• By Michael Borella —

    Federal Circuit SealAatrix brought an infringement action against Green Shades in the Middle District of Florida, alleging infringement of U.S. Patent Nos. 7,171,615 and 8,984,393.  Green Shades filed a 12(b)(6) motion to dismiss on the grounds that all asserted claims were not eligible for patent under 35 U.S.C. § 101.

    The patents in suit are directed to "designing, creating, and importing data into a viewable form on a computer so that a user can manipulate the form data and create viewable forms and reports."  In particular, a "form file is created using in-house form development tools and is designed to model the physical characteristics of an existing form, including the calculations and rule conditions required to fill in the form."  A data file "allows data from third-party applications to be seamlessly imported into the form file program to populate the form fields."  A "viewer generates a report by merging the data in the [data] file with the fields in the form file, performing calculations on the data, and allowing the user to review and change the field values."

    Claim 1 of the '615 patent recites:

    1.  A data processing system for designing, creating, and importing data into, a viewable form viewable by the user of the data processing system, comprising:
        (a) a form file that models the physical representation of an original paper form and establishes the calculations and rule conditions required to fill in the viewable form;
        (b) a form file creation program that imports a background image from an original form, allows a user to adjust and test-print the background image and compare the alignment of the original form to the background test-print, and creates the form file;
        (c) a data file containing data from a user application for populating the viewable form; and
        (d) a form viewer program operating on the form file and the data file, to perform calculations, allow the user of the data processing system to review and change the data, and create viewable forms and reports.

    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 § 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.

    Aatrix argued that Green Shades' motion should be denied so that the District Court could carry out claim construction.  The District Court ultimately granted the motion, and concluded that claim 1 of the '615 patent was "not directed to any tangible embodiment and therefore not directed to eligible subject matter."  This latter point was not argued by the parties.  The District Court also held that the Alice test rendered the remaining claims abstract, without an inventive concept, and therefore invalid as well.

    Aatrix moved for the District Court to reconsider the judgment, as well as for leave to amend its complaint.  Particularly, Aatrix wished to file a second amended complaint that provided evidence that would preclude a § 101 dismissal on the pleadings.  The District Court denied this request, merely stating that "[u]pon consideration of the filings and the relevant case law, the [district court] sees no reason to reconsider its prior determination."  Aatrix appealed.

    The majority opinion began by noting that the Federal Circuit has held that patent eligibility under § 101 can be determined on the pleadings, but that "[t]his is true only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law."  On the other hand, "[i]f there are claim construction disputes . . . either the court must proceed by adopting the non-moving party's constructions . . . or the court must resolve the disputes to whatever extent is needed to conduct the § 101 analysis, which may well be less than a full, formal claim construction."

    Here, the Federal Circuit found that the District Court erred in its determination that claim 1 is not directed to a tangible embodiment.  While the case law has long held that claims directed to nothing more than signals or data structures do not fall into any of the four categories of patentable subject matter, Aatrix's system claim "requires a computer operating software, a means for viewing and changing data, and a means for viewing forms and reports."  Thus, the system is tangible.

    The District Court also erred in denying Aatrix the opportunity to amend its complaint.  The District Court did so without explanation.  But the Federal Circuit viewed the second amended complaint as including factual allegations that "if accepted as true, establish that the claimed combination contains inventive components and improves the workings of the computer."  Notably, the second amended complaint included specific allegations regarding the technical improvements of, and problems solved by, the claimed inventions.  If accepted as true, they would "contradict the district court's conclusion that the claimed combination was conventional or routine."  As a consequence, the District Court's dismissal was an abuse of discretion, and premature.

    For these reasons, the dismissal of the case was vacated, and the matter was remanded to the District Court for further proceedings.

    Judge Reyna concurred in part and dissented in part.  He agreed that the District Court erred in its characterization of claim 1 being directed to an intangible embodiment, and believed that this conclusion led the District Court to improperly deny Aatrix's motion to file a second amended complaint.  He took issue, however, with "with the majority's broad statements on the role of factual evidence in a § 101 inquiry," noting that this determination is a matter of law.

    Specifically, he wrote:

    [T]he majority opinion attempts to shift the character of the § 101 inquiry from a legal question to a predominately factual inquiry.  The risk of this approach is that it opens the door in both steps of the Alice inquiry for the introduction of an inexhaustible array of extrinsic evidence, such as prior art, publications, other patents, and expert opinion.  Similarly, the majority opinion strongly suggests that the district court must require claim construction where the meaning of a claim term is placed in controversy, even where, as here, proposed claim constructions are not presented to the court.  One effect of this approach is that a plaintiff facing a 12(b)(6) motion may simply amend its complaint to allege extrinsic facts that, once alleged, must be taken as true, regardless of its consistency with the intrinsic record.

    Judge Reyna also pointed out that the new allegations and evidence from the second amended complaint were not before the Court, as "[t]here was no motion to dismiss filed challenging the Second Amended Complaint."  He noted that "[a]s an appellate court, we should not pass judgment on matters not addressed by the district court."

    Following so quickly on the heels of the Berkheimer v. HP case, the Federal Circuit once again used its remand power to address a § 101 dispute where there may be a matter of material fact as to whether a claimed invention is a technical improvement over conventional art.  While Berkheimer took place at the summary judgment stage, this case was decided on the pleadings.  If the opinions in these cases stand, it may become significantly more difficult for a challenger to invalidate claims under § 101.  The patentee need only explain how the specification describes that the claimed invention is a technical improvement over existing systems.  This will mean that far fewer § 101 cases are dismissed on the pleadings, and more will go to trial.

    On the other hand, the disagreement between the majority opinion and Judge Reyna point to a split in the Federal Circuit case law, with authority supporting both positions.  This tees up the issue of whether a § 101 analysis involves underlying issues of fact for en banc review.

    But lifting our heads up out of the details of the case law for a moment, how can the determination of whether an invention involves significantly more than well-known, conventional, and routine features be anything less than a factual inquiry in at least some situations?  What is well-known, conventional, and routine is defined by the prior art, and whether an invention is a technical improvement over this art should not be subject to sweeping and conclusory statements.

    Aatrix Software, Inc. v. Green Shades Software, Inc. (Fed. Cir. 2018)
    Panel: Circuit Judges Moore, Reyna, and Taranto
    Opinion by Circuit Judge Moore; opinion concurring-in-part and dissenting-in-part by Circuit Judge Reyna

  • CalendarFebruary 20, 2018 – "Patent-Eligibility in 2018: Current Status and Best Practices" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

    February 20, 2018 – "Managing and Defending Against Patent Infringement Lawsuits: Best Strategies and Practical Tips Explored" (The Knowledge Group) – 3:00 to 4:00 pm (ET)

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

    February 22, 2018 – "Managing Patent Infringement Risk in Product Development" (Strafford) – 1:00 to 2:30 pm (EST)

    February 22, 2018 – "PTAB on Wi-Fi One: What's Next for Appeals?" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

    February 22, 2018 – "Drafting Quality Patents: Avoiding 112 Rejections at the USPTO" (LexisNexis) – 12:00 pm (ET)

    February 26, 2018 – "Chinese Patent Developments" (Practising Law Institute) – 4:00 to 5:00 pm (Eastern)

    February 27, 2018 – "Patent Inventorship: Best Practices for Determination and Correction — Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" (Strafford) – 1:00 to 2:30 pm (EST)

    February 28, 2018 – "Going Global with Patents" (Bereskin & Parr) – 12:00 to 1:00 pm (EST)

    March 3, 2018 – "Patent Post-Grant Practice" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – 9:00 am to 4:30 pm, Chicago, IL

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

    March 8, 2018 – "Patent Exclusivity Health Checks for Small Molecules: Are Your U.S. Patents Ready to Maximize ROI? — Phase II Efficacy Trials, Phase III Clinical Trials, NDA Submission, Approval and Marketing" (Strafford) – 1:00 to 2:30 pm (EST)

    March 8-9, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Cincinnati, OH

    March 14, 2018 – Patent Litigation Seminar (New Jersey Intellectual Property Law Association) – 12:00 to 5:00 pm, Iselin, NJ

  • IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "PTAB on Wi-Fi One: What's Next for Appeals?" on February 22, 2018 from 2:00 to 3:00 pm (ET).  Hon. Michael Tierney of the U.S. Patent & Trademark Office, Matthew Berkowitz of Shearman & Sterling LLP, Scott Kamholz of Covington & Burling LLP, and David Kelley of Ford Global Technologies LLC will discuss the Federal Circuit's decision 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).  The panel will also address the following topics:

    • The AIA's various time bars as adjudicated by the PTAB — and whether there is a standing inconsistency among PTAB panels.
    • On which other issues are litigants likely to press for appeals such as the naming of all interested parties, or the reach of estoppel.
    • Real-party-in-interest and privacy, because in practice many potential appeals involve situations with various parties including joint defense groups, indemnification, and patent aggregators.
    • How will the PTAB respond to increased demands for discovery?

    The registration fee for the webinar is $135 (government and academic rates are available upon request).  Those interested in registering for the webinar can do so here.

  • Strafford #1Strafford will be offering a webinar entitled "Patent Inventorship: Best Practices for Determination and Correction — Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" on February 27, 2018 from 1:00 to 2:30 pm (EST).  Jill K. MacAlpine and Amanda K. Murphy of Finnegan Henderson Farabow Garrett & Dunner will provide guidance for patent counsel on identifying and determining inventorship, offer best practices for correcting errors regarding inventorship, and offer perspectives gained from working with the AIA since it was passed—and outline lessons from recent court decisions.  The webinar will review the following issues:

    • What key information does counsel need to determine inventorship?
    • What are the steps for counsel when inventorship must be corrected?
    • What is the AIA's impact on an inventorship determination?

    The registration fee for the webcast is $297.  Those interested in registering for the webinar, can do so here.

  • Bereskin & ParrBereskin & Parr will be offering a presentation entitled "Going Global with Patents" on February 28, 2018 from 12:00 to 1:00 pm (EST).  Isi Caulder of Bereskin & Parr, Stephen Yang of Co-Talent, and Andrea Hughes of Dehns will discuss how smart organizations obtain global patent coverage to maintain their competitive advantage.  The panel will also address the following topics:

    • Key factors for strategic selection of foreign patent protection
    • How to secure global patent protection on a cost and time effective basis
    • Tips for monetizing a global patent portfolio and identifying collaboration opportunities (cross-licensing)

    Those wishing to register for the presentation can do so here.

  • LexisNexisLexisNexis will be offering a webinar on "Drafting Quality Patents: Avoiding 112 Rejections at the USPTO" on February 22, 2018 at 12:00 pm (ET).  Gene Quinn of IPWatchdog.com and Dave Stitzel of Reed Tech® will discuss best practices for filing a robust application to avoid 112 rejections and associated problems, and will address the following topics:

    • Indefiniteness: Nautilus (SCOTUS standard) versus In re Packard (USPTO standard)
    • Identifying and Interpreting 112(f) means plus function limitations
    • Alternative and Negative Limitations
    • Relational and Exemplary Language
    • Numerical Ranges and Amount Limitation

    Those interested in registering for the webinar, can do so here.

  • Strafford #1Strafford will be offering a webinar entitled "Patent Exclusivity Health Checks for Small Molecules: Are Your U.S. Patents Ready to Maximize ROI? — Phase II Efficacy Trials, Phase III Clinical Trials, NDA Submission, Approval and Marketing" on March 8, 2018 from 1:00 to 2:30 pm (EST).  Thomas L. Irving, Shana K. Cyr, Mark J. Feldstein, and John D. Livingstone of Finnegan Henderson Farabow Garrett & Dunner will provide guidance to patent counsel on the essentials of patent exclusivity that are in critical need of independent checking, and discuss crucial health checks on U.S. patent exclusivity for small molecules in Phase II efficacy trials and proceeding through large-scale randomized Phase III clinical trials, submission of the NDA, and subsequent approval and marketing.  The webinar will review the following issues:

    • What can be done if sub-optimal protection or even serious defects are discovered during the "health check"?
    • Are Orange Book listed patent claims definite or enabled under the current standards?
    • Is there a need for supplemental examination to clear the path to enforceability?

    The registration fee for the webcast is $297.  Those interested in registering for the webinar, can do so here.

  • The Knowledge GroupThe Knowledge Group will offer a webcast entitled "Managing and Defending Against Patent Infringement Lawsuits: Best Strategies and Practical Tips Explored" on February 20, 2018 from 3:00 to 4:00 pm (ET).  Blaney Harper of Jones Day and Peter D. Siddoway of Sage Patent Group, PLLC will discuss the most important aspects of managing as well as defending against patent infringement lawsuits, and present the best strategies as well as the best practices to avoid potential risks and pitfalls.  Key topics to be addressed by the webcast include:

    • Litigation Strategies against NPEs
    • Venue after TC Heartland
    • Considerations regarding whether to file an IPR
    • Damages Assessments and latest case law
    • Latest IPR Trends
    • Recent Court Decisions and Developments

    The registration fee for the webcast is $49.  Those interested in registering for the webinar can do so here.

  • By Aaron Gin –

    Washington - Capitol #3Over the last two months, the United States legislature has introduced three new bills intended to establish a Federal Advisory Committee on the rapidly-evolving field of artificial intelligence (AI) and to analyze and report on the impact and growth of the technology.

    FUTURE of AI Act

    On December 12, 2017, Rep. John Delaney (D-MD) and Sen. Maria Cantwell (D-WA) introduced identical bills in the House (as H.R. 4625) and Senate (as S. 2217).  The twin bills were entitled the "Fundamentally Understanding The Usability and Realistic Evolution of Artificial Intelligence Act of 2017" — or FUTURE of AI Act.

    One aim of the bills is to better understand how AI might maximally benefit the economic prosperity and social stability of the United States.  The bills would also direct the Secretary of Commerce to establish a Federal Advisory Committee, which would be tasked with providing guidance on the development and implementation of artificial intelligence.  Among other roles, the Advisory Committee is to promote a "climate of investment and innovation," "optimize the development of [AI]," support the "unbiased development and application of [AI]," and "protect the privacy rights of individuals."

    The Advisory Committee is asked to provide advice to the Secretary of Commerce with regard to several specific topics including:

    (A) The competitiveness of the United States, including matters relating to the promotion of public and private sector investment and innovation into the development of artificial intelligence.

    (B) Workforce, including matters relating to the potential for using artificial intelligence for rapid retraining of workers, due to the possible effect of technological displacement.

    (C) Education, including matters relating to science, technology, engineering, and mathematics education to prepare the United States workforce as the needs of employers change.

    (D) Ethics training and development for technologists working on artificial intelligence.

    (E) Matters relating to open sharing of data and the open sharing of research on artificial intelligence.

    (F) International cooperation and competitiveness, including matters relating to the competitive international landscape for artificial intelligence-related industries.

    (G) Accountability and legal rights, including matters relating to the responsibility for any violations of laws by an artificial intelligence system and the compatibility of international regulations.

    (H) Matters relating to machine learning bias through core cultural and societal norms.

    (I) Matters relating to how artificial intelligence can serve or enhance opportunities in rural communities.

    (J) Government efficiency, including matters relating to how to promote cost saving and streamline operations.

    The Advisory Committee is additionally required to conduct a study on various intersections between AI and society, including analyzing the effects of AI on the economy, workforce, and competiveness of the United States.  The study also seeks to identify and eliminate bias in AI algorithms, identify potential "harmful outcomes," and contemplate the incorporation of ethical standards in AI development.  Furthermore, within 540 days of enactment of the Act, the Advisory Committee is required to provide a report based on the study to the Secretary of Commerce and Congress.

    The bills direct that the Advisory Committee shall include 19 voting members appointed by the Secretary of Commerce.  Specifically, the voting members will be selected from "diverse" geographical locations within the United States and include:  five members from academia or the AI research community, six from private industry, six from civil society, and two from labor organizations.

    One of the notable features of the twin House and Senate bills is the broad range of technologies being considered under the term "artificial intelligence."  The bills both define AI as:

    (A) Any artificial systems that perform tasks under varying and unpredictable circumstances, without significant human oversight, or that can learn from their experience and improve their performance.  Such systems may be developed in computer software, physical hardware, or other contexts not yet contemplated.  They may solve tasks requiring humanlike perception, cognition, planning, learning, communication, or physical action.  In general, the more human-like the system within the context of its tasks, the more it can be said to use artificial intelligence.

    (B) Systems that think like humans, such as cognitive architectures and neural networks.

    (C) Systems that act like humans, such as systems that can pass the Turing test or other comparable test via natural language processing, knowledge representation, automated reasoning, and learning.

    (D) A set of techniques, including machine learning, that seeks to approximate some cognitive task.

    (E) Systems that act rationally, such as intelligent software agents and embodied robots that achieve goals via perception, planning, reasoning, learning, communicating, decision making, and acting.

    H.R. 4625 and S. 2217 also contemplate "artificial general intelligence," which they define as "a notional future artificial intelligence system that exhibits apparently intelligent behavior at least as advanced as a person across the range of cognitive, emotional, and social behaviors."  Yet further, the bills consider "narrow artificial intelligence," or artificial intelligence systems that address specific applications such as playing strategic games, language translation, self-driving vehicles, and image recognition.

    AI Jobs Act of 2018

    On January 18, 2018, Rep. Darren Soto (D-FL) introduced H.R. 4829 entitled the "AI Jobs Act of 2018".  The bill promotes a "21st century artificial intelligence workforce," and focuses on training and retraining American workers in light of the possible effects of AI on the workforce and human worker demand.

    H.R. 4829 requires the Secretary of Labor to undertake an AI study to determine its potential impacts on the workforce.  A report based on the study is to include:

    (1) An outline of the specific data, and the availability of such data, necessary to properly analyze the impact and growth of artificial intelligence.

    (2) Identification of industries that are projected to have the most growth in artificial intelligence use, and whether the technology will result in the enhancement of workers' capabilities or their replacement.

    (3) Analysis of the expertise and education (including computer science literacy) needed to develop, operate, or work alongside artificial intelligence over the next two decades, as compared to the levels of such expertise and education among the current workforce.

    (4) Analysis of which demographics (including ethnic, gender, economic, age, and regional) may experience expanded career opportunities, and which such demographics may be vulnerable to career displacement, due to artificial intelligence.

    (5) Any recommendations to alleviate workforce displacement, prepare future workforce members for the artificial-intelligence economy, and any other relevant observations or recommendations within the field of artificial intelligence.

    In preparing the report, the Secretary of Labor is tasked with conducting a series of public hearing or roundtables with various organizations, such as industrial stakeholders, heads of Federal agencies, local educational agencies, institutions of higher education, workforce training organizations, and National Laboratories.

    While some language is common, the new House bill defines "artificial intelligence" more succinctly than the earlier twin bills.  Specifically, H.R. 4829 characterizes AI as systems that:

    (A) think like humans (including cognitive architectures and neural networks);

    (B) act like humans (such as passing the Turing test using natural language processing, knowledge representation, automated reasoning, and learning);

    (C) think rationally (such as logic solvers, inference, and optimization);

    (D) act rationally (such as intelligent software agents and embodied robots that achieve goals via perception, planning, reasoning, learning, communicating, decision-making, and acting); or

    (E) automate or replicate intelligent behavior.

    If enacted, the Acts and their resulting reports will undoubtedly lead to further discussion regarding artificial intelligence and provide multiple perspectives on how AI might impact society for better and, perhaps, for worse.  Additionally, as the bills target the Departments of Commerce and Labor separately, it will also be interesting to see how the different organizations read and react based on their respective AI studies.

    For additional information regarding this topic, please see:

    • H.R.4625 – FUTURE of Artificial Intelligence Act of 2017
    • S.2217 – FUTURE of Artificial Intelligence Act of 2017
    • H.R.4829 – AI JOBS Act of 2018
    • "Lawmakers introduce bipartisan AI legislation," The Hill, December 12, 2017
    • "Microsoft Sees Need for AI Laws, Regulations," Industry Week, January 18, 2018
    • "Forget Killer Robots—Bias Is the Real AI Danger," MIT Technology Review, October 3, 2017

  • By Grantland Drutchas —

    U.S. Chamber of CommerceThe U.S. Chamber of Commerce's Global Innovation Policy Center released its 5th annual study that ranks intellectual property systems worldwide.  In the Chamber of Commerce's latest study, the U.S. patent system has dropped to 13th in the world, well behind such diverse countries as Singapore, France, Ireland, Japan, South Korea, Spain, Sweden, Switzerland, and Italy.  See "U.S. Chamber International IP Index" ("2018 Report") at p. 35 (Category 1: Patents, Related Rights, and Limitations).  The U.S. Chamber International IP Index uses 40 discrete indicators covering policy, law, regulation, and enforcement.  The Chamber's stated goal:  to determine whether "a given economy's intellectual property system provide[s] a reliable basis for investment in the innovation and creativity lifecycle."  2018 Report at p. 1.

    A review of the last several rankings by the U.S. Chamber of Commerce's studies shows that, although the U.S. had the unquestioned lead in patent protection in 2012-2014, its advantage has dropped each year thereafter, and continues its precipitous decline:

    Table
    See "U.S. Chamber International IP Index," at "View Report".

    The reason for this precipitous drop in 2017, and the U.S.'s continued decline in 2018, is directly tied to recent Supreme Court decisions and the perceived one-sided nature of IPRs under the AIA, particularly as implemented by the U.S. Patent and Trademark Office:

    This change is primarily driven by relative weakness in patentability requirements and patent opposition (indicators 2 and 8).  For the former, the patentability of basic biotech inventions was compromised by the Supreme Court decisions in the 2013 Molecular Pathology v. Myriad Genetics and 2012 Prometheus Laboratories, Inc v. Mayo Collaborative Services cases.  The rulings raised uncertainties over the patentability of DNA molecules that mimic naturally occurring sequences as well as other patented products and technologies isolated from natural sources.  In 2017, interpretation of the recent Supreme Court decisions in Myriad, Mayo, and Alice Corp vs. CLS Bank International by lower courts and guidance from the USPTO remained inconsistent and difficult to apply.  There is considerable uncertainty for innovators and the legal community, as well as an overly cautious and restrictive approach to determining eligibility for patentable subject matter in areas such as biotech, business method, and computer-implemented inventions.  This seriously undermines the longstanding world-class innovation environment in the U.S. and threatens the nation's global competitiveness.

    2018 Report at p. 8; see also pp. 8-9 (citing the "disproportionate rate of rejections" in IPRs and "a lower burden of proof" than in litigation as "inject[ing] a great deal of cost and uncertainty for patent owners compared with other post-grant opposition systems").

    Although the United States remains the leader in IP protection when looked at as a whole, with a very slim lead over the U.K. (one hundredth of a point, 37.98 vs. 38.97) (2018 Report at p. 6), the U.S. has barely maintained that overall lead thanks to the continued strength of protection of copyrights, trademarks, trade secrets, and IP commercialization.

    The U.S. Chamber of Commerce, founded in 1912, is reportedly the world's largest business organization representing the interests of more than 3 million businesses in varying of all sizes, sectors, and regions and represents state and local chambers and industry associations.  The Global Innovation Policy Center is a committee within the U.S. Chamber of Commerce that seeks to promote innovation and creativity globally by advocating for strong IP standards.