Patent Docs

Advanced Video Technologies LLC v. HTC Corp. (Fed. Cir. 2018)

January 16, 2018

By Kevin E. Noonan –

One of the most important (if not the most important) inquiries in performing due diligence involving acquisition of a patent portfolio is ensuring that the entity asserting ownership of the patents actually has proper title (in what can be a complex chain, starting with the inventors). This is particularly true in view of the position taken by the Federal Circuit that even one inventor, who has not assigned her rights, can prevent the other inventors or their assignee from bringing suit as being an indispensible party, and that the Federal Rules of Civil Procedure do not permit that recalcitrant inventor from being involuntarily joined. The failure to make sure that the chain of title was intact led a district court to grant defendants' motion to dismiss, in Advanced Video Technologies LLC v HTC Corp., a decision the Federal Circuit affirmed last week.

The dispute arose over U.S. Patent No. 5,781,788, which claimed a "full duplex single chip video codex." As the opinion notes, "the technology of the patent is not at issue" — indeed the opinion says nothing more about the subject matter of the '788 patent. Instead, the Federal Circuit's opinion (as with the District Court's opinion below) revolved around whether the plaintiff had standing to sue, in light of evidence that one of the inventors had not assigned away her rights to the claimed invention.

The facts are, as could be expected, complicated. The patent lists three inventors: Beng-Yu "Benny" Woo, Xiaoming Li, and Vivian Hsiun, and the opinion states that these three co-inventors worked for Infochips Systems, Inc. at the time the invention was made. Mr. Woo and Ms. Li duly assigned their rights to the invention to Infochips; Ms. Hsiun did not, despite the existence of a contractual obligation to assign, according to plaintiff AVT here.

AVT's ownership in the patent in suit stems from a series of transfers having to do with business arrangements made by Infochips. These include pledging Infochips' rights to the patent as security to a financing arrangement between Infochips and Leased Management Services (LMS), which seized the patent assets when Infochips went out of business in 1993. (Whether this "seizure" was part of a bankruptcy or settlement of what Infochips owed LMS is unclear from the opinion.) LMS then sold the patent asset to inventor Woo, who then assigned his ownership interest to AVC Technology, Inc.

It was AVC that filed the "parent" application to the '788 patent, in 1995, and Mr. Woo and Ms. Li again executed assignments, this time to AVC. (Of course, if the chain of title transfers is correct, these inventors had no rights left to assign by this point. The title transfers also illustrate the bygone world of a patent having a term of 17 years from grant: under present law, the patents would have expired in 2016 at the latest.) Regarding Ms. Hsiun, this time she affirmatively refused to assign her rights. The U.S. Patent and Trademark Office permitted AVC to prosecute the parent patent that ultimately issued (as a continuation) as the '788 patent, based on AVC's petition supported by the Infochips Employment agreement and documents showing the chain of title culminating in AVC's purported ownership. Ownership in the patent was further transferred until it finally came to rest with the AVT plaintiff here.

The case at bar first arose in a lawsuit between the parties named in this case, filed in 2011 but dismissed due to failure to comply with Delaware law relating to how assets of dissolved corporations are distributed, wherein the patent ownership rights were not transferred to AVT (the error being sufficiently egregious that the District Court awarded attorneys' fees to defendants under 35 U.S.C. § 285). AVT corrected this error in title before the Delaware Chancery Court, and then refiled its lawsuit against the HTC defendants. The District Court's decision and this appeal followed.

The basis for Defendant HTC's motion to dismiss being failure of inventor Hsiun to assign her rights, AVT asserted three portions of the employment between Ms. Hsiun and Infochips: "a 'will assign' provision, a trust provision, and a quitclaim provision," as follows:

I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and will assign to the Company all my right, title, and interest in and to any and all inventions, original works of authorship, developments, improvements or trade secrets which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time I am in the employ of the Company.

(the "will assign" and "trust" provisions; emphasis in opinion); and

I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have infringement [sic] of any patents, copyrights, or mask work rights resulting from any such application assigned hereunder to the Company.

(the "quitclaim" provision; emphasis in opinion).

The District Court was unconvinced that these provisions "effect[ed] a transfer" of inventor Hsiun's ownership rights in the patent, and accordingly dismissed the complaint. Specifically, Judge McMahon on the bench in the Southern District of New York dismissed AVT's complaint for lack of standing, finding that Ms. Hsiun was a co-owner of the patent in suit and that she had not assigned her rights to plaintiff's predecessor in interest.

The Federal Circuit affirmed, in an opinion by Judge Reyna, joined by Judge O'Malley who wrote a concurring opinion. Judge Newman dissented. The Court reviewed the District Court's analysis of each of the asserted terms of the Infochips Employment agreement and came to the same conclusion regarding their ineffectiveness in transferring inventor Hsiun's ownership rights to Infochips (and hence, to plaintiff AVT).

With regard to the "will assign" provision, the panel agreed with the District Court that this provision merely "invoked a promise to do something in the future and did not effect a present assignment," relying on Arachnid, Inc. v. Merit Industries, Inc., 939 F.2d 1574, 1576 (Fed. Cir. 1991) (also consistent with the Supreme Court's opinion in another context, in Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc. (2011)). And the purported "trust" provision supported this interpretation, according to both the District Court and Federal Circuit, because Ms. Hsiun could not simultaneously assign her rights and hold them in trust for her employer.

The District Court further analyzed the trust provision in light of California law, which AVT argued created an "immediate trust" in favor of Infochips. Even if this is the case, the District Court concluded (and the Federal Circuit agreed) that there was no evidence that Ms. Hsiun ever transferred her interest from any such trust to Infochips, thus not providing any basis to find in AVT's favor. And the opinion cites precedent (Jim Arnold Corp. v. Hydrotech Sys., 109 F.3d 1567, 1578 (Fed. Cir. 1997)) that the proper order of asserting AVT's claim was to first bring an action against inventor Hsiun (in state court) to enforce the employment agreement, and only then (if successful) suing defendant HTC. Which of course AVT never did. In addition (and a point upon which the majority differs with Judge Newman), under California law a trust beneficiary "'generally is not the real party in interest,' 'may not sue in the name of the trust,' and 'has no legal title or ownership interest in the trust assets,'" citing relevant California decisions.

Finally, with regard to the quitclaim assignment argument, AVT advanced the interpretation that the language "assigned hereunder" should be taken to mean "assignable hereunder"; not surprisingly, neither the District Court nor the Federal Circuit was convinced. Both courts understood the provision to apply to Ms. Hsiun's ownership rights to any patents she had actually assigned, but that did not occur and thus this provision does not apply to the claims at issue before the court.

The majority opinion responded to Judge Newman's dissent, that the Employment Agreement language "intended" to have Ms. Hsiun's ownership interest in any patents be assigned to and owned by Infochips by stating that the agreement by its terms does not so provide, and that California courts have held that they "should not deviate from unambiguous provisions unless they lead to 'absurd results.'"

Judge O'Malley's concurrence sets forth her view that, while binding Federal Circuit precedent mandates the majority's result, she believes that precedent is wrongly decided. In particular, she takes issue with the standard that "a non-consenting co-owner or co-inventor can never be involuntarily joined in an infringement action pursuant to Rule 19 of the Federal Rules of Civil Procedure." In this she hales back to her dissent in STC.UNM v. Intel Corp., 767 F.3d 1351 (Fed. Cir. 2014), with regard to Rule 19. Specifically, she believes that Rule 19(a) mandates that anyone who is a mandatory party must be joined in order for a case to proceed. Further, she believes it settled law that the Federal Rules are "as binding as any Federal statute," citing Stone Container Corp. v. United States, 229 F.3d 1345, 1354 (Fed. Cir. 2000), and that they apply to patent cases as to all other cases brought in Federal Court, citing somewhat mischievously eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393–94 (2006). And she sets forth her belief that it is the Federal Rules, rather than "substantive judge-made laws governing joinder" that govern the question before the Court.

With that as prelude, she sets forth her opinion that Rule 19(a) provides for involuntary joinder of a necessary party, setting forth the Rule in the text of her opinion and in particular Rule 19(a)(2):

(2) Joinder by Court Order. If a person has not been joined as required, the court must order that the person be made a party. A person who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plaintiff.

In Judge O'Malley's view:

There is no dispute over whether co-owners are necessary parties to infringement actions; the question we must address is whether a co-owner's mere recalcitrance can prevent enforcement of another co-owner's rights. Rule 19(a) is designed to address circumstances just like those at issue here.

And in her opinion, the Rule certainly is so designed. She expressly rejects what she characterizes as dicta from Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456 (Fed. Cir. 1998), the idea that Federal Circuit precedent precludes using Rule 19 to effect involuntary joinder in patent cases, setting forth an "[e]xamination of the pertinent case law" that includes Ethicon as well as Schering Corp. v. Roussel-UCLAF SA, 104 F.3d 341, 345 (Fed. Cir. 1997), and an earlier case relied upon by the Schering panel, Willingham v. Lawton, 555 F.2d 1340 (6th Cir. 1977). As explicated by Judge O'Malley, none of these cases support the view apparently held by her brethren (as evidenced by DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1289 n.2 (Fed. Cir. 2008)) that a recalcitrant inventor can preclude an assignee or co-inventors from bringing suit. Moreover, Judge O'Malley perceives that, prior to its STC.UNM v. Intel Corp. decision, the Federal Circuit had "never explicitly held that one patent co-owner cannot involuntarily join the other."

Finally, Judge O'Malley cites § 281 of the Patent Act, to the effect that "[a] patentee shall have remedy by civil action for infringement of his patent," as being inconsistent with the Court's opinions in STC.UNM v. Intel Corp. and here, that one inventor can preclude co-inventors or their assignee(s) from enforcing a patent without the inventor's permission.

In her dissent, Judge Newman sets forth a detailed analysis of the Employment Agreement, which in her view taken in toto supports AVT's position that the agreement operates to vest title of Ms. Hsiun's interest in the patent in her employer Infochips (and through the series of transfers set forth above and in the opinion now rest with AVT). She also characterizes HTC's argument as a litigation stratagem developed by defendants and supported by no assertion by Ms. Hsiun that she has refused to assign her rights (other than by her refusal to execute a standard assignment document). And to the extent prior Federal Circuit case law applies, she distinguishes both Ethicon Inc. v. U.S. Surgical Corp. and Arachnid, Inc. v. Merit Industries, Inc. on their facts and disagrees with both Judges Reyna and O'Malley that the majority's decision is mandated by the Court's ruling in either of those cases.

Advanced Video Technologies LLC v. HTC Corp. (Fed. Cir. 2018)
Panel: Circuit Judges Newman, O'Malley, and Reyna
Opinion by Circuit Judge Reyna; concurring opinion by Circuit Judge O'Malley; dissenting opinion by Circuit Judge Newman
PTAB Life Sciences Report

January 15, 2018

By John Cravero —

About the PTAB Life Sciences Report: Each month we will report on developments at the PTAB involving life sciences patents.

Micro Labs Ltd. v. Santen Pharmaceutical Co.

PTAB Petition: IPR2017-01434; filed May 12, 2017.

Institution of Inter Partes Review; entered November 29, 2017.

Patent at Issue: U.S. Patent No. 5,886,035 ("Difluoroprostaglandin derivatives and their use," issued March 23, 1999) claims a fluorine-containing prostaglandin derivative of formula (1) or a salt thereof.

Petitioners Micro Labs Ltd. and Micro Labs USA Inc. are challenging the '035 patent on two grounds as obvious under 35 U.S.C. § 103(a). View the petition here. Administrative Patent Judges Lora M. Green, Jo-Anne M. Kokoski (author), and Christopher G. Paulraj issued a decision instituting inter partes review of whether claims 1-14 are unpatentable under 35 U.S.C. § 103(a) over Klimko, Kishi, and Ueno; and whether claims 1-14 are unpatentable under 35 U.S.C. § 103(a) over Klimko, Kishi, Bezuglov 1982 and/or Bezuglov 1986, and Ueno.

Related Matters: According to the petition, the '035 patent is the subject of the following litigations: Santen Pharmaceutical Co., Ltd. v. Micro Labs Ltd., Case No. 16-cv-00353 (D. Del. 2016), and Santen Pharmaceutical Co., Ltd. v. Sandoz Inc., Case No. 16-cv-00354 (D. Del. 2016).

Samsung Bioepis Co., Ltd. v. Genentech, Inc.

PTAB Petition: IPR2018-00192; filed November 30, 2017.

Patent at Issue: U.S. Patent No. 7,846,441 ("Treatment with anti-ErbB2 antibodies," issued December 7, 2010) claims a method for the treatment of a human patient with a malignant progressing tumor or cancer characterized by overexpression of ErbB2 receptor, comprising administering a combination of an intact antibody which binds to epitope 4D5 within the ErbB2 extracellular domain sequence and a taxoid, in the absence of an anthracycline derivative, to the human patient in an amount effective to extend the time to disease progression in said human patient, without increase in overall severe adverse events.

Petitioner Samsung Bioepis Co. is challenging the '441 patent on two grounds as being obvious under 35 U.S.C. § 103(a). View the petition here.

Related Matters: According to the petition, the European counterpart of '441 patent, EP 1,037,926, was invalidated and revoked as lacking inventive step in two proceedings: (1) Hospira UK, Ltd. v. Genentech, Inc., No. HP-2014-000034, [2015] EWHC (HC) 1796 (Pat), (Jun. 24, 2015) (Ex. 1003), aff’d Hospira UK, Ltd. v. Genentech, Inc., No. A3 2015 3238, [2016] EWCA Civ 1185 (Nov. 30, 2016) (Ex. 1021); and (2) Decision to Revoke European Patent EP 1,037,926, Application No. 98,963,840.8 (Jun. 13, 2016) (Ex. 1020).

Petitioner has identified several other inter partes review petitions on the '441 patent, including: IPR2017-0073 (Hospira Inc.; U.S. Patent No. 7,846,441; filed 01/20/2017; denied 07/27/2017; instituted following request for rehearing 10/26/2017; pending); IPR2017-01121 (Celltrion, Inc.; U.S. Patent No. 7,846,441; filed 03/21/2017; Instituted 10/04/2017; pending); IPR2018-00016 (Pfizer Inc.; U.S. Patent No. 7,846,441; filed 10/03/2017; pending). The Peition also identifies inter partes review petitions IPR2017-00737 (Hospira Inc.; U.S. Patent No. 7,892,549; filed 01/20/2017; instituted 07/27/2017; pending); IPR2017-00739 (Hospira Inc.; U.S. Patent No. 7,892,549; filed 01/20/2017; denied 07/27/2017); IPR2017-01122 (Celltrion Inc.; U.S. Patent No. 7,892,549; filed 03/21/2017; instituted 10/04/2017; pending); and IPR2017-01960 (Samsung Bioepis; U.S. Patent No. 7,892,549; filed 08/25/2017; pending).

Trans Ova Genetics, LC. v. XY, LLC

PTAB Petition: IPR2018-00247; filed November 30, 2017.

Patent at Issue: U.S. Patent No. 7,723,116 ("Apparatus, methods and processes for sorting particles and for providing sex-sorted animal sperm," issued May 25, 2010) claims a method of flow cytometry sperm processing.

Petitioner Trans Ova Genetics, LCC is challenging the '116 patent on four grounds as being obvious under 35 U.S.C. § 103(a). View the petition here.

Related Matters: According to the petition, the '116 patent is the subject of the following litigation: XY, LLC et al. v. Trans Ova Genetics, LC, No. 1:17-cv-00944 (D. Colo.). Petitioner has filed a separate inter partes review petition on claims 42-59, 65-67, and 69 of the '116 patent (IPR2018-00248; filed 11/30/2017; pending).

Trans Ova Genetics, LC. v. XY, LLC

PTAB Petition: IPR2018-00248; filed November 30, 2017.

Patent at Issue: U.S. Patent No. 7,723,116 ("Apparatus, methods and processes for sorting particles and for providing sex-sorted animal sperm," issued May 25, 2010) claims a method of flow cytometry sperm processing.

Petitioner Trans Ova Genetics, LCC is challenging the '116 patent on four grounds as being obvious under 35 U.S.C. § 103(a). View the petition here.

Related Matters: According to the petition, the '116 patent is the subject of the following litigation: XY, LLC et al. v. Trans Ova Genetics, LCC, No. 1:17-cv-00944 (D. Colo.). Petitioner has filed a separate inter partes review petition on claims 1-26, 33, 34, and 39-41 of the '116 patent (IPR2018-00247; filed 11/30/2017; pending).

Roquette Frères, S.A. v. Tate & Lyle Ingredients Americas LLC

PTAB Petition: IPR2017-01506; filed May 30, 2017.

Institution of Inter Partes Review; entered November 30, 2017.

Patent at Issue: U.S. Patent No. 7,608,436 ("Process for producing saccharide oligomers," issued October 27, 2009) claims a process for preparing saccharide oligomers, comprising: heating an aqueous feed composition that comprises at least one monosaccharide or linear saccharide oligomer, and that has a solids concentration of at least about 70% by weight, to a temperature of at least about 40^oC.; and contacting the feed composition with at least one catalyst that accelerates the rate of cleavage or formation of glucosyl bonds for a time sufficient to cause formation of non-linear saccharide oligomers, wherein a product composition is produced that contains a higher concentration of non-linear saccharide oligomers than linear saccharide oligomers; wherein the product composition comprises non-linear saccharide oligomers having a degree of polymerization of at least three in a concentration of at least about 20% by weight on a dry solids basis.

Petitioners Roquette Frères, S.A. are challenging the '436 patent on eight grounds as being anticipated under 35 U.S.C. § 102(b) (grounds 1, 3, and 5) or obvious under 35 U.S.C. § 103(a) (grounds 2, 4, and 6-8). View the petition here. Administrative Patent Judges Lora M. Green, Grace Karaffa Obermann (author), and Jacqueline T. Harlow issued a decision instituting inter partes review of whether claims 1-4, 15-18, 23-29, 31, and 32 are anticipated under 35 U.S.C. § 102(b) by Shah; whether claims 1-4, 15-18, 23-29, 31, and 32 are unpatentable under 35 U.S.C. § 103(a) over Shah and Craig; and whether claims 1-4, 15-18, 23-29, 31, and 32 are unpatentable under 35 U.S.C. § 103(a) over Shah, Craig, and Cleland.

Related Matters: According to the petition, the Petitioner concurrently filed a petition for inter partes review of related patent U.S. Patent No. 8,057,840 (IPR2017-01507; filed 05/30/2017; institution denied 11/30/2017).
Wordlogic Corp. v. Fleksy, Inc. (N.D. Ill. 2017)

January 14, 2018

By Michael Borella —

Wordlogic brought an action against Fleksy in the Northern District of Illinois, alleging infringement of U.S. Patent Nos. 7,681,124 and 8,552,984. Flesky moved to dismiss the case under Rule 12(b)(6), on the grounds that the asserted claims lacked subject matter eligibility. Presiding Judge Lefkow of the Northern District denied the motion.

Wordlogic manufactures and sells iKnowU, a predictive keyboard application for mobile devices. According to the Court, "[b]ased on the letters a user is typing, iKnowU predicts the next most likely letters, words, and phrases, allowing the user to complete the text she wishes to enter on the mobile device using fewer keystrokes." This product is covered by claims of both patents-in-suit. Flesky also manufactures and provides a predictive keyboard application, and Wordlogic alleged that this application infringed on claim 19 of the '124 patent and claim 1 of the '984 patent.

As an example of these two claims, claim 19 recites:

A computer-readable medium comprising codes for directing a processing unit to process text entered into a personal computing device, by:
    (a) receiving and displaying a partial text entry, comprising receiving at least part of the partial text entry via a keyboard, the partial text entry comprising at least a first character;
    (b) in response to receipt of the first character of the partial text entry, obtaining a plurality of completion candidates from among a group of completion candidates, wherein each of the plurality of completion candidates includes a portion matching the partial text entry;
    (c) displaying the plurality of completion candidates in a search list within a graphical user interface;
    (d) detecting user input corresponding to selection of a particular completion candidate from among the plurality of completion candidates displayed in the search list;
    (e) modifying the display of the partial text entry to correspond to the particular completion candidate selected from among the plurality of completion candidates at least while the particular completion candidate remains selected;
    (f) detecting modification of the partial text entry by the user via the keyboard;
    (g) obtaining and displaying in the search list a modified plurality of completion candidates from among the group of completion candidates, if the partial text entry is modified via the keyboard, wherein each of the modified plurality of completion candidates includes a portion matching the partial text entry; and
    (h) obtaining and displaying in the search list a further modified plurality of completion candidates from among the group of completion candidates, if a completion candidate is accepted via the search list from the modified plurality of completion candidates, wherein each of the further modified plurality of completion candidates includes a portion matching the accepted completion candidate.

The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a two-part 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.

Flesky contended that claim 19 was directed to the abstract idea of "listing word completion candidates based on partial information." Flesky further made analogies between the claimed invention and the games of Hangman and Wheel of Fortune (i.e., contending that individuals playing these games would create word completion lists in their minds). Wordlogic countered that Flesky's characterization of the claim was at too high a level. The Court agreed with Wordlogic.

The Court acknowledged that procedures for "analyzing information by steps people go through in their minds, . . . without more, [are] essentially mental processes within the abstract-idea category." Nonetheless, the Court did not acquiesce in Flesky's analogy. To that point, the Court found "no reasonable scenario in which a mobile device user would type the first letter of a word she wishes to enter, then consult a list of possible completion candidates, then return to entering the text, for she would already know what her intended text was."

Wordlogic also argued that claim 19 was an improvement to computing systems as it was more efficient and less time consuming than previous text entry mechanisms. Flesky attempted to take the position that the invention improved the user experience rather than the mobile device upon which it operated, but eventually conceded that virtually any application on a mobile device improves the function of that device.

Summing things up, the Court wrote that "[i]f less time is required to enter text, then less time is required to operate the device . . . . Plaintiffs argue, therefore, that claim 19 improves the operation of the device." Since Flesky failed to rebut this point, the Court ruled that dismissal on the pleadings was premature, and Flesky's motion was denied.

For better or worse, one of the key aspects of the § 101 analysis post-Alice is whether a challenger can convince the finder of fact that an analogy exists between a claimed procedure carried out on a computer and a previous procedure that had been carried out mentally or manually. As the Court noted, carrying out the claimed auto-completion procedure mentally makes no sense. Additionally, while entering text one character at a time arguably existed in analog typewriters, there is no evidence that these devices supported displaying "a plurality of completion candidates" or "selection of a particular completion candidate from among the plurality of completion candidates."

Furthermore, Wordlogic provided a textbook rebuttal of a patent-eligibility contention. First, Wordlogic attacked Flesky's shaky step one position, and then established that the claimed invention was an improvement to a computing device under step two. These arguments, and Flesky's inability to provide a convincing response, won the day.
Conference & CLE Calendar

January 14, 2018

January 17, 2018 – "Top Patent Law Stories of 2017" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

January 17, 2018 – Customer Partnership Meeting of Technology Center 2600 (U.S. Patent and Trademark Office) – 8:30 am to 4:00 pm (ET)

January 18, 2018 – "PTAB — A Year in Review" (Foley & Lardner) – 1:00 to 2:00 pm (CST)

January 18, 2018 – "Strategic Use of Patent Reissue: Whether and When to Pursue a Reissue Application — Correcting Errors, Responding to an IPR Challenge and Mastering the Recapture Rule" (Strafford) – 1:00 to 2:30 pm (EST)

January 18, 2018 – "IP Year in Review And Look Ahead" – Patent Research (LexisNexis) – 2:00 pm (ET)

January 19, 2018 – "Paragraph IV Patent Certifications: Recent Legal and Regulatory Developments" (The Knowledge Group) – 12:00 to 1:30 pm (EST)

January 23, 2018 – "Drafting Software Patents to Survive Section 101 and AIA Challenges — Anticipating and Minimizing the Risk of 101, 103 Rejections, Recent Court Guidance" (Strafford) – 1:00 to 2:30 pm (EST)

January 25, 2018 – "IP Year in Review And Look Ahead" — Patent Prosecution (LexisNexis) – 2:00 pm (ET)

January 29, 2018 – "IP Year in Review And Look Ahead" — Patent Drafting (LexisNexis) – 2:00 pm (ET)

January 31, 2018 – "Paragraph IV Litigation: Best Practices and Practical Tips in 2018" (The Knowledge Group) – 3:00 to 4:00 pm (ET)

January 31, 2018 – "Obviousness of Biologics Inventions: Strategies for Biologics Claims in the U.S., Europe and China" (Strafford) – 1:00 to 2:30 pm (EST)

February 21-22, 2018 – Advanced Summit on Life Sciences Patents (American Conference Institute) – New York, NY

March 5-6, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Houston, TX

March 8-9, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Cincinnati, OH
ACI Advanced Summit on Life Sciences Patents

January 13, 2018

American Conference Institute (ACI) will be holding its 16th Advanced Summit on Life Sciences Patents on February 21-22, 2018 in New York, NY. ACI faculty will offer sessions on:

• Exploring recent developments in case law related to IPRs, especially as they relate to the life sciences
• Strategies for obtaining patent protection for the latest developments in the life science space
• Discussions of the § 101 legislative initiatives, recent and pending legislation, and other happenings on the hill
• Analyzing life-science portfolios for licensing and IP due diligence
• How to effectively and ethical communicate with the Patent Office

In particular, ACI's faculty will offer presentations on the following topics:

• Living Large: Filing and Protecting Big Portfolios while Avoiding Double-Patenting Issues
• IPR Investigation: Diving into IPR Dos and Don'ts
• Beyond Sandoz v. Amgen: Future of the Biologics Marketplace and Evolving Biosimilars Development
• Around the World in 30 Months: Developing a Robust International Portfolio
• Advancing your Portfolio: Patenting Cutting-Edge Life Sciences Technologies
• §101 Developments: Exploring Legislative Initiatives
• Working with the PTO to Obtain (and Extend) Life Sciences Patents
• Leveraging your Life Sciences Assets: Best Practices for Licensing and IP Due Diligence
• Anti-Antibody Climate? Pursuing Protection for Antibodies in Today's Environment
• Ethical Considerations for Prosecuting Life Sciences Patents: Avoiding Inequitable Conduct

The agenda for the Advanced Summit on Life Sciences Patents can be found here. A complete brochure for this conference, including an agenda, detailed descriptions of conference sessions, list of speakers, and registration form can be obtained here.

The registration fee is $2,295. Patent Docs readers are entitled to a 10% discount off of registration using discount code P10-999-PTD18. Those interested in registering for the conference can do so here, by e-mailing CustomerService@AmericanConference.com, or by calling 1-888-224-2480.

Patent Docs is a media partner of ACI's Advanced Summit on Life Sciences Patents.
Webinar on Obviousness of Biologics Inventions

January 13, 2018

Strafford will be offering a webinar entitled "Obviousness of Biologics Inventions: Strategies for Biologics Claims in the U.S., Europe and China" on January 31, 2018 from 1:00 to 2:30 pm (EST). Bryan C. Diner and Carla Mouta-Bellum of Finnegan Henderson Farabow Garrett & Dunner, Amy Feng of Wu Feng & Zhang, and Hazel Ford of Finnegan Europe will provide guidance to patent counsel on overcoming the challenges of obviousness in biologics patent claims in the U.S., Europe, and China; will examine the similarities and differences between claim types that have the best chance of success; and will discuss recent case law and key issues that arise. The webinar will review the following issues:

• What evidence should counsel provide to support its assertion of nonobviousness in biologics patents?
• How can counsel overcome the inconsistency in the EPO's treatment of biologics patents?
• How can patent counsel guide applicants during patent application drafting to reduce the likelihood of rejection?

The registration fee for the webcast is $297. Those interested in registering for the webinar, can do so here.
Finjan, Inc. v. Blue Coat Systems, Inc. (Fed. Cir. 2018)

January 11, 2018

By Michael Borella —

The year's first substantive patent-eligibility decision from the Federal Circuit is a rare victory for the patentee. It is also further evidence that the outcome of an eligibility analysis may be more dependent upon how the analysis is carried out than the actual language of the claims under review.

Finjan asserted several patents against Blue Coat in the Northern District of California. After trial, the jury found that Blue Coat infringed four of these patents, and awarded $39.5 million in damages. Then, the District Court held a bench trial to address Blue Coat's patent eligibility challenge to Finjan's U.S. Patent No. 6,154,844. The District Court found the claims eligible, and Blue Coat appealed both verdicts.

Claim 1 of the '844 patent recites:

A method comprising:
    receiving by an inspector a Downloadable;
    generating by the inspector a first Downloadable security profile that identifies suspicious code in the received Downloadable; and
    linking by the inspector the first Downloadable security profile to the Downloadable before a web server makes the Downloadable available to web clients.

The District Court's claim construction order held that the term "Downloadable" means "an executable application program, which is downloaded from a source computer and run on the destination computer," and that the term "Downloadable security profile that identifies suspicious code in the received Downloadable" means "a profile that identifies code in the received Downloadable that performs hostile or potentially hostile operations." Importantly, the Federal Circuit conducted its review in light of these definitions.

The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a two-part 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 Court began by distinguishing Finjan's claim with those of Intellectual Ventures I LLC v. Symantec Corp., where the Court concluded that "by itself, virus screening is well-known and constitutes an abstract idea." Particularly, claim 1 (as construed) requires that "the security profile includes details about the suspicious code in the received downloadable, such as . . . all potentially hostile or suspicious code operations that may be attempted by the Downloadable." Thus, "[t]he security profile must include the information about potentially hostile operations produced by a behavior-based virus scan." In this light, the claimed invention is distinguishable from traditional virus scans that look for previously identified patterns of suspicious code in executable programs.

The Court further found that the claimed invention is an improvement to computer technology. Notably, behavior-based virus scans "can analyze a downloadable's code and determine whether it performs potentially dangerous or unwanted operations—such as renaming or deleting files." Thus, these scans can detect previously unknown viruses as well as infected code that has been purposely obfuscated or scrambled to avoid traditional virus scan technology. Moreover, since the security profile is linked to the downloadable, a computer can safely decide whether to access the downloadable by reviewing its security profile.

The Court compared claim 1 favorably to those of Enfish LLC v. Microsoft Corp., in that the claim recites a method that "enables a computer security system to do things it could not do before." Therefore, the Court found that the claim is "directed to a non-abstract improvement in computer functionality, rather than the abstract idea of computer security writ large."

Blue Coat argued that the claim merely called for an outcome and did not specify how to attain that outcome. Such a claiming style was the kiss of death under § 101 in other cases, such as Apple, Inc. v. Ameranth, Inc., Affinity Labs of Tex., LLC v. DIRECTV, LLC, and the aforementioned Intellectual Ventures. But here, the Court concluded that the claims recite specific steps that accomplished a desired result. Based on this reasoning, and the holding that the invention is a technical improvement, the Court upheld the validity of the '844 patent.

This case further reinforces that procedural aspects of the § 101 inquiry can sometimes trump substantive aspects. The claim at issue is broad, somewhat vague, and could have very easily been found to not pass muster under the Alice test. But it also was construed by the District Court and, not unlike Enfish, the Federal Circuit reviewed the claim in light of its construction. Thus, due to the very nature and purpose of claim construction, the claim as construed was more specific than its plain language. In contrast, other panels have found more focused claims to be invalid when reviewed prior to construction (see, e.g., RecogniCorp, LLC v. Nintendo Co. Ltd. and Smart Systems Innovations, LLC v. Chicago Transit Authority).

This panel also refrained from summarizing the gist of the claim at a high level of abstraction then tautologically concluding that the claim is directed to an abstract idea. Here, the Court considered evidence beyond the claim itself to find that the invention was an improvement to a computing system.

All of this demonstrates that different Federal Circuit judges are applying the § 101 inquiry in different ways, and this practice very likely results in the validity of claims hanging on the luck of a panel draw. Perhaps if the stars align, 2018 will see the en banc Court decide how to apply the Alice test in a more consistent fashion going forward.

Finjan, Inc. v. Blue Coat Systems, Inc. (Fed. Cir. 2018)
Panel: Circuit Judges Dyk, Linn, and Hughes
Opinion by Circuit Judge Dyk
Top Four Stories of 2017

January 10, 2018

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 11th annual list of top patent stories. For 2017, we identified nineteen stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants. In previous posts, we counted down stories #19 to #15, stories #14 to #10, and stories #9 to #5, and today we count down the top four stories of 2017. As with our other lists (2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look. As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know. In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2017" on January 17, 2018 from 10:00 am to 11:15 am (CT). Details regarding the webinar, which will focus on a handful of the most important stories on this year's list, can be found here.

4. Supreme Court: § 286 Trumps Laches Defense

In March, the Supreme Court vacated the Federal Circuit's affirmance of a District Court decision that a patent infringement suit filed by SCA Hygiene Products Aktiebolag against First Quality Baby Products, LLC was barred by laches (even though SCA brought suit about 7 years after it first notified First Quality regarding its allegations of infringement). The Supreme Court's decision in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC was based, in part, on the Court's earlier decision in Petrella v. Metro-Goldwyn-Mayer, Inc., where the Court barred laches as a defense in copyright infringement actions based on a three-year statute of limitations enacted by Congress. The Federal Circuit, sitting en banc, based its affirmance of the District Court on the reasoning that although Congress had enacted a six-year time limitation on money damages in 35 U.S.C. § 286, the provisions of 35 U.S.C. § 282 made unenforceability, which includes the equitable doctrine of laches, available as a defense. However, as in Petrella, the Supreme Court determined that there was no basis for the Federal Circuit's decision that laches could contradict the statute of limitations provisions of § 286. The Court also opined that the doctrine of laches was developed for situations where Congress had not specified a fixed time for bringing suit, and thus was a "gap-filling" doctrine to cure in equity what the law did not expressly provide. However, when, as here, Congress had provided an express statute of limitations "there is no gap to fill" and thus no purpose for laches.

For information regarding this and other related topics, please see:

• "SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC (2017)," March 21, 2017

3. Use of Tribal Sovereign Immunity as Shield to PTAB Review

In September, Allergan creatively invoked the protection of sovereign immunity under the Eleventh Amendment to the Constitution by assigning six Orange Book-listed patents protecting Allergan's RESTASIS^® (Cyclosporine Ophthalmic Emulsion 0.05%), which is used to treat chronic dry eye, to the St. Regis Mohawk Tribe (SRMT). The patents had been challenged in inter partes review (IPR) proceedings. Allergan paid SRMT $13.75 million upon transferring these patents, which SRMT licensed to Allergan for $15 million per year until the patents expire in 2024. Shortly after the transfer, SRMT filed a motion before the Patent Trial and Appeal Board (PTAB) to have six IPRs involving the patents dismissed based on SRMT's sovereign immunity upon Allergan's assignment of the patents. In October, Federal Circuit Judge William Bryson, sitting by designation on the bench of the U.S. District Court for the Eastern District of Texas, granted a motion made by Allergan to join SRMT to ANDA litigation as a necessary party, and then found the claims of the Orange Book-listed patents asserted in ANDA litigation to be invalid. Judge Bryson's decision rendered moot the inter partes review proceedings before the PTAB (insofar as the claims at issue before the District Court and the Board were the same). Back at the PTAB, the Board was sufficiently vexed over the question of whether SRMT was entitled to have the Board dismiss, on grounds of sovereign immunity, IPRs on patents SRMT licensed from Allergan to solicit amicus curiae briefs on the issue from "interested parties." However, in December, an expanded panel of the Board issued an order dismissing a sovereign immunity challenge by the State of Minnesota in Ericsson Inc. v. Regents of the University of Minnesota. The coincidence of these two decisions was curious, particularly because while the scope of sovereign immunity enjoyed by the various recognized Tribes of Native Americans is both uncertain and subject to Congressional abrogation, a State's sovereignty is acknowledged and protected by the Eleventh Amendment. The Board's decision in Ericsson Inc. provides some insight into not only how the Board may rule on SRMT's motion, but also on how the Board (and the Patent Office) perceives its role and authority to make such decisions, and almost certainly means that tribal sovereign immunity will be making a return trip to our list of top stories next year.

For information regarding this and other related topics, please see:

• "PTAB Decides Patent Infringement Lawsuit Waives Eleventh Amendment Sovereign Immunity to Inter Partes Review, December 19, 2017
• "More Instances of Tribal Sovereign Immunity Shielding Patents from PTAB Invalidation," November 1, 2017
• "District Court Allows Mohawk Tribe to Join ANDA Litigation, Finds Patents at Issue Invalid," October 16, 2017
• "Mohawk Nation Exercises Sovereign Immunity in Inter Partes Review," September 25, 2017
• "Allergan Avails Itself of Sovereign Immunity," September 13, 2017

2. Supreme Court to Decide Constitutionality of Post-Grant Review Proceedings

In November, the Supreme Court heard oral argument in Oil States Energy Services, LLC v. Greene's Energy Group, LLC, where the sole question being considered by the Court is:

1.Whether inter partes review––an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents––violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

Ultimately, Oil States Energy Services, LLC may come down to the Court's decision in the 1898 case of McCormick Harvesting Machine v. Aultman. In that case, the patentee had sought to add claims via reissuance, but the Examiner found that at least some of the issued claims were invalid and sought to revoke the patent right. The Supreme Court at the time determined that the Patent Office did not have the authority to do so, with the McCormick Harvesting Machine Court stating that:

It has been settled by repeated decisions of this court that when a patent has received the signature of the secretary of the interior, countersigned by the commissioner of patents, and has had affixed to it the seal of the patent office, it has passed beyond the control and jurisdiction of that office, and is not subject to be revoked or canceled by the president, or any other officer of the government. It has become the property of the patentee, and as such is entitled to the same legal protection as other property.

The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent.

Regardless of how the Supreme Court comes down with respect to the question presented, this case will no doubt appear on our top stories list again next year.

For information regarding this and other related topics, please see:

• "Is a Patent a Private or Public Right? — Supreme Court Hears Oral Arguments in Oil States Energy Services, LLC. v. Greene's Energy Group, LLC," November 30, 2017
• "Oil States Energy Services, LLC v. Greene's Energy Group, LLC — Positions Taken in Selected Amicus Curiae Briefs," November 27, 2017
• "Oil States Preview Take II — Just What Did the Supreme Court Hold in McCormick Harvesting Machine v. Aultman?" November 21, 2017
• "Supreme Court Preview — Oil States Energy Services, LLC v. Greene's Energy Group, LLC," November 15, 2017

1. Supreme Court Narrows Venue Options for Patentees

In May, the Supreme Court, in TC Heartland LLC v. Kraft Foods Group Brands LLC, reversed the Federal Circuit and held that the word "resides" in the patent venue statute (28 U.S.C. § 1400(b)), "refers only to the State of incorporation" of the alleged infringer. The case stemmed from a lawsuit brought by Kraft Foods Group Brands LLC against TC Heartland, LLC and Heartland Packaging Corp. in the U.S. District Court for the District of Delaware. TC Heartland is incorporated in Indiana, and has its headquarters in Carmel, Indiana. As a result, it moved to either dismiss the action on venue grounds (among others) or transfer venue to the Southern District of Indiana. The District Court denied the motion, and TC Heartland petitioned the Federal Circuit for a writ of mandamus to either dismiss or transfer the case, which the Federal Circuit denied. In reversing the Federal Circuit's decision, the Supreme Court looked at whether Congress had changed the meaning of § 1400(b) (the patent venue statute) when it amended 28 U.S.C. § 1391 (the general venue statute) in 1988 — the Court had previously determined, in Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), that the general venue statute does not override the patent venue statute, and therefore that the residence of an accused infringing corporation was its place of incorporation. In answering the above inquiry in the negative, the Court pointed out that Congress ordinarily provides a clear indication of its intent in the text of the amended provision, and that this clear indication was missing from § 1391.

For information regarding this and other related topics, please see:

• "More on Venue — Plexxikon v. Novartis Pharmaceutical Corp. (N.D. Cal. 2017)," December 13, 2017
• "More Views on Venue — Federal Circuit Addresses In re Micron Fallout," December 12, 2017
• "In re Micron Technology, Inc. (Fed. Cir. 2017)," November 22, 2017
• "Does the Federal Circuit's In re Cray Decision Suggest a New Business Model for Savvy Infringers?" October 1, 2017
• "Views on Venue — Take Two: Did the District of Delaware Get It Right?" September 24, 2017
• "In re Cray Inc. (Fed. Cir. 2017)," September 21, 2017
• "Views on Venue — District of Delaware Provides Some Guidance on Venue in ANDA Cases Post-TC Heartland," September 19, 2017
• "TC Heartland LLC v. Kraft Foods Group Brands LLC (2017)," May 22, 2017
• "TC Heartland LLC v. Kraft Foods Group Brands LLC — 98 Professors Chime In," March 26, 2017
• "Supreme Court Preview — TC Heartland LLC v. Kraft Foods Group Brands LLC," March 23, 2017
• "Xilinx, Inc. v. Papst Licensing GmbH & Co. KG (Fed. Cir. 2017)," February 19, 2017
Wi-Fi One, LLC v. Broadcom Corp. (Fed. Cir. 2018) (en banc)

January 9, 2018

By Andrew Williams —

On Monday, the en banc Federal Circuit held in Wi-Fi One, LLC v. Broadcom Corp. that PTAB time-bar determinations under 35 U.S.C. § 315(b) are appealable because they do not fall within the scope of the judicial-review prohibition of § 314(d). This decision overruled Achates Reference Publishing, Inc. v. Apple Inc., which was decided before the Supreme Court interpreted § 314(d) in Cuozzo Speed Technologies, LLC. v. Lee, but as we reported at the time, it was unclear whether time-bar determinations fell within the concerns of "shenanigans" expressed by Justice Breyer. The original panel decision in Wi-Fi One, authored by Judge Bryson and joined by Judge Dyk, determined that the Cuozzo v. Lee decision did not change anything ("We see nothing in the Cuozzo decision that suggests Achates has been implicitly overruled."). On the other hand, Judge Reyna writing separately believed that such decisions should be subject to review after Cuozzo. Nevertheless, he concurred in the decision because he believed Wi-Fi One had not shown that Broadcom was either a real party in interest in the underlying litigation at question, or was in privity with one of the defendants of that case. Judge Reyna, as author for the majority for the current en banc decision, got his chance to explain why he believes time-bar determinations are now appealable. The other two Wi-Fi One panel judges joined the dissent penned by Judge Hughes (which was also joined by Judge Lourie, a member of the original Achates panel). Rounding out the opinions, Judge O'Malley filed a concurrence because she thought resolution of the question simply turned on the distinction between authority to exercise discretion when reviewing the adequacy of a petition and authority to undertake such a review in the first instance. This, of course, harkens back to the "ultimate authority to invalidate" standard articulated in Versata Dev. Grp., Inc. v. SAP America, Inc. for CBM review. The Court did not extend the ruling to any other disputes arising from §§ 311-314, but this decision will certainly pave the way for more challenges (and potentially more appealable issues).

The Wi-Fi One case stems from a 2010 lawsuit filed by Telefonaktiebolaget LM Ericsson ("Ericsson") in U.S. District Court for the Eastern District of Texas. Ericsson asserted U.S. Patent Nos. 6,772,215 ("Method for minimizing feedback responses in ARQ protocols"), 6,466,568 (Multi-rate radiocommunication systems and terminals), and 6,424,625 ("Method and apparatus for discarding packets in a data network having automatic repeat request") against multiple defendants. The Court indicated that the technical aspects of these patents were not relevant to the opinion, but those interested can look to the panel decision for a description of the technology. Importantly, Broadcom, the company that filed the three IPR petitions at issue in this case, was never a defendant in the litigation. Nevertheless, the Patent Owner (which became Wi-Fi One during the course of the IPR proceedings when Ericsson transferred ownership) alleged that Broadcom was in privity with one or more of the defendants in the Texas litigation. Because the IPR petitions were filed more than a year after the commencement of that case, Wi-Fi One argued they were time-barred. The Board denied Wi-Fi One the opportunity to take discovery regarding the relationship of the parties, and the Federal Circuit denied a petition for a writ of mandamus. Ultimately, the Board instituted the IPRs, and issued Final Written Decisions finding the challenged claims unpatentable. After the Federal Circuit panel affirmed because it found Achates unchanged by Cuozzo, the Court granted Wi-Fi One's petition for rehearing en banc to answer the question:

Should this court overrule [Achates] and hold that judicial review is available for a patent owner to challenge the PTO's determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review?

In deciding the question in the affirmative, the majority started at the same place the Supreme Court did in the Cuozzo decision, with the recognition that there is a strong presumption favoring judicial review of administrative actions. Correspondingly, Congress must provide "clear and convincing" indications that it intends to prohibit appellate review. The majority did not find such strong indications in the statutory language, the legislative history, or the statutory scheme as a whole. Specifically, 35 U.S.C. § 314(d) recites: "No Appeal—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable." The natural reading, according to the majority, is that this bar is limited to determinations to institute as set forth in § 314. It is § 314(a) that both identifies the threshold requirement for institution ("a reasonable likelihood that petitioner would prevail with respect to at least 1 of the claims challenged in the petition") and provides that the director has discretion not to institute. Section 315(b), instead, controls the authority to institute IPRs unrelated to the preliminary patentability assessment even should a "reasonable likelihood" be found. "The time-bar determination, therefore, is not akin to either the non-institution or preliminary-only merits determinations for which unreviewability is common in the law, in the latter case because the closely related final merits determination is reviewable."

The majority also found that the overall statutory scheme supported its conclusion, especially in view of Cuozzo's directive to examine determinations that are "closely related" to § 314(a). For example, there are preliminary procedural requirements found in §§ 311-313 that are closely related to the preliminary patentability determination (or the discretion not to institute). On the other hand, the majority believed that the time-bar determination was fundamentally different than any such determination. It also found such a determination to not be "some minor statutory technicality," as referred to in Cuozzo. Instead, "[t]he time bar is not merely about preliminary procedural requirements that may be corrected if they fail to reflect real-world facts, but about real-world facts that limit the agency's authority to act under the IPR scheme." Because "enforcing statutory limits on an agency's authority" is the type of issue that has been historically reviewed, the majority held "that time-bar determinations under § 315(a) are reviewable by this court." The case was remanded to the merits panel to consider the Wi-Fi One's time-bar appeal.

Judge O'Malley agreed with much of the reasoning of the majority, but she filed a concurrence because she thought that resolution of the question presented was much simpler. She pointed out that it was important for the Court to address time-bar determinations to "give effect to the congressionally imposed statutory limitations on the PTO's authority to institute IPRs" She essentially reiterated the position she expressed in her concurrence in the Click-To-Call Technologies, LP v. Oracle Corporation remand from the Supreme Court (see "IPR Update — Is Reviewability of Time-Bar Institution Decisions Headed En Banc?"). That case was "GVR'ed" for further consideration in view of Cuozzo v. Lee after that decision was issued. Click-To-Call was a per curiam decision, concluding that Achates had not been overturned by the Cuozzo decision, and in any event it was also bound by the Wi-Fi One case. But Judge O'Malley wrote a separate concurrence to express her belief that the issue should be addressed en banc. In that decision, as well as the present concurrence, she focused on the difference between a petition for a PTAB post-grant proceeding (whether IPR, CBM, PGR, or derivation) and the act of institution by the PTAB as provided for by the statute. Believing that Congress established this distinction, she pointed out that "315(b)'s bar on institution in necessarily directed to the PTO, not those filing a petition to institute." The statute commands that an IPR proceeding "may not be instituted" by the Board if the petition is time barred. As she put it, "Congress is well versed in establishing statutory time bars. Congressional discretion should control the application of such time bars, not that of the Director of the PTO." Correspondingly, she added that she did "not see the need to say more."

The dissent, written by Judge Hughes, did not believe that appealability prohibition found in 35 U.S.C. § 314(d) was so limited because Congress's intent to prohibit judicial review was "clear and unmistakable." In so doing, it identified a couple of problems with the majority's position. First, it looked at the impact of the Director's decision regarding real parties in interest under different scenarios. On the one hand, if the patent owner alleges that an unidentified third party that has not been sued is a real party in interest, the Board's determination either way would not be reviewable (because the time bar would not be implicated). However, if the unidentified third party had been sued more than a year prior, than such a determination would be reviewable (at least according to the majority decision). Therefore, according to the dissent, the exact same determination would lead to different conclusions regarding appealability, which it found to be illogical. But is it? In the former example, the determination would have no practical consequences — if that decision could be appealed, nothing would change. However, if the decision of the Board results in the institution of a case that should have been time-barred, that would contravene the Congressional limits on the PTAB's authority to review cases using the IPR mechanism. It seems to be just such a decision that the courts should be reviewing.

The second problem identified by the dissent is that vacating the invalidity decisions of the Board based on such threshold questions as timeliness or real parties in interest would "squander the time and resources spent adjudicating the actual merits of the petition." While it is true that this would disturb the initial reason why IPRs were established in the first place ("providing quick and cost effective alternatives to litigation"), such may be the cost necessary to protect Patent Owners. Without the threat of judicial review, the PTAB has no particular incentive (outside the desire to get the case right in the first place) to develop procedures to get the question of real parties in interest correct. Instead, with the knowledge that their decisions could be reviewed, the Board will certainly be motivated to try to get the answer right in the first place.

Again, this case is limited to the time-bar issue found in 315(b), and the Court explicitly did not decide whether all disputes arising from §§ 311-314 are final and nonappealable. Nevertheless, it will certainly open the door to other challenges of determinations made by the PTAB at the institution stage. It will be interesting to see if this is a limited example or if the flood gates of appellate review are now open.

Wi-Fi One, LLC v. Broadcom Corp. (Fed. Cir. 2018) (en banc)
Panel: Chief Judge Prost and Circuit Judges Newman, Lourie, Bryson, Dyk, Moore, O'Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll
Opinion by Circuit Judge Reyna, joined by Chief Judge Prost and Circuit Judges Newman, Moore, O'Malley, Wallach, Taranto, Chen, and Stoll; concurring opinion by Circuit Judge O'Malley; dissenting opinion by Circuit Judge Hughes, joined by Circuit Judges Lourie, Bryson, and Dyk
The PTAB Strikes Back — Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR

January 8, 2018

By Kevin E. Noonan –

As previously reported, the St. Regis Mohawk Tribe filed a request for oral hearing that included a "request for discovery into the identity and impartiality of the merits panel assigned to this case." The paper was replete with justifications for its request and specific discovery it was seeking, all premised on its apprehension that the Patent Trial and Appeal Board (PTAB) might deprive the Tribe of due process by, inter alia, empaneling an expanded panel of Board members (including specifically Chief Administrative Patent Judge David Ruschke) that would not be impartial in deciding whether the Tribe's sovereign immunity precluded the Board from deciding on the validity of the patents (U.S. Patent Nos. 8,629,111; 8,633,162; 8,642,556; 8,648,048; 8,685,930; and 9,248,191) involved in the consolidated IPRs.

Last week, the PTAB responded, in a sharply worded per curiam decision denying the Tribe's motion and an Order precluding the Tribe from filing any additional papers in this IPR. The Board's displeasure was evident from the first sentence of the Order, wherein the Board noted that the Tribe's January 2nd filing was "without authorization" and was based only "purportedly" on 37 C.F.R. § 42.70(a). The Board characterized this request as being improper and then proceeded to list its reasons why.

First, the request for oral argument is improper in the Board's view because it was made at the same time as the request for discovery, which had not been made prior to the request for oral argument and thus was not an issue that could be raised under Rule 70(a) by that rule's plain language. Second, the Board's Scheduling Order in these consolidated IPRs mandated that any request for Oral Argument be made by DUE DATE 4, which in this case was July 20, 2017 (and at that time, both Mylan and the patent owner at that time, Allergan, requested oral argument, which requests were granted on August 1, 2017). Thus, in the Board's view, the request was untimely (although, in addition to the Tribe having been added as the real party in interest after that date, the substantive basis for the request was unknown at DUE DATE 4). Third, under these circumstances Board rules required the Tribe to have sought authorization to file its discovery request, 37 C.F.R. § 42.70(a), (b), which it did not do. And it is clear the Board believes this action was willful: the Order states that "counsel for the Tribe ignored our rules (once again) and preemptively filed its paper." In verbiage dripping with institutional sarcasm, the Board offered to "assist the Tribe in complying with our rules" by mandating that "the Tribe shall not file any further papers in these proceedings without prior authorization from the Board" (emphasis in Order).

After noting that the Board had the power to expunge the (in its view) improvident request from the record, the Order states that it shall decline to do so in order to "ensure the record is clear regarding why we deny not only the Request for Oral Hearing, but the Tribe's request for authorization to file a motion for additional discovery, as well." And that reasoning is that the request "far exceeds the scope of permissible discovery in these proceedings." The first ground for this decision is that the rule cited in the Tribe's request, 37 C.F.R. § 42.51, relates to discovery between the parties, not from the Board itself. As such, the Board can take shelter from the fact that its rules were not promulgated to permit a party from interrogating the Board as the Tribe has attempted to do, "and the Tribe has not pointed us to any legal authority that suggests otherwise." That would be enough, according to the PTAB, to justify denial of the Tribe's discovery request.

In addition, the Board asserted that the Tribe has proffered nothing more than "gross speculation" regarding its allegations of impropriety by the Board, either in its alleged lack of impartiality or susceptibility to political pressure, here citing its decision with regard to discovery from a party in Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, Case IPR2012-00001, Paper No. 26, slip op. at 6 (PTAB Mar. 5, 2013). This portion of the Order is backed in a footnote with a citation to the USPTO Rules of Professional conduct with regard to allegations regarding the qualifications or integrity of a judge (37 C.F.R. § 11.802(a), albeit these are qualified as being allegations a practitioner knows to be false or with reckless disregard as to its truth or falsity'), and 37 C.F.R. §§ 11.804, 11.901 (related to penalties for violating these Rules).

After noting that the makeup of the panel has always been "listed on the cover page of our decisions" and reminding the Tribe's counsel that the Board has "considered this issue twice now," the Order concludes with a stark warning:

As a final note, we caution counsel for the Tribe that failure to comply with an applicable rule or order, abuse of discovery, and abuse of process are all grounds for sanctions. 37 C.F.R. § 42.12(a)(1), (5), (6). We strongly advise counsel for the Tribe to review our rules and caution that any further actions that demonstrate a disregard for our process will not be tolerated. See 37 C.F.R. § 42.12(b).

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