About “About”: “Less Than About 3%” Includes 4%

Posted on January 5, 2018 by bwheelock

In Monsanto Technology LLC v. E.I. DuPont De Nemours & Co., [2017-1032] (January 5, 2018), the Federal Circuit affirmed the PTAB’s decision that affirmed reexamination examiner’s rejection of claims of U.S. Patent No. 7,790,953, on Soybean Seed and Oil Compositions and
Methods of Making Same as anticipated by or obvious from U.S. Patent No. 6,426,448.

Monsanto argued that misconstruing the Board misconstrued the “about 3% or less” limitation in the ’953 patent to include progeny with a linolenic acid content of 4%, but the Federal Circuit found that the PTAB “reasonably interpreted” Booth’s parent line containing 4% linolenic acid “to be within the scope of ‘about 3%,’” as recited in claim 1 step (a). The Federal Circuit found that the claim language was not instructive, so it turned to the the remainder of the specification. The Federal Circuit noted that Exhibit 9, which purportedly had a linolenic acid content of about 3%, which included a reference that disclosed linolenic acid contents from 2.3% to 4.1%. Thus the Federal Circuit found that the intrinsic evidence supported finding that a person having ordinary skill in the art would reasonably consider “about 3%” to encompass a range that includes 4%, and that Monsanto’s counterarguments were “unavailing.”

Monsanto further argued that the finding of anticipation was not supported by substantial evidence because the anticipation was not inherent, as the PTAB found. The Federal Circuit disagreed, saying that inherent anticipation applies because the prior art “necessarily include the unstated limitation.” Declarations in the record confirmed that the generation identified in the prior art would necessarily result in progeny within the scope of claim 1. Monsanto challenged the PTAB’s reliance on this “non-prior art data” and “secret data” in the declarations, but the Federal Circuit found this was appropriate, saying that Monsanto was confusing prior art with extrinsic evidence used to support what is “necessarily present” in a prior art’s teaching. Extrinsic evidence may be used to interpret the allegedly anticipating reference and to shed light on what it would have meant to a person of ordinary skill in the art. The Federal Circuit said that the declarations did not expand the
meaning of reference or serve as prior art: they demonstrate
what is inherent in the disclosure. Second the declarations were not improper “secret data” — the were not used as prior art , but merely in support of prior art already of record. Third, the Federal Circuit offered no rebuttal evidence to the declarations.

The Federal Circuit further affirmed the obviousness determination, noting that PTAB did not rely solely on its finding of inherent anticipation, but explained that explained that a PHOSITA would have been motivated to modify the reference to meet the requirements of the claims.

The Board Says that IPRs are Adjudicatory Proceedings — What will the Supreme Court Say?

Posted on January 5, 2018 by bwheelock

In Ericsson Inc. v. Regents of the University of Minnesota, [IPR2017-01186, IPR2017-01197, IPR2017-01200, IPR2017-01213, IPR2017-01214, IPR2017-01219 (December 19, 2017), Chief Administrative Patent Judge Ruschke, writing for an expanded panel of the PTAB, held that 11th Amendment immunity is available to States as a defense in an inter partes review. The 11th Amendment states;

The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

So in holding that the 11th Amendment applies, the Board is conceding that it is exercising the “Judicial power” of the United States. This was the issue in Oil States energy Services, LLC v. Greene’s Energy Group, LLC where Petitioner struggled to establish that inter partes reviews are adjudicatory in nature. In Ericsson, the Board conceded the point, stating “IPR is an adjudicatory proceeding of a federal agency from which state entities are immune.”

Ultimately the Board found that Minnesota waived its immunity by enforcing the patents in court.

To the extent that the Supreme Court in Oil States needs to decide whether IPR’s are adjudicatory proceedings involving judicial power, it has the USPTO’s admission in Ericsson.

Provisional Patent Rights

Posted on January 1, 2018 by bwheelock

Provisional patent rights have nothing to do with provisional patent applications, and instead refer to the rights that the owner of a published patent application has to recover a reasonable royalty for pre-issuance infringements. 35 USC §154(d) provides that a patent includes the right to obtain a reasonable royalty from any person who, after the publication of the application infringes a claim of the published application, PROVIDED THAT: (1) the infringer had actual notice of the published patent application (35 USC §154(d)(1)(B)), and (2) the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application (35 USC §154(d)(2). Provisional rights also apply to PCT applications, but if the PCT application was not published in English, the provisional rights only apply after the USPTO receives a translation of the publication in the English language.

Actual Notice

The statute does not explain the “actual notice” requirement. Does it require that the patent applicant provide notice to the accused infringer, or is it sufficient that the accused infringer discovers the publication itself? The legislative history provides some guidance:

The requirement of actual notice is critical. The mere fact that the published application is included in a commercial database where it might be found is insufficient. The published applicant must give actual notice of the published application to the accused infringer and explain what acts are regarded as giving rise to provisional rights.”

Statements on Introduced Bills and Joint Resolution, Senate, S. 1948, Cong. Rec. S14719 (Nov. 17, 1999), available at http://thomas.loc.gov.

Stephens v. Tech Int’l, Inc., 393 F.3d 1269, 1276 (Fed. Cir. 2004) suggests that §154(d) requires notice from the applicant. The Federal Circuit determined that the patent owner “operated within its rights under section 154 when it notified Tech [the defendant] of its potential infringement. The letter represented Spectrum’s adherence to section 154’s requirement that Tech be placed on notice of Spectrum’s future right to obtain royalties if a patent issued in a form substantially identical to the published ‘222 application.”

As to the content of the notice, the legislative history indicates that the notice should “explain what acts are regarded as giving rise to provisional rights.”

It is generally assumed that this notice is similar to the notice requirement of 35 U.S.C. §287(a). Based on §287(a) cases, the actual notice must identify the patent application serial number and the activity that is within the scope of the claims, and should include a proposal to abate the activity.

Substantially Identical

35 U.S.C. §154(d)(2) conditions recovery of a reasonable royalty on the infringed claim in the published application being substantially identical to a claim in the issued patent. In Pandora Jewelry, LLC v. Chamilia, LLC, 2008 U.S. Dist. LEXIS 61064 (D. Md., August 8, 2008), the court addressed the “substantially identical” requirement of §154(d) and concluded that it was the same as that found in §252. The court said:

Under § 252, amended patent claims are “substantially identical” to the original claims “if they are without substantive change.” Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998) (internal quotations omitted). “[I]n determining whether substantive changes have been made, [a court] must discern whether the scope of the claims are identical, not merely whether different words are used.” Id. (citing Slimfold Mfg. Co. v. Kinkead Indus., 810 F.2d 1113, 1115 (Fed. Cir. 1987)). Although not a per se rule, “it is difficult to conceive of many situations in which the scope of a rejected claim that became allowable when amended is not substantively changed by the amendment.” Id. at 1348. Where a substantive change has been made to a claim, the allegedly harmed party has no provisional rights to assert.”

Pandora’s published patent application claimed a reversibly attached band. During prosecution, however, the applicant amended that element to be a “fixedly attached band.” According to the district court in this was done “in order to overcome the PTO’s rejection based on the prior art.” This amendment caused the court to conclude that Pandora had substantively amended the scope of the claim. The court found no provisional patent rights because “Pandora substantively altered the scope of the claim when it amended the patent to require a permanently fixed band. Because the issued patent is not substantially identical to the published patent application, Pandora has no provisional rights to assert.”

In Classen Immunotherapies, Inc. v. Shinogi, Inc., Civil Action No. RWT-13-921 (D. Md, 1914) the Court found that Classen’s allegations under §154(d) must also be dismissed because the published applications for the ‘069 and ‘639 patents were not substantially identical to the patents that ultimately issued:

When a published patent application’s claims are amended such that their scope is changed, the patent is no longer “substantially identical” to its application. See Icon Outdoors, LLC v. Core Res., Inc., Civil Action No. RDB-11-2967, 2013 WL 2476392, at *14-15 (D. Md. June 7, 2013) (holding that a change from “waterproof or windproof” to “waterproof and windproof” in a claim describing the material of “the upper portion of [a] hunting garment” was a “substantive change” precluding the application of § 154(d)). “Although not a per se rule, ‘it is difficult to conceive of many situations in which the scope of a rejected claim that became allowable when amended is not substantively changed by the amendment.’” Pandora Jewelry, LLC v. Chamilia, LLC, Civil No. CCB-06-600, 2008 WL 3307156, at *9 (D. Md. Aug. 8, 2008) (quoting Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1348 (Fed. Cir. 1998)).

Thus, the applications for the ‘069 and ‘639 patents are not “substantially identical” to the patents issued, and §154(d) simply does not apply.

Calculating the Reasonable Royalty

In Parker-Hannifin Corp. v. Champion Labs., 2008 U.S. Dist. LEXIS 61108 (N.D. Ohio 2008), Champion admitted that its oil filter infringed Parker’s Patent No. 6,983,851 and further admitted that it owed a “reasonable royalty” to the patentee for pre-issuance sales based on the provisional rights of 35 U.S.C. 154(d). Because of these admissions, the court was left only to consider the amount of reasonable royalty. The court found the reasonable royalty to be $2.00 per unit by applying the Georgia Pacific factors and to a hypothetical negotiation, awarding a total of $203,524 on these provisional rights. However the Court did not address how the hypothetical negotiation is altered based on the fact that the right infringed was only provisional.

35 U.S.C. §154(d) Provisional Rights.—

(1) In general.— In addition to other rights provided by this section, a patent shall include the right to obtain a reasonable royalty from any person who, during the period beginning on the date of publication of the application for such patent under section 122 (b), or in the case of an international application filed under the treaty defined in section 351 (a) designating the United States under Article 21(2)(a) of such treaty, the date of publication of the application, and ending on the date the patent is issued—

(A)(i) makes, uses, offers for sale, or sells in the United States the invention as claimed in the published patent application or imports such an invention into the United States; or

(ii) if the invention as claimed in the published patent application is a process, uses, offers for sale, or sells in the United States or imports into the United States products made by that process as claimed in the published patent application; and

(B) had actual notice of the published patent application and, in a case in which the right arising under this paragraph is based upon an international application designating the United States that is published in a language other than English, had a translation of the international application into the English language.

(2) Right based on substantially identical inventions.— The right under paragraph (1) to obtain a reasonable royalty shall not be available under this subsection unless the invention as claimed in the patent is substantially identical to the invention as claimed in the published patent application.

(3) Time limitation on obtaining a reasonable royalty.— The right under paragraph (1) to obtain a reasonable royalty shall be available only in an action brought not later than 6 years after the patent is issued. The right under paragraph (1) to obtain a reasonable royalty shall not be affected by the duration of the period described in paragraph (1).

(4) Requirements for international applications.—

(A) Effective date.— The right under paragraph (1) to obtain a reasonable royalty based upon the publication under the treaty defined in section 351(a) of an international application designating the United States shall commence on the date of publication under the treaty of the international application, or, if the publication under the treaty of the international application is in a language other than English, on the date on which the Patent and Trademark Office receives a translation of the publication in the English language.

(B) Copies.— The Director may require the applicant to provide a copy of the international application and a translation thereof.

Concrete Allegations that Claim Elements are Not Well-Understood, Routine, or Conventional Prevents Dismissal under Rule 12(b)(6)

Posted on January 1, 2018 by bwheelock

In Aatrix Software, Inc. v. Green Shades Software, Inc., [2017-1452] (June 1, 2018), the Federal Circuit denied rehearing and rehearing en banc of the panel decision. Judge Moore, concurring, explained that Aatrix stands for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time is a question of fact. As this is a factual question, the normal procedural standards for fact questions must apply, including the rules in the Federal Rules of Civil Procedure applicable to motions to dismiss or for summary judgment and the standards in the Federal Rules of Evidence for admissions and judicial notice.

Turning to the case at hand, Judge Moore noted that when patent eligibility is challenged in a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6),
the Court must apply the well-settled Rule 12(b)(6) standard which is consistently applied in every area of law: A motion to dismiss for failure to state a claim must be
denied if “in the light most favorable to the plaintiff and with every doubt resolved in the pleader’s favor—but disregarding mere conclusory statements—the complaint states any legally cognizable claim for relief.” Judge Moore noted that the second amended
complaint in Aatrix included “concrete allegations . . . that individual elements and the claimed combination are not well-understood, routine, or conventional activity” and that nothing in the limited record at the Rule 12(b)(6) stage refuted these allegations, so there was no legal basis to affirm the dismissal of the complaint.