Clarity in §101: Half of the Judges Considering the Question Find Plaintiff’s Computer Memory System to be Patentable Subject Matter

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In Visual Memory LLC v. NVIDIA Corp., [2016-2254](August 15, 2017), the Federal Circuit reversed the district court’s determination that Visual
Memory’s U.S. Patent No. 5,953,740, on a memory system with programmable operational characteristics that can be tailored for use
with multiple different processors, was drawn to patent ineligible subject matter.

Claim 1 states:

   1. A computer memory system connectable to a processor and having one or more programmable operational characteristics, said characteristics
being defined through configuration by said computer based on the type of said processor, wherein said system is connectable to said processor
by a bus, said system comprising:
a main memory connected to said bus; and
a cache connected to said bus;
wherein a programmable operational characteristic of said system determines a type of data stored by said cache.

The Federal Circuit said that the framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts comprises two steps.  The first step requires courts to determine whether the claims at issue are directed to one of those patent-ineligible concepts.  If they are, the court must then analyze whether the claim elements, either individually or as an ordered combination, contain an “inventive concept” that transforms the nature of the claim into a patent-eligible application.

At step one, the Federal Circuit asked whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.  Analogizing to Enfish (self-referential table for a computer
database) and Thales (unique configuration of inertial sensors), the Federal Circuit  found that the claims were directed to an improved computer memory system, not to the abstract idea of categorical data storage.

The Federal Circuit noted the many benefits explained in the specification; the elimination of the one-size-fits-all approach of the prior art, which resulted in trade-offs; interoperability with multiple different processors; and improved performance over prior art systems with even larger caches.  The Federal Circuit said that the claims were directed a technological improvement: an enhanced computer memory system.  The Federal Circuit said this was not a case where the claims merely recite the “use of an abstract mathematical formula on any general purpose computer,” “a purely conventional  computer implementation of a mathematical formula,” or “generalized steps to be performed on a computer using conventional computer activity.”

The Federal Circuit went on to distinguish Content Extraction which merely employed a computer, and TLI Communications which used conventional hardware and were “not directed to a specific improvement to computer
functionality.”

The opinion addressed the dissent’s contention that the claimed programmable operational characteristic is “nothing more
than a black box” by pointing out there was a microfiche appendix of computer code, that enablement was a §112 issue not a §101 issue, and finally by pointing out that the innovative effort was not in the programminer required, but in the creation of the memory system.

The Federal Circuit conceded that the concept of categorical data storage underlies the patent’s claims, but said that this is not enough to doom a claim under § 101 because the claims are not so limited, and “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature,
natural phenomena, or abstract ideas.”  The Federal Circuit ended the inquiry at Step 1 and remanded the case.

In the end the finding of patentable subject matter was 2 judges for and 2 judges (the dissent and the district court judge) against.  If only all patentability determinations were as certain as 50-50.

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Check Each Link in the Chain of Title; The Time to Find Out Your Assignor Does Not Exist is Before you Sue

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In In re Certain Thermoplastic-Encapsulated Electric Motors, 337-TA-1052, (August 11, 2017), Administrative Judge Dee Lord dismissed Intellectual Ventures II LLC complaint asserting infringement of U.S. Patent Nos. 7,154,200, 7,067,944, 7,683,509 and 7,928,348 for lack of standing.  Intellectual Ventures predecessor in interest received an assignment from Encap Technologies in 2012.  Unfortunately for Intellectual Ventures Encap Technologies did not exist in 2012, having merged with Encap Holding back in 2008.

Intellectual Ventures made a number of technical arguments about how the documents could be construed to transfer title, including arguing that the intention to transfer was clear, and that Encap Technologies was simply acting for Encap Holding.  Regardless of what the intention of the parties may have been, the documents simply did not reflect this intent.

Intellectual Ventures also deployed the panacea for chain of title defects — the confirmatory assignment.  However,  as the ALJ noted, “such after-the-fact attempts to alter the plain language of an assignment agreement during litigation cannot establish standing.”  Federal law requires that a complainant establish standing at the time the complaint is filed.

The ALJ noted that Intellectual Ventures best argument was for reformation of the contracts conveying title so as to effectuate the obvious intent of the parties and permit the plaintiffs to claim rights as patent owners. Case law supports such reformation in a number of instances, but unfortunately for Intellectual Ventures, while a court has the power to reform a contract, the ITC is not a court, and lacks the authority to reform the agreements which on their face showed that Intellectual Ventures lacked ownership and therefore standing.

While Intellectual Ventures might have obtained a better result in a district court than before the ITC, the case is reminder of the importance of minding the chain of title, each link of which must be tested to ensure that assignor and assignee in fact existed at the time.

 

Federal Circuit: The Second Circuit Would Agree with the Third, Fourth, Fifth, Sixth, and Ninth Circuits that Octane Fitness Applies to Lanham Act Claims

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In Romag Fasteners, Inc. v. Fossil, Inc., [2016-1115, 2016-1116, 2016-1842] (August 9, 2017), the Federal Circuit vacated and remanded the district court’s award of attorneys fees to Romag under 35 U.S.C. § 285 but not under the identically worded 15 U.S.C. § 1117(a).

Romag has successfully sued defendants for infringement of U.S. Patent
No. 5,722,126 and U.S. Trademark Reg. No. 2,095,367.  Under the Patent Act and the Lanham Act, “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285; 15 U.S.C. § 1117(a).

Applying the Octane standard, the district court found that Romag was entitled to attorney’s fees under § 285 of the Patent Act because Fossil did not “withdraw [anticipation and obviousness] defenses with prejudice until
after trial,” and because Fossil’s “patent invalidity defense of indefiniteness bordered on frivolous.”  With respect to the Lanham Act, the district court applied the prevailing Second Circuit precedent with respect to 15 U.S.C. § 1117(a) that “allows recovery of a reasonable attorney’s fee only on evidence of fraud or bad faith.”

Before Octane, the Second Circuit allowed recovery of attorney’s fees under 15 U.S.C. § 1117(a) only if there was bad faith or willful infringement on the part of the defendants.  However the Federal Circuit found that there is intervening relevant Supreme Court authority which, we think, would lead the Second Circuit to follow other circuits which have held that the Octane standard applies to the Lanham Act.

The Federal Circuit noted that since Octane was decided, the Third, Fourth, Fifth, Sixth, and Ninth Circuits have all held that Octane applies to Lanham Act Cases as well, and that no circuit has specifically considered Octane and then declined to apply it to the Lanham Act. Thus the Federal Circuit concluded that the Second Circuit would hold that, in light of Octane, the Lanham Act should have the same standard for recovering attorney’s fees as the Patent Act.  Thus, the Federal Circuit vacated the denial of attorneys fees, and remanded the case.

On the issue of attorneys fees on the patent infringement claim, the Federal Circuit likewise vacated the award.  The Federal Circuit noted that a district court must consider the totality of circumstances, including the conduct of the prevailing party that is seeking attorney’s fees.  The Federal Circuit found that the district court erred in declining to consider, in connection with its totality of circumstances analysis, Romag’s earlier litigation misconduct. Romag’s misconduct cannot be disregarded on the theory that failure to award fees is equivalent to double-sanctioning Romag.  In fact the Federal Circuit said that the fact that Romag’s misconduct has already been sanctioned should be weighed more heavily, rather than be excluded, in the 35 U.S.C. § 285 analysis.

This Federal Circuit remanded the case to the district court to consider the Lanham Act and the Patent Act attorney’s fees and the claimed expert fees under the correct standard, free of the errors it identified.

Wait Your Turn: No Exception to Final Judgment Rule for Appeal of Denial of Motions to Compel

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In Amgen Inc. v. Hospira, Inc., [2016-2179] (August 10,. 2017), the Federal Circuit dismissed Amgen’s appeal of the district court’s denial of its motion to compel for lack of jurisiction, and rejected Amgen’s petition for mandamus to compel the discovery.

The parties’ dispute arises from the disclosure requirements
of the BPCIA, which the Supreme Court recently explained:

The BPCIA sets forth a carefully calibrated scheme for preparing to adjudicate, and then adjudicating, claims of [patent]  infringement resulting from the approval of “biological products” by the federal Food and Drug Administration (“FDA”).

Hospira is attempting to market a biosimilar to Amgen’s EPOGEN® product, and was resisting disclosure of the cell culture medium used in the manufacture of its product, while Amgen was arguing that this was part of the “the process . . .used to manufacture the biological product” that the BPCIA required disclosure.

The Federal Circuit noted that ordinarily, an appeal must be from a “final” judgment that ends the litigation on the merits and leaves nothing for
the court to do but execute the judgment. The collateral order doctrine provides a narrow exception to this general rule, but the Federal Circuit found that the denial of Amgen’s motion to compel did not fall within this narrow exception because it was not “effectively unreviewable on appeal from a final judgment.

Amgen alternatively sought mandamus under the All Writs Act ordering the district court to compel discovery. The Federal Circuit observed that mandamus is a drastic remedy reserved for the most “extraordinary causes.” Amgen would have to show that it has no other adequate
means to attain the desired relief, and must demonstrate that its right to the writ’s issuance is “clear and indisputable.”

The Federal Circuit agreed with the district court that Hospira’s
cell-culture media is not relevant to any claim of infringement
of the patents asserted by Amgen or any of Hospira’s defenses or counterclaims.  The Federal Circuit rejected Amgen’s arguments that it could not have identified its cell culture patents pursuant to the BPCIA procedures and obtain Hospira’s cell culture information pursuant to the BPCIA, and thus needed the discovery.

The Federal Circuit found that the district court correctly denied Amgen’s motion to compel on the ground that the composition of Hospira’s cell-culture media was of “no relevance to the patents that are asserted,” and that Amgen has not established a clear and indisputable right to discovery of the information it seeks. It therefore has not established the prerequisites for this court to issue a writ of mandamus.

 

 

The Sport of Kings: Federal Circuit Affirms $3.9 Million Fee Award for Two Week Trial on Patent Ownership

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In AIA America, Inc. v. Avid Radiopharamaceuticals, [2016-2647] (August 10, 2017), the Federal Circuit affirmed the award of attorneys fees because (1) the Seventh Amendment right to a jury trial does not apply to
requests for attorney’s fees under § 285 of the Patent Act, (2) the district court did not err by making factual findings not foreclosed by the jury’s verdict on standing, and (3) AIA’s due process rights were not violated.

The Federal Circuit recounted an elaborate scheme perpetrated by plaintiff AIA and the purported sole inventor Mullan to appropriate for themselves inventions from Imperial College (Imperial) in London and the University of South Florida (USF).  The jury determined that USF did not knowingly and intentionally waive its ownership rights to the invention and that Hardy was a co-inventor. Based on the jury’s verdict, the district court found AIA lacked standing to assert the U.S. Patent Nos. 5,455,169 and 7,538,258, and entered judgment in favor of Avid.  Avid then sought attorneys fees for the case (in which in which twelve witnesses testified and over 200 exhibits were introduced) of $6,508,687.00, and was awarded of $3,943,317.70.

The most interesting aspect of the case is the Special Master’s Report which trimmed the attorneys fees ask from $6.5 to $3.9 million.  Highlights of which include:

  • Reducing by more than half non-attorney time of more than 900 hours at an average rate of $227/hour for docketing and updating case files.
  • Eliminating 300 hours of attorney time ($67,000) for collecting documents, which the Special Master found to be a clerical task.
  • Cutting in half the $35,000 charged by the firms Case Manager/Training Coordinator for communications with the litigation team
  • Cutting by 66% the $470,000 in attorney time for assisting with the preparation of documents.
  • Cutting by 2/3 the $730,000 for preparing three witnesses for their trial testimony, in view of what the Special Master thought was “piling on”
  • Cutting by 2/3 the $633,000 spent on a motion for summary judgement on which more than 12 attorneys billed time
  • Cutting in half the $308,000 spent on motions in limine
  • Cutting in half the $240,000 spent on preparing the pretrial memorandum and preparation for the pretrial hearing
  • Cutting the 654 hours spent preparing the Exhibit List and Witness list by $100,000
  • Cutting by 2/3 the $414,400.50 (846 hours) for preparing an expert witness who was not called at trial
  • Cutting by half the $1,098,654.50 billed for attendance at trial, finding that it difficult to understand the contribution of eight lawyers to the trial.
  • Cutting local counsels fees for merely attending the trial.

All in all, the Special Master reduced the fees requested by $2.9 million. This still resulted in the $3.9 million award affirmed by the Federal Circuit, proving once again that patent litigation is the sport of kings, and that if you have to ask “how much,” you probably can’t afford it.

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You Need Standing to Appeal and IPR Decision, But Not to Participate in the Appeal

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In Personal Audio, LLC v. Electronic Frontier Foundation, [2016-1123] (August 7, 2017), the Federal Circuit affirmed the PTAB’s determination in an IPR that claims 31-35 of U.S. Patent No. 8,112,504, related to a system and apparatus for storing and distributing episodic media files, were unpatentable.

The Federal Circuit first addressed whether the Electronic Frontier Foundation had standing to participate in the appeal after  Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014), where the Federal Circuit held that a challenger who was not a competitor did not have Article III standing to appeal a PTAB determination of patentability.

However the Federal Circuit concluded that because Personal Audio had standing to appeal the invalidation of its patent claims, the Electronic Frontier Foundation did not need Article III standing to merely participate in the proceeding in which the appellant had standing.

On the merits, the Federal Circuit rejected Personal Audio’s objections to the Board’s claim construction, and affirmed the Board’s decision that the claims were anticipated or obvious.

Where in the World . . .

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For most US patent practitioners deciding where to file the first patent application used to be simple: If the invention was made in the US, applications could not be filed outside the US without a foreign filing license, so the typical filing plan was to file the application first in the United States, and then file abroad when the foreign filing license was granted.  However invention these days is not always a single country activity.  Citizens or residents of multiple countries often collaborate, and this can complicate where the first application can/must be filed and whether foreign filing licenses from one or more countries need to be obtained.

WIPO has a helpful web page on international applications and national security considerations. The follow chart based on the WIPO web page can help identify potential foreign filing issues.  If you end up checking one of the boxes on the right hand side of the chart, you should consult the laws (or better yet the lawyers) of that country before proceeding.

Board Was Mixed Up Over Blender Patent

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In Homeland Housewares, LLC v. Whirlpool Corp., [2016-1511](August 4, 2017), the Federal Circuit reversed the PTAB’s determination that Whirlpool’s U.S. Patent No. 7,581,688 relating to household blender was not anticipated by U.S. Patent No. 6,609,821.

The patent claims a pre-programmed, automated blending cycle designed to blend items “by repeatedly dropping to a speed slow enough to allow the blender contents to settle around the cutter assembly, and then returning to a [higher] speed suitable for processing the contents.”  It was it was well known that a user could manually pulse between a high speed and a low speed to achieve efficient mixing.  Thus, in the words of the Federal Circuit “the claimed automatic blending routine was, in the prior art, done manually.”

Claim 1 provided that during pulsing, “the speed of the cutter assembly is reduced from the operating speed to a predetermined settling speed.” The Federal Circuit noted that the Board failed to explicitly construe “settling speed,” even though the parties disagreed about its meaning.  Whirlpool urged a construction the essentially required an empirical determination of the settling speed, while Homeland urged a construction that that “settling speed” means any comparative low speed less than the operating speed.  The Federal Circuit found that both parties were wrong, and that the broadest reasonable construction of “a predetermined settling speed” is a speed that is slower than the operating speed and permits settling of the blender contents.

With this construction the Federal Circuit found that the Wulf reference’s teaching of  alternating between high and low speeds “permits the material being blended to fall back to the region of the cutting knives” met the claim language.  While the Board credited Whirlpool’s exert testimony because it was unrebutted, the  Federal Circuit said that expert testimony should be disregarded when it is plainly inconsistent with the record.

The Federal Circuit found all of the claims anticipated, and vacated the decision of the Board.

Can Unexpected Results Make the Obvious Non-Obvious?

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In Honeywell, Int’l Inc. v. Mexichem Amanco Holdings S.A., [16-1996] (August 1, 2017). the Federal Circuit vacated the USTPO’s reexamination decision invalidating claims 1–26, 31–37, 46–49, 58, 59, 61–68, 70–75, 80, and 81 of U.S. Patent 7,534,366 on a refrigerant and lubricant composition for air conditioning systems.  The Federal Circuit found that the Board erred by improperly relying on inherency to find obviousness and in its analysis of motivation to combine the references.

First, the Board erred in relying on inherency to dismiss evidence showing unpredictability in the art.   The use of inherency in the context of obviousness must be carefully circumscribed because that which may be inherent is not necessarily known and that which is unknown cannot be obvious.  What is important regarding properties that may be inherent, but unknown, is whether they are unexpected. All properties of a composition are inherent in that composition, but unexpected properties may cause what may appear to be an obvious composition to be nonobvious.  The Board, in dismissing properties of the claimed invention as merely inherent, without further consideration as to unpredictability and unexpectedness, erred as a matter of law.

Second, the Board erred in dismissing evidence of unpredictability in the art when it stated that one of ordinary skill would no more have expected failure than success in combining the references, and thus concluded that the person of ordinary skill would be led to routine testing, which would have eventually led to the claimed combination.  The Federal Circuit found that this put the burden on the patent owner to show that a person of ordinary skill in the art would have expected failure.  The Federal Circuit said that instead the the burden is on the Office to show that one of ordinary skill would have had a motivation to combine the references with a reasonable expectation of success.

The use of unexpected results to show non-obviousness is a curious aspect of patent law.  If it truly is obvious to modify a reference, or combine two or more references, then the fact that the obvious modification or obvious combination results in something unexpected, should not change the determination of obviousness, While we might feel like rewarding someone who provides unexpected results, by giving them a patent for doing what is obvious is not what the patent laws prescribe.  In Honeywell, however, the non-obviousness did not hinge on unexpected results, but on the unpredictability of the art.

The Federal Circuit also agreed that the Board improperly relied upon a new ground of rejection, resurrecting a reference cited by the requesters, but not relied upon by the Examiner.

Celebrity Endorsement Provokes Patent Infringement Claim

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Snap Light LLC has sued Kim Kardashian, though her company Kimsaprincess, Inc., and her collaborator Urban Outfitters, Inc., for patent infringement.  As improbable as that sounds, it is illuminating U.S. Patent No. 8,428,644 covers a phone case with a light source for taking improved selfies.

It seems Snap Light’s real complaint is the candle power of Kim Kardashian’s endorsement, rather than the LuMee product that Kim is endorsing.  Snap Light’s comparison of the  patent with the LuMee device shows at least one significant difference between the claims and the accused device:

The patent claims require an “integrated right of Light Emitting Diode (LED) lights,” while the LuMee case has two parallel rows of lights (like a conventional make-up mirror.”  Another issue the patent owner may have to address is whether the claim mixes a method step (“provide”) in a apparatus claim.

The complaint seems more focused on Kim Kardashian’s marketing activities than whether the product infringes.