Patent Docs

Ex Parte Reis (PTAB 2018)

May 14, 2018

By Michael Borella —

The Patent Trial and Appeal Broad (PTAB) of the U.S. Patent and Trademark Office has often been criticized for being particularly harsh when reviewing appeals of claims rejected by an examiner of grounds of patent-ineligibly under 35 U.S.C. § 101. According to some sources, examiners are affirmed about 80-86% of the time in these matters.[1] Therefore, when the PTAB reverses an examiner's § 101 rejection, it is worthwhile to note how and why.

U.S. Patent Application No. 13/961,567 was filed in August of 2013, and finally rejected three years later. The Applicant appealed to the PTAB soon after, and a decision was handed down earlier this month.

According to the PTAB:

The claimed subject matter relates to mapping and characterizing sea ice from synthetic aperture radar (SAR) measurements. The ability to characterize sea ice is becoming increasingly important as the makeup of ice that covers various surfaces of the globe is changing and the characteristics of the ice have changed dramatically in recent years. Both environmental concerns and natural resource concerns have a great deal of interest in measuring and characterizing regions of the earth that have ice coverage. The structure, thickness, and location of sea ice are of particular interest.

The claimed subject matter uses dual frequency (X- and P-band) data acquired from synthetic aperture radar (SAR) systems to determine sea ice depth and the presence of leads in the ice floe. The P-band SAR penetrates ice to 5 to 10 meters or more, while the X-band SAR images the surface of the ice. The claimed subject matter also uses co-polarized (e.g., HH and VV) P-band data obtained from a SAR system to map ice structures and weak points in the ice floe.

As a representative example, claim 1 recites:

A method of generating and using mapping layers, comprising:
    acquiring, via a synthetic aperture radar (SAR) system, full polarity SAR data over an area containing sea ice, wherein the acquired full polarity SAR data includes X-band data and P-band data;
    storing the acquired full polarity SAR data in a SAR database;
    generating layers via a processor of the SAR system by performing interferometric processing operations on the acquired full polarity SAR data that includes the X-band data and the P-band data;
    registering, by the processor, the generated layers one to another geographically; and
    determining, by the processor, a depth of the sea ice by combining the generated layers.

The Examiner rejected claims 1-7, 15-21, 23, 24, and 28-33 under § 101 as allegedly being directed to an abstract idea and not including significantly more than that idea.

The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a test to determine whether claims are directed to patent-eligible subject matter under 35 U.S.C. § 101. One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea. If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to "significantly more" than the judicial exclusion. But generic computer implementation of an otherwise abstract process does not qualify as significantly more. On the other hand, a claimed improvement to a computer or technological process is typically patent-eligible.

The PTAB began its analysis by describing the aforementioned Alice decision, as well as the Federal Circuit's follow-on decision in McRO, Inc. v. Bandai Namco Games America Inc. Regarding the latter case, the PTAB noted that the Court held claims directed to a rules-based lip-synchronization process to be patent eligible because, among other reasons, "the claims do not simply use a computer as a tool to automate conventional activity," and that there was "no evidence that the process previously used by animators is the same as the process required by the claims."

Concerning the present invention, the PTAB put a heavy emphasis on the teachings of the specification. In particular, the specification "describes that prior art attempts at using SAR and IFSAR to measure and characterize sea ice have used satellite-based X-band systems or airborne systems to map the top of ice through a few decimeters of dry snow and characterize only new from first-year and multiyear ice." But these systems did not measure ice thickness — instead low-flying radar or drilling techniques were used for such a purpose, resulting in thickness data only on small sections of ice.

Applicant's SAR system, however, was different because "the P-band SAR penetrates the surface features and the ice itself to reveal details of surface and internal cracking of an ice floe not evident in X-band data." Notably, the specification describes "the specific steps the processor employs to determine the thickness of the ice based on the X-band and P-band SAR data." This includes "creating elevation models for the top of the ice based on the X-band digital elevation map, creating elevation models for the penetration depth based on the P-band HH digital elevation map, and subtracting these models to provide a direct measure of ice thickness."

As a result, the PTAB found that the claimed improvement involves "the processor of a SAR system to determine ice thickness, leads in the ice, and ice cracks, each of which requires data taken from below the ice surface, that previously could only be produced over very small areas using low-flying profiling radar systems, sled-based ground penetrating radar, or core samples drilled from the ice." Further "these characterizations of the sea ice are realized by improving the prior art using specific rules to combine and process dual-frequency SAR data and using specific rules to process particular types of P-band SAR data."

While the Examiner contended that the claimed invention that did not differ from past manual techniques, the PTAB disagreed. Specifically, the PTAB wrote that "[t]he record before us does not contain sufficient evidence to show that the claimed process is the same as any prior art process used to determine the claimed sea ice characteristics." Moreover, there is nothing in the background of the specification that discloses using P-band SAR data for characterizing sea ice, and the Examiner had not pointed to any such disclosure in the prior art.

The Examiner also contended that the claims are "merely a series of mathematical or logical operations that determines the depth of sea ice after merely generically gathering data used in the operation." The PTAB disagreed, noting that the claims also recite "processing the acquired data to build layers of a map, and registering the layers together to create a depth map prior to calculating the ice thickness." Thus, "the claim limitations amount to specific formatting of the data according to rules to identify leads and cracks in the ice," and "the claim limitations recite a combined order of specific rules that renders information into a specific format that is then used and applied to characterize the sea ice."

Concluding, the PTAB asserted that "[t]he Examiner erred in oversimplifying the claims and characterizing them as directed to generic computer operations, mathematical algorithms, and mere automation of prior manual activity." Therefore, the PTAB reversed the examiner's § 101 rejections.

At first blush, claim 1 of the '567 application looks doomed under § 101. This is because the Electric Power Group, LLC v. Alstom S.A. Federal Circuit case has been applied broadly by the Office to reject claims that are allegedly directed to no more than gathering data, processing the data, and providing a result. Arguably, that is all that is going on in claim 1. That case, however, was not even mentioned in this decision. Perhaps this is because it was decided in August 2016, right before the '567 application was appealed. Still it is somewhat surprising that the PTAB did not rely on, or even mention, Electric Power Group.

Instead, the PTAB's emphasis on McRO and a detailed analysis of the teaching of the Applicant's specification won the day. This might imply that even if a claim recites no more than gathering data, processing the data, and providing a result, when the claim also involves a technical advance, that is enough to overcome a § 101 challenge. While it would be nice to have the PTAB (or even better, the Federal Circuit) explain where Electric Power Group ends and McRO begins, the outcome herein is a potentially persuasive holding that can be (and probably should be) cited when § 101 prosecution gets difficult.

Ex Parte Reis (PTAB 2018)
Panel: Administrative Patent Judges Linda E. Horner, Brett C. Martin, and Paul J. Korniczky
Decision on Appeal by Administrative Patent Judge Horner

[1] http://www.bilskiblog.com/blog/2017/09/surviving-alice-with-an-appeal.html; https://www.lexology.com/library/detail.aspx?g=b5dcb8ae-3478-4e4b-b344-38258b910431.
New York v. Aleynikov — On Second Thought, New York State’s Penal Code (Unlike Federal Criminal Law) Covers Electronic Reproduction of Source Code

May 13, 2018

By Josh Rich —

As the saying goes, hard cases make bad law. And it certainly looked improper when Sergey Aleynikov downloaded high-frequency trading ("HFT") source code as he was leaving his job as a Goldman Sachs programmer, at least to the juries who convicted him of Federal and New York state crimes. But while the U.S. Court of Appeals for the Second Circuit overturned his conviction because the law did not fit the offense, the New York Court of Appeals (the highest court in the state) recently upheld his conviction on "Unlawful Use of Secret Scientific Material." To reach that conclusion, however, the Court of Appeals had to construe two statutory provisions in ways that may have unintended — and unwanted — consequences for New York's criminal laws.

To recap, Mr. Aleynikov left Goldman Sachs on June 5, 2009 to take a job with another trading firm where he would be writing HFT software.[1] Before he left, first on June 1 then again on June 5 (his last day as an employee), he downloaded portions of the Goldman Sachs HFT software source code and uploaded them to a server in Germany. He later downloaded the source code to his personal computer and allegedly used it to structure HFT code modules for his new employer.

After discovering Mr. Aleynikov's actions, Goldman Sachs notified the FBI, who questioned Mr. Aleynikov about Goldman Sachs's allegations. Mr. Aleynikov cooperated with the interrogation, admitting that he had downloaded the source code, but explaining that he had innocent motives. The FBI and the U.S. Attorney did not see his actions as innocent; he was prosecuted in the Southern District of New York for violations of the Economic Espionage Act and National Stolen Property Act and found guilty under both laws.[2] Upon appeal, however, the Second Circuit reversed his conviction on both counts. Importantly, in doing so, it found that source code was "intangible property" and therefore not a "good" under the National Stolen Property Act.[3]

Although the Second Circuit overturned Mr. Aleynikov's conviction, the FBI turned Mr. Aleynikov's computer, passport, and other materials over to the Manhattan District Attorney's Office rather than returning them to him. The Manhattan D.A. then charged Mr. Aleynikov with two counts of Unlawful Use of Secret Scientific Material (each count tied to one of the two downloading sessions) and one count of Unlawful Duplication of Computer Related Material. At trial, the jury convicted Mr. Aleynikov on the count of unlawful use related to his June 5 downloads, hung on the count of unlawful use related to his June 1 downloads, and acquitted him of unlawful duplication. But the trial court (known in New York as the Supreme Court) overturned the jury conviction, reasoning (among other things) that Mr. Aleynikov had not made a "tangible reproduction or representation" of the Goldman HFT source code and that the prosecution had not shown that he had intended to "appropriate" the use of the code, both of which were statutory requirements for the unlawful use offense.[4]

The appellate court (the Appellate Division of the Supreme Court) reversed the trial court order, reinstating the jury conviction on the unlawful use count.[5] Whether the source code itself was tangible or intangible property was irrelevant to the appellate court. Instead, it found that Mr. Aleynikov made a "tangible reproduction or representation" when he uploaded the source code to the German server because "when he copied it onto the server's 'physical' hard drive[,] it took up 'physical space' and was 'physically present." With regard to the term "appropriate," defined in the New York Penal Law generally for all larceny offenses, the appellate court considered the portion of the definition that indicated that "[t]o 'appropriate' property of another to oneself or a third person means (a) to exercise control over it, or to aid a third person to exercise control over it, permanently . . . ."[6] The appellate court focused on Mr. Aleynikov's intent with regard to the copy he had made of the secret scientific material, finding that there was no evidence that he had intended to return the copy, and therefore had appropriated it.

Against this backdrop, the New York Court of Appeals accepted review to consider whether Mr. Aleynikov had made a "tangible reproduction or representation of [Goldman's HFT source code] by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material," and whether he had intended to appropriate the use of that source code. It answered both questions in the affirmative.

The first issue the Court faced was what the term "tangible" meant in the context of the unlawful use statute. The Court reviewed the background of the statute (which arose out of concerns that the conduct in a Federal case, United States v. Bottone, 365 F.2d 389 (2d Cir. 1966), might not be prohibited under New York law), but then noted that the term "tangible" is not defined in the Penal Law. It noted that dictionaries could provide "useful guideposts" for determining the ordinary meaning of statutory terms; indeed, both the prosecution and Mr. Aleynikov had proposed definitions from Black's Law Dictionary for the interpretation of the word "tangible." Mr. Aleynikov had suggested that it meant "capable of being touched," the State had argued that it meant "having or possessing physical form."

The Court of Appeals rejected Mr. Aleynikov's proposed definition in two steps. First, it asserted that, if construed that way, "the term does not apply to ink printed on paper any more readily than to source code, and provides no workable criterion." Second, it indicated that the question was not whether source code was tangible (and, to conform with prior cases, the Court was constrained to agree that source code is intangible), but whether a copy of that source code would be tangible when downloaded. Thus, the Court sought to distinguish between source code generally and a copy of source code taking up physical space on a hard drive or CD.

The Court's position is curious, and appears to be based on a limited computer literacy. The Court's first statement is odd, as there is no doubt that paper with printed indicia can be touched by hand. On the other hand, virtual (that is, not printed) source code is not stored in the same format as it is printed; it is saved as binary code. Therefore, it cannot be touched as compiled source code, even on a microscopic level. There is a clear distinction that, while perhaps intellectually unsatisfying, is easy to police. Second, even before it is saved, computer code takes up physical space (whether in memory or saved on media). That is, the Court of Appeals makes a distinction where there is no difference.

Notably, the Court struggles to provide any meaning to the term "tangible" in the phrase "tangible reproduction or representation." It posits the example of memorization of source code, but notes that such memorization would not fall under the statute because the reproduction or representation must be "by means of writing, photographing, drawing, mechanically or electronically reproducing or recording." It circumvents the conundrum by stating, "the word 'tangible,' as we interpret it, does not introduce redundancy; it adds a modest element to 'reproduction,' serving to emphasize that the crime consists in making a physical, not a mental, copy of secret scientific material." But that "emphasis," in light of the requirement of certain means for making the reproduction, is redundancy.

The Court then gets to the heart of its objection to Mr. Aleynikov's position, stating that "it would be absurd to suppose that the statute criminalizes photographs stored on film but not ones stored on a hard drive." But that absurd result is for the legislature to prevent through an amendment of the statute, not the Court to fix through interpretation.[7] The unlawful use statute was adopted in 1967, long before the internet was in common use. The legislature had not yet criminalized computer crime specifically, and would not do so for almost two more decades. And even now, there is a package of legislation proposed that would remedy the absurd juxtaposition noted by the Court.

The Court of Appeals made short work of Mr. Aleynikov's second argument, that he did not intend to appropriate the relevant source code because he did not intend to deprive Goldman Sachs of the source code. In doing so, it disaggregated the definition of "appropriate": under the New York Penal Law, "[t]o 'appropriate' property of another to oneself or a third person means (a) to exercise control over it, or to aid a third person to exercise control over it, permanently or for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit, or (b) to dispose of the property for the benefit of oneself or a third person."[8] The Court asserted that the definition was intended to indicate that control could be exercised (i) permanently or (ii) for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit. From that, it surmised that exercising permanent control over another's property would be sufficient, and asserted that Mr. Aleynikov intended to exercise control over the source code permanently, since he admittedly did not intend to return the copy of source code in his possession.

The Court's resolution of the appropriation issue is ironic, as it elides the distinction between the source code and the copy of the source code it made in relation to "tangible reproduction or representation. That is, Mr. Aleynikov certainly intended to keep the copy of source code he had made, but had no intent to control Goldman Sachs's use of its own copy of the source code. But the Court did not address the inconsistency between the two interpretations.

While the Court of Appeals was clearly bothered by the prospect of Mr. Aleynikov getting off on a "technicality," it substantially expanded the unlawful use statute to do so. Of course, the language of a statute is not a technicality. But the Court interpreting the statute extremely broadly is likely to chill behavior that the legislature did not intend to criminalize. There is always tension between preventing harm to intellectual property owners and allowing employees freedom to move from job to job; the New York Court of Appeals drew the line far more to employers' liking because of the hard facts of the case. In truth, that should have been the legislature's job.

[1] For more details on Mr. Aleynikov’s conduct and prosecutions, please see the Patent Docs posts "Another Aleynikov Trade Secrets Case Ends with Narrower Statute" and "Aleynikov Conviction Reinstated by New York Appellate Court," as well as the Snippets article "New York v. Aleynikov: New York State's Penal Code (Like Federal Criminal Law) Does Not Cover Electronic Reproduction of Source Code."

[2] The Economic Espionage Act is found at 18 U.S.C. § 1832 and the National Stolen Property Act is found at 18 U.S.C. § 2314.

[3] United States v. Aleynikov, 676 F.3d 71, 76-79 (2d Cir. 2012).

[4] See N.Y. Pen. L. § 165.07 ("A person is guilty of unlawful use of secret scientific material when, with intent to appropriate to himself or another the use of secret scientific material, and having no right to do so and no reasonable ground to believe that he has such right, he makes a tangible reproduction or representation of such secret scientific material by means of writing, photographing, drawing, mechanically or electronically reproducing or recording such secret scientific material.").

[5] New York v. Aleynikov, 148 A.D. 3d 77 (N.Y. App. Div. [1st Dept.] 2017).

[6] N.Y. Pen. L. § 155.00[4].

[7] For example, after the Second Circuit reversed Mr. Aleynikov's conviction under the Economic Espionage Act, Congress moved quickly to amend the statute to cover future abuses of the same sort. Pub. L. 112-236.

[8] N.Y. Pen. L. 155.00[4].
Conference & CLE Calendar

May 13, 2018

May 15, 2018 – "USPTO Post-Grant Patent Trials 2018: Change & Recalibration" (Practising Law Institute) – San Francisco

May 17, 2018 – "Patenting Antibodies at the EPO" (J A Kemp) – 15:30 (Greenwich Mean Time)

May 17, 2018 – "Patent Exclusivity Health Checks for Biologics: Are Your U.S. Patents Ready to Maximize ROI?" (Strafford) – 1:00 to 2:30 pm (EDT)

May 18, 2018 – "US-China: The Relationship and Concerns Raised in the Section 301 Investigation and Report" (Federal Circuit Bar Association) – 3:00 pm to 4:30 pm (EST)

May 22, 2018 – "Sovereign Immunity and Patents at the PTAB and District Courts" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

May 22, 2018 – "Last Party Standing: Who Has Standing to Appeal Administrative Decisions to the Federal Circuit?" (Federal Circuit Bar Association) – 3:00 pm to 4:30 pm (EST)

May 22, 2018 – "Nuances in Amending Patent Claims before the PTAB and Avoiding Tribal Immunity at the PTAB" (Intellectual Property Law Association of Chicago Litigation Committee) – 5:00 to 7:30 pm (CT), Chicago, IL

May 24, 2018 – "Divided Infringement after Travel Sentry v. Tropp: Direct Infringement Liability for Third-Party Conduct" (Strafford) – 1:00 to 2:30 pm (EDT)

May 31, 2018 – "Oil States and SAS: Implications of the Supreme Court's Decisions for Patent Practice" (Strafford) – 1:00 to 2:30 pm (EDT)

June 4-7, 2018 – BIO International Convention (Biotechnology Innovation Organization) – Boston, MA

June 13-15, 2018 – Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) – New York, NY

June 25-27, 2018 – Summit on Biosimilars (American Conference Institute) – New York, NY

July 18-20, 2018 – Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) – San Francisco, CA

September 21, 2018 – "USPTO Post-Grant Patent Trials 2018: Change & Recalibration" (Practising Law Institute) – New York & Groupcasts in Philadelphia, Indianapolis, New Brunswick, NJ, Pittsburgh, and Mechanicsburg, PA
2018 BIO International Convention

May 12, 2018

The Biotechnology Innovation Organization (BIO) will be holding its annual BIO International Convention June 4-7, 2018 in Boston, MA. Founded in 1993, BIO is a nonprofit association seeking supportive biotechnology policies on behalf of biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. The BIO International Convention serves to educate the public and policymakers about biotechnology, while fostering partnering meetings and other business development activities to keep the biotech industry growing.

Descriptions of the Convention's 125+ Breakout Sessions and eight Super Sessions can be obtained here. Among the sessions that may be of interest to Patent Docs readers are:

Monday, June 4

Intellectual Property Track Opening Plenary with Andrei Iancu, Under Secretary of Commerce for IP and Director, USPTO (Intellectual Property Track) — 1:00 to 2:15 pm (Room 259A, Level 2)

Has Big Pharma Fixed its Broken Innovation Model? (Business Development & Finance Track) — 1:00 to 2:15 pm (Room 257AB, Level 2)

Tuesday, June 5

FDA Town Hall (Regulatory Innovation Track) — 11:00 am to 12:00 pm (Room 207, Level 2)

Hatch-Waxman ANDA Cases and IPRs (Intellectual Property Track) — 3:00 to 4:00 pm (Room 208, Level 2)

Global Leadership Forum: Is Biotechnology Innovation Globally Sustainable? (Emerging Opportunities in Global Markets Track) — 3:00 to 4:00 pm (Room 204AB, Level 2)

IP Issues in Rare Diseases: Addressing the Unmet Need (Intellectual Property Track) — 4:15 to 5:15 pm (Room 208, Level 2)

The Changing Face of Academic Technology Transfer (Translational Research Track) — 4:15 to 5:15 pm (Room 206AB, Level 2)

Wednesday, June 6

Functional Antibody Patents Are Dead: Long Live Functional Antibody Patents (Intellectual Property Track) — 11:00 am to 12:00 pm (Room 208, Level 2)

Are Your Pharmaceutical Patents at Risk? (Intellectual Property Track) — 1:45 to 2:45 pm (Room 208, Level 2)

Legal Certainty at an Affordable Price – the European Opposition Procedure (Intellectual Property Track) — 3:00 to 4:00 pm (Room 208, Level 2)

Using America’s Seed Fund (SBIR/STTR) and NIH Technology Transfer to Accelerate Technology Development and Secure Follow-On Investments (Business Development & Finance Track) — 3:00 to 4:00 pm (Room 252AB, Level 2)

State Universities, Indian Tribes, and Biotech Patent Law (Intellectual Property Track) — 4:15 to 5:15 pm (Room 208, Level 2) — panel includes Patent Docs author Kevin Noonan

Thursday, June 7

Fireside Chat with Dr. Scott Gottlieb, Commissioner, U.S. Food and Drug Administration — 9:00 to 9:45 am (Room 253ABC, Level 2)

As part of the Convention, more than 1,800 biotech companies, organizations, and institutions will participate in the BIO Exhibition. A searchable list of exhibitors can be found here. Information regarding registration and pricing can be obtained here. Patent Docs authors Donald Zuhn, Kevin Noonan, and Andrew Williams will be attending BIO as part of the MBHB contingent. Patent Docs readers who may be attending BIO are encouraged to stop by the MBHB booth (#2620).

In addition, the Docs will be attending the MBHB reception at Black Rose Irish Pub (160 State Street, Boston) on Tuesday, June 5 from 8:00 pm to 1:00 am. Additional information about the reception, including invitations for the event, can be picked up at the MBHB booth.
FCBA Webast on Standing to Appeal Administrative Decisions to Federal Circuit

May 12, 2018

The Federal Circuit Bar Association (FCBA) will be offering a webcast entitled "Last Party Standing: Who Has Standing to Appeal Administrative Decisions to the Federal Circuit?" on May 22, 2018 from 3:00 pm to 4:30 pm (EST). Russell E. Cass of Clark Hill PLC will moderate a panel consisting of Saurabh Vishnubhakat, Associate Professor of Law, Texas A&M University; Jonathan Stroud of Unified Patents Inc.; and Matthew Dowd of Dowd PLLC. The panel will review the law governing Article III standing as applied to appeals from the PTAB, highlight unresolved issues, and discuss advantages and disadvantages to differing approaches to standing requirements for patent challenges.

The webinar is complimentary for FCBA members and $50 (government/academic/retired) or $125 (private practitioner) for non-members. Those interested in registering for the webcast, can do so here.
Webinar on Implications of Oil States and SAS

May 12, 2018

Strafford will be offering a webinar entitled "Oil States and SAS: Implications of the Supreme Court's Decisions for Patent Practice" on May 31, 2018 from 1:00 to 2:30 pm (EDT). Thomas L. Irving, Amanda K. Murphy, and Barbara R. Rudolph of Finnegan Henderson Farabow Garrett & Dunner will provide guidance to patent counsel on two recent Supreme Court patent decisions. The panel will provide an analysis of the Court’s Oil States and SAS decisions and discuss the impact of these decisions on daily patent practice. The webinar will review the following issues:

• Has there been an increase in IPR petition filings now that the proceedings have been found constitutional?
• Have the constitutional issues raised by the Oil States majority been raised by parties already?
• Has SAS helped clarify the scope of IPR estoppel?
• Has SAS impacted the level of detail of institution decisions and/or the scope and detail of Final Written Decisions?
• Has PTAB extended its statutory deadline for any Final Written Decisions?
• Have any post-SAS Final Written Decisions been appealed to the Federal Circuit?

The registration fee for the webcast is $297. Those interested in registering for the webinar, can do so here.
Panel Discussion on Amending Claims at the PTAB

May 12, 2018

The Intellectual Property Law Association of Chicago (IPLAC) Litigation Committee will be presenting a panel discussion entitled "Nuances in Amending Patent Claims before the PTAB and Avoiding Tribal Immunity at the PTAB" on May 22, 2018 from 5:00 to 7:30 pm (CT) at the offices of Kirkland & Ellis LLP in Chicago, IL.

There is no registration fee for the panel discussion. However, those interested in attending should register for event here.
Webinar on Divided Infringement

May 12, 2018

Strafford will be offering a webinar entitled "Divided Infringement after Travel Sentry v. Tropp: Direct Infringement Liability for Third-Party Conduct" on May 24, 2018 from 1:00 to 2:30 pm (EDT). Thomas L. Irving, Paul W. Browning, and Barbara R. Rudolph of Finnegan Henderson Farabow Garrett & Dunner will provide guidance to counsel on the impact of the Federal Circuit's decision in Travel Sentry Inc. v. Tropp on divided patent infringement claims, examine how the decision fits into the Akamai V framework, and outline steps to protect IP rights and allocate liability in the event of infringement. The webinar will review the following issues:

• How does the Travel Sentry decision change the playing field for divided infringement claims?
• What guidance does the Travel Sentry decision provide on the application of Akamai V?
• What steps can companies and counsel take to assess their risk when partnering with other companies to minimize potential exposure?

The registration fee for the webcast is $297. Those interested in registering for the webinar, can do so here.
USPTO Director Addresses U.S. Patent System’s Decline in U.S. Chamber of Commerce Worldwide Patent Protection Rankings

May 10, 2018

By James Korenchan —

At the U.S. Chamber of Commerce Patent Policy Conference last month, U.S. Patent and Trademark Office (USPTO) Director Andrei Iancu (at right) gave a keynote address on the role of U.S. patent policy in domestic innovation and the potential impacts on investment towards the advancement of science and technology. The primary goals of the address was to address the results of the U.S. Chamber of Commerce's 5th annual study on worldwide intellectual property systems. The study dropped the U.S. patent system to 13th in the world, thereby extending the U.S.'s decline since 2016 (in 2016, the U.S. was ranked 1st, and then ranked 10th in 2017). Further, the study attributed the decline to weak and uncertain patentability standards — particularly those surrounding subject matter eligibility — as well as to weak patent opposition procedures established by the America Invents Act (AIA).

Iancu's address, which was unsurprisingly bookended and peppered with emphases on the ongoing importance of the U.S. patent system in innovation and economic growth, first acknowledged the substantial changes to the U.S. patent system over the past few years. "Importantly," he added, "the rhetoric surrounding the patent system has focused relentlessly on certain faults in, or abuses of, the system—instead of the incredible benefits the system brings to our nation."

Iancu then laid out a two-point plan to reverse the U.S.'s downward trend and reinvigorate the role of the U.S. patent system in the economy. First, he aims to draw focus away from the skepticism of IP rights and the faults of the U.S. patent system and instead create "a new pro-innovation, pro-IP dialogue":

A successful system cannot be defined by its faults. Rather, a successful system must be defined by its goals, aspirations, and successes. Obviously, errors in the system should be corrected. And no abuse should be tolerated. Errors and abuse should be identified and swiftly eliminated. However, the focus for discussion, and the focus for IP policy, must be on the positive. We must create a new narrative that defines the patent system by the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to society. And it is these benefits that must drive our patent policies. . . . Here's a start: when we write, interpret, and administer patent laws, we must consistently ask ourselves "Are we helping these inventors?" Whether it's an individual tinkering in her garage, or a team at a large corporation, or a laboratory on a university campus, we must ask ourselves "Are we helping them? Are we incentivizing innovation?"

This led into Iancu's second point: To increase the reliability of granted patents, giving applicants more confidence in seeking to protect their inventions and giving patent owners more confidence in the rights they hold.

Iancu followed with certainly the most stimulating remarks of the address, where Iancu acknowledged the unpredictability and frustration with subject matter eligibility analysis under 35 U.S.C. § 101.

First, our current law surrounding patentable subject matter has created a more unpredictable patent landscape that is hurting innovation and, consequently, investment and job creation. Recent cases from the Supreme Court — Mayo, Myriad, and Alice — have inserted standards into our interpretation of the statute that are difficult to follow. Lower courts applying these cases are struggling to issue consistent results. Patent lawyers trying to advise their clients are, in turn, struggling to predict the outcome with respect to certain patents. And examiners at the USPTO must spend increased amounts of time addressing this challenging issue. The current standards are difficult for all: stakeholders, courts, examiners, practitioners, and investors alike. System-wide, a significant amount of time is being spent trying to figure out where the lines should be drawn. . . . Something must be done.

While we might not be able to rest assured just yet, Iancu stressed that, while faithfully applying the law, the USPTO will do more within the bounds of the statute to increase the clarity and predictability of eligibility analyses and outcomes. "Currently," he said, "we're actively looking for ways to simplify the eligibility determination for our examiners through forward-looking guidance. Through our administration of the patent laws, which we are charged to execute, the USPTO can lead, not just react to, every new case the courts issue."

Iancu then turned to patent opposition procedures, primarily Inter Partes Review (IPR). (Note: Since giving this address, the Supreme Court held in a 7-2 decision in Oil States v. Greene's Energy that IPR proceedings do not violate Article III or the Seventh Amendment of the Constitution.)

Acknowledging the popularity of IPR proceedings since the AIA ("more than 8,000 such proceedings"), Iancu also acknowledged the divisiveness surrounding the IPR system:

Pointing to the high invalidation rates in IPR proceedings, some hate the new system with vigor, arguing that it's an unfair process that tilts too much in favor of the petitioner. Others love the system, and think it's the best tool we have to correct errors, eliminate "bad patents," and improve patent quality. Who is right? Well, both arguments have legitimate elements. But I encourage people to reduce the hyperbole and look at the process with fresh eyes, in order to understand its true benefits and true challenges.

Further, Iancu called this understanding of IPR proceedings "one of [the USPTO's] highest priorities," as well as achieving balance between the interests of both petitioners and challengers. "And so," he said, "among various other things, we are now examining: how and when we institute proceedings, the standards we employ during the proceedings, and how we conduct the overall proceedings. The goal, with whatever action we take, is to increase predictability of appropriately-scoped claims."

Not stopping there, Iancu next stressed that, to further increase the reliability of patent rights, the USPTO needs to issue "appropriately-scoped patent claims from the get-go." To do this, he seeks to ensure that examiners are properly-equipped with the guidance and search tools needed to improve the initial examination. Iancu hopes that this will in turn reduce the gap between prior art found during initial examination and prior art found during litigation and improve the U.S. patent system as a whole.

Near the end of his address, Iancu again stressed the importance of the U.S. patent system and quoted the co-founder of SanDisk, Dr. Eli Harari, who is credited with the invention of Electrically Erasable Programmable Read-Only Memory (EEPROM) and perfection of flash memory data storage:

"If you are not protected," [Dr. Harari] said, "God help you!"

The benefits of an increased reliability in obtaining and holding patent rights are clear. And as stimulating as some of Iancu's remarks may be, we can only wait and see whether he delivers on his ambitions.
USPTO Proposes Harmonizing Claim Construction Standard In PTAB Proceedings

May 9, 2018

By Andrew Williams —

The U.S. Patent and Trademark Office published a notice of proposed Rulemaking in the Federal Register (83 Fed. Reg. 21221) today which would provide a change to the claim construction standard used in Inter Partes Reviews (IPRs), Post-Grant Proceedings (PGRs), and Covered Business Method Reviews (CBMs). Instead of the broadest reasonable interpretation ("BRI") standard originally adopted, and blessed by the Supreme Court in Cuozzo Speed Technologies LLC v. Lee, the proposed rulemaking would adopt the same standard used by district courts and the ITC. The use of a harmonized standard has been long advocated by patent holders, specifically because they are faced with an unfair dichotomy — a more stringent construction when alleging infringement, but a broader construction when faced with an allegation of unpatentability at the PTAB. Or, as the Office acknowledged in the notice, it is possible that "even if a competitor's product would not be found to infringe a patent claim if it was sold after the patent's effective filing date, the same product nevertheless could constitute invaliding prior art if publically sold before the patent's effective filing date." Nevertheless, over time, the BRI standard for post-issuance proceedings has been refined by the Federal Circuit to the extent that it was almost approaching the Phillips standard anyway. In fact, cases in which the claim construction standard has been outcome determinative are few and far between. Still, this effort to harmonize the construction of issued claims regardless of which tribunal is considering the issue is welcome and long overdue.

Specifically, the Patent Office is proposing amending 37 C.F.R. §§ 42.100(b), 42.200(b), and 42.300(b) to replace the first sentence with the following: "a claim of a patent, or a claim proposed in a motion to amend, 'shall be construed using the same claim construction standard that would be used to construe such claim in a civil action to invalidate a patent under 35 U.S.C. 282(b), including construing the claim in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.'" The Office, in other words, would begin applying the principles that were articulated by the Federal Circuit in Phillips and its progeny. This would include taking into account the claim language, the specification, and the prosecution history (including any other post-issuance proceeding), as well as relevant extrinsic evidence. Moreover, the Office is proposing amending each of these sections to add the following sentence: "Any prior claim construction determination concerning a term of the claim in a civil action, or a proceeding before the International Trade Commission, that is timely made of record in the . . . proceeding will be considered." Finally, the Office proposes removing the language for a different standard for claims in an expired (or expiring) patent because there would no longer be a need for a distinction. Importantly, these proposed rule changes "would be applied to all pending IPR, PGR, and CBM proceedings before the PTAB." As a result, practitioners with pending proceedings will likely need to account for the two different standards during the transition.

One of the stated reasons for this change was the goal of implementing "a fair and balanced approach, providing greater predictability and certainty in the patent system." In making this claim, the Board pointed to PPC Broadband, Inc. v. Corning Optical Comm'ns RF, LLC, 815 F.3d 734 (Fed. Cir. 2016). In that case, the Court noted that it "hinge[d] on the claim construction standard applied—a scenario likely to arise with frequency. And in this case, the claim construction standard is outcome determinative." Id. at 740-42. Nevertheless, it is unclear how frequent such cases have been, as there were very few (if any) subsequent cases decided by the Federal Circuit that had such an outcome. In fact, over time, the two standards seemed to be converging. It began with the admonition in Microsoft Corp. v. Proxyconn, Inc., in which the Federal Circuit pointed out that a BRI construction still had to be that — reasonable. In fact, the Court warned in Trivascular, Inc. v. Samuels in February of 2016 that the PTAB does not have an "unfettered license" to construe claims inconsistent with the specification and prosecution history. Instead, the Court concluded that any construction must reflect the "ordinary" and "customary" meaning of the terms as understood by those skilled in the art. Clearly, by this point, the two different standards were already appearing to be not as far apart as originally feared.

For those wishing to submit comments, the deadline is July 9, 2018. Comments can be sent via e-mail to PTABNPR2018@uspto.gov, or they can be sent via the Federal eRulemaking Portal at http://www.regulations.gov. All such submitted comments should include the docket number (PTO-P-2018-0036). Comments can also be submitted by postal mail, but the Office would prefer electronic submissions to more easily share the comments. The Notice also provides that if further information is required, please contact Michael Tierney and Jacqueline Wright Bonilla, Vice Chief Administrative Patent Judges, by telephone at (571) 272-9797. And, of course, we will monitor comments and provide updates as warranted.

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