Other Barks & Bites, August 2: VirnetX Patent Claims Revived, AIA Trial Fees Increased, and CAFC Rules in Celgene that AIA Trials Do Not Violate the Fifth Amendment

By IPWatchdog
August 2, 2019

Bites (noun): more meaty news to sink your teeth into.

Barks (noun): peripheral noise worth your attention.

https://depositphotos.com/182060190/stock-photo-dog-reading-newspaper-on-a.htmlThis week in Other Barks & Bites: The Federal Circuit issues several precedential decisions, including one reviving the patent claims in VirnetX and another determining that America Invents Act (AIA) validity trials don’t violate the Fifth Amendment’s Takings Clause in Celgene; the USPTO proposes fee increases to patent examination and AIA trials and issues a final rule on e-filing in trademark registrations; Katy Perry is ordered to pay $2.7 million for copyright infringement; free OTA TV service Locast is targeted in a copyright suit filed by Disney and other major broadcasters; Pfizer and Mylan consider creating a global giant in off-patent drugs; the University of California files patent suits against major retailers over LED light bulb technology; and patent applications listing artificial intelligence machine inventor are filed in patent offices across the world.

Bites

Federal Circuit Determines That AIA Trials Don’t Create Unconstitutional Takings – On Tuesday, July 30, the Federal Circuit issued a precedential decision in Celgene Corporation v. Peter where the appellate court affirmed an obviousness finding in a PTAB IPR and also determined that validity trials under the America Invents Act (AIA) do not violate the Takings Clause of the Fifth Amendment when those trials invalidate patent claims issued prior to passage of the AIA.

Federal Circuit Revives VirnetX Patent Claims – On Thursday, August 1, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in VirnetX Inc. v. Apple Inc. which reversed some invalidity findings at the Patent Trial and Appeal Board (PTAB) after determining that Apple had previously failed on proving the invalidity of those same claims in the past. Bloomberg reports that the Federal Circuit also denied a request by Apple to overturn a ruling from this January upholding a $1 billion infringement verdict in favor of VirnetX.

Federal Circuit Tosses Trademark Appeal Based on Waived Arguments – On Thursday, August 1, the Federal Circuit issued a precedential decision in Hylete LLC v. Hybrid Athletics, LLC, dismissing an appeal of a trademark registration rejected at the Trademark Trial and Appeal Board (TTAB) after determining that Hylete had waived certain arguments on appeal because they could have been raised in the below proceedings. 

Katy Perry Infringes Christian Rap Single, Ordered to Pay $2.7M – On Monday, July 29, a jury in the Central District of California found that the 2013 hit “Dark Horse” released by American pop star Katy Perry copied elements of the 2008 Christian rap single “Joyful Noise” released by Flame. On Thursday, the district court awarded damages of $2.7 million against Perry and the other defendants for infringing rapper Marcus Gray’s work. 

USPTO Issues Proposed Fee Increase for Patent Examination, AIA Trials – On Wednesday, July 31, the U.S. Patent and Trademark Office issued a notice of proposed rulemaking in the Federal Register to seek public comment on adjustment of fees collected by the agency, including increases to fees for patent examination and a $4,500 increase in fees for businesses looking to petition the PTAB for inter partes review (IPR) proceedings.

USPTO Issues Rule Requiring E-Filing in Trademark Applications – On Wednesday, July 31, the USPTO issued a final rule in the Federal Register which mandates electronic filing for trademark registration applications and all associated submissions to achieve end-to-end electronic processing of trademark submissions and improve administrative efficiency. Only 144 trademark applications filed in 2018 were on paper but 12 percent of trademark applications that year involved some paper processing that the agency is looking to eliminate.

Law Professors, Judge Michel and Former USPTO Directors Rebut ACLU – On Tuesday, July 30, 24 law professors, retired Federal Circuit Chief Judge Paul Michel and former USPTO Directors David Kappos and Todd Dickinson sent a letter to the leadership of the Senate IP Subcommittee and the House Judiciary Committee to rebut misleading claims made by the American Civil Liberties Union that the proposed amendments to Section 101 of U.S. patent law would harm innovation.

Iancu, Denison Op-Ed Discusses Efforts to Protect Trademark Register – On Tuesday, July 23, World Trademark Review published an op-ed authored by USPTO Director Andrei Iancu and Commissioner for Trademarks Mary Boney Denison discussing efforts to dissuade bad-faith trademark applications, including the creation of a task force to identify improper activity and refusing registration for submitting suspicious specimens of use. which Denison referred to in a recent House hearing.

Debbie Cohn to Retire From International Trademark Association – the International Trademark Association (INTA) has announced that former USPTO Commissioner for Trademarks Debbie Cohn, who has served as the Association’s Senior Director of Government Relations for the last four years, will retire as of August 2.  Jennifer M. McDowell will join INTA’s Washington, DC office as Director, Government Relations. McDowell has held positions at the Office of the U.S. Trade Representative and the USPTO.

Barks 

Third Circuit Upholds Injunction Against Banana Costume – On Thursday, August 1, the Court of Appeals for the Third Circuit issued a decision in Silvertop Associates Inc. v. Kangaroo Manufacturing Inc., deciding an issue of first impression in the Third Circuit by determining that the non-utilitarian, sculptural features of a banana costume are copyrightable and upholding a district court injunction preventing Kangaroo from selling an infringing banana costume. 

Major Broadcasters File Copyright Suit Against Free OTA Service – On Wednesday, July 31, Disney, ABC, Fox, NBC and Universal filed a copyright infringement lawsuit in the Southern District of New York against the operators of a free online over-the-air digital TV service known as Locast which rebroadcasts content from those networks to its subscribers.

https://depositphotos.com/10882248/stock-photo-cross-breed-dog-4-years.htmlMeat Loaf Settles Copyright Dispute Over “I’ll Do Anything For Love” – On Wednesday, July 31, copyright infringement charges filed in the Central District of California against Michael Aday, aka Meat Loaf, were dismissed, exonerating him from allegations that he infringed upon copyright protecting a song written by British keyboardist Jon Dunmore Sinclair when he released “I’d Do Anything For Love” in 1993.

U.S., EU Patent Applications From AI Inventor Filed This Week – On Wednesday, July 31, Financial Times reported that the USPTO and EUIPO were among intellectual property offices receiving patent applications this week which listed the inventor as Dabus, an artificial intelligence machine developed by AI expert Stephen Thaler.

Kylie Jenner Trademarks Suspended Over Chinese Applications for “Kylie” – On Wednesday, July 31, RadarOnline.com reported that three trademark applications filed by reality TV star Kylie Jenner for “Kylie Skin” cosmetic products and retail services were suspended by the USPTO because of a March 2017 trademark application from a Chinese entity covering “Kylie” for use on cosmetic products, although that trademark application was abandoned in late July of this year.

University of California Sues Big Retailers Over Light Bulb Patents – On Tuesday, July 30, the University of California filed lawsuits in the Central District of California against major retailers Amazon, Walmart, Target, Ikea and Bed Bath & Beyond alleging that those companies are infringing claims of four patents covering filament LED light bulb technologies.

Street Artist Sues Walmart, Ellen Degeneres for Copyright Infringement – On Monday, July 29, street artist Julian Rivera filed a copyright lawsuit in the Central District of California over the EV1 Collection clothing line which allegedly incorporates elements of Rivera’s work.

Lego Wins U.S. Copyright Suit Against British Rival – On Thursday, July 25, U.S. District Judge Charles Haight Jr. issued a ruling in the District of Connecticut finding that British toymaker Best-Lock Construction Toys sold figurines which infringed on copyrights owned by Danish firm Lego.

This Week on Wall Street 

Wireless Growth Helps Verizon Beat Quarterly Earnings Estimates – On Thursday, August 1, telecom company Verizon Communications posted its earnings report for 2019’s second quarter, beating analyst estimates on earnings per share by 3 cents based in large part to the addition of 451,000 retail postpaid wireless customers.

Pfizer, Mylan Considering Sale of Off-Patent Drugs Unit – On Sunday, July 28, The Wall Street Journal reported that drugmakers Pfizer and Mylan were exploring options to create an off-patent drugs company in response to declining prices for generics as well as Pfizer’s loss of patent exclusivity for several major pharmaceuticals.

Quarterly Earnings– The following firms identified among the IPO’s Top 300 Patent Recipients for 2018 are announcing quarterly earnings next week (2018 rank in parentheses):

  • Monday: HTC Corporation (t-233rd); KLA Corp. (t-178th)
  • Tuesday: Daikin Industries Ltd. (221st); Nikon Corp. (141st); Renesas Electronics Corp. (71st); Schaeffler AG (130th); Shimadzu Corp. (t-251st); Walt Disney Co. (t-136th)
  • Wednesday: Continental AG (161st); Japan Display Inc. (64th); Skyworks Solutions, Inc. (t-156th); Sonos, Inc. (t-163rd); Sumitomo Rubber Industries, Ltd. (t-173rd); Toshiba Corp. (30th)
  • Thursday: Fujifilm Corporation (55th); Merck KGaA (t-178th); Semiconductor Manufacturing International Corp. (245th); Symantec Corp. (t-219th); Synaptics, Inc. (183rd); Terumo Corp. (t-251st)
  • Friday: Bridgestone Corp. (t-181st)

 

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Discuss this

There are currently 7 Comments comments. Join the discussion.

  1. Anon August 3, 2019 10:35 am

    Listing an inventor as a non-real person (DABUS) borders on sanctionable action by the attorney involved (given that Stanford v. Roche is known and controlling law).

    Had not the AIA amended the penalties for “getting inventorship wrong,” it also likely would have been an act of malpractice.

    The only caveat that I would place is that the Financial Times article is behind a paywall, so there might be some finer points that I have not yet seen.

  2. mike August 3, 2019 5:48 pm

    In the Celgene v. Peter oral argument (See http://www.cafc.uscourts.gov/oral-argument-recordings Search for #2018-1167), one judge stated this:

    “Looking for an analogy here in another area. Suppose under the Homestead Act of 1862, where people were given the right to get property in unsettled areas on the condition that they settle and farm there. Suppose that the Act had a provision that said ‘Anyone with a previous felony conviction is not eligible for the Homestead Act allocation’, and Congress discovered after five years that a lot of people who had previous felonies had actually applied for and gotten grants of homestead property, and decided this is causing all sorts of trouble on the frontier — a lot of violence — and decided that they would let the — enact a statute that said the Interior Department may inquire/investigate how — to whatever extent necessary — to determine whether any of these people actually had felony convictions. Would that be a taking with respect to any of the people who are on the land and who are discovered to have felony convictions?”

    This analogy is way off. In this Homestead Act analogy, the criteria for obtaining a grant of homestead property is a) settle and farm the land and b) do not have a previous felony. These are the merits. The judge is missing the point because in the case of patents, the government has already vetted the merits, that is, in this Homestead analogy, the government has already determined, when the people applied for the homestead property, that these people do not have felonies and meet the condition for settling and farming.

    Given that the GOVERNMENT has already vetted an application and determined the application is satisfactory and thus grants the property, if the government then decides later to take a second look to investigate whether the government made a mistake, especially at the cost of the property owner, that indeed IS a taking. Especially if the property owner entered into the bargain “subject to the terms” at the time of the application when such a second look and financial burden on the owner caused by this particular second look did not exist.

    And that is the most important part.

    The PTO argument that the judges bought is that ‘well, you should have expected this.’ Really? Those who entered the bargain prior to the procedural changes should have expected that the procedures would change in such a way that would tip the scales in favor of petitioners and increase financial burden because they now take advantage of those new procedures?

    This second look is at the cost of the homestead property owner, and the property owner did nothing wrong to warrant the second look. It is vetted by the government. Any second look instituted by the government is on the government. What did the property owner do wrong? The government is the original decider. So the onus is on the government in this “second look”.

    So for those property owners who entered into the application process and social compact with the government when such a second look did not exist, and then the government changes the law and creates a second look in a tribunal favorable to the petitioner that also causes a new financial burden upon the property owner for something that has already been vetted, and the government doesn’t provide just compensation for the burden, this is an unconstitutional taking indeed.

    If such a taking passes muster and is determined to be just, then there is absolutely no reliance in the grant. No reliance? No trust. No trust? No investment. No investment? Then INVENTORS WILL GO ON STRIKE. No sharing of their inventions with the public, because the patent grant cannot be trusted to be upheld by the government. No public disclosure, and thus, no promotion of the Useful Arts and Sciences by providing Inventors identified in the Patent Clause of the Constitution any reliable rights. This discourages innovation like no other. Accordingly, this act of Congress and changing of the rules in the middle of the game goes AGAINST the very purpose and substance of the Patent Clause of the Constitution.

  3. Jeff Hardin August 3, 2019 6:10 pm

    Mike, I just read the Celgene v. Peter (2019) CAFC decision. I agree with you wholeheartedly. The Constitution states “No ex post facto law shall be passed.” Moreover, Justice Thomas has opined on this in Eastern Enterprises. See below.

    But first, the line of reasoning for justification of IPRs retroactively applied to preAIA patents in Celgene falls victim to the fallacy of expediency: it doesn’t matter how we get there, just as long as we get there. They conclude:

    “[W]e hold that the retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment. Patent owners have always had the expectation that the validity of patents could be challenged in district court. For forty years, patent owners have also had the expectation that the PTO could reconsider the validity of issued patents on particular grounds, applying a preponderance of the evidence standard. Although differences exist between IPRs and their reexamination predecessors, those differences do not outweigh the similarities of purpose and substance and, at least for that reason, do not effectuate a taking of Celgene’s patents.”

    In other words, because
    1) the purpose of the AIA is for a “second look”,
    2) patent owners have always had the expectation that the validity of patents could be challenged district court,
    3) patent owners have had the expectation that the USPTO could reconsider the validity of issues patents on particular grounds applying a preponderance of evidence standard, and
    4) any differences between IPRs and their reexamination predecessors do not outweigh the similarities of purpose and substance (for this second look),
    this does not effectuate an unconstitutional taking under the 5th amendment.

    I submit they should focus attention of purpose of substance towards the actual Patent Clause of the Constitution and the Inventors in said clause. For expediency, the underrepresented Inventor who never agreed to such a bargain has been overlooked in the means in pursuit of the IPR “second look”.

    Moreover, recall that Congressman Smith is in the Congressional record saying that the purpose of the Leahy Smith AIA was to stop ‘patent trolls’.
    So, using the same line of reasoning as the court, because
    1) the purpose of the AIA is to stop ‘patent trolls’,
    2) patent owners have always had the expectation that they will be able to receive representation when having their patents challenged,
    3) the AIA changed the procedures such that a) petitioners can take advantage of the new procedures, and thus b) financially-challenged patent owners can no longer receive contingency representation for IPR proceedings,
    4) this difference outweighs the similarities of purpose and substance (for stopping ‘patent trolls’),
    thus, this effectuates an unconstitutional taking under the 5th amendment.

    Second, what of the differences of justice and fairness in the patent bargain/social compact?

    In addition to the “patent owner expectations” cited above, what the judges fail to recognize is that patent owners have always had the expectation that they will be able to receive representation when having their patents challenged. But now, no patent practitioner will take on an IPR proceeding for a defendant on a contingency fee arrangement because of the differences IPR proceedings bring, as well as the fact that there are no damages and thus no upside in an IPR proceeding. For this reason, post-AIA, the cost for representation is solely on the patent owner. Thus, the financially-challenged patent owner cannot even engage in a licensing discussion. They must sit on their hands due to the risk of being dragged into an IPR, and if someone takes their IP, they must let them, otherwise their patents will be challenged from financially-able petitioners who can lean on their poker chips. You might not be able to find this data, because these patent owners cannot even engage, and they must stay home. But recall the truth that absence of evidence is not evidence of absence.

    So for the pre-AIA patent owners in this predicament who never entered into the AIA patent bargain that created IPR proceedings, is that difference enough to outweigh the alleged similarities of purpose and substance? More important than these, especially for a judge, what of the differences of justice and fairness in the patent bargain/social compact, and the purpose and substance of the Patent Clause of the Constitution? (Mike you addressed that well.) To that, I will leave you with this:

    “I write separately to emphasize that the Ex Post Facto Clause of the Constitution, Art. I, § 9, cl. 3, even more clearly reflects the principle that ‘[r]etrospective laws are, indeed, generally unjust.’ I have never been convinced of the soundness of [Calder’s limitation of Ex Post Facto to a criminal context] … In an appropriate case, therefore, I would be willing to reconsider Calder and its progeny to determine whether a retroactive civil law that passes muster under our current Takings Clause jurisprudence is nonetheless unconstitutional under the Ex Post Facto Clause.” (pp 538-539)

    — Justice Thomas, concurring, Eastern Enterprises v. Apfel, 524 U.S. 498 (1998)

    And J. Thomas is not alone here. There are papers that look at the history around the time of Federalist #44 and prior, showing that the definition of ‘ex post facto’ as limited by Calder was wrong.

    (mike I think you were the one who brought this to light)

  4. Concerned August 4, 2019 8:26 am

    Above posters and with regard to retroactivity or ex post defacto.

    My patent examiner just changed right before the USPTO response to our argument in the PTAB appeal. Reason unknown.

    I believe the previous examiner made statements contrary to the facts and evidence on the official record. Will the new examiner be bound by statements in the official record, as I am bound by my statements per the USPTO s101 directive of January 2019? Or can horses/statements be switched in mid stream retroactively?

    The new examiner has a much higher patent grant rate. Could this new examiner be a positive sign to resolve the matter consistent with MPEP, official memos and facts/evidence placed into the record?

    It seems to me with the discussion in Washington DC on s101, an application with documents from every possible end user, 2 university studies, and on point documents from the Administrating agency should be moved into the resolved column as to what really is routine, conventional and well understood.

    Your thoughts are welcome and appreciated as always. Thank you.

  5. Perkins August 4, 2019 11:09 am

    Regarding the USPTO Proposed Fee Increase, I’m surprised that you didn’t specifically mention the proposed new “(c) Annual Active Patent Practitioner Fee” – effectively another tax. Now I feel just like the guy in the striped shirt.

  6. Anon August 4, 2019 6:34 pm

    Thanks Perkins – it should be noted that TWICE now the Patent Office attempted that device, and TWICE now the pushback was severe enough for the Office to drop the item.

  7. Pro Say August 5, 2019 11:30 am

    An annual active patent practitioner fee?

    Why, what’s next?

    Patent maintenance fees?

    Oh, wait; what?

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