claim-by-claim basis to avoid § 315(e)(1) estoppel.

The full change to the Court’s Caltech opinion is as follows:

Accordingly, we take this opportunity to overrule Shaw and clarify that estoppel applies not just to claims and grounds asserted in the petition and instituted for consideration by the Board, but to all claims and grounds not stated in the IPR petition but which reasonably could have been included in the petition asserted. In a regime in which the Board must institute on all grounds asserted challenged claims and the petition defines the IPR litigation, this interpretation is the only plausible reading of “reasonably could have been raised” and “in the IPR” that gives any meaning to those words.

Paradise Lost: Art Created by AI Is Ineligible for Copyright Protection

by Jodi Benassi | Mar 3, 2022 | Copyrights

The US Copyright Office Review Board (“Board”) rejected a request to register a computer-generated image of a landscape for copyright protection, explaining that a work must be created by a human being to obtain a copyright. Second Request for Reconsideration for Refusal to Register A Recent Entrance to Paradise (Copyright Review Board Feb. 14, 2022) (S. Perlmutter, Register of Copyrights; S. Wilson., Gen. Counsel; K. Isbell, Deputy Dir. of Policy).

In 2018, Steven Thaler filed an application to register a copyright in a work named “A Recent Entrance to Paradise.” Thaler listed as the author of the work the “Creative Machine,” a computer algorithm running on a machine. Thaler listed himself as a claimant and sought to register the work as a “work-for-hire” as the “owner” of the Creative Machine. The Board refused to register the work, finding that it lacked the necessary human authorship. Thaler requested reconsideration, arguing that the “human authorship requirement is unconstitutional and unsupported by either statute or case law.”

After reviewing the work a second time, the Board found that Thaler provided no evidence of sufficient creative input or intervention by a human author. The Board refused to abandon its longstanding interpretation of the Copyright Act, as well as Supreme Court and lower court precedent, that a work meets the requirements of copyright protection only if it is created by a human author. The Board concluded that “A Recent Entrance to Paradise” lacked the required human authorship and therefore affirmed refusal to register. Thaler filed for a second reconsideration.

The Board found that Thaler’s second request for consideration repeated the same arguments as his first request. Relying on the Compendium of US Copyright Office Practices (the Office’s practice manual), the Board found that Thaler provided neither evidence that the work was a product of human authorship nor any reason for the Board to depart from more than a century of copyright jurisprudence.

The Board explained that the Supreme Court of the United States, in interpreting the Copyright Act, has described a copyright as the exclusive right of a human and her own genius going back to 1884. The Board noted that the Supreme Court has repeatedly articulated the nexus between the human mind and creative expression as a prerequisite for copyright protection. The human authorship requirement is further supported by the lower courts. For example, in 1997 the US Court of Appeals for the Ninth Circuit held in Urantia Found. v. Kristen Maaherra that a book containing words “‘authored’ by non-human spiritual beings” can only gain copyright protection if there is “human selection and arrangement of the revelations.”

The Board further explained that federal agencies have followed the courts. In the 1970s, the National Commission on New Technological Uses of Copyrighted Works (CONTU) studied the creation of new works by machines. CONTU determined that the requirement of human authorship was sufficient to protect works created with the use of computers and that no amendment to copyright law was necessary. CONTU explained that “the eligibility of [...]

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2022 IP Outlook Report: The Developments Shaping European IP Law

by Dr. Henrik Holzapfel, Laura Morelli, Claire Boosz, Charles de Raignac and Dr. Maximilian Kiemle, LLM | Mar 1, 2022 | EU Update, Patents, Trademarks

Key Takeaways and Outlook for 2022

While European intellectual property (IP) regimes have slowly digested the Brexit shock, brand owners are vacillating between optimism and apprehension in 2022 as they navigate continuous developments in IP law. At the forefront is the prospect of greater patent law harmonization with the entry into force of the Unified Patent Court (UPC) and the European patent with unitary effect. En route to this unification, however, are some anticipated challenges.

The actions initiated in 2021 that will continue to spark conversation (and controversy) in 2022 include:

Read the full report.

Dominik Rissman, a trainee in the Dusseldorf office, also contributed to this report.

Third-Party Licensing Information May Be Exception to General Right of Public Access to Court Records

by Paul Devinsky | Feb 24, 2022 | Patents

In a second appeal relating to sealing third-party licensing information, the US Court of Appeals for the Federal Circuit vacated and remanded a district court’s order denying a motion to seal because the district court failed to follow the Federal Circuit’s previous instruction to make particularized determinations regarding the information. Uniloc USA, Inc. v. Apple Inc., Case No. 21-1568 (Fed. Cir. Feb. 9, 2022) (Lourie, Cunningham, JJ.) (Mayer, J., dissenting).

In a previous decision, the Federal Circuit affirmed the denial of a motion to seal with regard to information pertaining to Uniloc but vacated and remanded the denial of the motion to seal with regard to certain third-party licensing information. The Court instructed the district court to “make particularized determinations as to whether and, if so, to what extent, the materials of each of these [third] parties should be made public.”

On remand, the district court again denied the motion to seal the third-party licensing information. The district court made findings regarding the relative weight of the public’s interest in accessing judicial records, including patent licensing information. It also found that the particular licensing information at issue was relevant to a dispute over Uniloc’s standing to sue. With regard to one particular third party, Uniloc’s financier Fortress Credit Co. LLC, the district court denied the motion to seal because Fortress had not complied with Local Rule 79-5(e)(1) of the Northern District of California, which requires that a supporting declaration be filed. Uniloc appealed a second time.

The Federal Circuit found that the district court failed to follow its instructions to make particularized determinations regarding whether the third-party licensing information sought to be sealed should be made public. Accordingly, the Court remanded for the district court to carry out the inquiry it had previously ordered.

The Federal Circuit also noted its disagreement with certain statements the district court had made in its order denying the motion to seal. The district court had stated that “[t]he public has an interest in inspecting the valuation of patent rights . . . particularly given secrecy so often plays into the patentee’s advantage in forcing bloated royalties.” The Federal Circuit stated that the district court committed “an error of law in making a blanket ruling that the public has a broad right to licensing information relating to patents.” While the district court had stated that the public has a strong interest in knowing the full extent of the terms and conditions involved in the exercise of its patent rights and in seeing the extent to which the patentee’s exercise of the government grant affects commerce, the Federal Circuit wrote that “[a]bsent an issue raised by the parties concerning license rights and provisions, there is no public interest or entitlement to information concerning consideration for the grant of licenses.” And while the amount Uniloc received in royalties was relevant to the dispute regarding standing, the Court wrote that “that fact can be proved without opening up all the licenses that the court granted [...]

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