Posts in Courts

The Federal Circuit, with Chief Judge Prost writing for the majority, joined by Judge Moore and Judge Stoll, vacated and remanded the case after ruling that the ‘929 patent claims are not directed to a patent-ineligible concept. “This is very heartening since the Supreme Court denied cert in Sequenom,” said Bob Stoll, former Commissioner for Patents at the United States Patent and Trademark Office and current partner at Drinker Biddle in Washington, DC. “It is great to see the CAFC apply the Supreme Court decisions more narrowly, as intended by that Court, and provide some relief to innovators that will help them to attract funding to develop their inventions.”

Allied Erecting & Dismantling Co. v. Genesis Attachments, LLC (Fed. Cir. June 15, 2016) (Before Dyk, Wallach, and Newman, J.) (Opinion for the court, Wallach, J.). The test for obviousness is not whether the devices disclosed in various references are physically combinable, but whether a person of ordinary skill, in possession of teachings of the references, could arrive at the claimed invention. Further, the modification of Caterpillar would be minimal, as it would simply require replicating the mechanism for moving the first jaw to move the second jaw.

There has been a rising tide of voices seeking to ensure that the Internet remains open to alternative viewpoints with easy access to all for years to come. In recent years, these groups have sought political avenues for ensuring that their ideals become the law of the land. For instance, many thousands of American citizens have supported net neutrality rules implemented by the Federal Communications Commission (FCC), rules which have recently been upheld by a federal appellate court this June. Now, a consortium of civil rights and open technology groups are trying to make open Internet concepts an issue on the political trail leading up to the election of the next U.S. President.

This case arrived at the Federal Circuit on an appeal brought by BASCOM from the district court’s decision to grant a motion to dismiss under Rule 12(b)(6). In the majority opinion Chen made much of the civil procedure aspects of a 12(b)(6) motion, as well he should. Frankly, it is about time that the Federal Circuit notice that these patent eligibility cases are reaching them on motions to dismiss. This should be overwhelmingly significant in virtually all cases given that a motion to dismiss is an extraordinary remedy in practically every situation throughout the law. Simply put, judges are loath to dismiss cases on a motion to dismiss before there has been any discovery or any issues are considered on their merits. That is, of course, except when a patent owner sues an alleged infringer.

The waters surrounding Section 101 of the Patent Act are as muddied as they come. The statute sets forth only in broad strokes what inventions are patentable, leaving it to the courts to create an implied exception to patentability for laws of nature, natural phenomena, and abstract ideas. It has been difficult for lower courts to determine whether an invention falls within one of these excluded categories, and the U.S. Supreme Court has refused to provide a definition of what constitutes an “abstract idea.” Nonetheless, the Court in recent years has laid several foundation stones in Bilski, Mayo, Myriad and Alice for a bridge over these troubled waters. Trying to build upon these, the Federal Circuit issued two recent opinions dealing with Section 101: Enfish, LLC v. Microsoft Corporation and In re: TLI Communications LLC Patent Litigation. However, these decisions only create more confusion and cannot provide a safe means of passage over the turbulent waters of patent eligibility.

Cooper and MCM have submitted Petitions for Writ of Certiorari to the Supreme Court of the United States, asking it to consider the constitutionality of Article I final adjudication of issued patent claims, subject only to Article III appellate review. Importantly, the resolution of this question turns on the determination of (1) whether the claim of patent invalidity is a public or private right, and (2) if a private right, whether the claim may be delegated to an Article I tribunal for (a) advisory determination, requiring (b) enforcement by a federal district court, where (c) legal conclusions are reviewed de novo, and (d) factual conclusions are reviewed for substantial evidence. As revealed during briefing by litigants and amici, in addition to the Court of Appeals for the Federal Circuit’s (“CAFC”) precedential MCM opinion, ambiguity in the Court’s Stern decision has led to confusion, and the analysis required for question (2) has been improperly applied to the resolution of question (1). In light of this confusion—and the merits of the constitutional question aside—Cooper and MCM present the Court with a rare opportunity to clarify that questions (1) and (2) are in fact separate, and require, per its own decisional law, distinct modes of analysis.

Earlier today the United States Supreme Court denied certiorari to Sequenom, Inc., which will let stand a decision of the United States Court of Appeals for the Federal Circuit that ruled a truly revolutionary medical test to be patent ineligible. If the Supreme Court were to have taken the case they would have been required to reconsider the overwhelming breadth and scope of their prior ruling in Mayo Collaborative Servs. v. Prometheus Labs. Obviously, the Supreme Court is not ready to reconsider Mayo.

In rejecting the objective prong of Seagate, the Court rejected the notion that a defendant may escape the specter of enhanced damages by asserting a defense that the defendant was unaware of at the time the infringement occurred. For example, the Court pointed out that under the Seagate test, “[t]he existence of . . . a defense insulates the infringer from enhanced damages, even if he did not act on the basis of the defense or was even aware of it.” Halo at 10. But, as the Court stated, “culpability is generally measured against the knowledge of the actor at the time of the challenged conduct.” Id. Moreover, in response to an argument by Pulse based on the Court’s earlier Safeco decision, the Court held that “[n]othing in Safeco suggests that we should look to facts that the defendant neither knew nor had reason to know at the time he acted.” Id. at 11.

In last week’s Halo Elecs. v. Pulse Elecs. decision, the Supreme Court unanimously rejected the Federal Circuit’s Seagate standard for awarding enhanced damages in patent cases under Section 284, finding the Federal Circuit’s two-part test “impermissibly encumbers the statutory grant of discretion to district courts.” Slip Op. at 9. The Supreme Court’s decision, which vacated and remanded, means that the award of treble damage may very well be reinstated in that case, and reversals of enhanced patent damages rulings – both awards and denial – may become less common.

David Kappos, the director of the USPTO under President Obama from 2009 to 2013, recently called for congress to repeal section 101 of the patent act. According to Kappos, the current chaotic “I know it when I see it” 101 test that must be somehow consistently applied by thousands of USPTO examiners and hundreds of judges, means American inventors are better off seeking protection in China and Europe. While America “is providing less protection than other countries”, European countries are “putting their foot down in favor of innovation”.

AIA trials have been sought over 5,000 times to challenge patents and are widely used to resolve patent disputes. Many patent owners complained that these proceedings were unfairly tilted in favor of those challenging patents. Cuozzo sought Supreme Court review of two such practices that it felt went too far and were inappropriate given the language and intent of the AIA. However, the Court sided with the PTAB on both issues, leaving the AIA trial process, as practitioners have come to know it over the last four years, intact.

Just how much knowledge about piracy on its system does an online service provider need before it loses its safe harbor protection, which severely limits its potential liability for copyright infringement, under the Digital Millennium Copyright Act (DMCA)? In Capitol Records v. Vimeo, the Second Circuit sets the bar very high, further blurring one of most important lines in copyright law—the line between actual and red flag knowledge—and protecting a not-so-innocent service provider in the process. Worse still, the Second Circuit leaves copyright owners with little chance of a remedy in the face of rampant piracy, even against a service provider that welcomes the infringement.

Jericho’s access control model was first used as the blueprint for the Department of Defense Global Information grid in 2007. The software was later deployed across two Department of Defense secure network enterprises, providing access control to over six million persons and entities. Five years later, President Obama mandated the use of this model in every U.S. Government enterprise. The district court found the patent claims to be patent ineligible under the abstract idea doctrine, saying it did not matter that the system operated faster and more efficiently. The Federal Circuit affirmed without opinion in a Rule 36 summary affirmance.

Justice Kagan stated as one primary factor that a District Court should put substantial weight on the reasonableness of the losing party’s position. The lower courts are in a good position to review and administer this factor, and it encourages parties with meritorious positions to advance them. Justice Kagan quite rightly stated that this was not the only factor, and that other previously articulated factors set forth in Fogerty also need to be evaluated. These include the “frivolousness [of the losing party’s position], [such party’s] motivation, objective unreasonableness, and the need in particular circumstances to advance considerations of compensation and deterrence.” Fogerty at 534, n.19.

“This is obviously a victory for some who challenge a patent’s validity in IPR proceedings since broadly construed claims are more vulnerable to attack than narrowly construed claims” remarked Scott Daniels, partner at Westerman Hattori Daniels & Adrian, LLP. “Still, the great majority of IPR decisions do not turn on claim construction and for those cases Cuozzo simply makes no difference.”… Levy, who was similarly dead on accurate with his predictions, raises an important point that so many in the patent community who were rooting for Cuozzo failed to keep in mind. Those challenging the action of an agency face a substantial uphill battle when they seek a judicial determination overriding agency rulemaking and statutory implementation.