Note Quite Game Over as Bot M8 Receive a 1-Up from the CAFC
| July 23, 2021
Bot M8 LLC., v. Sony Corporation of American, Sony Corporation, Cony Interactive Entertainment LLC.
Decided on July 13, 2021
Before Dyk, Linn and O’malley, Circuit Judges.
Opinion by Circuit Judge O’malley.
SUMMARY
Briefly, the CAFC addresses the stringency of pleading requirements in cases alleging patent infringement, and that patentees need not prove their case at the pleading stage. Further that “a patentee may subject its claims to early dismissal by pleading facts that are inconsistent with the requirements of its claims” Col. 2, L., 1 to 13.
DETAIL
Bot M8 LLC (herein Bot M8) filed suit against Sony et al (herein Sony) alleging infringement of six patents, five of which remain at issue. U.S. Patent Nos., 8,078,540, 8,095,990, 7,664,988, 8,112,670 and 7,338,363. The asserted patents relate to gaming machines. Bot M8 accused Sony’s PlayStation 4 (PS4) consoles and aspects of Sony’s network of infringing the ‘540, ‘990, ‘998 and ‘670 Patents, while certain PS4 videogames of infringing the ‘363 patent.
- Procedural History
Bot M8 initially sued Sony in the United States District Court for the Southern District of NY, Sony filed an answer, asserting non-infringement and arguing that “the Complaint fails to identify legitimate theories for how the claim limitations of the patent-in-suit are all allegedly satisfied,” along with a motion to transfer the case to California. Col 6, L., 1 to 6. Sony did not move to dismiss the complaint for failure to state a claim.
After the case was transferred, the district court held a case management conference, and the court directed Bot M8 to file an amended complaint specifying “every element of every claim that you say is infringed and/or explain why it can’t be done.” The court instructed Bot M8 that, “if this is a product you can buy on the market and reverse engineer, you have got to do that.” Id. Counsel for Bot M8 responded that they “would be happy to…” and that reverse engineering would not be a problem because it had already “torn down the Sony PlayStation.”
— First Amended Complaint (FAC)
Bot M8 timely filed a FAC, and Sony moved to dismiss. The district court held oral argument on Sony’s motion and at the hearing questioned why Bot M8 had not cited to Sony’s source code in the FAC, a failing Sony did not identify in its motion to dismiss. The Court specifically asked “Why can’t you buy one of these products and take whatever code is on there off and analyze it?” Bot M8 indicated that the PS4 source code is not publicly available.
Consequently, the district court granted Sony’s motion to dismiss as to the ’540, ’990, ’988 and ’670 patents.
Briefly, the district court held the following:
- For the ’990 patent—which describes a mutual authentication mechanism for video games—the court found that “the complaint fails to allege when or where the game program and mutual authentication program are stored together.”
- For the ‘540 patent—which describes an authentication mechanism for video games—the district court found that “the complaint fails to allege when or where the game program and authentication program are stored together on the same memory board.” Because the allegations “do not address where the game program is stored,” the court found them insufficient.
- For the ’988 and ’670 patents—which describe computer program fault inspection—the court found that “the complaint provides no basis to infer the proper timing of the inspection”—i.e., whether a “fault inspection program” is “completed before the game starts.” That Bot M8’s “allegation too closely tracks the claim language to be entitled to the presumption of truth,” and “[n]o underlying allegations of fact are offered.”
The district court explained that Bot M8 “already enjoyed its one free amendment under the rules” and was instructed to “plead well, element-by-element.” The court stated that Bot M8 “does not deserve yet another chance to re-plead,” but nevertheless gave Bot M8 another chance to do so. But added that, if Bot M8 “move[d] for leave to file yet another amended complaint, it should be sure to plead its best case.”
Next, during a discovery hearing, Bot M8 raised, for the first time, concerns about the legality of reverse engineering the PS4’s software, otherwise known as “jailbreaking,” under the Digital Millennium Copyright Act (“DMCA”) and other anti-hacking statutes. The District Court asked Sony to give Bot M8 permission, and Sony agreed.
— Motion for Leave to Amend (Second Amended Complaint – SAC)
Bot M8 filed a motion for leave to amend its complaint and attached a redlined version of its proposed Second Amended Complaint (“SAC”). Bot M8 explained that the SAC was based on new evidence obtained only after Sony gave them permission to “jailbreak” the PS4.
Though Bot M8 moved for leave to file the SAC within the time frame authorized by the district court, the court still denied Bot M8’s motion for lack of diligence. Specifically, the court found that Bot M8 should have done the so-called “jailbreak” early in the proceedings and included the evidence in the FAC. The court explained that Bot M8’s motion was governed by FRCP 16, which authorized modifications “only for good cause.”
The district court found that Bot M8 “could have, and should have” included this evidence early because the issue of reverse engineering was brought up at the case management conference during which they failed to raise on concerns about the legality thereof. In fact, Bot M8’s counsel indicated they had already done it.
Consequently, the proposed amendment was deemed untimely.
—Motion to Reconsider
Bot M8 sought leave to move for reconsideration of the court’s order denying leave to amend, arguing that it could not have reverse engineered the PS4 before obtaining permission to disable the PS4’s access control technology in light of the DMCA.
The district court denied the motion, finding that Bot M8’s “theory of the [DMCA] crossing paths with patent rights remain[ed] unsupported by caselaw,” and Bot M8 “offer[ed] no binding decision directing a different pleading or amendment standard.”
—Summary Judgement under 35 U.S.C. §101
Sony moved for summary judgment of non-infringement and patent ineligibility under 35 U.S.C. § 101 against the ‘363 patent. In applying the two-part test set forth in Alice (Alice Corp. v. CLS Bank International, 573 U.S. 208, 217– 18 (2014)) the district court found claim 1 of the ’363 patent ineligible.
At Alice step one, the court found that claim 1 recites “the abstract idea of increasing or decreasing the risk-to-reward ratio, or more broadly the difficulty, of a multiplayer game based upon previous aggregate results.” At Alice step two, the court concluded that “claim 1 offers no inventive concept.” That, “[t]hough given special names, each part remains a generic computer part invoked to effect the conventional computer task of gathering, manipulating, transmitting, and using data.”
Bot M8 has submitted two expert declarations to establish inventive step, but the court concluded that Bot M8’s expert testimony was insufficient “to forestall summary judgment,” because, for example, the experts failed to articulate any “specific inventive concept in claim 1… other than [a generic reference to] ‘the totality’” based expert report.
- CAFC
- Amending the Original Complaint: Bot M8 argued that the district court erred by “forcing” them to replace their original complaint. The CAFC disagreed, holding that the court merely gave Bot M8 a chance to amend, and Bot M8 chose to file an amended complaint rather than defend the original.
- Dismissal of the FAC: As per FRCP 8(a)(2) “generally requires only a plausible ‘short and plain’ statement of the plaintiff’s claim,” showing that the plaintiff is entitled to relief. Skinner, 562 U.S. at 530. To survive a motion to dismiss under Rule 12(b)(6), a complaint must “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555).
Initially, the CAFC disagreed with the districts approach of instructing Bot M8 that it must “explain in [the] complaint every element of every claim that you say is infringed and/or explain why it can’t be done.” The CAFC reiterated that a plaintiff “need not ‘prove its case at the pleading stage.’” That, a plaintiff is not required to plead infringement on an element-by-element basis.
Instead, it is enough “that a complaint place the alleged infringer ‘on notice of what activity . . . is being accused of infringement.’” Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372, 1379 (Fed. Cir. 2017) (quoting K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1284 (Fed. Cir. 2013)). See Twombly, 550 U.S. at 556 (“[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.”)
Thus, “The relevant inquiry under Iqbal/Twombly is whether the factual allegations in the complaint are sufficient to show that the plaintiff has a plausible claim for relief. Iqbal, 556 U.S. at 679. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678. In other words, a plausible claim must do more than merely allege entitlement to relief; it must support the grounds for that entitlement with sufficient factual content. Id.” Col. 14, L., 4 to 13.
As such, the Plaintiff “cannot assert a plausible claim for infringement under the Iqbal/Twombly standard by reciting the claim elements and merely concluding that the accused product has those elements. There must be some factual allegations that, when taken as true, articulate why it is plausible that the accused product infringes the patent claim.” Col. 14, L 22 to 28. That is, a Plaintiff is to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests,” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555).
Having clarified the standard, the CAFC concluded that they agreed with the district court that the allegations as to the ‘540 and ‘990 patents were conclusory, and at times contradictory but disagreed with the dismissal of the ‘988 and ‘670 patents. Here, the CAFC emphasized that the “court simply required too much.”
Briefly, the CAFC held the following:
- For the ’990 patent—which describes a mutual authentication mechanism for video games—the CAFC agreed with the district counts analyzing that found “the complaint fails to allege when or where the game program and mutual authentication program are stored together.”
- For the ‘540 patent—which describes an authentication mechanism for video games—the CAFC agreed with Sony that the FAC actually alleges away from infringement by asserting that the purported “authentication program” is stored on the PS4 motherboard—an allegation that is inconsistent with Bot M8’s infringement theory. That CAFC noted that Bot M8 had taken a “kitchen sink” approach in their complaint, revealing inconsistencies that ended up being fatal.
- For the ’988 and ’670 patents—which describe computer program fault inspection—and completed the inspection before the game starts. Here, the CAFC differed with the district court. Bot M8 argued on appeal that the district court erred in its dismissal because the FAC “includes specific evidence demonstrating that the PS4 includes a fault inspection program that concludes prior to the game starting.” That is, the PS4 displays error codes upon boot up and prior to a game starting, and the CAFC agreed this supports a plausible inference that the PS4’s fault inspection program concluded prior to the start of a game. Sony argued, and the district court agreed, that these passages failed to allege that execution of a fault inspection program completes before a game start, only that they commence during start-up. That CAFC held that Sony, like the district court, “demands too much as this stage of proceedings.”
- Denial of Leave to Amend the FAC: The CAFC ultimately determined that the denial was proper, because Bot M8 did not raise any concerns about its ability to reverse engineer the PS4 until after the district court issued its decision on Sony’s motion to dismiss, thus Bot M8 was not diligent.
Of note, the CAFC stated that while the district court perhaps should not have required reverse engineering of Sony’s products as a prerequisite to pleading claims of infringement, Bot M8 ultimately waived its objection to that obligation when it told the court it was happy to undertake that exercise.
- The ‘363 Patent: After consideration, the CAFC found no error in the districts 101 analysis.
CONCLUSION: Affirmed in part, reversed in part and remanded to the district court for further proceedings regarding infringement of the ’988 and ’670 patents.
- Take-Aways:
- Patentees need not prove their case as the pleading stage. But there must be some factual allegations that, when taken as true, articulate why it is plausible that the accused product infringes the patent claim.
- A patentee may subject its claims to early dismissal by pleading fats that are inconsistent with the requirements of its claims. As here, be mindful of “kitchen sink” approached, that arguments do not end up inconsistent.
- Be mindful of comments made during pre-trail procedures and always strive to be timely. Here, Bot M8’s counsel stated during the case management conference that their client was happy to reverse engineer the PS4 and had already done it, which turned out to be untrue and thus their wait of around 9 weeks to seek authorization to reverse engineer the product provide fatal for a lack of diligence. This ultimately lead to Bot M8 waiving its objection to this obligation.
The “inferior” Board: Supreme Court preserves the Patent Trial and Appeal Board, but empowers the PTO Director with final decision-making authority over Board proceedings
| July 13, 2021
United States v. Arthrex, Inc. (also, Smith & Nephew, Inc. v. Arthrex, Inc., Arthrex, Inc. v. Smith & Nephew, Inc.) (Supreme Court)
Decided on June 21, 2021
Chief Justice Roberts wrote the opinion of the Court, with Justices Alito, Thomas, Breyer, Sotomayor, Kagan, Gorsuch, Kavanaugh, and Barrett variously concurring and dissenting.[1]
Summary
In U.S. v. Arthrex, the U.S. Supreme Court confirmed that the Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board are improperly appointed in violation of the Appointments Clause of the Constitution. The Court held that 35 U.S.C. §6(c), which provided that only the Board may grant a rehearing of a final decision arising out of an inter partes review proceeding, was unenforceable insofar as the provision denied the Director the power to review the Board’s decision. To cure the constitutional infirmity, the Court held that the correct remedy was to require that the Director review decisions by APJs.
Details
When Arthrex, Inc. saw their U.S. Patent No. 9,179,907 being invalidated by the Patent Trial and Appeal Board, in an inter partes review brought by Smith & Nephew, Inc., they appealed to the Federal Circuit, challenging not only the substance of the Board’s Final Written Decision, but also the constitutionality of the Board. Arthrex argued that the appointment of the Administrative Patent Judges (APJs) violated the Appointments Clause of the Constitution. And being unconstitutionally appointed, the APJs had no authority to deprive Arthrex of their rights in their patent.
Arthrex’s constitutionality argument might have started out as a long-shot. It was the last of their four arguments on appeal, and occupied only 7 of their 149-page opening brief. Remarkably, it was the one that brought Arthrex the most success.
The Appointments Clause (Art. II, §2, cl. 2) of the Constitution provides that principal officers in the U.S. government must be appointed by the President “and by and with the Advice and Consent of the Senate”. But the Appointments Clause also provides that inferior officers may be appointed by “the President alone, in the Courts of Law, or in the Heads of Departments.”
The America Invents Act of 2011 established the Patent and Trial Appeal Board as a tribunal within the Executive Branch. The Board sits in panels of at least three members drawn from the PTO Director, PTO Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and APJs. The Secretary of Commerce appoints the members of the Board, except for the Director, who is appointed by the President.
On appeal at the Federal Circuit, the principal question was whether APJs were principal officers or inferior officers, the former requiring appointment by the President as opposed to the Secretary of Commerce.
To answer the question, the Federal Circuit looked mainly to Edmonds v. United States, 520 U.S. 651 (1997).
In Edmonds, the Supreme Court explained that “[w]hether one is an ‘inferior’ officer depends on whether he has a superior”, and “‘inferior officers’ are officers whose work is directed and supervised at some level by others who were appointed by Presidential nomination with the advice and consent of the Senate”. Edmonds, 520 U.S. at 662-63. The Supreme Court in Edmonds articulated three factors that aided in distinguishing between principal and inferior officers: (1) whether an appointed official has the power to review and reverse the officers’ decision; (2) the level of supervision and oversight an appointed official has over the officers; and (3) the appointed official’s power to remove the officers. Id. at 664-65. The central consideration was the “extent of direction or control” that the appointed officials had over the officers, because the objective was to preserve the chain of command down from the President, so that “political accountability” may be preserved. Id. at 663.
Following Edmonds,the Federal Circuit found that APJs were principal officers due to the lack of any presidentially appointed officials who could review decisions by APJs, as well as the lack of unfettered authority on the part of the Secretary of Commerce and Director to remove APJs at will. Because APJs were found to be principal officers, their appointments by the Secretary of Commerce, instead of the President, violated the Appointments Clause.
Having found a constitutional violation, the Federal Circuit then fashioned a remedy that severed and invalidated the statutory limitations on the removal of APJs. The Federal Circuit reasoned that making APJs removable at will would render them inferior officers. The Federal Circuit also determined that, because the invalidity decision against Arthrex’s patent was issued by an unconstitutionally appointed Board, the decision must be vacated and remanded to the Board for a fresh hearing before a panel of new, constitutionally appointed APJs.
“This satisfied no one”, as the Supreme Court reflected in U.S. v. Arthrex.
All the parties involved in the Federal Circuit appeal—the government, Arthrex, Smith & Nephew—requested the Court’s review of different aspects of the Federal Circuit’s decision.
Nevertheless, the question before the Court was the same one that faced the Federal Circuit: “[W]hether the PTAB’s structure is consistent with the Appointments Clause, and the appropriate remedy if it is not.”
In a divided 5-4 decision, the Court agreed with the Federal Circuit that APJs were unconstitutionally appointed, but disagreed with the Federal Circuit on the appropriate remedy.
The Court began with the premise that “Congress provided that APJs would be appointed as inferior officers, by the Secretary of Commerce as head of a department”. However, the nature of the APJs’ authority was such that they were really acting as principal officers.
The problem was the lack of supervision over the APJs’ decision-making:
What was “significant” to the outcome [in Edmonds]—review by a superior executive office—is absent here: APJs have the “power to render a final decision on behalf of the United States” without any such review by their nominal superior or any other principal officer in the Executive Branch. The only possibility of review is a petition for rehearing, but Congress unambiguously specified that “[o]nly the Patent and Trial Appeal board may grant rehearings.” [35 U.S.C. § 6(c)]. Such review simply repeats the arrangement challenged as unconstitutional in this suit.
The current setup “diffuses” accountability. The Court recognized that “[he, the Director] is the boss” of APJs in most ways, but the Court was troubled by the Director’s powerlessness over the one source of APJs’ “significant authority”—their power to issue decisions on patentability. In that regard, the Director is relegated to the ministerial duty of issuing a certificate canceling or confirming patent claims. As the Court noted, “[t]he chain of command runs not from the Director to his subordinates, but from the APJs to the Director”.
The government attempted to drum up the Director’s influence over the Board’s decision-making. The government argued that it was the Director who decided whether to initiate inter partes reviews, who could designate APJs predisposed to his views to hear a case, who could vacate an institution decision “if he catches wind of an unfavorable ruling on the way” as long as he intervened before a final written decision, who could “manipulate the composition of the PTAB panel that acts on the rehearing petition”, who could “‘stack’ the panel at rehearing, and who could appoint himself to a panel to reverse a decision at rehearing.
Putting aside the troubling due process and fairness concerns raised by the alleged influences of the Director, the Court criticized the government for creating “a roadmap for the Director to evade a statutory prohibition on review [i.e., 35 U.S.C. § 6(c)] without having him take responsibility for the ultimate decision”:
Even if the Director succeeds in procuring his preferred outcome, such machinations blur the lines of accountability demanded by the Appointments Clause. The parties are left with neither an impartial decision by a panel of experts nor a transparent decision for which a politically accountable officer must take responsibility. And the public can only wonder “on whom the blame or the punishment of a pernicious measure, or series of pernicious measures ought really to fall.”
All this led to the Court’s conclusion that “the unreviewable authority wielded by the APJs during inter partes review is incompatible with their appointment by the Secretary to an inferior office”.
For a solution, the Court disagreed with the Federal Circuit that at-will removal of APJs was the answer. The unconstitutionality of the APJs’ appointments lay in the unreviewability of their decisions, and the Federal Circuit’s proposed solution did not adequately address that problem. The solution must instead empower the Director to review Board decisions:
In our view, however, the structure of the PTO and the governing constitutional principles chart a clear course: Decisions by APJs must be subject to review by the Director.
More particularly, the Court explained that:
The upshot is that the Director cannot rehear and reverse a final decision issued by APJs. If the Director were to have the “authority to take control” of a PTAB proceeding, APJs would properly function as inferior officers.
We conclude that a tailored approach is the appropriate one: Section 6(c) cannot constitutionally be enforced to the extent that its requirements prevent the Director from reviewing final decisions rendered by APJs….The Director may accordingly review final PTAB decisions and, upon review, may issue decisions himself on behalf of the Board. Section 6(c) otherwise remains operative as to the other members of the PTAB.
The Director’s decision is then subject to judicial review:
When reviewing such a decision by the Director, a court must decide the case “conformably to the constitution, disregarding the law” placing restrictions on his review authority in violation of Article II.
Finally, the Court vacated the Federal Circuit’s decision to grant Arthrex a hearing before a new panel of APJs. The Court found sufficient their remedy of a limited remand to the Director to determine whether to rehear Smith & Nephew’s inter partes review petition.
There are few interesting aspects to the Court’s Arthrex opinion.
The Court’s holding is narrow. It applies only to 35 U.S.C. §6(c), which currently provides that “[o]nly the Patent Trial and Appeal Board may grant rehearings”, and only to the extent that section 6(c) prohibits the Director from reviewing the Board’s decisions. The holding also applies only to inter partes reviews—the Court is explicit that “[w]e do not address the Director’s supervision over other types of adjudications conducted by the PTAB, such as the examination process for which the Director has claimed unilateral authority to issue a patent”.
In other words, the Court’s decision is unlikely to bring any radical changes to the Board.
It is also notable that Chief Justice Roberts wrote the majority opinion in Arthrex. In Oil State energy Services, LLC v. Greene’s Energy Group, LLC, 138 S.Ct. 1365 (2018), the Supreme Court held that patent grants involved public rights and the Board’s adjudication of patents without a jury, despite not being an Article III tribunal, was constitutionally permissible. But Chief Justice Roberts joined in the dissenting opinion in that case. The dissent was resolute that the Director and the Board, that is, “a politically appointee and his administrative agents, instead of an independent judge”, should not be permitted to adjudicate patents. Id. at 1380. That is, patent adjudication should be insulated from politics. During the oral argument in Oil State, Chief Justice Roberts raised due process concerns over the Director’s ability to influence Board decisions through panel stacking.
Yet, in Arthrex, Chief Justice Roberts would give the politically appointed Director plenary power to review, modify, and even nullify a Board decision, potentially making the Board vulnerable to political influences. How can Chief Justice Roberts’ positions in Oil State and Arthrex be reconciled?
The Court’s decision in Arthrex also touches on the complex relationship between the PTO, which is an agency, the Board, which is an adjudicatory within the agency, and the Administrative Procedure Act (APA) that is supposed to govern their actions.
The Federal Circuit has suggested in the past that proceedings before the Board are APA-governed formal adjudication subject to the formal adjudication procedures set forth in 5 U.S.C. §§556-557. However, the Court in Arthrex suggested that Board proceedings were actually “adjudication that takes place outside the confines of §557(b)”. If Board proceedings are not subject to the APA, then what, if any, regulatory scheme governs Board proceedings to ensure procedural fairness?
In addition, the plain language of the statutes seems to already authorize the Director to grant rehearings. Section 6(a) provides that “[t]he Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges shall constitute the Patent Trial and Appeal Board”, and section 6(c) provides that “[o]nly the Patent Trial and Appeal Board may grant rehearings”. Is the Court really rewriting the statute by giving the Director reviewing powers? Or is the Court merely making explicit what Congress had already intended?
Interestingly, the Court’s opinion referred to the Trademark Modernization Act of 2020, which makes explicit that “the authority of the Director…includes the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board”. The Trademark Modernization Act of 2020 thus shields the Trademark Trial and Appeal Board from copycat constitutional challenges.
What now?
The PTO will now need to issue guidance on how the Court’s holding will be implemented. The PTO’s existing Standard Operating Procedure 2[2] appears to provide a procedural framework for requesting rehearing by the Director, as the SOP2 already establishes the Director’s authority to convene a “Precedential Opinion Panel” to review decisions in cases before the Board and determine, in the Director’s sole discretion, whether to order sua sponte rehearing.
The PTO has its work cut out. Following the Federal Circuit’s decision in Arthrex, Inc. v. Smith & Nephew, Inc., the Chief Administrative Patent Judge of the Board issued a general order holding in abeyance more than 100 Board decisions from post-grant proceedings, which were remanded as a result of the Federal Circuit’s Arthrex decision. See General Order in Cases Remanded under Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019) (Boalick, Chief APJ, PTAB, May 2020).
Also complicating the situation is the current absence of a Director at the PTO. Is a Commissioner of Patent, serving as an Acting Director, constitutionally authorized to review and potentially modify Board decisions? Can the Secretary of Commerce step in while the PTO awaits a new Director?
[1] This review will focus only on the majority opinion.
[2] https://www.uspto.gov/sites/default/files/documents/SOP2%20R10%20FINAL.pdf.
Tags: administrative patent judge > Administrative Procedure Act > Constitutional Law > Patent Trial and Appeal Board (PTAB) > Supreme Court
DOCTRINE OF PROSECUTION DISCLAIMER ENSURES THAT CLAIMS ARE NOT CONSTRUED ONE WAY TO GET ALLOWANCE AND IN A DIFFERENT WAY TO AGAINST ACCUSED INFRINGERS
| July 8, 2021
SpeedTrack, Inc. v. Amazon.com, Inc. et al.
Decided on June 3, 2021
Prost (author), Bryson, and Reyna
Summary:
The Federal Circuit affirmed the district court’s claim construction orders regarding the hierarchical limitations recited in the SpeedTrack’s ’360 patent based on Applicants’ arguments and claim amendments made during the prosecution of the ’360 patent.
Details:
The ’360 patent
SpeedTrack owns U.S. Patent No. 5,544,360 (“the ’360 patent), which is directed to providing “a computer filing system for accessing files and data according to user-designated criteria.” The ’360 patent discusses that prior-art systems “employ a hierarchical filing structure” which could be very cumbersome when the number of files are large or file categories are not well-defined. In addition, the ’360 patent discusses that some prior-art systems are subject to errors when search queries are mistyped and restricted by the field of each data element and the contents of each field.
However, the ’360 patent discloses a method that uses “hybrid” folders, which “contain those files whose content overlaps more than one physical directory,” for providing freedom from the restrictions caused by hierarchical and other computer filing systems.
Representative claim 1 recites a three-step method: (1) creating a category description table containing category descriptions (having no predefined hierarchical relationship with such list or each other); (2) creating a file information directory as the category descriptions are associated with files; and (3) creating a search filter for searching for files using their associated category descriptions.
1. A method for accessing files in a data storage system of a computer system having means for reading and writing data from the data storage system, displaying information, and accepting user input, the method comprising the steps of:
(a) initially creating in the computer system a category description table containing a plurality of category descriptions, each category description comprising a descriptive name, the category descriptions having no predefined hierarchical relationship with such list or each other;
(b) thereafter creating in the computer system a file information directory comprising at least one entry corresponding to a file on the data storage system, each entry comprising at least a unique file identifier for the corresponding file, and a set of category descriptions selected from the category description table; and
(c) thereafter creating in the computer system a search filter comprising a set of category descriptions, wherein for each category description in the search filter there is guaranteed to be at least one entry in the file information directory having a set of category descriptions matching the set of category descriptions of the search filter.
District Court
In September of 2009, SpeedTrack sued retail website operations for infringement of the ’360 patent. The Northern District construed the hierarchical limitation with the below construction (relied in part on disclaimers made during prosecution):
The category descriptions have no predefined hierarchical relationship. A hierarchical relationship is a relationship that pertains to hierarchy. A hierarchy is a structure in which components are ranked into levels of subordination; each component has zero, one, or more subordinates; and no component has more than one superordinate component.
After that, SpeedTrack moved to clarify the district court’s construction regarding prosecution-history disclaimer.
Subsequently, the district court issued a second claim construction order by adding the following clarification in its first order:
Category descriptions based on predefined hierarchical field-and-value relationships are disclaimed. “Predefined” means that a field is defined as a first step and a value associated with data files is entered into the field as a second step. “Hierarchical relationship” has the meaning stated above. A field and value are ranked into levels of subordination if the field is a higher-order description that restricts the possible meaning of the value, such that the value must refer to the field. To be hierarchical, each field must have zero, one, or more associated values, and each value must have at most one associated field.
In order to support its second claim construction order, the district court analyzed SpeedTrack’s prosecution statements (for their clear disavowal of category descriptions based on hierarchical field-and-value relationships).
The Federal Circuit
The CAFC handled the issue of claim construction.
SpeedTrack acknowledged that the hierarchical limitation was added during the prosecution of the ’360 patent to overcome the Schwartz reference.
During the prosecution, Applicants distinguished their invention from Schwartz by arguing that “unlike prior art hierarchical filing systems, the present invention does not require the 2-part hierarchical relationship between fields or attributes, and associated values for such fields or attributes.”
In addition, Applicants argued that “the present invention is a non-hierarchical filing system that allows essentially ‘free-form’ association of category descriptions to files without regard to rigid definitions of distinct fields containing values.”
Finally, Applicants argued that “this distinction has been clarified in the claims as amended by the addition of the following language in all of the claims: ‘each category description comprising a descriptive name, the category descriptions having no predefined hierarchical relationships with such list or each other.’”).
The CAFC agreed with the district court’s assessment that predefined field-and-value relationships are excluded from the claims.
The CAFC disagreed with SpeedTrack’s argument that the “category descriptions” of the ’360 patent are not the fields of Schwartz and that the hierarchical limitation precludes predefined hierarchical relationships only among category descriptions.
SpeedTrack argued that Applicants distinguished Schwartz on other grounds. However, the CAFC did not agree with this argument.
In addition, the CAFC noted that SpeedTrack’s position contradicts its other litigation statements. “Ultimately, the doctrine of prosecution disclaimer ensures that claims are not ‘construed one way in order to obtain their allowance and in a different way against accused infringers.’” Aylus Networks, Inc. v. Apple Inc., 856 F.3d 1353, 1360 (Fed. Cir. 2017) (quoting Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1576 (Fed. Cir. 1995)).
Finally, the CAFC noted that both of the first and second construction orders acknowledged the disclaimer.
Therefore, the CAFC affirmed the district court’s final judgement of noninfringement.
Takeaway:
- Applicants need to be careful about claim amendments and arguments made during the prosecution of their patents.
- Litigation statements, while not inventors’ prosecution statements and do not demonstrate prosecution-history disclaimer, can strengthen the court’s reasonings on the prosecution history.
