Posts Tagged: "America Invents Act"

On June 30, New Vision Gaming & Development filed a corrected appellant brief with the U.S. Court of Appeals for the Federal Circuit challenging two covered business method (CBM) reviews conducted at the Patent Trial and Appeal Board (PTAB) which canceled all claims of New Vision’s patents covering a gaming invention. Among other things, New Vision argues that the PTAB is constitutionally flawed, that its structure creates financial incentives for administrative patent judges (APJs) to grant validity reviews in a way that destroys due process for patent owners, and that the PTAB’s APJs have neither the judicial independence nor the oversight of Article III courts necessary to address the impermissible appearance of bias at that tribunal.

Recently, the USPTO published a Notice of Proposed Rulemaking (NPRM) to change the “Trial Practice at the Patent Trial and Appeal Board,” which is contained in Part 42 of Title 37 of the Code of Federal Regulations. This is the fifth rule change since the Patent Trial and Appeal Board (PTAB) was created and the second of Director Iancu’s tenure. The first rules were issued on September 16, 2012, the one year anniversary of the America Invents Act. David Kappos was Director at the time. The first rules were controversial and heavily biased against inventors.

Whoever wrote the America Invents Act (AIA) left out the U.S. Patent and Trademark Office (USPTO) examiners. The examiner on any given patent at issue in an inter partes review (IPR) proceeding at the Patent Trial and Appeal Board (PTAB) agreed with the patent holder that the patent claims, as amended, were valid. Examiners are specialists, working under Supervisory Patent Examiners (SPEs), who are even more experienced, though in very narrow fields. As such, they knew the state of the art at the time a patent was being prosecuted.

Last week, in Golden v. United States, the Federal Circuit again rejected the argument that the cancellation of a patent in an America Invents Act (AIA) post-grant proceeding violates the Fifth Amendment’s Takings Clause. Just as it did in other cases raising Patent Trial and Appeal Board (PTAB)-related Takings Clause issues, the appellate court in Golden relied on its July 2019 decision in Celgene Corp. v. Peter (931 F.3d 1342 [Fed. Cir. 2019]), rejecting the Takings Clause argument on the merits. See Collabo Innovations, Inc. v. Sony Corp., 778 F. App’x 954, 961 (Fed. Cir. 2019); Enzo Life Sci., Inc. v. Becton Dickinson & Co., 780 F. App’x 903, 911 (Fed. Cir. 2019). But unlike these previous decisions, the Federal Circuit’s analysis in Golden also included discussion and resolution of an important threshold jurisdictional question—an issue that, as we argued in a November 2019 IPWatchdog piece, should have precluded the Federal Circuit from reaching the merits of the Takings Clause argument in Celgene in the first place.

As an in-house IP attorney, you may take comfort in knowing that your patent marking program is thorough, well-established, and properly executed. You have standardized procedures to determine which patents cover which products. You monitor product release dates to ensure appropriate marking. You have set up a “virtual marking” website to take advantage of this form of marking established by the America Invents Act (AIA). You regularly update the virtual marking website to remove expired patents and add newly granted patents. Your patent marking program is a well-oiled machine. But what about your licensees’ patent marking programs? Do you know anything about your licensees’ patent marking programs? Do you even care about your licensees’ patent marking programs? Well, you should, and the Federal Circuit recently provided another opinion to remind patent licensors that a licensee’s failure to mark can be costly.

A flash of genius hits like lightning. It shocks you into a superior state of understanding and your entire body buzzes. My flash struck in the summer of 2000, while I was asleep. Then, a New York Times article came out in October 2006 with a picture of the 20-something wunderkind who apparently “experienced an epiphany…an idea that would be worth billions and billions of dollars.”  Standing next to him was my former boss who thought my invention was “brilliant.”

From the time my patent was granted to the time it expires, a company that stole my invention from my hands will have generated over $1 trillion dollars using it. When faced with a patent infringement lawsuit, they weaponized the America Invents Act (AIA), which they lobbied into law, and the Patent Trial and Appeal Board (PTAB) validated their theft.

The patent industry is in the doldrums. While the U.S. economy continues to endure historic, sustained growth, the stock market has skyrocketed, and new services, products, and investments launch every year, patents as an asset class have remained relatively flat for years. In the last decade, at best, patents as assets have shown anemic growth and stagnant value creation. While capital for litigation funding is available and overall U.S. patent grants and holdings continue to rise, patent valuations have not. Some blame the America Invents Act (AIA) and court decisions over the past decade as the reason why the market has not thrived. I disagree. Any effects felt from changes in the law are symptoms of much more systematic problems that must be solved first for patents to fulfill their full potential as valuable investment vehicles. These problems—identified below— won’t be solved by rolling back regulations or reversing opinions and artificially increasing the value of unworthy assets.

Outlined below is the story of how the America Invents Act (AIA) of 2011 made a novel 2002 invention obvious in 2018. I’m the first named inventor of the 7058524 patent, which was filed on October 25, 2002. The title of the patent is “Electrical Power Metering System”. Unfortunately, I was never able to produce, let alone market the meter. There were many barriers to entry for my essentially hardware-based invention. I was working full time and had a growing family to be concerned with. Following retirement in 2013, I decided to attempt to license the ‘524’ technology. In early fall 2014, I partnered with a Non-Practicing Entity (NPE). I received an up-front sum and had an agreement with the NPE to share (fairly in my view) in any ‘back-end’ licensing revenue. After extensive investigation and attempts at licensing, in 2016 the NPE asserted against Duke Energy in Delaware. We believed Duke’s new smart meters, particularly those using Itron’s OpenWay Riva technology, were infringing the ‘524 patent. Ultimately, we were Rule 36ed by the Federal Circuit. In my opinion, the key broken piece in the system is the way the AIA removed the probability of a jury trial from the patent holder by creating a post-grant system that allows for abuse and delay of other proceedings.

If you are a patent owner asserting and licensing your patent, chances are you want to avoid an America Invents Act (AIA) proceeding, whether that proceeding is an Inter Partes Review (IPR), Post Grant Review (PGR) or Covered Business Method Review (CBM). This is separate from any belief about the fairness of the proceedings or about whether you believe your patent would survive; simply because of the added cost, it is likely that you do not want to be involved in one. All that said, the question is whether you can avoid it. The answer to that is “sometimes, yes.” No patent owner can be immune from AIA proceedings in the absolute. You cannot stop all routes of attack on your patent, but there is a chance that you can limit your exposure.

On Monday, December 9, the U.S. Supreme Court will hear oral arguments in Thryv, Inc. v. Click-to-Call Technologies, LP. The case, which has gone through multiple name changes since its original appeal from the Patent Trial and Appeal Board (PTAB), will ask the nation’s highest court whether 35 U.S.C. § 314(d), which states that decisions to institute inter partes review (IPR) proceedings shall not be appealable, permits appeals of PTAB institution decisions based upon 35 U.S.C. § 315(b). Section 315(b) states that IPRs won’t be instituted if the patent owner served the petitioner with a complaint for patent infringement more than one year prior to the petition. To summarize the lower court proceedings in this case, the patent-at-issue was first asserted against Keen Inc. by Inforocket.com in 2001 in a case that was voluntarily dismissed. Click-to-Call acquired the patent and asserted it in 2012 against Ingenio, a company formed through a merger of Keen and Inforocket.com. Ingenio filed for an IPR petition and Click-to-Call challenged it based on the Section 315(b) time-bar and the former suit against Ingenio’s predecessor. The appeal reached the Supreme Court, where it was remanded in June 2016 in light of Cuozzo Speed Technologies v. Lee. Most recently, the U.S. Court of Appeals for the Federal Circuit rendered a decision last August where all 12 Federal Circuit judges joined a footnote finding that the Section 315(b) time bar applies even when the earlier infringement action had been voluntarily dismissed without prejudice.

My company, Chestnut Hill Sound Inc. (ChillSound), has been victimized by a U.S. patent system that for nearly a decade has been in a sorry state. Changes wrought by the America Invents Act (AIA) in 2011 and other recent developments cost my company, its investors and inventors millions of dollars. These changes have allowed a large company to reap great profits at our expense. Even more unfortunately, our story is too typical of many other inventors and small companies. Small businesses are the backbone of our economy and need to be cultivated, as they are the most dynamic source of new jobs and competitive products and technologies. There have always been reports of large corporations stealing inventions from small businesses, but it used to be possible via the courts to vindicate the patent rights of owners and obtain ultimate redress.  The AIA—sold by the “efficient infringers” lobby as a measure to protect big business from the expense and nuisance of so-called “patent trolls”—has turned into a weapon of deep-pocketed big businesses that enables them to steal with impunity inventions from small businesses and independent inventors. The AIA brought with it the Patent Trial and Appeal Board (PTAB) and Inter Partes Review (IPRs), a post-grant adversarial proceeding at the United States Patent and Trademark Office (USPTO). As has been amply discussed here on IPWatchdog, the Court of Appeals for the Federal Circuit (CAFC) recently opined that the so-called Administrative Patent Judges (APJs) were unconstitutionally appointed from the beginning. Yet these unconstitutionally appointed APJs continue to kill patents, especially when the patent owner is a small company that has sued a large company for infringement, as was the case with ChillSound.

This week in Other Barks & Bites: the U.S. Patent and Trademark Office issues an updated AIA Trial Practice Guide following SAS Institute v. Iancu; the AM-FM Act is introduced into Congress to update copyright law for terrestrial radio stations; VoIP-Pal.com defeats remaining IPRs challenging its patents at the institution phase; the Copyright Royalty Board announces cost of living adjustments in certain royalty rates; a Senate report shows that U.S. law enforcement didn’t adequately respond to Chinese IP theft for 20 years; China outpaces the rest of the world in terms of blockchain patent filing activities; and Apple joins Intel’s antitrust actions against Fortress Investment Group’s patent assertions.

Nearly four months ago, the Federal Circuit for the first time addressed the applicability of the Takings Clause of the Fifth Amendment to IPRs, holding in Celgene Corp v. Peter “that the retroactive application of inter partes review (IPR) proceedings to pre-America Invents Act (AIA) patents is not an unconstitutional taking under the Fifth Amendment” Celgene Corp. v. Peter, 931 F.3d 1342, 1362 (Fed. Cir. 2019). Since then, the court has continued to reject similar Patent Trial and Appeal Board (PTAB)-related Takings Clause claims on the merits. E.g., Collabo Innovations v. Sony Corp., No. 2018-1311 (Fed. Cir. Aug. 5, 2019). Unsurprisingly, Celgene filed a request for an en banc rehearing, and the government has just this week filed its response. Both Celgene’s en banc petition and the government’s response address the merits of Celgene’s constitutional claim—but as we hinted at in an earlier article analyzing the Celgene decision, there is a serious question whether the Federal Circuit should have even reached the merits of the Takings Clause issue in its panel opinion. In light of Supreme Court Takings Clause precedent, the Federal Circuit may want to either request supplemental briefing to decide whether it should have addressed the constitutional question in the first place, or potentially even revise the panel opinion and leave this issue to be decided in another case.

The U.S. Court of Appeals for the Federal Circuit, in an opinion authored by Judge Moore, has ruled that the current statutory scheme for appointing Administrative Patent Judges (APJs) to the Patent Trial and Appeal Board (PTAB) violates the Appointments Clause of the U.S. Constitution as it makes APJs principal officers. APJs are presently appointed by the Secretary of Commerce, but principal officers must be appointed by the U.S. President under the Constitution, Article II, § 2, cl. 2. To remedy this, the statutory removal provisions that are presently applied to APJs must be severed so that the Secretary of Commerce has the power to remove APJs without cause, said the Court. Dismissing the government’s and appellees’ arguments that the Appointments Clause issue had been waived by the appellant, Arthrex, Inc., because Arthrex had not raised the issue with the PTAB, the Federal Circuit said that “this is an issue of exceptional importance, and we conclude it is an appropriate use of our discretion to decide the issue over a challenge of waiver.”

Dismissing the government’s and appellees’ arguments that the Appointments Clause issue had been waived by the appellant, Arthrex, Inc., because Arthrex had not raised the issue with the PTAB, the Federal Circuit said that “this is an issue of exceptional importance, and we conclude it is an appropriate use of our discretion to decide the issue over a challenge of waiver.”

The Patent Trial and Appeal Board (PTAB) recently issued its first-ever preliminary guidance on motions to amend claims filed by patent owner Sanofi and, although the substituted claims haven’t escaped an obviousness challenge from Mylan, patent owners might be able to use that guidance as a roadmap for their own motions to amend claims. In other PTAB decisions between October 1 and 16, USAA escaped covered business method (CBM) reviews based on the technological invention exclusion, NHK Spring factors led the PTAB to deny two inter partes reviews (IPRs) petitioned against TRUSTID patents, oral hearings were held in Apple’s IPRs against Qualcomm, despite the patent settlement agreement between the two firms, and NuCurrent failed to avoid Samsung IPRs after arguing issue preclusion based on district court litigation of a forum selection clause in a contract between the two companies.