Posts Tagged: "innovation"

On June 25, the U.S. Court of Appeals for the Federal Circuit issued an opinion in Cellspin Soft, Inc. v. Fitbit, Inc. (2018-1817, 2018-1819 to 1826), reversing a district court’s grant of various Rule 12(b)(6) motions to dismiss complaints that alleged patent infringement based on U.S. Pat. No. 8,738,794 (the ’794 patent), U.S. Pat. No. 8,892,752 (the ’752 patent), U.S. Pat. No. 9,258,698 (the ’698 patent), and U.S. Pat. No. 9,749,847 (the ’847 patent). The Federal Circuit did so because the district court misconstrued precedent from both Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018) and Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018). The Federal Circuit panel consisted of Judges Lourie, O’Malley, and Taranto. Judge O’Malley authored the panel’s opinion. he Federal Circuit agreed with the district court that the claims were directed to an abstract idea but reversed anyway on the basis of the district court failing to conduct a proper Alice step two. This was because the district court ignored Cellspin’s factual allegations that, when properly accepted as true, precluded the grant of a 12(b)(6) motion to dismiss.

On Tuesday, June 24, the Patent Trial and Appeal Board (PTAB) declared an interference proceeding  between a collection of entities that are on opposing sides in the race to commercialize CRISPR-Cas9 genomic editing technologies. The patent interference will decide if inventors from the Regents of the University of California, the University of Vienna and the Umea University of Sweden were the first to invent certain methods for gene editing in eukaryotic cells, or plant and animal cells, that are covered by patent claims which have been issued to the Broad Institute, the Massachusetts Institute of Technology (MIT) and Harvard College. The patent interference involves 10 patent applications that have been filed by the University of California group and 13 patents that have been filed by the Broad Institute group. These two groups have been facing off in a series of legal battles regarding which side can properly claim to be the rightful inventor of perhaps the world’s most widely applicable gene editing technology useful for treating diseases, improving life science research and increasing the rate of biotechnology innovations.

IPWatchdog’s third Patent Masters Symposium was held this past week in Arlington, Virginia, and included some of the best and brightest in the patent world. The event focused on the effects of Alice five years on, but more importantly, identified practical approaches for navigating Section 101 law now and in the future. Throughout the event, I also asked attendees to vote on several statements in an effort to come to consensus on certain points relating to the pending patent reform legislation. Those statements that received at least 80% of the vote are included in the letter below, which will be sent to the Senators and Representatives working on the next draft of the new Section 101.

Coverage of the Senate Judiciary Subcommittee on Intellectual Property hearings on proposed amendments to the Patent Act has trumpeted the possibility that Congress will undo the Alice test for Section 101 eligibility. Many stakeholders have commented on the benefits this could bring to patentees. But if this comes to pass, accused infringers won’t cease bringing early validity challenges—they’ll instead shift their focus from Section 101 to other grounds. Testimony before the Senate and the data on recent district court decisions strongly suggest that Section 112(f) will emerge as the preeminent ground for early validity challenges.

This week in Other Barks & Bites: The Supreme Court today agreed to hear two trademark cases next term; Senators Thom Tillis and Chris Coons issue a statement regarding the recent round of patent eligibility hearings by the Senate Intellectual Property Subcommittee; four bills that would impact pharmaceutical patents and practices have passed out of the Senate Judiciary Committee; Huawei publicly calls out negative impact of Senator Marco Rubio’s legislative amendment preventing it from seeking U.S. patent infringement damages, one day after losing its trade secret case against CNEX Labs; Spotify settles a pair of major copyright suits targeting its music streaming service; Intel will reportedly auction thousands of IP assets related to wireless device technology; and revised data shows that U.S. GDP grew 3.1% during the first three months of 2019.

On May 2, the Antitrust Division of the U.S. Department of Justice (DOJ) took the unusual step of submitting a Statement of Interest in the Federal Trade Commission’s (FTC’s) case against Qualcomm to take a position contrary to the FTC. The DOJ argued that “[b]ecause an overly broad remedy could result in reduced innovation, with the potential to harm American consumers, this Court should hold a hearing and order additional briefing to determine a proper remedy that protects competition while working minimal harm to public and private interests.” In response, the FTC informed the court that it “did not participate in or request” the DOJ’s filing, that it “disagree[d] with a number of contentions” made by the DOJ, and that the DOJ “misconstrues applicable law and the record.” In the end, the court agreed with the FTC and issued injunctive relief against Qualcomm without conducting the further remedy proceedings the DOJ advocated. The public feuding between the two federal antitrust enforcement agencies about how to resolve a case litigated by one them was a remarkable spectacle. It also brought into focus a broader divide between the FTC and DOJ on the role of antitrust law in addressing patents that are essential to industry standards (SEPs) and subject to commitments to license on fair, reasonable, and non-discriminatory (FRAND) terms.

One of the more dramatic moments in my $20 million dollar patent brawl occurred in the pivotal preliminary injunction hearing at the courthouse in downtown Tyler, Texas. I learned that Walmart was coming to monitor the proceedings. I think they were curious to meet the crazy inventor who dared to sue the largest retailer on the planet. The proposal on the table was that I dismiss the suit with prejudice (i.e., drop the suit and waive all my rights) or else Walmart would never buy another product from my exclusive licensee, Zuru—no balloons, no robotic fish, no dart guns. Distraught, I hid in a side room and didn’t show for the meeting where my lawyers had advised me to capitulate. Curiosity heightened; the Walmart attorney unexpectedly suspended all demands and invited me to sit down and explain my point of view. I pointed to the infringing spiral-faced Battle Balloons and told her they were selling my invention without permission, thereby harming me and my family. The Walmart attorney was flummoxed and suggested that I didn’t understand how the patent system worked and was overreaching. Here I was claiming to have invented this apparatus that looked different than mine. It had a spiral face and mine was flat. This is the problem with our patent system; it is run by people who don’t understand invention. Think about it, we have to use this bizarre legal document not only to describe our discovery but to describe the boundaries of it. For inventors, there are no boundaries—why would we stop applying and extending our discoveries? We do our best to describe it, but in the end, non-inventors write and interpret the laws that determine our rights.

The Investpic v. SAP America case (Supreme Court Dkt. No. 18-1199), which is the 44th patent eligibility case to be considered for certiorari since the notorious Alice Corp. decision, was announced earlier this week. Cert. denied. Unlike almost any other case, the Investpic decision represents a hostility to the patent rights of software developers based on capricious foundations. The Federal Circuit’s holding is inconsistent with the statutory language of Section 101, the holding is hostile to Section 112(f), and the holding has no nexus to preemption. Investpic is just one of Judge Taranto’s latest monstrosities that holds that a patent must be based on a “physical realm improvement” of the sort that has an “inventive concept.” Investpic also holds that one isn’t allowed to use functional claim language, and that algorithms are unworthy of patent protection.

The Federal Circuit last week upheld a PTAB final written decision invalidating Mayne Pharma’s U.S. Patent 6,881,745 over its objection that the petition for inter partes review (IPR) filed by Merck Sharpe & Dohme (MSD) was fatally defective for having omitted parent corporation Merck & Co., Inc. as a real-party-in-interest. Mayne Pharma Int’l v. Merck Sharp & Dohme, Case No. 2018-1593 (Fed. Cir. June 21, 2019). Because Merck would have had to add its parent as an RPI in the proceeding after the one-year time bar had lapsed, Mayne argued the error was not correctable. The Federal Circuit rejected this view, holding that the Board has authority to make corrections to a petition that are “in the interest of justice.” This decision suggests that form will not be elevated over substance in addressing the one-year IPR time bar of Section 315(b).

The United States is on the brink of making changes to the U.S. patent law that would be modeled on India’s Patent Law. At a Senate Judiciary Committee markup scheduled for tomorrow, June 27, Senator Lindsey Graham (R-SC) plans to offer language as an amendment in the form of the No Combination Drug Patents Act. The language of the bill would prohibit the patenting of new forms, new uses and new methods of administration of new medicines unless the patent applicant can show “a statistically significant increase in efficacy”. This language is oddly similar to India’s Section 3(d), something the Trump Administration’s U.S. Trade Representative has complained “restricts patent eligible subject matter in a way that poses a major obstacle to innovators” (see here, page 49). Other Senators have also weighed in against “a generally deteriorating environment for intellectual property” in India (see here), including Judiciary Committee ranking member Dianne Feinstein (D-CA) and Judiciary Committee members Mike Crapo (R-ID), Amy Klobuchar(D-MN)and Chris Coons (D-CT).

Seventy-two companies and organizations, ranging from Tivo to Bristol-Myers Squibb and from the American Conservative Union to the Alliance of U.S. Startups & Inventors for Jobs (USIJ)— as well as retired Federal Circuit Chief Judge Paul Michel—have sent a letter to Senators Thom Tillis and Chris Coons and Representatives Hank Johnson, Doug Collins, and Steve Stivers in support of the current draft language to reform Section 101 of the U.S. Patent Act. The letter comes as the patent community eagerly awaits a new version of the bill, following three hearings and 45 witnesses in which most voiced their general support for the approach taken in the draft, but several sticking points were identified. The next iteration is expected soon after Congress’ July 4 recess.

The Lanham Act’s ban on federal registration of “immoral or scandalous” trademarks is unconstitutional under the First Amendment.  So held the United States Supreme Court on Monday, resoundingly, if a bit uneasily, in Iancu v. Brunetti.  It’s a good result, and one that the trademark bar and the free speech community had broadly urged, including Debevoise’s client, the International Trademark Association (INTA), in an amicus brief that we had the privilege of writing. 

This week on Capitol Hill and vicinity, the Supreme Court issues its decision in Iancu v. Brunetti and issues orders in several other IP cases. Meanwhile, various House committees will explore the Federal Communications Commission’s broadband Internet coverage maps, state and local government cybersecurity issues, voting technologies, fintech, federal agency IT acquisition and artificial intelligence. Senate committee hearings this week will look at emerging technologies in surface transportation, the persuasive effects of machine learning in Internet platforms as well as a pair of drug patent bills. Elsewhere, the Information Technology and Innovation Foundation hosts an event looking at the effect of global trade tensions on technology supply chains and the Brookings Institution considers the potential of privacy legislation to address concerns with digital information-sharing systems.

Panelists in this past Thursday’s IPWatchdog webinar, “Dissecting Alice,” gave credit to the U.S. Patent and Trademark Office (USPTO) for the steps it has taken to minimize the damage caused by the courts’ lack of action on patent eligibility, but expressed concern that it simply isn’t enough. USPTO Commissioner for Patents Drew Hirshfeld joined the webinar to report on the progress made since the decision came out and said that, while Alice undoubtedly caused some confusion and disarray for practitioners, “we’re in a better place today than we were two or five years ago.” Hirshfeld explained that the Office’s initial approach to providing guidance for examiners on Alice was to use a “case law matching process,” which eventually became untenable after years of case law had built up. He said that the January 2019 Guidance—which Hirshfeld noted is also binding on the Patent Trial and Appeal Board—was developed over an intensive eight-month period by a small team of people that included Director Andrei Iancu himself and involved at least one full Sunday. He added that the examiner training effort for the 101 Guidance has also been more thorough than any he’s seen in his 25 years at the USPTO. The Office is currently in the process of developing additional concrete case examples for examiners and practitioners to work with in order to further enhance the guidance.

When it was announced that I would be testifying to the Senate Judiciary Subcommittee on IP about Section 101, I was surprised. Not only did they grant a critic of the 101 roundtables a chance to speak, but not one inventor who used patents to fund a startup has testified in any patent-related hearing in decades. This gave me faith that Senators Tillis and Coons are serious about fixing 101 right by considering what inventors need. When the hearing was announced, several inventors contacted me. They wanted to personally tell their stories to Congress. They trusted the government to protect them, but instead lost their careers, their secrets, and their investments of hard work and money. A few even lost their families, their home, or their health. The inventors were happy about eliminating all 101 exceptions, but the draft language of 100(k) and 112(f) transfer the damage to those sections.