What’s scarier than a Section 101 rejection? Some of these patents for celebrating the spookiest holiday?
Happy Halloween
IPR’s Survive More Constitutional Challenges
In Mobility Workx, LLC v. Unified Patents, LLC, [2020-1441] (October 13, 2021), the Federal Circuit concluded that Mobility’s constitutional arguments were without merit, and without reaching the merits of the Board’s decision, in light of Arthrex, it remanded to the Acting Director to determine whether to grant rehearing.
Mobility argued that the structure and funding of the Board violates due process. First, because “the fee-generating structure of AIA review[] creates a temptation” for the Board to institute AIA proceedings in order to collect post institution fees (fees for the merits stage of the AIA proceedings) and fund the agency. Second, because individual APJs have an unconstitutional interest in instituting AIA proceedings because their own compensation in the form of performance bonuses is favorably affected. The Federal Circuit found no merit to these defenses.
Mobility raised several additional constitutional challenges not raised before the agency that have been previously rejected by this court in other cases. Mobility argued that the Director’s delegation of his authority to institute AIA proceedings violates due process and the Administrative Procedure Act because the Director has delegated the initial institution decision to “the exact same panel of Judges that ultimately hears the case.” Mobility additionally argued that subjecting a pre-AIA patent to AIA review proceedings “constitutes an unlawful taking of property.” The Federal Circuit rejected these challenges.
Finally, Mobility raised an Appointments Clause challenge. The Federal Circuit agreed that a remand is required under the Supreme Court’s decision in Arthrex to allow the Acting Director to review the final written decision of the APJ panel pursuant to newly established USPTO procedures, and remanded the case.
An Army of Citation Footnotes Crouching in a Field of Jargon is no Substitute Explanation
In Traxcell Technologies, LLC v. Sprint Communications Company, LP, [2020-1852, 2020-1854] (October 12, 2021), the Federal Circuit agreed with the district court’s claim construction, and further that under that construction Traxcell failed to show a genuine issue of material fact as to infringement, and further that several of Traxcell’s claims were indefinite.
The case involves U.S. Patent Nos. 8,977,284, 9,510,320, 9,642,024, and 9,549,388 related to self-optimizing network technology for making “corrective actions” to improve communications between a wireless device and a network.
At issue was the claim limitation “means for receiving said performance data and corresponding locations from said radio tower and correcting radio frequency signals of said radio tower.” The parties agreed that this was a means-plus-function claim, and the corresponding structure was an algorithm identified in the specification. Traxcell argued that Sprint’s accused technology included a structural equivalent to the disclosed structure under the function-way-result test. The district court disagreed, reasoning that Traxcell failed to establish that Sprint’s accused technology operates in substantially the same “way.”
The Federal Circuit agreed, noting that the identified structure from the specification was a “very detailed” algorithm, including numerous steps necessary for its function. However, Traxcell neglected to address a significant fraction of that structure. Accordingly, Traxcell didn’t provide enough evidence for a reasonable jury to conclude that the accused structure performs the claimed function in “substantially the same way” as the disclosed structure.
Also at issue was the limitation “location.” The parties agreed, and the district court accepted, that “location” meant “location that is not merely a position in a grid pattern.” However, under this construction Traxell lost. On appeal Traxell insisted in retrospect that this construction was wrong. The Federal Circuit said that “having stipulated to it, Traxcell cannot pull an about-face.”
With respect to infringement by Sprint, the independent claims all require sending, receiving, generating, storing, or using the “location” of a wireless device. The district court concluded that Traxcell simply hadn’t shown that the accused technologies used “location” as construed by the court, and the Federal Circuit agreed. With respect to infringement by Ericson, the district court rejected Traxcell’s argument that the accused technology uses “location” because it collects “information regarding the distance of devices from a base station.” The Federal Circuit agreed that this was not location information but information to calculate distance.
Also at issue were the limitations “first computer” and “computer.” Construing these as referring to a single computer, the district court concluded that Traxell had not shown that these limitations were met, and the Federal Circuit agreed. The Federal Circuit said that Traxell failed to particularize those conclusory assertions with specific evidence and arguments. Traxell argued it provided substantial evidence that the district court ignored, but the Federal Circuit said it was “an army of citation footnotes crouching in a field of jargon. What they lack is explanation.” The Federal Circuit concluded that Traxell’s showing was “simply too unexplained and conclusory.” The Federal Circuit said that Traxcell has cited swaths of documents, but it Failed to explain how those documents support its infringement theory. It didn’t do so at the trial court, and it didn’t do so on appeal.
Traxcell’s remaining infringement arguments on appeal relied upon the doctrine of equivalents. But the Federal Circuit concluded that Traxcell surrendered multiple computer equivalents during prosecution of these patents.
Turning to indefiniteness, Claim 1 of the ‘284 patent was found indefinite on two grounds: (1) lack of reasonable certainty about which “wireless device” the term “at least one said wireless device” referred to, and (2) lack of an adequate supporting structure in the specification for the claim’s means-plus-function limitation. The Federal Circuit found that the claim was indefinite for lack of adequate supporting structure in the specification.
A means-plus-function claim is indefinite if the specification fails to disclose adequate corresponding structure to perform the claimed function. While Traxcell cited an algorithm, the district court found that Traxcell’s explanation provided nothing more than a restatement of the function, as recited in the claim. The Federal Circuit concluded that the claim was indefinite, without the need to reach the issue of “wireless device.”
As to infringement of the ‘388 patent, the claims required that the device’s location is (1) determined on the network, (2) communicated to the device, and (3) used to display navigation information. The district court determined that Traxcell failed to show that the device location was determined by the network, and the Federal Circuit agreed. Traxcell argued that the network provided data to the devices, but the court observed that it is not data from the network that the claims require. It is that the network itself determines location and transmits the location to the device. The Federal Circuit said that Traxcell has not shown that the network does so with anything but broad and conclusory scattershot assertions.
Revised Judgment is Less Judgmental
In Hyatt v. Hirshfeld, [2020-2321, 2020-2323, 2020-2324, 2020-2325] (October 12, 2021), the Federal Circuit reissued its August 18, 2021, opinion, at Hyatt’s request, striking the language “in an efforts to submarines his patent applications and receive lengthy patent terms,” leaving the much less judgmental observation that Hyatt “adopted an approach to prosecution that all but guaranteed indefinite prosecution delay.”
A Little Background on Columbus
First, a little background on Backgrounds. 37 CFR 1.77(b)(7) suggests that an application should contain a “background of the invention.” However the MPEP is ambiguous as to its content:
Experienced practitioners know that the Background is just another opportunity to make a mistake. From calling it a “BACKGROUND OF THE INVENTION” rather than simply “BACKGROUND,” to admitting admitting prior art that is not prior art, or otherwise limiting the scope of the claims, ther seems little to be gained and much to be lost with a carelessly drafted background. While patent applications continue to include Backgrounds, they are getting shorter and less detailed.
An interesting example of an old-school background, particularly apropos on Columbus Day, is the Background in U.S. Patent No. 5,802,513:
The drafter probably should have stopped right here, and today probably would have stopped right here. A hint about the subject matter of the invention, and the problems it addresses, without admitting anything in particulary is prior are, and without saying anything that might otherwise limit the scope of the claims.
THIS forum selection clause in THIS NDA agreement did not bar the IPRs
In Kannuu Pty Ltd. v. Samsung Electronics Co., [2021-1638] (October 7, 2021) the Federal Circuit affirmed the district court denial of Samsung’s motion for a preliminary injunction compelling Samsung to seek dismissal of Samsung’s petitions for inter partes review at the Patent Trial and Appeal Board (Board).
In 2012, Samsung contacted Kannuu, an Australian start-up company that develops various media-related products (including Smart TVs and Blu-ray players), inquiring about Kannuu’s
remote control search-and-navigation technology. Kannuu and Samsung entered into a non-disclosure agreement (NDA), to protect confidential business information while engaging in business discussions and the like. Among other things, the agreement provided:
Any legal action, suit, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby must be instituted exclusively in a court of competent jurisdiction, federal or state, located within the Borough of Manhattan, City of New
York, State of New York and in no other jurisdiction.
Following over a year of discussions, the parties ceased communications. No deal (i.e., intellectual property license, purchase, or similar agreement) over Kannuu’s technology was made. Six years later, Kannuu sued Samsung for patent infringement and breach of the NDA.
Samsung then filed petitions for inter partes review of the patents. Kannuu argued that the that review should not be instituted because Samsung violated the NDA’s forum selection
clause in filing for such review. When the Board institued proceedings as to some of the petitions, Kannuu sought rehearing, which was denied. Kannuu then sought a preliminary injunction to compel Samsung to seek dismissal of the instituted inter partes reviews. The
motion was denied, and Kannuu appealed.
The issue before the district court, and before the Federal Circuit on appeal, was whether the forum selection in the non-disclosure agreement prohibited Samsung from petitioning for inter partes review of Kannuu’s patents at the Board. The District Court found it did not, and the Federal Circuit found no abuse of discretion.
Though the district court held the forum selection clause was valid and enforceable, it concluded that the plain meaning of the forum selection clause in the NDA did not encompass the inter partes review proceedings. Specifically, the district court found that the inter partes review proceedings did not “relate” to the Agreement or transactions contemplated under it. The Federal Circuit said that the district court correctly concluded that the inter partes review proceedings “do not relate to the Agreement itself.” The connection between the two—the inter partes review proceedings and the NDA—is too tenuous for the inter partes review proceedings to be precluded by the forum selection clause in the NDA, which is a contract
directed to maintaining the confidentiality of certain disclosed information, and not related to patent rights.
Neither the district court nor the Federal Circuit said that a forum selection clause in an NDA could not bar an IPR, rather they both held that this forum selection clause in this NDA agreement did not bar the IPRs. Under appropriate circumstances, a properly drafted forum selection cause in an NDA could bar an IPR between the parties, just as such clauses in a license agreement can bar challenges to the licensed patents before the PTAB.
What’s in a Name? Patentability.
In re SurgiSil LLP, [2020-1940] (October 4, 2021), the Federal Circuit reversed the Patent Trial and Appeal Board’s decision affirming an examiner’s rejection of SurgiSil’s design patent application, No. 29/491,550 an “ornamental design for a lip implant as shown and described.”
The examiner rejected the sole claim of the application as anticipated by an art tool called a stump, shown in a Dick Blick catalog (Blick):
.
The Board rejected SurgiSil’s argument that Blick could not anticipate because it disclosed a “very different” article of manufacture than a lip implant, reasoning that it is appropriate to ignore the identification of the article of manufacture in the claim language, because whether a reference is analogous art is irrelevant to whether that reference anticipates.
The Federal Circuit said that a design claim is limited to the article of manufacture
identified in the claim; it does not broadly cover a design in the abstract. The Federal Circuit noted that in Curver Luxembourg, SARL v. Home Expressions Inc., 938 F.3d 1334, 1336 (Fed. Cir. 2019), it held that the design patent was limited to the particular article of manufacture
identified in the claim, i.e., a chair, and not other furniture.
The Federal Circuit noted that the claim identified a lip implant, and the Board found
that the application’s figure depicts a lip implant. As such, the claim is limited to lip implants and does not cover other articles of manufacture. There is no dispute that Blick discloses an art tool rather than a lip implant, so the Board’s anticipation finding therefore rested on an erroneous interpretation of the claim’s scope. Thus the Federal Circuit reversed the rejection of the claim.
As a result, a carefully selected title may allow a designer to get a patent where the design is similar to the designs for other types of protects. What’s in a name? Patentability.
Providing Software Does Not Make the Provider the “Final Assembler”
In Acceleration Bay LLC v. 2K Sports, Inc., [2020-1700] (October 4, 2021), the Federal Circuit affirmed the district court’s claim construction of U.S. Patent No. 6,910,069 and its grant of summary judgment of non-infringement as to the ’069 and U.S. Patent No. 6,920,497, and dismissed the appeal of non-infringement U.S. Patent Nos. 6,701,344 , 6,714,966
With respect to the ‘069 patent, Acceleration Bay argued that the district court erroneously interpreted the claim term “fully connected portal computer” to include a “m-regular” limitation, i.e., a requirement that each participant in the network is connected to exactly m neighbor participants. Take Two argued that pointed out that the district court did not only construe the term “fully connected portal computer” to include the M-regular limitation, but it also construed the term “each participant being connected to three or more other participants” to include it. Since Acceleration Bay did not challenge the construction of each participant being connected to three or more other participants, Take Two argued that the appeal should fail, and the Federal Circuit agreed.
With respect to the ‘497 patent, the Federal Circuit said that Acceleration Bay proffered a “novel theory, without case law support,” that the defendants are liable for “making” the
claimed hardware components, even though they are in fact made by third parties, because defendant’s accused software runs on them, the customer, not Take Two, completes the system by providing the hardware component and installing Take Two’s software. Thus the “final assembler” doctrine of Centrak (where the accused infringer made hardware products and installed them by connecting them to an existing network to create an infringing system) did not apply.
§101: Why We Won’t Have Nice Things
In a recent IP Watchdog panel discussion incluing Harness Dickey’s new CEO Ray Millien, Faegre Drinker’s Robert Stoll, Schwegman Lundberg & Woessner’s Russ Slifer, and AddyHart’s Benjamin Cappel, Ray Millien posited that the only obstacle to autonomous cars is software, but given the present state of §101 jurisprudence, “once someone solves that problem, it’s an abstract idea.“
Consider what technologies §101 is holding back, and imagine what technologies §101 will hold back if this problem is not corrected. Patent lawyers of the future might one day read something like this:
In In re Erickson,* (Fed. Cir. 2124), the Federal Circuit issued a Rule 36 affirmance of the decision of the PTAB affirming the Examiner’s rejection of all of the pending claims of Emory Erickson’s application 31/239484 entitled “Teleportation System and Methods.” The PTAB opinion explained that the claimed invention, which Mr. Erickson calls a “Transporter,” is directed to a teleportation apparatus and a method for “nearly instantaneously” moving an object from one location to another. Mr. Erickson apparently provided a practical demonstration of his invention during a recent outage of the USPTO’s EFS system, delivering his Applicant’s Brief on Appeal to the USPTO via his “Transporter,” together with the $50,000 fee (37 CFR 1.17(zz)) for non-electronic filings.
Transporting Goods is an Abstract Idea
The Board began its analysis with the familiar two-step test from the classic Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014), which requires at step one a determination whether the claims are directed to an abstract idea, and if so, at step two to a determination whether the claim is directed to “something more.” The Board noted that the Examiner found that the claims were directed to the abstract idea of “transporting goods,” and the Board agreed, citing GT Nexus, Inc. v. Inttra, Inc., 2015 WL 6747142 (N.D.Cal. 2015)(“the shipping of goods is a conventional business practice ‘long prevalent in our system of commerce.’”)
Operation in the Real World Does not Make Idea Less Abstract
While Erickson argued that the Transporter would “result in life altering consequences,” the Board said that while laudable, it does not render the system or method any less abstract, citing University of Florida Research Foundation, Inc. v. General Electric Company, 916 F.3d 1363 (Fed. Cir. 2019). The Board considered the case to be similar to Smart Systems Innovations, LLC v. Chicago Transit Authority, 873 F.3d 1364, 124 U.S.P.Q.2d 1441 (Fed. Cir. 2017), where the patent owner’s arguments that the invention operated “in the tangible world” and satisfied “a public demand for more convenient travel that did not exist in the prior art” did not save the claims from being directed to an abstract idea.
Novelty of Components Does Not Make Idea Less Abstract
The Board also rejected the arguments that the Transporter, and in particular its Heisenberg compensator, had never before existed, citing Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014)(“We do not agree with Ultramercial that the addition of merely novel or non-routine components to the claimed idea necessarily turns an abstraction into something concrete. In any event, any novelty in implementation of the idea is a factor to be considered only in the second step of the Alice analysis.”). “It is well-settled that mere recitation of concrete, tangible components is insufficient to confer patent eligibility to an otherwise abstract idea.” TLI Communications LLC v. AV Automotive, L.L.C., 823 F.3d 607, 118 U.S.P.Q.2d 1744 (Fed. Cir. 2016).
Lack of Preemtion Does not Make Idea Less Abstract
The Board also dismissed Erickson’s argument that the claimed invention did not preempt all methods of transporting goods, citing buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed.Cir.2014) (collecting cases). A narrow claim directed to an abstract idea, however, is not necessarily patent-eligible, for “[w]hile preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015).
The Groundbreaking, Innovative, and Brilliant Can Still Be Abstract
While the Board found Erickson’s practical demonstrations of teleportation were “impressive,” but said that even accepting that the techniques claimed are “[g]roundbreaking, innovative, or even brilliant,” that is not enough for eligibility. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591, 133 S.Ct. 2107, 186 L.Ed.2d 124 (2013); accord buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1352 (Fed. Cir. 2014). Nor was it enough for subject-matter eligibility that claimed techniques be novel and nonobvious in light of prior art, passing muster under 35 U.S.C. §§ 102 and 103. See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 89–90, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012); Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) (“[A] claim for a new abstract idea is still an abstract idea. The search for a § 101 inventive concept is thus distinct from demonstrating § 102 novelty.”); Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1315 (Fed. Cir. 2016) (same for obviousness).
The Board concluded that no matter how much of an advance in the field the claims recite, the advance lies entirely in the realm of abstract ideas, with no plausibly alleged innovation in the non-abstract application realm. An advance of that nature is ineligible for patenting.
SAP America, Inc. v. Investpic, LLC, 890 F.3d 1016, 126 U.S.P.Q.2d 1638 (Fed. Cir. 2018).
At Alice Step II, the Board found that most of the components were conventional off-the-shelf electronic and computer componets, adn thust there was no “something more” to save the claims.
* In the Star Trek universe, the transporter was invented in the early 22nd century by Dr. Emory Erickson, who also became the first human to be successfully transported.
Given Ray Millien’s prediction that the solution to autonomous vehicles may turn out to be an unpatentable abtract idea, we should all be concerned about what technologies may be overlooked or at least dealyed because the current application of §101 is interfereing with the incentives the patent system is supposed to provide to encourage their development and disclosure. While the transporter example above may be too far fetched, as Millien points out the threat to the progress of science and the useful arts is not.
Damage Award Must Reflect Apportionment of Incremental Value of Invention
In Omega Patents, LLC. v. CalAmp Corp., [2020-1793, 2020-1794] (September 14, 2021), the Federal Circuit affirmed the judgment of infringement of the asserted claims of U.S. Patent No. 8,032,278, but vacated and remanded for a new trial on damages. The Federal Circuit also vacated the jury’s finding of direct infringement of U.S. Patent No. 6,756,885. The patents relate generally to multi-vehicle-compatible systems that can remotely control various vehicle functions (for example, remote vehicle starting), and read the status of various vehicle devices (for example, battery health).
CalAmp appealed (1) the district court’s denial of JMOL that CalAmp’s customers did not directly infringe the ’885 patent (and in the alternative, CalAmp requests that we vacate the direct-infringement finding); (2) the district court’s denial of JMOL and a new trial on CalAmp’s infringement of the ’278 patent; and (3) the district court’s denial of remittitur and a new trial as to damages for the ’278 patent. Omega cross-appealed the district court’s de-termination of the ongoing royalty rate for infringement of the ’278 patent.
The Federal Circuit vacated the finding of direct infringement by CalAmp’s customers of the ‘885 patent because Omega’s decision not to appeal the final judgment of non-induced infringement frustrated the CalAmp’s right to appeal, and pointing out that the question of whether CalAmp’s customers directly infringed the asserted claims of the ’885 patent is moot.
The Federal Circuit also found that the district court properly denied JMOL and an new trial on the issue of infringement of the ‘278 patent. CalAmp argued that that the district court improperly permitted Omega’s technical expert, Joseph McAlexander, to testify beyond the scope of his expert report. The Federal Circuit found that the report “provided enough notice to CalAmp to adequate prepare its case, and noted that CalAmp deposed the expert in line with is ultimate trial testimony.
CalAmp also argued that Omega presented an improper “device code” theory to the jury upon which the jury relied and that Omega failed to present evidence that two claim limitations were met. The Federal Circuit disagreed, and pointed out that there was adequate evidence of direct infringement. The Federal Circuit further found that Omega failed to object to the allegedly improper evidence of infringement, waiving any objection thereto. Finally, given the instructions that were given to the jury, the Federal Circuit said it must assume that the jury verdict rested on a proper theory.
On the issue of damages, CalAmp argued that the district court erroneously precluded its damages expert from testifying in rebuttal, and that Omega’s damages theory was legally flawed. The Federal Circuit agreed that it was error to preclude CalAmp’s expert from testifying on rebuttal, simply because his direct testimony was excluded, and this exclusion was not appealed. The Federal Circuit found that law of the case did not apply to preclude other testimony from the excluded expert.
The Federal Circuit concluded that ultimately, a new trial on damages was warranted. The jury awarded a $5.00-per-unit royalty for CalAmp’s infringement of the ’278 patent, and CalAmp argued that the $5.00 royalty figure does not reflect apportionment and that Omega failed to show the incremental value of the ’278 patent (or that the patented improvement drove demand for the entire accused product), rendering the jury’s damages award unsustainable. The patentee must in every case give evidence tending to separate or apportion the patentee’s damages between the patented feature and the unpatented features. No matter what the form of the royalty, a patentee must take care to seek only those damages attributable to the infringing features. Where multi-component products are involved, the governing rule is that the ultimate combination of royalty base and royalty rate must reflect the value attributable to the infringing features of the product, and no more.
Omega argued that because its claims included all the elements of the accused device, no apportionment was needed. Citing Exmark v. Briggs & Stratton, the Federal said that even when the claims are directed to a product as a whole, the patent owner was still required to “apportion or separate the damages between the patented improvement and the conventional components of the multicomponent product” to ensure that the patent owner was compensated for the patented improvement.
Turning to the merits of apportionment, the Federal Circuit concluded that Omega did not present sufficient evidence to the jury to sustain its damages award for infringement of the asserted claims of the ’278 patent. First, it said that Omega failed to show that its patented improvement drove demand for the entire product. Second, in the alternative, it said that Omega failed to show the incremental value that its patented improvement added to the product as apportioned from the value of any conventional features. Lastly, the Federal Circuit rejected Omega’s comparable-licenses theory, finding that flat fee licensing did not address “built-in apportionment” between the patented improvements and the conventional features of the accused products. The Federal Circuit likewise concluded that Omega failed to show built-in apportionment based on specific the license agreements presented to the jury.