Posts Tagged: "US Supreme Court"

The Supreme Court has requested that Apple and Cisco file responses to Straight Path IP Group, LLC’s (SPIP’s) petition for certiorari in Straight Path IP Group, LLC v. Apple Inc., et al. The petition presents the following question: “Whether Rule 36(e) of the Federal Circuit’s Rules of Procedure violates the Fifth Amendment by authorizing panels of the Federal Circuit to affirm, with no explanation whatever, a District Court judgment resolving only issues of law.” SPIP filed its petition on August 23 and Apple and Cisco filed waivers of their right to respond on September 4 and 5, respectively. But on September 18, the Court requested that both companies file their responses by October 18.

It is time to recognize the elephant in the room. The Patent Trial and Appeal Board (PTAB) is broken. And, if we want to be perfectly fair and reasonable in our assessment of the reasons that the PTAB is failing, the blame must trace all the way back to Congress. The creation of three new ways to invalidate patent rights was at best ill-conceived. The manner in which it was done clearly put the finger of infringers on the scale of justice. The creation of an open-ended second window for patents to endlessly be challenged without title ever quieting and ownership ever settling is making a mockery of patent ownership.

The present U.S. eligibility jurisprudence, and especially that of the Federal Circuit, not only creates serious issues of U.S. domestic law but also arguably places the U.S. in violation of its obligations under the TRIPS treaty with respect to inventions at both ends of the subject-matter spectrum. Acts of Congress, including Section 101, where fairly possible, ought to be construed so as not to conflict with international law or with an international agreement with the United States, particularly where, as with TRIPS, the United States was the moving spirit behind the treaty. See Murray v. The Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804). Although there may have been room for doubt prior to the en banc refusal in Athena and the Australian decision in Ariosa, it is submitted following Judge Moore’s dissent that the situation has become a virtual certainty.

The Intellectual Property Owners Association and four other associations have filed amicus briefs with the Supreme Court in the case of Romag Fasteners v. Fossil, Inc., Fossil Stores, I. Inc., Macy’s Inc, and Macy’s Retail Holdings, Inc. The case will examine whether lower courts have discretion under the Lanham Act with respect to how to award damages in trademark infringement cases, or whether courts are required to establish that the infringement was willful before awarding profits. While the American Bar Association (ABA), the International Trademark Association (INTA), the American Intellectual Property Law Association (AIPLA) and the Intellectual Property Law Association of Chicago (IPLAC) support adopting a more flexible approach that would not make willfulness a prerequisite to recover profits, IPO argues that the plain language of the statute necessitates such a requirement.

USPTO Director Andrei Iancu said “something has to be done about” Section 101, as it has been thrown into flux following various U.S. Supreme Court cases, in comments made at the AIPPI Congress in London, United Kingdom last week. Iancu took part in an hour-long discussion with AIPPI Reporter General John Osha, and also took questions from the audience last Monday. He addressed topics including AI, anti-IP sentiment, litigation costs, bad faith trademark filings and gender parity. But it was issues of patent eligibility that were chief on his mind. Iancu said the Administration “has tried to bring consistency and predictability” to Section 101 with its January 2019 guidance, but added: “Courts are independent. They don’t have to follow our guidance. And so far, I have seen no evidence that they want to.”

Last week the United States Court of Appeals for the Federal Circuit issued an important decision that might be easy to overlook. In Intellectual Ventures I LLC v. Capital One Financial Corporation, the Federal Circuit dodged the antitrust question presented by finding that a prior ruling had collateral estoppel effect. Still, the arguments raised by Capital One against Intellectual Ventures are part of a disturbing trend. Unwilling licensees who engage in a scheme of efficient infringement to avoid paying for patent licenses are increasingly looking to creative antitrust theories to escape liability for their actions. Efficient infringement is a cold-hearted business calculation whereby businesses decide it will be cheaper to use patented technology without paying than to license it and pay a fair royalty to the patent owner. This calculus is made on the part of large entities who realize there are a certain number of patent owners that are just simply not going to assert their patents for one reason or another, frequently because they don’t have the money to do so. Then there is another group of those that will assert their patents but will not win. The calculation progresses to realize that there is a small group of those who are likely to both assert patents and prevail, thanks to all the hurdles put in place (i.e., patent eligibility challenges, the Patent Trial and Appeal Board, etc.). The calculation further recognizes that even if a patent owner prevails, a permanent injunction is virtually impossible to obtain as the result of the Supreme Court’s decision in eBay v. MerchExchange, and damages are likely to be minimal thanks to a continual judicial erosion in damages available to victorious patent owners. This cold-hearted business approach to using intellectual property without paying has gone on for decades, but with the weakened state of the U.S. patent system since 2006, it has grown progressively worse.

Trading Technologies International, Inc. (TT) has filed a petition for certiorari with the U.S. Supreme Court asking it to clarify U.S. patent eligibility law, including whether the Court should overrule its “abstract idea” precedents. The petition relates to the Federal Circuit’s April 2019 decision siding with the Patent Trial and Appeal Board (PTAB) that certain claims of TT’s patents for graphical user interfaces (GUI) for electronic trading were eligible for covered business method (CBM) review and also patent ineligible. IPWatchdog has written much about this and related Trading Technologies cases. Though earlier Federal Circuit panels had found other TT patents not eligible for CBM, as the court found they were directed to technological inventions, Judge Moore said in her April opinion that the patents at issue here—numbers 7,533,056, 7,212,999, and 7,904,374—”relate to the practice of a financial product, not a technological invention,” and that “the specification makes clear that the invention simply displays information that allows a trader to process information more quickly.”

In Curver Luxembourg SARL v. Home Expressions, Inc. (CAFC, Sept. 12, 2019)—which already has become a rather infamous design patent case—the claims at issue recited an “ornamental design for a pattern for a chair,” while the figures illustrated only the fabric pattern, not associated with any article of manufacture. The alleged infringing article was a basket, and the Federal Circuit held “because we agree with the district court that the claim language “ornamental design for a pattern for a chair” limits the scope of the claimed design in this case, we affirm.” While the case may thus be disheartening for those who would seek to broaden the scope of protection obtainable via a design patent to surface ornamentation separable from an article of manufacture (which the Court takes care to say is within the sole purview of copyright protection), what the Court takes on one hand, it gives on another.

The bipartisan STRONGER Patents Act of 2019 took an important step forward last week, as the Senate Judiciary Subcommittee on Intellectual Property held a hearing on the proposed legislation. Senators Tillis and Coons, the Subcommittee’s Chairman and Ranking Member, should be commended for holding the hearing and focusing attention on our patent system’s role in promoting American innovation and job creation. As several of the hearing witnesses made clear in their testimony, our patent system has been dangerously weakened in recent years through a series of judicial, legislative, and administrative changes. These changes have undermined patent rights and made it difficult for inventors to protect their innovations from infringement. Meanwhile, our foreign competitors, including China and Europe, have strengthened their patent rights. This has put us at a competitive disadvantage and helped contribute to a trend of both innovation and venture capital increasingly moving overseas. For example, the U.S. share of global venture capital fell from 66% in 2010 to 40% in 2018, while China’s share increased from 12% to 38% in the same time period. And despite more than a decade of economic growth following the Great Recession of 2007-2009, startup formation has failed to return to its pre-recession levels.

On August 30, a number of amicus briefs were filed in the FTC v. Qualcomm appeal in the U.S. Court of Appeals for the Ninth Circuit. The appeal stems from a May 2019 order finding Qualcomm liable for anticompetitive behavior and issuing “sweeping” injunctive relief. Following Judge Koh’s ruling, her opinion has been called “disastrous,” an “utter failure,” and “based on scant evidence,” and further been accused of “mangling” antitrust law. The Ninth Circuit, in granting a partial stay of the injunction, noted there were “serious questions on the merits” of Judge Koh’s decision. Three of the amicus briefs in particular point out the errors in Judge Koh’s opinions that have given rise to these “serious questions.” Retired Federal Circuit Chief Judge Paul Michel filed an amicus brief focusing primarily on patent law issues, including the smallest salable patent-practicing unit (SSPPU) concept and reasonable royalty calculation. The International Center for Law & Economics (ICLE) and Scholars of Law and Economics filed an amicus brief arguing that Judge Koh’s decision “is disconnected from the underlying economics of the case” and will cause serious harm to antitrust law. Finally, a number of Antitrust and Patent Law Professors, Economists, and Scholars filed an amicus brief highlighting how antitrust overreach, as they allege is present here, will harm innovation and arguing that the district court failed to engage in the level of real-world economic analysis as is required by this case.

Last week during IPWatchdog’s Patent Masters Symposium, former Federal Circuit Chief Judge Paul Michel sat down with me to discuss the state of the U.S. patent system and best options/ predictions for moving forward. He began by lamenting that “the courts have failed and failed and failed” with flawed rulings such as Helsinn v. Teva, which Michel characterized as “completely illogical”, and Impression Products, Inc. v. Lexmark International, Inc. To boot, the Supreme Court has refused to take any patent eligibility cases, and the Federal Circuit has managed to make the harm and illogic of the SCOTUS rulings even worse, Michel said. In fact, they’ve “expanded on the bad rulings of the SCOTUS.” Part of the problem may lie in a misunderstanding of the true intent of the patent system, according to Michel. “The real point of the patent system is to incentivize innovation, not to encourage creative people. Creative people will create no matter what. Investment is extremely risky and costly—if the incentive to invest shrinks, and there is evidence that it has, we are in trouble.” Below, Michel offers more of his thoughts on the current patent landscape, including what to expect from pending legislation and why he is cautiously optimistic that change is coming soon.

Commissioner Christine Wilson of the U.S. Federal Trade Commission (FTC) addressed the IPWatchdog Patent Masters Symposium on Tuesday, September 10, emphasizing three main points in her keynote: that Judge Lucy Koh’s decision in FTC v. Qualcomm was flawed, that antitrust analyses should be more focused on dynamic, rather than static effects, and that, despite the latter point, antitrust authorities routinely try and fail to integrate dynamic effects into antitrust law. She was clear up front that her views did not necessarily match those of her fellow commissioners. First, Wilson reiterated the ideas expressed in her May 28 op-ed for the Wall Street Journal, which she summarized by saying that U.S. District Court for the Northern District of California Judge Lucy Koh’s opinion in the FTC v. Qualcomm case “creates bad law and bad policy.” Wilson explained that Koh in her lengthy analysis took the opportunity to “radically expand a company’s legal obligation to help its competitors” by reviving a “discredited” 1985 Supreme Court case, Aspen Skiing Co. v. Aspen Highlands Skiing Corp. “My opposition to the court’s opinion does not stem from any desire to help or protect Qualcomm,” Wilson said. “I am focused on applying and preserving sound antitrust principles and this decision scares me.”

On September 5,  the U.S. Court of Appeals for the Federal Circuit (CAFC) held that state sovereignty principles asserted by the Board of Regents of the University of Texas System (UT) do not give UT the right to bring suit in an improper venue. The appeal clarifies once again that sovereign immunity may be used only as a shield, not a sword. UT argued that Boston Scientific Corporation’s request that the case be transferred to the District of Delaware should be reversed because venue was proper in the Western District of Texas since a state has the right to sue a nonresident in a forum of its choosing where personal jurisdiction is satisfied. It argued that the federal patent venue statute cannot override this sovereign right. UT also argued that the District of Delaware lacks jurisdiction because UT never consented to suit in Delaware, nor did it waive its sovereignty in Delaware or abrogate its sovereignty by statute. The CAFC disagreed with the above, holding that state sovereignty does not allow states to bring patent infringement suits in an improper venue, as is the case where BSC does not have a place of business in Texas. It also held in Regents of University of Cal. V. Eli Lilly & Co. that sovereign immunity does not apply where the state acts only as the plaintiff, and therefore the right of UT to choose the forum does not apply because the Eleventh Amendment only applies to suits against a state, not by a state.

If you’re reading this blog, then you likely are an avid follower of the Section 101 saga. The most recent episode in this saga, Chamberlain v. Techtronic at the Federal Circuit, is about so much more than a garage door operator being an abstract idea. It’s about the fact that we still have no clue what’s supposed to happen in the 2A and 2B steps of the judicially-created Alice/Mayo test. The Chamberlain panel applied the Alice/Mayo test completely backwards compared to what the Berkheimer panel said. First, the question of improvement was assessed in Chamberlain’s “Step One” (or 2A). Not only that, the panel then immediately went on to find that “(t)he specification admits that the act of transmitting data wirelessly is ‘well understood in the art,’ and no other changes to the generically claimed movable barrier operator are recited in the asserted claims or described in the specification.” 

Courts construe, administer, and apply the Federal Rules of Civil Procedure so as “to secure the just, speedy and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1. Large patent portfolios have contributed to the increase in numbers of unwieldy cases that assert many patents and claims. A court presiding over such a case usually makes every…