Transcript A Review of Significant Recent IP Decisions and Coming Attractions

A Review of Significant Recent IP Decisions and
Coming Attractions
Group 3
November 20, 2014
Karl Quackenbush


Electrodes mounted in “a spaced relationship with
each other.” Meaning what?

District Court: granted SJ on indefiniteness


Doesn’t tell anyone what the space in “spaced
relationship” should be or supply parameters for
determining what it is.
Fed. Cir: reversed

Claim, read with the spec and the history, discloses
“certain inherent parameters”, somewhere between
“infinitesimally small” and the width of a hand.


Claim is indefinite if it is not amenable to claim
construction, or “insolubly ambiguous”
Indefiniteness judged on claim by claim basis




Unanimous decision; Reversed and remanded
“Insolubly ambiguous” standard inconsistent
with Sec 112.
Not enough that a court could “ascribe some
meaning” to the terms.
Fed. Cir. standard breeds lower court
confusion

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The claims, viewed in light of the specification and
the history, must “inform those skilled in the art
about the scope of the invention with reasonable
certainty”
To those skilled in the art at the time the patent
was filed
Some uncertainty is tolerable given the inherent
limitations of language.
Did not adopt Nautilus’ proposed standard that
more than one reasonable interpretation =
indefinite.
Declines to apply the new standard to the case.
Remanded to Fed Cir.




Too soon to tell. Numerous post-Nautilus
decisions going both ways on indefiniteness.
Not as impactful as Alice.
Likely more assertions of indefiniteness.
Cases will likely include an expert (or two) on
indefiniteness. Patents not “addressed to
lawyers, or even to the public generally”
Most D. Cts. have been unwilling to address
before Markman stage.




Is clear and convincing evidence of
indefiniteness required?
Deference to PTO’s resolution of disputed
issues of fact?
Is definiteness a legal issue? The Fed. Cir.
treated it as a legal issue without deference.
“We leave these questions for another day”
Kaustuv M. Das
10

Bilski v. Kappos, 130 S. Ct. 3218 (2010)
 Method claim directed to hedging risks between a commodity
provider and consumers of said commodity based on identifying
market participants.

Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347
(2014)
 Method and system claims directed to hedging risks based on
creating “shadow” credit and debit records (account ledgers) with
an intermediary who facilitates exchange of credit between
relevant financial institutions.
11

Whether business methods are unpatentable.
 “[P]etitioners’ claim is not a ‘process’ within the meaning of § 101
because methods of doing business are not, in themselves,
covered by the statute.” Justice Stephens joined by Justices
Ginsburg, Breyer, and Sotomayor in Bilski v. Kappos.

Whether software as a whole is unpatentable.
 Whether claims to computer-implemented inventions—including
claims to systems and machines, processes, and items of
manufacture—are directed to patent-eligible subject matter
within the meaning of 35 U.S.C. § 101 as interpreted by this
Court?
12
13
14

Whether business methods are unpatentable.
 NOPE. In Alice Justice Stevens’s almost-majority opinion is
reduced to Justices Sotomayor’s concurrence (joined by Justices
Ginsburg and Breyer): “I adhere to the view that any ‘claim that
merely describes a method of doing business does not qualify as a
“process” under § 101.’”

Whether software as a whole is unpatentable.
 NOPE.
15

First, we determine whether the claims at issue are directed to one of
those patent-ineligible concepts.
 At the same time, we tread carefully in construing this exclusionary
principle lest it swallow all of patent law. . . . Thus, an invention is not
rendered ineligible for patent simply because it involves an abstract
concept.

16
At Mayo step two, we must examine the elements of the claim to
determine whether it contains an “ ‘inventive concept’ “ sufficient to
“transform” the claimed abstract idea into a patent-eligible
application. . . . Mayo made clear that transformation into a patenteligible application requires “more than simply stat[ing] the [abstract
idea] while adding the words ‘apply it.’”
17

Using a computer to create and maintain “shadow” accounts
amounts to electronic recordkeeping—one of the most basic
functions of a computer.

The same is true with respect to the use of a computer to obtain data,
adjust account balances, and issue automated instructions; all of
these computer functions are “well-understood, routine,
conventional activit[ies]” previously known to the industry.

Each step does no more than require a generic computer to perform
generic computer functions.
18

In the en banc Federal Circuit decision there was a lot of dissension as
to whether method claims and system claims should be treated the
same way.

This Court has long “warn[ed] ... against” interpreting § 101 “in
ways that make patent eligibility ‘depend simply on the draftsman's
art.’”
19

buySAFE Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014)
 Claims directed to computer implementation of underwriting
online transactions not statutory subject matter.

Planet Bingo, LLC v. VKGS LLC, 2014 WL 4195188 (Fed. Cir. Aug. 26,
2014)
 Claims directed to managing a game of bingo (including ten
separate limitations) not statutory subject matter.

Digitech Image Techs., LLC v. Electronics for Imaging, 758 F.3d 1344
(Fed. Cir. 2014)
 Claims directed to describing color content and spatial
information in a digital image reproduction system not statutory
subject matter.
Ultramercial, Inc. v. Hulu, LLC,
Slip Op. 2010-1544 (Fed. Cir. Nov. 14, 2014)
20

Third time back to the Federal Circuit (previously the Federal Circuit had
reversed the district court’s dismissal on 12(b)(6) grounds - twice).

This decision is interesting because it shows that at least some judges on the
Federal Circuit see Alice as having set a different standard than Mayo.

After Mayo, the Federal Circuit remanded to the district court. After Alice the
claims are found to be non-statutory subject matter.

A method claim for accessing copyrighted materials in exchange for
watching an advertisement. Claim 1 included eleven separate steps, but that
was not enough to get it over the Mayo second step.

Thirty-five district court decisions that have cited Alice. Seventeen of
the cases, however, involve the same patents (found invalid).

Of the 31 decisions that reached the merits (the others referenced
Alice with reference to non-substantive motions), only four have
denied the challenges (and one did so without prejudice).
 In only one was the Mayo second step implicated.

21
In at least three cases district courts have granted motions to dismiss
under Rule 12(b)(6) or 12(c) based on the claims being directed to
unpatentable subject matter.

22
Two decisions at the PTAB: one affirming a software patent because
it was not directed to an abstract idea, the other canceling all claims
under the Mayo two-step.

PNC Bank v. Secure Axcess LLC (CBM2014-00100) – not directed
to an abstract idea.

Salesforce.com Inc. v. VirtualAgility, Inc. (CBM2013–00024) – all
claims canceled.

23
LexMachina has released data that the number of new patent cases
being filed has dropped precipitously. Professor Lemley conjectures
that this is attributable to Alice, but it is like far too early to tell.
• Expiration of dot.com
Boom Patents
• IPRs/CBMs/PGRs
• Twombly/Iqbal and
the Demise of Form
18
• Easier to Prevail on
1404(a) Motions
• Alice v. CLS Bank
24
Judy Jennison
Partner, Perkins Coie


Exceptional cases
Octane Fitness v. Icon Health & Fitness
•
•

Highmark v. Allcare
•


26
Issue: What is an exceptional case?
Issue: What is the standard of review?
Seattle IP Inn of Court
Brooks framework:
•
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SCOTUS says: Too restrictive
•



27
Material inappropriate conduct or
Brought in subjective bad faith *and* objectively
baseless
Clear and convincing evidence
Exceptional = stands out from others
Preponderance of the evidence
Seattle IP Inn of Court
District Court awarded fees to defendant
Fed Circuit reviewed do novo and reversed
as to one claim
•
•

SCOTUS says No: Standard is Abuse of
Discretion
•

28
“objective baselessness” is a question of law
based on mixed questions of fact and law
Seattle IP Inn of Court
David Binney
Akamai vs. Limelight
Can patent infringement be induced if
no single entity is liable for direct
infringement?
SUPREME COURT: NO! (But maybe we
should look at what direct infringement
is…)
Induced Infringement
B
A method for . . . comprising:
1.
•
A
•
•
•
generating . . . ;
transmitting . . . ;
receiving . . . ;
playing . . . .
35 U.S.C. § 271(b):
“Whoever actively induces infringement of a
patent shall be liable as an infringer”
B
A method for . . . comprising:
1.
•
A
•
•
•
generating . . . ;
transmitting . . . ;
receiving . . . ;
playing . . . .
No single entity performs all of the limitations.
No one is liable for direct infringement.
Limelight
B
A method for . . . comprising:
1.
•
A
•
•
•
generating . . . ;
transmitting . . . ;
receiving . . . ;
playing . . . .
What if B induces A to perform all of the method
steps
that B does not itself perform?

“Indirect infringement requires, as a predicate,
a finding that some party amongst the accused
actors has committed the entire act of direct
infringement.”

BMC Resources, Inc. v. Paymentech, LP, 498 F.3d 1373 (Fed. Cir.
2007)

BMC Resources overruled



“[T]hat there can be no indirect infringement
without direct infringement . . . is well settled.”
“[But] [r]equiring proof that there has been direct
infringement . . . is not the same as requiring proof
that a single party would be liable as a direct
infringer.”
“[A]ll the steps of a claimed method must
be performed . . . to find induced
infringement, but . . . it is not necessary to
prove that all the steps were committed by a
single entity.”


Opinion by Justice Alito for unanimous
court
Holds that you can’t have inducement
unless another entity would be liable for
direct infringement.

To be liable for inducement there
must be direct infringement.
… our case law leaves no doubt that inducement
liability may arise "if, but only if, [there is] . . . direct
infringement." Aro Mfg. Co. v. Convertible Top
Replacement Co., 365 U. S 336, 341, 81 S.Ct. 599, 5 L.Ed.2d
592, 1961 Dec. Comm'r Pat. 635 (1961) [134 S.Ct. 2117]

The Federal Circuit has said
there is no direct infringement
unless one entity commits it.
“The Federal Circuit held in Muniauction that a method's
steps have not all been performed as claimed by the
patent unless they are all attributable to the same
defendant, either because the defendant actually
performed those steps or because he directed or
controlled others who performed them. See 532 F.3d, at
1329-1330.” [Id.]

Therefore, since no one party infringes directly,
there cannot be liability for inducement.
“Assuming … Muniauction is correct, there has simply
been no infringement of the method in which
respondents have staked out an interest, because the
performance of all the patent's steps is not attributable
to any one person. And, as both the Federal Circuit and
respondents admit, where there has been no direct
infringement, there can be no inducement of
infringement under § 271(b).” [Id.]

The opinion appears to assume as a given one
of the key issues underlying the Federal Circuit
opinion: that infringement and liability for
infringement are essentially the same thing.

The opinion pointedly does not address
whether Muniauction was correct in
holding that direct infringement
requires a single actor.
Assuming without deciding that the Federal Circuit's
holding in Muniauction is correct … [134 S.Ct. 2117]
Muniauction (which, again, we assume to be correct)
instructs … [134 S.Ct. 2118]
“Respondents ask us to review the merits of the Federal
Circuit's Muniauction rule for direct infringement under
§ 271(a). We decline to do so today. … on remand, the
Federal Circuit will have the opportunity to revisit the §
271(a) question if it so chooses.” [134 S.Ct. 2120]
Stacie Foster

Coca Cola’s Product:





a MINUTE MAID
branded drink labeled
“Pomegranate Blueberry
Flavored Blend of 5
Juices” (“Juice Drink”).
99.4% Apple & Grape
Juices
.3% pomegranate juice
.2% blueberry juice
.1% raspberry juice

POM’s Product:

POM WONDERFUL
branded drinks
including pomegranate
and pomegranate
blueberry juices. Each
contains 100% of the
labeled juices.

11/26/08: POM sued Coca Cola in C.D. Cal.

False advertising (Lanham Act & Cal.
BPC)

Statutory Unfair Competition (Cal. BPC)

POM: Coca Cola’s product misled
consumers into believing it was mostly
made of pomegranate and blueberry
juices

District Court & 9th Circuit:

The District Court & 9th Circuit held
that the Federal Food, Drug, &
Cosmetic Act (FDCA) preempted
POM’s Lanham Act claims against
Coca Cola’s Juice Drink (as well as state
law claims to the extent they conflicted
with the FDCA).

SCOTUS issue: whether 9th Circuit Court
erred in holding that a private party
cannot bring a Lanham Act claim
challenging a product label regulated
under the Federal Food, Drug, &
Cosmetic Act.

POM’s Arguments:


The Lanham Act and FDCA
are not in “irreconcilable
conflict”
Circuit Split:


3rd, 8th, and 10th recognize false
labeling & advertising claims
under the Lanham Act
9th: FDCA preempts these claims

Coca Cola’s Argument:

Circuits are not in conflict -the cases POM relies on
outside the 9th Circuit did
not address the FDCA’s
preemption of the Lanham
Act.

Government has adequate
resources to regulate food and
beverage labels and should be
permitted to do so.

Solicitor General’s Amicus Brief:

Urged the Supreme Court not to grant
Certiorari

FDCA is not “privately enforceable” and
permits manufacturers to use truthful
flavoring names on food and beverage labels.



SCOTUS: June 12, 2014: Justice Kennedy
Held: Competitors may bring Lanham Act
claims like POM’s challenging food and
beverage labels regulated by the FDCA.
This is not a pre-emption case, for it does not
raise the question whether state law is preempted by a federal law, but instead concerns
the alleged preclusion of a cause of action
under one federal statute by the provisions of
another federal statute.


Neither the Lanham Act nor the FDCA limits
claims challenging labels that are regulated by
the FDCA. The absence of such a textual
provision when the Lanham Act and the FDCA
have coexisted for over 70 years is “powerful
evidence that Congress did not intend FDA
oversight to be the exclusive means” of
ensuring proper food and beverage labeling.
The Lanham Act protects commercial interests,
while the FDCA protects public health and
safety



The Government’s position is flawed, as it
assumes that the FDCA and its regulations are
a ceiling on the regulation of food and
beverage labeling when Congress intended the
Lanham Act and the FDCA to complement
each other with respect to labeling.
Reversed and remanded.
Implications beyond pomegranate juice?
Mark P. Walters
Member, Lowe Graham Jones PLLC


Petrella v. MGM,
No. 12-1315

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
1963: Jake LaMotta wrote story with
Frank Petrella
1976: rights assigned to MGM
1980: MGM releases Raging Bull
1981: Frank Petrella dies, renewal
rights passed to his heirs
1991: Paula Petrella renews
1998: Paula advises MGM of
infringement
2009: Paula sues MGM seeking
damages after 2006 (i.e., the 3-year
limitation period)
Petrella v. MGM, No.
12-1315





Summary Judgment Granted for
MGM (laches)
18 year delay in filing suit was
unreasonable
Affirmed by 9th Cir.
MGM Argues that FRCP 8(c)
includes laches as an affirmative
defense, so it should be
“available in every civil action”
to bar all forms of relief
(including money damages)
HELD: Laches is not available to
preclude assertion of a copyright
lawsuit seeking damages within
the statutory period of
limitations
LaMotta v. Billy Fox in 1947
Shannon Jost
B & B Hardware, Inv. v. Hargis Industries, Inc., Dkt. 13352
Appealed from: 8th Circuit
Oral Argument set for: Dec. 2, 2014
Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., Dkt.
13-854
Appealed from: Fed. Circuit
Oral Argument held: Oct. 15, 2014
Party
B&B Hardware
Hargis Industries
Mark
SEALTIGHT
SEALTITE
Goods
industrial fasteners for the
aerospace industry
fasteners (self-drilling, self-taping
screws) for construction industry
First use
1990
1992
PTO status
Registered
1993
Application filed 1996; PTO
Refused: 2(d) rejection based on
B&B, and merely descriptive


Lengthy PTO proceedings resulted in TTAB finding
that confusion was likely between the parties’
marks
Overlapping federal litigation resulted in rulings
that:


TTAB likelihood of confusion finding not preclusive
No likelihood of confusion
(1)
(2)
Whether the Trademark Trial and Appeal Board’s
finding of a likelihood of confusion precludes
respondent from re-litigating that issue in
infringement litigation, in which likelihood of
confusion is an element.
Whether, if issue preclusion does not apply, the
district court was obliged to defer to the Board’s
finding of a likelihood of confusion absent strong
evidence to rebut it.


Unless SCOTUS holds that PTO decisions are never
entitled to deference or preclusive effect, the
ultimate ruling may not provide much guidance
Issue preclusion will probably continue to require
fact-specific analysis of whether the same issues
were adjudicated, etc.
Patent infringement case based on Teva patent for
Copaxone medication for MS patients.
 District court concluded, based on factual findings,
that Teva’s patent has a definite meaning


Relying on expert testimony, the district court found
that claim term “average molecular weight” was not
indefinite because skilled artisans would have
understood its meaning
Federal Circuit reviewed the evidence de novo and
found the patent indefinite
Question presented (Petitioners): Whether a district
court’s factual finding in support of its construction of
a patent claim term may be reviewed de novo, as the
Federal Circuit requires (and as the panel explicitly did
in this case), or only for clear error, as Rule 52(a)
requires.
Question presented (Respondents):
Whether the court of appeals properly concluded
that claim construction involves a pure question of law, and
thus the standard of appellate review of the lower court’s
interpretation of a patent’s claims is de novo.
If claim construction could entail factual findings
that are reviewed for clear error, whether the court of
appeals correctly concluded that the language of the
claims, specification, and prosecution history rendered the
patent claims at issue “insolubly ambiguous” and thus, a
fortiori, indefinite under this Court’s recent decision in
Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120
(2014).



Oral argument suggests Justices may be
focusing on what is fact vs. law, and whether,
for claim construction, they should be treated
differently.
But what would happen if everything a
district court decided could be subject to full,
independent review by the CAFC?
Should patent law really be an exception to
FRCP 52?
Dan Royalty


744 F.3d 1272 (Fed. Cir. 2014)
Fed. Cir. upheld Cybor en banc, 6-4



Upheld on stare decisis grounds
De novo review needed to provide “national
uniformity, consistency, and finality to the
meaning and scope of patent claims”
Dissent: overrule Cybor to “(1) avoid[]
undermining the legitimacy of district courts
and (2) prevent[] unnecessary appeals by
discouraging appellate retrial of factual issues.”
Leapfrogging Lighting Ballast
LIGHTING BALLAST


TEVA
Jan 2013 – panel decision
Mar 2013 – PFR granted

Jul 2013 – panel decision
Oct 2013 – PFR denied
Jan 2014 – cert petition filed

Mar 2014 – cert granted




Feb 2014 – en banc
decision
Jun 2014 – cert petition
filed


Oct 2014 – argued
Jun 2015 – decision
expected





Lighting Ballast Control LLC v. Universal
Lighting Techs., No. 13-1536
Gevo, Inc v. Butamax Advanced Biofuels LLC,
No. 13-1286
Shire Development, LLC v. Watson
Pharmaceuticals, Inc., No. 14-206
Takeda Pharmaceutical Co. Ltd v. Zydus
Pharmaceuticals USA, Inc., No. 14-217
Stryker Corporation v. Hill-Rom Services, Inc.,
No. 14-358

Questions?