UNDERSTANDING STANDING IN AN IPR
| May 4, 2021
The enactment of inter partes review (IPR) on September 16, 2012 as part of the America Invents Act has created some interesting issues. IPRs replaced the prior inter partes reexamination process. In an inter partes reexamination, claims of a patent are reexamined (as in a “normal” examination by an examiner) to confirm/determine patentability. In an IPR, however, claims are challenged, i.e., the validity of the claims is determined by the Patent Trial and Appeal Board (PTAB). Such a validity challenge had previously been conducted by a jury in district courts instead of by an administrative agency such as the PTAB.
The use of an administrative agency has raised several issues under the U.S. Constitution. For example, the Supreme Court heard oral argument on March 1, 2021 in Arthrex, Inc. v. Smith & Nephew, Inc. to decide (1) whether, for purposes of the Appointments Clause, U.S. Const. Art. II, § 2, Cl. 2, administrative patent judges of the US Patent and Trademark Office are principal officers who must be appointed by the President with the Senate’s advice and consent, or “inferior officers” whose appointment Congress has permissibly vested in a department head, and (2) Whether, if administrative patent judges are principal officers, the court of appeals properly cured any Appointments Clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. 7513(a) to those judges.
Another issue which may find its way to the Supreme Court is standing for a party to appeal a decision in an IPR. The U.S. Constitution limits its grant of the “judicial power” to “Cases” or “Controversies” under Article III, § 2. As such, any party that appeals to the CAFC must have standing under Article III for the CAFC to consider the merits of the case. For a party to have standing, it must show (1) an injury in fact, (2) a casual connection between the injury complained of, and (3) a likelihood that the injury will be redressed by a favorable decision. See Lujan v. Defenders of the Wildlife, 504 U.S. 555, 560-561 (1992). An injury in fact is a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Id. at 560.
Standing has become an issue in IPRs since any party can file a request for an IPR, but not every party can appeal. A person does not need to have Article III standing to file an IPR petition and obtain a PTAB decision because Article III requirements do not apply to administrative agencies like the PTAB. On the other hand, Article III requirements apply to the CAFC.
The philosophy for the requirement of standing is to ensure “that the plaintiffs have a stake in the fight and will diligently prosecute the case . . . while, at the same time, ensuring that the claim is not abstract or conjectural so that resolution by the judiciary is both manageable and proper.” Canadian Lumber Trade All. V. United States, 517 F.3d 1319, 1333 (FED. Cir. 2008). This philosophy is similar to the duty of disclosure during patent prosecution to ensure that the strongest patent claims issue.
Several recent cases are of interest in that some parties were deemed to have standing whereas others were deemed to lack standing. One of the most recent cases on standing is General Electric Company v. Raytheon Technologies Corporation decided on December 23, 2020 which found that GE did have standing to appeal. What makes this case particularly interesting is another decision earlier that year between the same parties where GE was found to lack standing.
So, what was the difference in these cases?
We need to examine several decisions from the CAFC to have a better understanding of standing in an IPR. All these decisions involve competitors. These cases include:
Phigenix, Inc. v. Immunogen, Inc., 845 F.3d 1168 (Fed. Cir. 2017)
JTEKT Corp. v. GKN Auto. Ltd., 898 F.3d 1217 (Fed. Cir. 2018)
AVX Corporation v. Presidio Components, Inc., 923 F.3d 1357 (Fed. Cir. 2019)
General Electric Company v. United Technologies Corporation, F.3d 1xxx (Fed. Cir. 2020)
General Electric Company v. Raytheon Technologies Corporation, F.3d 1xxx (Fed. Cir. 2020)
Phigenix – No Standing
Phigenix failed to establish that it had suffered an injury in fact. Phigenix argued that the statutory estoppel provision of 35 U.S.C. 315(e) was an injury in that it would be prevented from asserting the same challenges if Immunogen asserted the claims against Phigenix in the future. The CAFC held that such would not be an injury in fact when Phigenix is not engaged in any activity that would give rise to a possible infringement suit. Phigenix did not manufacture any products that could be considered to infringe the patent in question. Phigenix argued that the mere existence of the patent in question encumbered its efforts to license its own patent directed to similar cancer treatments. Phigenix argued it suffered an economic injury in the form of lost licensing revenue due to competition presented by the existence of the patent involved in the IPR. The CAFC found such to be hypothetical and only supported by conclusory statements in the submitted declarations. There was no evidence of the risk of infringement.
JTEKT – No Standing
In JTEKT, the record was not sufficient to establish standing. JTEKT had argued competitive harm. JTEKT had not admitted to engaging in infringing activity because its product had not yet been finalized. The CAFC held that JTEKT had failed to show concrete plans for future potentially infringing activity, and therefore lacked standing to appeal (noting that “typically in order to demonstrate the requisite injury in an IPR appeal, the appellant/petitioner must show that it is engaged or will likely engage ‘in an[] activity that would give rise to a possible infringement suit,’. . . or has contractual rights that are affected by a determination of patent validity” (quoting Consumer Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258, 1262 (Fed. Cir. 2014)).
AVX – No Standing
AVX addressed the “competitor standing doctrine” in IPR appeals. This doctrine, in non-patent contexts, recognized that government actions that “alter competitive conditions” may give rise to injuries that suffice for standing. Clinton v. City of New York, 524 U.S. 417, 433 (1998). AVX argued that the PTAB’s decision upholding claims in a patent injures AVX because the decision reduces AVX’s ability to compete with Presidio. The panel of the CAFC (Newman, O’Malley and Taranto, opinion by Taranto) rejected this argument, holding that “the rationale for finding standing in those cases does not carry over to support standing in the present context, where AVX has no present or nonspeculative interest in engaging in conduct even arguably covered by the patent claims at issue.”
The panel in AVX found that the government action of upholding specific patent claims is different in that they “do not address prices or introduce new competitors, but rather give exclusionary rights over precisely defined product features.”
General Electric Company (I) – No Standing
The first GE case held that the evidence of record did not support standing. In the decision before the panel of Reyna, Taranto and Hughes, the CAFC noted that the two declarations of record were the only evidence of standing before the court, but each declaration failed to show “a concrete and imminent injury to GE related to the ‘605 patent.”
The concurring opinion by Hughes is interesting in that he believed that AVX was incorrectly decided. Hughes stated that he does
“not believe that a Board decision erroneously upholding a competitor’s patent in an IPR is meaningfully different from the type of government actions held to invoke competitor standing in those cases. Thus, absent our holding in AVX Corp., I would conclude that GE possesses Article III standing in this appeal.”
Although Hughes believed that GE should be considered to have standing to appeal, he was bound by the precedent of the AVX decision indicating that the competitor standing doctrine does not apply in the patent context. Even when parties are direct competitors, Hughes noted that decisions of the CAFC have required an unsuccessful IPR appellant/petitioner to show concrete current or future plans to infringe the challenged patent. Hughes’ concurring opinion may have been instructive to GE in what is needed to show that it has suffered an injury-in-fact.
General Electric Company (II) –Standing
In the second GE decision (panel[1] of Lourie, Reyna and Hughes), GE was found to have standing. The decision specifically noted that GE had remedied the deficiencies in GE I. More specifically, the evidence submitted by GE has shown concrete plans raising a substantial risk of future infringement. In GE I, the CAFC had faulted GE for contending only that some unspecified amount of time and money was expended to consider engine designs that could potentially implicate the patent at issue in that case.GE also did not provide any evidence that it had designed a geared-fan engine covered by the patent at issue. Considered as a whole, the allegations “were not just speculative, but overtly theoretical.”
In GE II, however, these deficiencies were addressed and remedied in that:
(1) GE has alleged that it has conceived a geared turbofan engine design that Raytheon would likely argue falls within the scope of the asserted claims.
(2) GE has alleged specific ongoing expenditures to continue to develop and refine that design.
(3) GE provides that this geared turbofan engine design is its preferred design to offer its customers for the next-generation narrow body market segment.
(4) GE identifies an Airbus aircraft program where it intends to offer this design for sale to Airbus.
(5) GE supports the concreteness of its plans by showing that it in fact submitted the design to Airbus for the preliminary stage of the bidding process, and it has not yet submitted any other design.
(6) GE alleges that it believes Raytheon would accuse this specific design of infringement.
Where do we now stand on standing?
As can be seen, the current status for establishing standing in an IPR appeal is to almost admit to infringement. Of course, a competitor does not typically want to make such an admission. It remains to be seen whether there is any movement away from the rigid precedent set in AVX toward a recognition of the competitor standing doctrine in patent cases. This issue could quite possibly make its way to the Supreme Court.
[1] Note that Taranto, the author of the AVX decision, and a panel member of GE I was not on this panel.
STANDING FOR A SUBSTITUTED PARTY IS NOT A CROCK
| April 26, 2021
MOJAVE DESERT HOLDINGS, LLC, v. CROCS, INC.
Decided February 11, 2021
NEWMAN, DYK, and O’MALLEY (Opinion by Dyk)
This precedential decision further clarifies that article III standing exists for a successor in interest. Article III standing had also been an issue in another recent decision from the CAFC in General Electric Company v. Raytheon Technologies Corporation decided on December 23, 2020 as reported by Miki Motohashi. The issue arises in the present case due to a change in the real party in interest while an appeal was pending in an inter partes reexamination.
The following timeline illustrates how this issue arose.
August 6, 2012 – Crocs sued U.S.A. Dawgs, Inc. for patent infringement of U.S. Design No. D517,789. Many should be familiar with this design:
August 24, 2012 – U.S.A. Dawgs filed a third-party request for inter partes reexamination.
November 19, 2012 – The USPTO orders reexamination. The district court stays the infringement proceedings in light of the reexamination.
2012 – 2018 – Reexamination proceeds with an anticipation rejection under 35 U.S.C. 102(b), which is appealed by Crocs.
January 31, 2018 – U.S.A. Dawgs files for Chapter 11 bankruptcy.
July 20, 2018 – The bankruptcy court approves the sale of all of U.S.A. Dawgs’s assets to Dawgs Holdings. The bankruptcy court stated that the sale was not free and clear of any claims Crocs may hold for patent infringement post-closing date.
August 15, 2018 – Dawgs Holdings assigns all rights, including explicitly the claims asserted by U.S.A. Dawgs in the infringement action and the inter partes reexamination, to Mojave Desert Holdings.
October 23, 2018 – U.S.A. Dawgs dissolves but continues to exist for limited purposes including “prosecuting and defending suits.”
July 18, 2019 – Mojave files a petition with the Board to change the real party in interest from U.S.A. Dawgs to Mojave.
August 19, 2019 – The Board dismisses and expunges the petition based on three reasons: (1) the initial transfer of assets from U.S.A. Dawgs to U.S.A. Dawgs Holdings appears to be silent about rights to the reexamination, (2) based on its interpretation of the transfer of assets, Mojave was not a party to the reexamination and did not have standing to update the real party in interest[1], and (3) Mojave did not file its submission within 20 days of any change of the real party-in-interest as required by 37 C.F.R. § 41.8(a), making it untimely.
September 10, 2019 – The Board reverses the Examiner’s rejection; U.S.A. Dawgs appeals to the CAFC sometime after.
December 13, 2019 – U.S.A. Dawgs and Mojave file a motion to substitute (under Federal Rule of Appellate Procedure 43(b)).
The CAFC addresses the motion to substitute in its decision. Although Crocs asserts that the motion should be denied for several reasons, the CAFC disagrees. The decision addresses why five different reasons for denial fail.
I. Crocs asserts the bankruptcy sale did not transfer U.S.A. Dawgs interest as a requester to Dawgs Holdings. This argument fails because the assignment was comprehensive in transferring all the “right, title and interest in, to and under all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible …”. Crocs had argued that this case was like Agilent Technologies, Inc. v. Waters Technology Corp., 811 F.3d 1326 (Fed. Cir. 2016). In Agilent, however, “substantially all” of the assets were transferred such that it was unclear whether Agilent was the successor in interest, unlike the present case which clearly conveyed all.
II. Crocs asserts that the substitution was not timely in that Mojave did not seek substitution for almost a year after it acquired the interest, well beyond the 20 days required by 37 C.F.R. § 41.8(a). In addressing this issue, the CAFC did not read 37 C.F.R. § 41.8(a) as permitting the Board to ignore a transfer of interest, pointing out that the rule is intended to detect conflicts of interest and to enable enforcement of estoppel provisions. The CAFC also pointed out that the rule is not directly related to substitution where in federal courts there is no time limit for a party moving for substitution. In addition, the CAFC pointed out that the Board has permitted parties to continue appeals after a change in the real party-in-interest despite the parties not filing the notices. Thus, the Board erred by not substituting Mojave as the third-party requester while the inter partes reexamination was pending before the Board.
III. Crocs argues that the interest of a requester cannot be assigned under 35 U.S.C § 141. The CAFC pointed out that it has previously concluded that “mere privies” cannot appeal a reexamination due to lacking a cause of action. Furthermore, the CAFC had observed in Agilent that “[w]hile the language of the statute does not explicitly forbid a change in the identity of the third-party requester over the course of the proceeding or on appeal, … it similarly does not appear to address whether and under what circumstances a change of the identity of the third-party requester can occur.” The CAFC noted two lines of Supreme Court cases related to assigning causes of action. Both lines of cases rely on a policy against separating the right to exclude from the right to sue for infringement. Notably, the CAFC states:
But we are aware of no case that suggests that a federal claim is lost when it is transferred together with the assignor’s entire business. Where, as here, the requester’s right has been transferred together with all other assets, there is no reason that the requester’s right to challenge the Board’s decision cannot be effectively transferred. To refuse to recognize such a transfer where the other assets remain subject to infringement liability would create a situation in which the assets remained potentially liable for infringement, but the transferee would have lost the right to challenge patent validity.
Thus, the requester’s right (including its right to appeal) may be transferred at least when it occurs as part of the transfer of the requester’s entire business or assets.
The CAFC also noted that Vaillancourt v. Becton Dickenson & Co., 749 F.3d 1368 (Fed. Cir. 2014) is not contrary. In that case, the inventor had assigned his rights to a company while an inter partes reexamination was pending and before a decision on appeal. When the Board affirmed the examiner’s rejection, the individual could not appeal as the assignee was indisputably the owner when the individual had filed the appeal.
IV. Crocs argues that Mojave lacks standing because it does not face a potential suit for infringement. The CAFC pointed out that Article III of the Constitution limits judicial power to cases and controversies. Standing has three elements of injury in fact, causation and redressability, and these requirements apply on appeal, and with equal force to appeals from administrative agencies to the federal courts.
To establish an Article III injury on appeal from an inter partes reexamination, we have previously held that it is sufficient for an appellant to show that it has engaged in “activity that would give rise to a possible infringement suit.”
The sale agreement specifically provided that the transferred assets were not free and clear of any claims made by Crocs, so that the acquired assets face potential patent infringement claims, and Mojave could also face potential infringement liability because of activities after the bankruptcy sale. In addition, Mojave’s injury is traceable to the challenged patent and would be redressed by a favorable ruling by the CAFC reversing the patentability of the patent, meeting all elements of standing. In a footnote, the CAFC also noted that Mojave may also suffer an Article III injury as a result of false advertising counterclaims.
V. Lastly, Crocs argues that Mojave failed to file a notice of appeal from the Board’s decision. Mojave could not file a notice of appeal because it had not been added as a party. Under Nevada law, however, U.S.A. Dawgs had retained the ability to file a protective notice of appeal which was sufficient to confer jurisdiction to the CAFC.
Since the CAFC held that Mojave is the successor-in-interest, it has standing, and the Board had erred in not substituting Mojave as the third-party requester. Furthermore, the CAFC thought that there is no useful purpose served by remanding such that the appropriate course is to proceed with granting the motion to substitute while also updating the official caption of the decision to reflect Mojave.
Takeaways
Standing to continue as a successor-in-interest is established if it is clear all assets are transferred (a federal claim is not lost when it is transferred together with the assignor’s entire business).
Notice of a change in a real party in interest under 37 C.F.R. 41.8(a) differs from a motion to substitute under Federal Rule of Appellate Procedure 43(b) in that the former has a time limit (20 days) whereas the latter does not have a time limit. There is no apparent penalty for failure to comply with 37 C.F.R. 41.8(a) although this section is entitled “Mandatory notices.”
[1] For patent owners, an assignment is recorded to show that a party is the real party in interest. In this case, since Mojave was not a patent owner but instead a third-party requester.
Who has Standing to Appeal of IPR Decision? And What is Teaching Away?
| April 21, 2021
General Electric Company v. Raytheon Technologies Corporation, No. 2019-1319.
Decided on December 23, 2020
Before Lourie, Reyna and Hughes (Opinion by Hughes).
Summary
Raytheon had ’920 patent which was related to a gas turbine engine. GE filed IPR and PTAB reviewed the claim and found the patent is non-obvious. GE filed a request for rehearing challenging the PTAB’s application of the legal standard for both teaching away and motivation to combine. The PTAB denied the request for rehearing and GE appealed to the CAFC. Raytheon claimed that GE does not have standing to appeal because GE did not have the injury in fact. At the appeal, GE showed a concrete business plan as evidence of injury in fact, and the CAFC found that GE has a substantial risk of future infringement and has standing. Then, the CAFC reviewed the PTAB’s decision on obviousness issue. Upon review, the CAFC found that the PTAB correctly set forth the standard for teaching away, however, applied it erroneously. The CAFC also found that the PTAB lacked substantial evidence for its conclusion that GE did not establish a motivation to combine the prior arts. Therefore, the CAFC vacated the PTAB’s decision and remanded the case to the PTAB.
Details
Background
Raytheon Technologies Corporation (“Raytheon”[1]) filed US Patent No.8,695,920 (“’920 patent”) in 2011 and the patent was issued in April 2014.
In December 2016, General Electric Company (“GE”), a competitor of Raytheon in the industry of commercial aviation, petitioned to the Patent Trial and Appeal Board (“PTAB”) for reviewing the 920 patent’s claims 1-4, 7-14, and 19. GE explained that the claims were obvious based on two prior art references, Wendus and Moxon.
Before the IPR institution Raytheon disclaimed claims 1-4, 7, 8, 17, and 19. The PTAB reviewed only claims 9 -14. After the IPR institution, Raytheon disclaimed 9 and the PTAB only ruled on claims 10-14.
The disputed claims 10-14 were depended on independent claim 9.
9. A method of designing a gas turbine engine comprising:
providing a core nacelle defined about an engine centerline axis;
providing a fan nacelle mounted at least partially around said core nacelle to define a fan bypass flow path for a fan bypass air-flow;
providing a gear train within said core nacelle;
providing a first spool along said engine centerline axis within said core nacelle to
drive said gear train, said first spool includes a first turbine section including be-tween three–six (3–6) stages, and a first compressor section;
providing a second spool along said engine centerline axis within said core nacelle, said second spool includes a second turbine section including at least two (2) stages and a second compressor section;
providing a fan including a plurality of fan blades to be driven through the gear train by the first spool, wherein the bypass flow path is configured to provide a bypass ratio of airflow through the bypass flow path di-vided by airflow through the core nacelle that is greater than about six (6) during engine operation.
10. The method as recited in claim 9, wherein said first turbine section defines a pressure ratio that is greater than about five (5.0).
11. The method as recited in claim 10, wherein a fan pressure ratio across the plurality of fan blades is less than about 1.45.
12. The method as recited in claim 11, wherein the gear train is configured to provide a speed reduction ratio greater than about 2.5:1.
13. The method as recited in claim 12, wherein the plurality of fan blades are configured to rotate at a fan tip speed of less than about 1150 feet/second during engine operation.
14. The method as recited in claim 13, wherein the second turbine section includes two (2) stages.
The PTAB concluded that Wendus taught away from combination with Moxon and GE did not establish the obviousness of claim 10 when considered as a whole. Therefore, the PTAB found claims 10-14 are nonobvious. GE filed a request for rehearing challenging the PTAB’s application of the legal standard for both teaching away and motivation to combine. The PTAB denied the request for rehearing and GE timely appealed to the Federal Circuit (“CAFC”).
Standing
Raytheon moved to dismiss this appeal for lack of standing because GE has never “sued or threatened to sue” for infringing the ’920 patent. Raytheon also mentioned that GE “had never alleged that an engine exists that presents a concrete and substantial risk of infringing the ’920 patent,”
In JTEKT[2], the CAFC found that when the appellant does not currently engage in infringing activity and “relies on potential infringement liability as a basis for injury in fact”, the appellant must show that “it has concrete plans for future activity that creates a substantial risk of future infringement or would likely cause the patentee to assert a claim of infringement.”
In prior lawsuit between the same parties GE v. UTC[3], GE failed to show the evidence. However, the CAFC shows some guideline of what kind of evidence do we need to have a standing to appeal IPR decision to CAFC. GE responds that it has alleged facts that show it “is currently undertaking activities” likely to lead Raytheon to sue it for infringement.
Here, GE has shown concrete plans for future activities:
- GE spent $10–12 million in 2019 developing a geared turbofan architecture and design;
- GE intends to keep developing its geared turbofan engine design;
- The design is GE’s technologically preferred design for the next-generation narrow body market;
- GE has offered this preferred geared turbofan design to Airbus;
- GE has also established that such a sale would raise a substantial risk of an infringement suit; and
- GE believes its preferred design raises a substantial risk of infringement.
GE explicitly stated that “this preferred geared turbofan design includes a gear train driven by the low-pressure spool and a two-stage high-pressure turbine.” The CAFC found that this GE’s declaration “plausibly establish that its preferred next-generation engine design substantially risks infringing the ’920 patent.” With these concrete plans, the CAFC found that GE has shown concrete plans raising a substantial risk of future infringement.
Obviousness
The CAFC reviewed the PTAB’s decision on Obviousness. The patent at issue is related to “turbofan gas turbine engines used to propel commercial airliners.” Typically, a turbofan engine has four main components, (1) the fan, (2) compressor, (3) combustor, and (4) turbine[4]. In a turbofan engine, there are two ways airflow, “bypass flow” and “core flow.” The bypass ratio is a ratio of bypass flow to core flow and it was known that a “higher bypass ratio increases fuel efficiency.”
In the industry, the high-pressure compressor and high-pressure turbine are referred to as the “high spool” and the low-pressure compressor and low-pressure turbine are referred to as the “low spool.” Ordinary, “direct-drive” turbofan engine has a low spool and all connected to the same shaft and rotate at the same speed. On the other hand, a high bypass ratio (fuel-efficient) turbofan, the difference of the diameter of the fan and the engine creates the difference of the rotational speed and the rotational speed is ideal compared to the low-pressure turbine.
Contrary to the ordinary “low spool” turbofan, Raytheon’s patent was a “‘geared’ turbofan which uses a gearbox mounted between the low-pressure compressor and the fan to reduce the rotational speed of the fan compared to the” low spool turbine. When the gearbox is used, “the fan to rotate more slowly than the rest of the low spool.” Therefore, each part can rotate at an optimal speed and create many benefits. Such as reducing engine fuel consumption, improving aerodynamic efficiency with less costly design, reducing the mechanical stress on the fan and improving safety, reducing torque on the low spool shaft and allowing to design smaller diameter shaft, and reducing engine noise.
During the IPR, GE explained that “Wendus discloses all elements of claims 9–14 except that it teaches a one-stage high-pressure turbine instead of the “at-least-two-stage” high-pressure turbine taught in claim 9 and narrowed to two stages in claim 14” and “Moxon concludes that because of increased performance demands on the high-pressure turbine required to improve fuel efficiency, “a move to one instead of two high pressure turbine stages is thought unlikely, although designs have been carried out and demonstrations have been run.”
However, the PTAB found that Wendus taught away from combination with Moxon “despite the PTAB’s prior findings of the benefits of the two-stage high-pressure turbine” and concluded “GE did “not establish the obviousness of claim 10 when considered as a whole.” Therefore, the PTAB found claims 10-14 are nonobvious.
Therefore, GE pointed the errors of the Board’s decision on three issues before the CAFC. As to the first issue, teaching away, GE asserted that “the PTAB errored by misreading Wendus to find that it disparages or discourages the use of a two-stage high pressure turbine, and therefore erred in finding that Wendus taught away from a two-stage high-pressure turbine.” For the second issue, artisan’s motivation to combine references, GE also argues that the PTAB “applied an overly rigorous requirement for motivation to combine the Wendus and Moxon references.” Lastly, GE argues that the PTAB also erred by requiring GE to show that an artisan would be motivated to retain the claimed performance parameters taught in Wendus in combining Wendus and Moxon.
Raytheon counter-argued that the CAFC must affirm the PTAB’s decision if there is substantial evidence of “(1) Wendus teaches away from modifying its advanced engine to add a two-stage high-pressure turbine; (2) no matter if Wendus teaches away, Wendus discloses a strong preference for a one-stage high-pressure turbine, undermining GE’s motivation-to-combine arguments; or (3) GE failed to establish a motivation for modifying the Wendus advanced engine to achieve the invention of claim 10, ‘as a whole.’”
CAFC stated that the PTAB correctly set forth the standard for teaching away.
“[a] reference does not teach away ‘if it merely expresses a general preference for an alternative invention but does not “criticize, discredit, or otherwise discourage” investigation into the invention claimed.’”
The PTAB found that criticism of the use of a two-stage high-pressure turbine in the prior art suggests a general preference for a one-stage high-pressure turbine.
By referencing Table 16 of Wendus[5], the PTAB concluded that “Wendus discourages the useof a two-stage high-pressure turbine rather than merely suggesting a general preference for a one-stage high-pressure turbine because…A person of ordinary skill in the art would have known that modifying the Wendus [advanced] engine to include a two-stage turbine would have increased the weight and cost of the engine which Wendus criticizes, discredits, or otherwise discourages.”
However, the CAFC found that the PTAB misleads Table 16 in the full context of Wendus because “Wendus itself only weakly supports that a one-stage high-pressure turbine has weight and cost advantages over a two-stage high pressure turbine.” Also, the CAFC mentioned that “Wendus itself does not criticize the use of a two-stage turbine for weight or cost reasons” and “Wendus references neither efficiency nor number of parts in comparison to any other high-pressure turbine design.”
The CAFC also explained that “even if an artisan recognized that a one-stage turbine would have led to reduced engine weight and lower engine cost than a two-stage turbine, Wendus is hardly consistent in indicating that weight and cost concerns alone mandate the correct design choices of an improved engine, compared to other factors like fuel efficiency or reliability.”
“Wendus ‘expressly weigh[ed] the tradeoffs [between a one-stage and two-stage turbine] and cho[se] the one-stage option’ cannot withstand scrutiny.” Therefore, the CAFC conclude that “Wendus does not criticize, credit, or discourage the use of a two-stage high-pressure turbine” and there is no substantial evidence to support the PTAB’s conclusion of teaching away.
Secondly, the CAFC concluded that the PTAB lacks substantial evidence for its conclusion that GE did not establish a motivation to combine Wendus and Moxon. By referring the PharmaStem Therapeutics[6], the CAFC confirmed the standard of obviousness is that “a person of ordinary skill in the art would have had reason to attempt to make the composition or device, or carry out the claimed process, and would have had a reasonable expectation of success in doing so.”
The CAFC found that the PTAB again misread Wendus and applied “its faulty findings that Wendus described ‘the one-stage turbine as a critical and enabling technology providing significant advantages over a prior art engine having a two-stage turbine,’ and that ‘other [Wendus] engine components [being] specifically designed to accommodate the [one-stage] turbine[7].”
Finally, the CAFC concluded that the PTAB’s holding that GE did not establish the obviousness of claim 10 “as a whole” lacks substantial evidence. The CAFC pointed that “Wendus meets all the elements of claim 10 except for the two-stage high-pressure turbine, which Moxon discloses” and “GE does not merely identify each claim element as present in Wendus and Moxon. Instead, GE’s obviousness theory combines the elements disclosed in Wendus’s advanced engine with Moxon’s teaching of a two-stage high-pressure turbine to attain better turbine reliability and efficiency.”
Therefore, the CAFC vacated the PTAB’s decision and remand the case to the PTAB.
Takeaway
- As to the standing requirement “injury in fact”, this case shows what degree the appellee needs to prove the concrete plans in the future and what type of evidence is appropriate. 35 U.S.C §319 states that “Any party to the inter partes review shall have the right to be a party to the appeal.” The law did not specifically state the minimum standing requirement to appeal of IPR decision.
- An appellant’s declaration that it believes the preferred design raises a substantial risk of infringement is also plausible only if the declaration was supported by the other evidence.
- When determining the obviousness by teaching away from the prior art references, the meaning must be interpreted by the entire reference, not the partial words in the reference.
- Teaching away argument needs “criticize” more than “preference.”
[1] During the appeal, Raytheon was known as United Technologies Corporation.
[2] JTEKT Corp. v. GKN Auto. LTD., 898 F.3d 1217, 1221 (Fed. Cir. 2018), cert. denied, 139 S. Ct. 2713 (2019).
[3] Gen. Elec. Co. v. United Techs. Corp., 928 F.3d 1349 (Fed. Cir. 2019).
[4] The compressor pressurized the air come into the core flow. Then, the combustor mixed the compressed air and fuel and ignite and generates hot gas. The hot gas expands in the turbine and create power to rotate the blades in turbine.
[5] Wendus, See page 52 of https://ntrs.nasa.gov/api/citations/20030067946/downloads/20030067946.pdf
[6] PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1360 (Fed. Cir. 2007).
[7] Final Written Decision at *13 (citations omitted).
Broad functional limitations in claims “raise the bar for enablement”
| April 13, 2021
Amgen Inc. v. Sanofi
February 11, 2021
Before Prost, Lourie, and Hughes (Opinion by Lourie).
Summary
The Federal Circuit invalidates genus claims with functional limitations for lacking enablement. The Federal Circuit focuses the enablement analysis on the broad scope of structures covered by the claims and the lack of guidance in the specification on how to identify those structures that exhibit the claimed functionalities.
Details
Low-density lipoprotein (LDL) cholesterol is often called the “bad” cholesterol. An elevated LDL level leads to fatty buildups (or plaques) in arteries and contributes to heart disease. LDL receptors remove LDL cholesterol from the bloodstream and regulates the amount of LDL cholesterol in circulation.
The proprotein convertase subtilisin/kexin type 9 (PCSK9) enzyme has for years been an important cholesterol-lowering target. The PCSK9 enzyme degrades LDL receptors and can interfere with the regulation of circulating LDL cholesterol levels. It has been found that loss-of-function mutations in the PCSK9 enzyme lead to higher levels of the LDL receptor, lower circulating LDL cholesterol levels, and protection from heart disease.
U.S. Patent Nos. 8,829,165 and 8,859,741, owned by Amgen Inc., relate to antibodies that bind to and block PCSK9 to inhibit PCSK9-LDL receptor interactions.
The relevant claims in the 165 and 741 are all directed to an antibody, and all define the antibody in terms of two specific functions: first, the antibody “binds to” a combination of amino acid residues on the PCSK9 protein, and second, the antibody “blocks” binding of PCSK9 to LDL receptor.
For example, independent claim 1 of the 165 patent recites:
1. An isolated monoclonal antibody, wherein, when bound to PCSK9, the monoclonal antibody binds to at least one of the following residues: S153, I154, P155, R194, D238, A239, I369, S372, D374, C375, T377, C378, F379, V380, or S381 of SEQ ID NO:3, and wherein the monoclonal antibody blocks binding of PCSK9 to LDLR.
Independent claim 29 of the 165 patent specifically requires that the antibody blocks the binding of PCSK9 to LDL receptor by at least 80%.
Independent claim 1 of the 741 patent recites:
1. An isolated monoclonal antibody that binds to PCSK9, wherein the isolated monoclonal antibody binds an epitope on PCSK9 comprising at least one of residues 237 or 238 of SEQ ID NO: 3, and wherein the monoclonal antibody blocks binding of PCSK9 to LDLR.
The 165 and 741 patents share a common written description. The specifications disclose 26 specific antibodies, including their production, screening, and amino acid sequences. For only 2 of those antibodies, the specifications disclose the 3D structures showing the binding of the antibodies to specific PCSK9 residues. The examples test the binding of only 3 antibodies to PCSK9.
Another one of Amgen’s patents, not at issue in this case, claims Repatha®, which is a PCSK9 inhibitor that Amgen currently markets as a prescription injection therapy for treating adults with high cholesterol. Amgen used to sell Repatha® for $14,520, but to stay “competitive” with other drug makers’ PCSK9 inhibitors, Amgen lowered the price tag to $5,850 in 2020. Amgen still made nearly $900 million from Repatha® in 2020.
Repatha® is exemplified in the 165 and 741 patents, but not claimed. And whereas Amgen’s Repatha patent claims the amino acid sequence of the antibody, the 165 and 741 patents at issue in this case do not define the antibodies in terms of their amino acid sequences. Rather, the 165 and 741 patent claims use functional language to recite an entire genus of antibodies that bind to specific amino acid residues on PCSK9 and block PCSK9 from binding to LDL receptors.
The use of functional limitations is central to the Federal Circuit’s affirmance of the district court’s determination that the 165 and 741 patent claims lack enablement.
The Federal Circuit begins with the usual reiteration of the Wands factor for evaluating enablement:
- the quantity of experimentation necessary;
- the amount of direction or guidance presented;
- the presence or absence of working examples;
- the nature of the invention;
- the state of the prior art;
- the relative skill of those in the art;
- the predictability or unpredictability of the art; and
- the breadth of the claims.
The Federal Circuit then compares the facts of the case to several precedents:
- Wyeth & Cordis Corp. v. Abbott Laboratories, 720 F.3d 1380 (Fed. Cir. 2013);
- Enzo Life Sciences, Inc. v. Roche Molecular Systems, Inc., 928 F.3d 1340 (Fed. Cir. 2019); and
- Idenix Pharmaceuticals LLC v. Gilead Sciences Inc., 941 F.3d 1149 (Fed. Cir. 2019).
In each of those precedents, the claims required both a particular structure and functionality. And in each case, the Federal Circuit found that the claims were not enabled, because the large number of embodiments within the scope of the claims and the specification’s lack of guidance on the structure/function correlation would have required undue experimentation to determine which embodiments would exhibit the required functionality.
None of these precedents are favorable to Amgen. The precedents, together with Sanofi’s argument that the binding limitation in Amgen’s claims alone encompasses “millions” of antibodies, effectively focuses the Federal Circuit’s attention on the breadth of Amgen’s patent claims:
While functional claim limitations are not necessarily precluded in claims that meet the enablement requirement, such limitations pose high hurdles in fulfilling the enablement requirements for claims with broad functional language…
Turning to the specific Wands factors, we agree with the district court that the scope of the claims is broad. While in and of itself this does not close the analysis, the district court properly considered that these claims were indisputably broad… However, we are not concerned simply with the number of embodiments but also with their functional breadth. Regardless of the exact number of embodiments, it is clear that the claims are far broader in functional diversity than the disclosed examples. If the genus is analogized to a plot of land, the disclosed species and guidance “only abide in a corner of the genus.” Further, the use of broad functional claim limitations raises the bar for enablement, a bar that the district court found was not met.
Amgen argues that the specifications provide “roadmap” for making the claimed antibodies, but the problem, as the Federal Circuit sees it, is that even after the antibodies are made, identifying those specific antibodies that exhibit the claimed functionalities of binding and blocking PCSK9 is only possible through laborious “trial and error” requiring “substantial time and effort”.
Amgen is not helped by seemingly undisputed expert testimony on the unpredictability of the art. There appears to be agreement between the two sides’ experts that a small modification in an antibody’s sequence can result in big changes in structure and functions. Further, there is evidence that translating an antibody’s amino acid sequence into a known 3D structure is still not possible, so that it is difficult to visualize and evaluate the binding of an antibody to PCSK9. As the Federal Circuit articulates, “the enablement inquiry for claims that include functional requirements can be particularly focused on the breadth of those requirements, especially where predictability and guidance fall short.”
There are some interesting observations.
First, while the patents at issue clearly claim a biotech invention, the Federal Circuit’s decision cites frequently to McRO, Inc. v. Bandai Namco Games Am. Inc., 959 F.3d 1091 (Fed. Cir. 2020)—a computer case—for its discussion on the enablement of a claimed range. However, in McRO, the Federal Circuit did not even address the question of whether the disputed claims were enabled. The Federal Circuit held only that the enablement analysis required first delineating the precise scope of the claimed invention, and having failed to make that delineation, the district court’s summary determination of non-enablement must be vacated.
Second, at first glance, the Federal Circuit appears to have articulated a “heightened” standard of enablement for claims reciting functional limitations. But really, the “heightened” bar seems to be no more than a proposition that the broader the claim, the more guidance the specification may need to provide to satisfy the enablement requirement.
Third, during prosecution of the 165 patent, the Examiner rejected the claims as lacking enablement. However, Amgen overcame the rejection by arguing, without any Rule 132 declarations, that “various antibodies” and “crystal structures” provided in the specification explained how antibodies bound to PCSK9 to achieve the claimed functionalities.
Takeaway
- The use of functional limitations, while desirable for imparting breadth to a claim, remains rife with pitfalls. For certain types of claims, such as claims directed to biologics, functional limitations are almost unavoidable because claiming the invention strictly in structural terms would be unduly narrow. For those claims, details in the specification are especially important.
- Where a claim requires both a particular structure and functionality, the specification should preferably describe some correlation between the structure and the claimed functionality.
- Where a claim recites a broad genus of structures for achieving a specific function, it is important for the specification to exemplify more than one species within that genus. Ideally the specification should also describe structural characteristics common to the species of the genus.
THE PTAB’S IPR INSTITUTION DECISION IS FINAL AND NONAPPEALABLE
| April 6, 2021
CyWee Group LTD. v. Google LLC
Summary:
CyWee appealed the PTAB’s final decision on three grounds. First, CyWee argued that the PTAB erred in concluding that Google disclosed all real parties in interest. However, the CAFC noted that the CAFC is precluded from reviewing this challenge because the PTAB’s determination on this issue is final and nonappealable. Second, CyWee argued that the CAFC should terminate and dismiss the IPR proceedings because the APJs were appointed in violation of the Appointments Clause. The CAFC rejected this challenge because the APJs were constitutionally appointed as of the date that the Arthrex decision was issued. Finally, a prior cited by Google (Bachmann) is not an analogous art. However, the CAFC held that Bachmann is reasonably pertinent to the particular problem with which the inventor is involved, and that this reference does not have to be reasonably pertinent to every problem facing a field to be analogous prior art. Therefore, the CAFC affirmed that the PTAB’s determination that the challenged claims would have been obvious in view of Bachmann.
Details:
Google LLC (“Google”) petitioned for IPR of claims 1 and 3-5 of U.S. Patent No. 8,441,438 and claims 10 and 12 of U.S. Patent No. 8,552,978, asserting that those claims are unpatentable as obvious in view of U.S. Patent No. 7,089,148 (“Bachmann”).
The PTAB instituted IPR and found that those claims would have been obvious. CyWee appeals.
CyWee’s first argument
CyWee argues that the PTAB erred in concluding that Google disclosed all real parties in interest, as required by 35 U.S.C. §312(a)(2)[1].
The CAFC found that the CAFC is precluded from reviewing this challenge because the PTAB’s determination on this issue is final and nonappealable under 35 U.S.C. §314(d)[2] because this issue “raises an ordinary dispute about the application of an institution-related statute.”
CyWee argued that CyWee attempts to challenge the PTAB’s denial of CyWee’s post-institution motion to terminate the proceedings in view of newly found evidence.
However, the CAFC found that CyWee’s request is nothing more than a request for the PTAB to reconsider its institution decision, which is final and nonappealable.
CyWee’s second argument
CyWee argues that the CAFC should terminate and dismiss the IPR proceedings because the APJs were appointed in violation of the Appointments Clause.
However, the CAFC rejected this challenge because the APJs were constitutionally appointed as of the date that the Arthrex decision[3] was issued, and because the Arthrex decision was issued before the final decisions in this case. Therefore, the CAFC found that those final decisions were rendered by constitutional panels.
CyWee’s third argument
CyWee argues that Bachmann is not an analogous art.
However, the CAFC found that the PTAB’s conclusion is supported by substantial evidence because the PTAB determined that (1) “improving error compensation with an enhanced comparison method” was of “central importance” to the inventors, and that (2) Bachmann was reasonably pertinent to this problem because Bachmann “illustrates collection of data from the same kinds of sensors” and “correct[s] for the same kinds of errors that were of concern to the inventor[s].”
Therefore, the CAFC found that Bachmann is reasonably pertinent to the particular problem with which the inventor is involved.
Furthermore, the CAFC noted that a reference need not be reasonably pertinent to every problem facing a field to be analogous prior art, but rather need only be “reasonably pertinent to one or more of the particular problems to which the claimed inventions relate.” Donner Tech., LLC v. Pro Stage Gear, LLC, 979 F.3d 1353, 1361 (Fed. Cir. 2020).
Finally, the CAFC noted that “a reference can be analogous art with respect to a patent even if there are significant differences between the two references.” Donner, 979 F.3d at 1361.
Takeaway:
- The PTAB’s decision on whether to institute an IPR proceeding is final and nonappealable.
- The Supreme Court heard the oral argument in the Arthrex case on March 1, 2021. Two questions before the Court are (1) whether APJs are properly appointed, and (2) if they are not properly appointed, whether removing employment protections corrects the defect.
- A reference need not be reasonably pertinent to every problem facing a field to be analogous prior art, but rather need only be “reasonably pertinent to one or more of the particular problems to which the claimed inventions relate.” A reference can be analogous art with respect to a patent even if there are significant differences between the two references.
[1] 35 U.S. Code § 312 – Petitions
(a) Requirements of Petition. – A petition filed under section 311 may be considered only if –
(2) the petition identifies all real parties in interest;
[2] 35 U.S. Code § 314 – Institution of inter partes review
(d) No Appeal. – The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
[3] Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019): “The APJs were actually “principal officers” under the Appointments Clause, and that the APJ appointment provisions of the AIA creating the PTAB were unconstitutional because the APJs were not appointed by the President and confirmed by the Senate, as is required for “principal officers.””
Tags: administrative patent judge > Analogous Art > appointment clause > inter partes review > real party in interest
Claim construction of a non-functional term in an apparatus claim; proof of vitiation against infringement under the doctrine of equivalents
| March 29, 2021
Edgewell Personal Care Brands, LLC v. Munchkin, Inc. (Fed. Cir. 2021) (Case No. 2020-1203)
March 9, 2021
Newman, Moore, and Hughes. Court opinion by Moore
Summary
On appeals from the district court for summary judgment of noninfringement of two patents, both directed to a cassette to be installed when a diaper pail system is in use, the Federal Circuit unanimously vacated the summary judgment of noninfringement of one patent because of erroneous claim construction, with caution that it is usually improper to construe non-functional claim terms in apparatus claims in a way that makes infringement or validity turn on the way an apparatus is later put to use. Furthermore, the Federal Circuit unanimously reversed the summary judgment of noninfringement of the other patent under the doctrine of equivalents because of erroneous application of the vitiation theory in the context of summary judgment, with caution that courts should be cautious not to shortcut the inquiry for infringement under the doctrine of equivalents by identifying a ‘binary’ choice in which an element is either present or ‘not present.’”
Details
I. Background
(i) The Patents in Dispute
U.S. Patent Nos. 8,899,420 (“the ’420 patent”) and 6,974,029 (“the ’029 patent”) are directed to a cassette to be installed when a diaper pail system is in use.
The ’420 patent is directed to a cassette with a “clearance” located in a bottom portion of the cassette. Claim 1 is the representative of the ’420 patent, which recites:
1. A cassette for packing at least one disposable object, comprising: an annular receptacle including an annular wall delimiting a central opening of the annular receptacle, and a volume configured to receive an elongated tube of flexible material radially outward of the annular wall; a length of the elongated tube of flexible material disposed in an accumulated condition in the volume of the annular receptacle; and an annular opening at an upper end of the cassette for dispensing the elongated tube such that the elongated tube extends through the central opening of the annular receptacle to receive disposable objects in an end of the elongated tube,
wherein the annular receptacle includes a clearance in a bottom portion of the central opening, … (emphasis added).
Fig. 2A of the ’420 patent, reproduced below, illustrates a bottom perspective view of a cassette 30 to be used with an apparatus 10 (not shown in the figure) for packaging disposable objects (34: a central opening; 38: a bottom annular receptacle; a chamfer clearance 41).
The ’029 patent is directed to a cassette with a cover extending over pleated tubing housed therein. Claim 1 is the representative of the ’029 patent, which recites:
1. A cassette for use in dispensing a pleated tubing comprising:
an annular body having a generally U shaped cross-section defined by an inner wall, an outer wall and a bottom wall joining a lower part of said inner and outer walls, said walls defining a housing in which the pleated tubing is packed in layered form;
an annular cover extending over said housing; said cover having an inner portion extending downwardly and engaging an upper part of said inner wall of said body and a top portion extending over said housing; said top portion including a tear-off outwardly projecting section having an outer edge engaging an upper part of said outer wall of said annular body; said tear-off section, when torn-off, leaving a peripheral gap to allow access and passage of said tubing therebetween; said downwardly projecting inner portion having an inclined annular area defining a funnel to assist in sliding said tubing when pulled through a central core defined by said inner wall of said body; and … (emphasis added).
(ii) The District Court
Edgewell Personal Care Brands, LLC, and International Refills Company, Ltd. (“Edgewell”) sued Munchkin, Inc. (“Munchkin”) in the United States District Court for the Central District of California (“the district court”) for infringement of claims of the ’420 patent and ’029 patent.
Edgewell manufactures and sells the Diaper Genie, which is a diaper pail system that has two main components: (i) a pail for collection of soiled diapers; and (ii) a replaceable cassette that is placed inside the pail and forms a wrapper around the soiled diapers.
Edgewell accused Second and Third Generation refill cassettes, which Munchkin marketed as being compatible with Edgewell’s Diaper Genie-branded diaper pails.
After the district court issued a claim construction order, construing terms of both the ’420 patent and the ’029 patent, Edgewell continued to assert literal infringement for the ’420 patent, and infringement under the doctrine of equivalents (“the DoE”) for the ’029 patent. Munchkin moved for, and the district court granted, summary judgment of noninfringement of both patents. Edgewell appealed.
II. The Federal Circuit
The Federal Circuit (“the Court”) unanimously vacated the summary judgment of noninfringement (literal infringement) of the ’420 patent, reversed the summary judgment of noninfringement (infringement under the DoE) of the ’029 patent, and remanded the case to the district court for further proceedings.
(i) The ’420 Patent
There was no dispute that the cassette itself contained a clearance when it is not installed in the pail. Rather, the dispute focused on whether the claims required a clearance space between the annular wall defining the chamfer clearance and the pail itself when the cassette was installed (emphasis added). The district court determined that “clearance” required space after cassette installation and construed the clearance as “the space around [interfering] members that remains (if there is any), not the space where the interfering member or cassette is itself located upon insertion” (emphasis added).
The Court held that the district court erred in construing the term “clearance” in a manner dependent on the way the claimed cassette is put to use in an unclaimed structure, and vacated the district court’s grant of summary judgment of noninfringement of the ’420 patent.
On the merits, the Court stated that it is usually improper to construe non-functional claim terms in apparatus claims in a way that makes infringement or validity turn on the way an apparatus is later put to use because an apparatus claim is generally to be construed according to what the apparatus is, not what the apparatus does.
The Court moved on to argue that, absent an express limitation to the contrary, the term “clearance” should be construed as covering all uses of the claimed cassette as the parties do not dispute that the ’420 patent claims are directed only to a cassette. The Court looked into the specification to find that, in nearly all of the disclosed embodiments, the specification suggests that the cassette clearance mates with a complimentary structure in the pail such that there is “engagement” (emphasis added). Thus, the Court concluded that the claim does not require a clearance after insertion. In other words, the specification, taken as a whole, does not support the district court’s construction which would preclude such engagement when the cassette is inserted into the pail (emphasis added).
In conclusion, the Court vacated the district court’s grant of summary judgment of noninfringement of the ’420 patent and remanded the case because the Court held that the district court erred in its construction of the term “clearance.”
(ii) The ’029 Patent
The district court construed “annular cover” in the ’029 patent as “a single, ring-shaped cover, including at least a top portion and an inner portion that are parts of the same structure” (emphasis added). Edgewell did not dispute the construction. Instead, Edgewell sought infringement under the DoE for the ’029 patent because Munchkin’s accused Second and Third Generation cassettes each include a two-part annular cover (emphasis added). The district court granted summary judgment of noninfringement of the ’029 patent under the DoE. because the district court determined that no reasonable jury could find that Munchkin’s Second and Third Generation Cassettes satisfy the ’029 patent’s “annular cover” and “tear-off section” limitations under the DoE given that favorable application of the DoE would effectively vitiate the ‘tear-off section’ limitation (emphasis added).
The Court affirmed the district court’s claim construction in view of the plain language of the claims and the written description of the ’029 patent.
In contrast, the Court disagreed to the district court’s vitiation theory under the DoE. While the Court reconfirmed the vitiation theory by stating that vitiation has its clearest application “where the accused device contain[s] the antithesis of the claimed structure”(citing Planet Bingo, LLC v. GameTech Int’l, Inc., 472 F.3d 1338, 1345 (Fed. Cir. 2006)), the Court cautioned that “[c]ourts should be cautious not to shortcut this inquiry by identifying a ‘binary’ choice in which an element is either present or ‘not present’” (citing Deere & Co. v. Bush Hog, LLC, 703 F.3d 1356–57 (Fed. Cir. 2012)).
Applying these concepts to the facts of this case, the Court conclude that the district court erred in evaluating this element as a binary choice between a single-component structure and a multi-component structure, rather than evaluating the evidence to determine whether a reasonable juror could find that the accused products perform substantially the same function, in substantially the same way, achieving substantially the same result as the claims.
Citing Edgewell’s expert testimony, the Court concluded that the detailed application of the function-way-result test, supported by deposition testimony from Munchkin employees, is sufficient to create a genuine issue of material fact for the jury to resolve and, therefore, is sufficient to preclude summary judgment of noninfringement under the DoE.
In conclusion, the Court reversed the district court’s grant of summary judgment of noninfringement of the ’029 patent under the DoE and remanded the case.
Takeaway
· Claim construction: A term in a claim should be construed as covering all uses of the claimed subject matter.
· Infringement under the DoE: Proof of vitiation requires more than identifying a binary choice in which an element is either “present” or “not present.” Instead, the proof still requires failure of passing the function-way-result test.
Tags: claim construction > doctrine of equivalents > summary judgment > vitiation
Trademark licensing agreements are not distinguishable from other types of contracts – the contracting parties are generally held to the terms for which they bargained
| March 23, 2021
Authentic Apparel Group, LLC, et al. v. United States
March 4, 2021
Lourie, Dyk, Stoll (opinion by Lourie)
Summary
The Court of Appeals for the Federal Circuit (“the CAFC”) upheld the grant of summary judgement by United States Court of Federal Claims (“the Claims Court”), finding the plaintiff’s arguments unpersuasive. The CAFC found trademark licensing agreement to not be any different from other types of contracts, and there was no legal or factual reason to deviate from a plain reading of the exculpatory clauses in the trademark license agreement between the plaintiff and the defendant.
Details
Department of the Army (“Army”) and Authentic Apparel Group, LLC (“Authentic”) entered into a nonexclusive license for Authentic to manufacture and sell clothing bearing the Army’s trademarks in exchange for royalties. The license agreement stated that prior to any sale or distribution, Authentic must submit to the Army all products and marketing materials bearing the Army’s trademark for the Army’s written approval. The license also included exculpatory clauses that exempted the Army from liability for exercising its discretion to deny approval.
Between 2011 and 2014, Authentic submitted nearly 500 requests for approval to the Army, of which 41 were denied. During this time period, several formal notices were sent to Authentic, stating Authentic’s failures to timely submit royalty reports and pay royalties. Authentic eventually paid royalties through 2013, but on November 24, 2014, but expressed its intention of not paying outstanding royalties for 2014, and that it would sue the government for damages.
On January 6, 2015, Authentic and Ruben filed a complaint in the Claims Court for breach of contract. The allegations of breach were based on “the Army’s denial of the right to exploit the goodwill associated with the Army’s trademarks, refusal to permit Authentic to advertise its contribution to certain Army recreation programs, delay of approval for a financing agreement for a footwear line, and denial of approval for advertising featuring the actor Dwayne ‘The Rock’ Johnson.” The Claims Court dismissed Ruben as a plaintiff for lack of standing. Authentic subsequently amended its complaint to include an allegation that “the Army breached the implied duty of good faith and fair dealings by not approving the sale of certain garments.”
One November 27, 2019, the Claims Court granted the government’s motion for summary judgment, determining that Authentic could not recover damages based on the Army’s exercise of discretion in view of the express exculpatory clauses included in the license agreement. With regard to Authentic’s amended complaint, the Claims Court also found that the Army’s conduct was not unreasonable, and in line with its obligation under the agreement.
The plaintiffs appealed, challenging dismissal of Ruben as a plaintiff, and the Claims Court’s grant of summary judgment.
With regard to the dismissal of Ruben as a plaintiff, the CAFC ruled that the Claims Court properly dismissed Ruben for lack of standing, as he was not a party to the license agreement, and there is no indication of Ruben as an intended beneficiary of the agreement.
The CAFC then turned to the Claims Court’s grant of summary judgment. The CAFC stated that the license agreement expressly stated that the Army had “sole and absolute discretion” regarding approval of Authentic’s proposed products and marketing materials.
Authentic argued that even if the Army has broad approval discretion under the agreement, that discretion cannot be so broad as to allow the Army to refuse to permit the use of its trademarks “for trademark purposes.” However, the CAFC ruled that the Army’s conduct was not at odd with principles of trademark law. Authentic’s argument appeared to distinguish trademark licenses from other types of contracts, but the CAFC stated that underlying subject matter of the contract is not an issue, and contracting parties are “generally held to the terms of which they bargained.”
The CAFC found Authentic’s argument to be problematic also in that it relies on an outdated model of trademark licensing law, where, at one point, “a trademark’s sole purpose was to identify for consumers the products’ physical source of origin,” and therefore, trademark licensing was “philosophically impossible.” Under the current law, trademark licenses are allowed as long as the trademark owner exercises quality control over the products associated with its trademarks. Here, Army fulfilled its duty of quality control with an approval process.
The CAFC considered Authentic’s arguments and found them unpersuasive, thus affirming the Claims Court’s grant of summary judgment in favor of the government.
Takeaway
- Review carefully the terms of any licensing agreement and negotiate for terms prior to signing. Trademark license agreements are not any different from other types of contracts, and the parties are generally held to the terms of the contracts.
Quality and Quantity of Specification Support in Determining Patent Eligibility
| March 19, 2021
Simio, LLC v Flexsim Software Products, Inc.
December 29, 2020
Prost, Clevenger, and Stoll
Summary:
In upholding a district court’s finding of patent ineligibility for a computer-based system for object-oriented simulation, the Federal Circuit uses a new “quality and quantity” assessment of the specification’s description of an asserted claim limitation that supposedly supports the claim being directed to an improvement in computer functionality (and not an abstract idea). Here, numerous portions of the specification emphasized an improvement for a user to build object-oriented models for simulation using graphics, without the need to do any programming. This supported the court’s finding that the character of the claim as a whole is directed to an abstract idea – of using graphics instead of programming to create object-oriented simulation models. In contrast to the numerous specification descriptions supporting the abstract idea focus of the patent, one claimed feature that Simio asserted as reflecting an improvement in computer functionality was merely described in just one instance in the specification. This “disparity in both quality and quantity” between the specification support of the abstract idea versus the specification support for the asserted claim feature does not change the claim as a whole as being directed to the abstract idea.
Procedural History:
Simio, LLC sued FlexSim Software Products, Inc. for infringing U.S. Patent No. 8,156,468 (the ‘468 patent). FlexSim moved for judgment on the pleadings under Rule 12(b)(6) for failing to state a claim upon which relief could be granted because the claims of the ‘468 patent are patent ineligible under 35 USC § 101. The district court granted that motion and dismissed the case. The Federal Circuit affirmed.
Background:
Representative claim 1 of the ‘417 patent follows:
A computer-based system for developing simulation models on a physical computing device, the system comprising:
one or more graphical processes;
one or more base objects created from the one or more graphical processes,
wherein a new object is created from a base object of the one or more base objects by a user by assigning the one or more graphical processes to the base object of the one or more base objects;
wherein the new object is implemented in a 3-tier structure comprising:
an object definition, wherein the object definition includes a behavior,
one or more object instances related to the object definition, and
one or more object realizations related to the one or more object instances;
wherein the behavior of the object definition is shared by the one or more object instances and the one or more object realizations; and
an executable process to add a new behavior directly to an object instance of the one or more object instances without changing the object definition and the added new behavior is executed only for that one instance of the object.
Computer-based simulations can be event-oriented, process-oriented, or object-oriented. Earlier object-oriented simulation platforms used programming-based tools that were “largely shunned by practitioners as too complex” according to the ‘468 patent. Use of graphics emerged in the 1980s and 1990s to simplify building simulations, via the advent of Microsoft Windows, better GUIs, and new graphically based tools. Along this graphics trend, the ‘468 patent focuses on making object-oriented simulation easier for users to build simulations using graphics, without any need to write programming code to create new objects.
Decision:
Under Alice step one’s “directed to” inquiry, the court asks “what the patent asserts to be the focus of the claimed advance over the prior art.” To answer this question, the court focuses on the claim language itself, read in light of the specification.
Here, the preamble relates the claim to “developing simulation models,” and the body of the claim recites “one or more graphical processes,” “one or more base objects created from the one or more graphical processes,” and “wherein a new object is created from a base object … by assigning the one or more graphical processes to the base object…” There is also the last limitation (the “executable-process limitation”). Although other limitations exist, Simio did not rely on them for its eligibility arguments.
The court considered these limitations in view of the specification. The ‘468 patent acknowledged that using graphical processes to simplify simulation building has been done since the 1980s and 1990s. And, the ‘468 patent specification states:
“Objects are built using the concepts of object-orientation. Unlike other object-oriented simulation systems, however, the process of building an object in the present invention is simple and completely graphical. There is no need to write programming code to create new objects.” ‘468 patent, column 8, lines 22-26 (8:22-26).
“Unlike existing object-oriented tools that require programming to implement new objects, Simio™ objects can be created with simple graphical process flows that require no programming.” 4:39-42.
“By making object building a much simpler task that can be done by non-programmers, this invention can bring an improved object-oriented modeling approach to a much broader cross-section of users.” 4:47-50.
“The present invention is designed to make it easy for beginning modelers to build their own intelligent objects … Unlike existing object-based tools, no programming is required to add new objects.” 6:50-53.
“In the present invention, a graphical modeling framework is used to support the construction of simulation models designed around basic object-oriented principles.” 8:60-62.
“In the present invention, this logic is defined graphically … In other tools, this logic is written in programming languages such as C++ or Java.” 9:67-10:3.
Taking the claim limitations, read in light of the specification, the court concludes that the key advance is simply using graphics instead of programming to create object-oriented simulations. “Simply applying the already-widespread practice of using graphics instead of programming to the environment of object-oriented simulations is no more than an abstract idea.” “And where, as here, ‘the abstract idea tracks the claim language and accurately captures what the patent asserts to be the focus of the claimed advance …, characterizing the claim as being directed to an abstract idea is appropriate.’”
Simio argued that claim 1 “improves on the functionality of prior simulation systems through the use of graphical or process modeling flowcharts with no programming code requited.” However, an improvement emphasizing “no programming code required” is an improvement for a user – not an improvement in computer functionality. An improvement in a user’s experience (not having to write programming code) while using a computer application does not transform the claims to be directed to an improvement in computer functionality.
Simio also argued that claim 1 improves a computer’s functionality “by employing a new way of customized simulation modeling with improved processing speed.” However, improved speed or efficiency here is not that of the computer, but rather that of the user’s ability to build or process simulation models faster using graphics instead of programming. In other words, the improved speed or efficiency is not that of computer functionality, but rather, a result of performing the abstract idea with well-known structure (a computer) by a user.
Simio finally argued that the last limitation, the executable-process limitation reflects an improvement to computer functionality. It is with regard to this last argument that the court introduces a new “quality and quantity” assessment of the specification. In particular, the court noted that “this limitation does not, by itself, change the claim’s ‘character as a whole’ from one directed to an abstract idea to one that’s not.” As support of this assessment of the claim’s “character as a whole,” the court cited to at least five instances of the specification emphasizing graphical simulation modeling making model building easier without any programming, in contrast to a single instance of the specification describing the executable process limitation:
Compare, e.g., ’468 patent col. 4 ll. 29–42 (noting that “the present invention makes model building dramatically easier,” as “Simio™ objects” can be created with graphics, requiring no programming), and id. at col. 4 ll. 47–50 (describing “this invention” as one that makes object-building simpler, in that it “can be done by non-programmers”), and id. at col. 6 ll. 50–53 (describing “[t]he present invention” as one requiring no programming to build objects), and id. at col. 8 ll. 23–26 (“Unlike other object-oriented simulation systems, however, the process of building an object in the present invention is simple and completely graphical. There is no need to write programming code to create new objects.”), and id. at col. 8 ll. 60–62 (“In the present invention, a graphical modeling frame-work is used to support the construction of simulation models designed around basic object-oriented principles.”), with col. 15 l. 45–col. 16 l. 6 (describing the executable-process limitation). This disparity—in both quality and quantity—between how the specification treats the abstract idea and how it treats the executable-process limitation suggests that the former remains the claim’s focus.
Even Simio’s own characterization of the executable-process limitation closely aligns with the abstract idea: (a) that the limitation reflects that “a new behavior can be added to one instance of a simulated object without the need for programming” and (b) that the limitation reflects an “executable process that applies the graphical process to the object (i.e., by applying only to the object instance not to the object definition).” Although this is more specific than the general abstract idea of applying graphics to object-oriented simulation, this merely repeats the above-noted focus of the patent on applying graphical processes to objects and without the need for programming. As such, this executable-process limitation does not shift the claim’s focus away from the abstract idea.
At Alice step two, Simio argued that the executable-process limitation provides an inventive concept. However, during oral arguments, Simio conceded that the functionality reflected in the executable-process limitation was conventional or known in object-oriented programming. In particular, implementing the executable process’s functionality through programming was conventional or known. Doing so through graphics does not confer an inventive concept. What Simio relies on is just the abstract idea itself – use of graphics in object-oriented simulation. Reliance on the abstract idea itself cannot supply the inventive concept that renders the invention “significantly more” than that abstract idea.
Even if the use of graphics instead of programming to create object-oriented simulations is new, a claim directed to a new abstract idea is still an abstract idea – lacking any meaningful application of the abstract idea sufficient to constitute an inventive concept to save the claim’s eligibility.
Takeaways:
- This case serves a good reminder of the importance of proper specification drafting to address 101 issues such as these. An “improvement” that can be deemed an abstract idea (e.g., use graphics instead of programming) will not help with patent eligibility. The focus of an “improvement” to support patent eligibility must be technological (e.g., in order to use graphics instead of programming in object-oriented simulation modeling, this new xyz procedure/data structure/component replaces the programming interface previously required…). “Technological” is not to be confused with being “technical” – which could mean just disclosing more details, albeit abstract idea type of details that will not help with patent eligibility. Here, even a “new” abstract idea does not diminish the claim still being “directed to” that abstract idea, nor rise to the level of an inventive concept. Improving user experience is not technological. Improving a user’s speed and efficiency is not technological. Improving computer functionality by increasing its processing speed and efficiency could be sufficiently technological IF the specification explains HOW. Along the lines of Enfish, perhaps new data structures to handle a new interface between graphical input and object definitions may be a technological improvement, again, IF the specification explains HOW (and if that “HOW” is claimed). In my lectures, a Problem-Solution-Link methodology for specification drafting helps to survive patent eligibility. Please contact me if you have specification drafting questions.
- This case also serves as a good reminder to avoid absolute statements such as “the present invention is …” or “the invention is… .” There is caselaw using such statements to limit claim interpretation. Here, it was used to ascertain the focus of the claims for the “directed to” inquiry of Alice step one. The more preferrable approach is the use of more general statements, such as “at least one benefit/advantage/improvement of the new xyz feature is to replace the previous programming interface with a graphical interface to streamline user input into object definitions…”
- This decision’s “quality and quantity” assessment of the specification’s focus on the executable-process limitation provides a new lesson. Whatever is the claim limitation intended to “reflect” an improvement in technology, there should be sufficient specification support for that claim limitation – in quality and quantity – for achieving that technological improvement. Stated differently, the key features of the invention must not only be recited in the claim, but also, be described in the specification to achieve the technological improvement, with an explanation as to why and how.
- This is yet another unfortunate case putting the Federal Circuit’s imprimatur on the flawed standard to find the “the focus of the claimed advance over the prior art” in Alice step one, albeit not as unfortunate as Chamberlain v Techtronic (certiorari denied) or American Axle v Neapco (still pending certiorari). In another lecture, I explain why the “claimed advance” standard is problematic and why it contravenes Supreme Court precedent. Briefly, the claimed advance standard is like the “gist” or “heart” of the invention standard of old that was nixed. In Aro Mfg. Co. v. Convertible Top Replacement Co., the Supreme Court stated that “there is no legally recognizable or protected ‘essential’ element, ‘gist’ or ‘heart’ of the invention in a combination patent.” In §§102 and 103 issues, the Federal Circuit said distilling an invention down to its “gist” or “thrust” disregards the claim “as a whole” requirement. Likewise, stripping the claim of all its known features down to its “claimed advance over the prior art” is also contradictory to the same requirement to consider the claim as a whole under section 101. Moreover, the claimed advance standard contravenes the Supreme Court’s warnings in Diamond v Diehr that “[i]t is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. … [and] [t]he ‘novelty’ of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the 101 categories of possibly patentable subject matter.” Furthermore, the origins of the claimed advance standard have not been vetted. Originally, the focus was on finding a practical application of an abstract idea in the claim. This search for a practical application morphed, without proper legal support, into today’s claimed advance focus in Alice step one. Interestingly enough, since the 2019 PEG, the USPTO has not substantively revised its subject matter eligibility guidelines to incorporate any of the recent “claimed advance” Federal Circuit decisions.
Tags: 35 U.S.C. § 101 > abstract idea > patent eligibility > specification drafting
Make Sure Patent Claims Do Not Contain an Impossibility
| March 12, 2021
Synchronoss Technologies, Inc., v. Dropbox, Inc.
February 12, 2021
PROST, REYNA and TARANTO
Summary
Synchronoss Technologies appealed the district court’s decisions that all asserted claims relating to synchronizing data across multiple devices are either invalid or not infringed. The Federal Circuit affirmed the district court’s judgments of invalidity under 35 U.S.C. § 112, paragraph 2, with respect to certain asserted claims due to indefiniteness. The Federal Circuit also found no error in the district court’s conclusion that Dropbox does not directly infringe by “using” the claimed system under § 271(a). Thus, the Federal Circuit affirmed on non-infringement.
Background
Synchronoss sued Dropbox for infringement of three patents, 6,757,696 (“’696 patent”), 7,587,446 (“’446 patent”), and U.S. Patent Nos. 6,671,757 (“’757 patent”), all drawn to technology for synchronizing data across multiple devices.
The ’446 patent discloses a “method for transferring media data to a network coupled apparatus.” The indefinite argument of Dropbox targets on the asserted claims that require “generating a [single] digital media file” that itself “comprises a directory of digital media files.” Synchronoss’s expert conceded that “a digital media file cannot contain a directory of digital media files.” But Synchronoss argued that a person of ordinary skill in the art “would have been reasonably certain that the asserted ’446 patent claims require a digital media that is a part of a directory because a file cannot contain a directory.” The district court rejected the argument as “an improper attempt to redraft the claims” and concluded that all asserted claims of the ’446 patent are indefinite.
The ’696 patent discloses a synchronization agent management server connected to a plurality of synchronization agents via the Internet. The asserted claims of the ‘696 patent all include the following six terms, “user identifier module,” “authentication module identifying a user coupled to the synchronization system,” “user authenticator module,” “user login authenticator,” “user data flow controller,” and “transaction identifier module.” The district court concluded that all claims in the ’696 patent are invalid as indefinite. The decision leaned on the technical expert’s testimony that all six terms are functional claim terms. The specification failed to describe any specific structure for carrying out the respective functions.
The asserted claim 1 of ‘757 patent recites “a system for synchronizing data between a first system and a second system, comprising …” The district court found that hardware-related terms appear in all asserted claims of ‘757 patent. The hardware-related terms include “system,” “device,” and “apparatus,” all that means the asserted claims could not cover software without hardware. Dropbox argued that it distributed the accused software with no hardware. The district court granted summary judgment of non-infringement in favor of Dropbox.
Discussion
i. The ‘446 Patent – Indefiniteness
The Federal Circuit noted that the claims were held indefinite in circumstances where the asserted claims of the ’446 patent are nonsensical and require an impossibility—that the digital media file contains a directory of digital media files. As a matter of law under § 112, paragraph 2, the claims are required to particularly point out and distinctly claim the invention. “The primary purpose of this requirement of definiteness of claim language is to ensure that the scope of the claims is clear so the public is informed of the boundaries of what constitutes infringement of the patent.” (MPEP 2173)
Synchronoss argued that a person of ordinary skill would read the specification to interpret the meaning of the media file. However, the Federal Circuit rejected the argument since Synchronoss’s proposal would require rewriting the claims and also stated that “it is not our function to rewrite claims to preserve their validity.”
ii. The ‘696 Patent – Indefiniteness
The ‘696 patent was focused on whether the claims at issue invoke § 112, paragraph 6. The Federal Circuit applied a two-step process for construing the term, 1. identify the claimed function; 2. determine whether sufficient structure is disclosed in the specification that corresponds to the claimed function.
However, the asserted claims were found not to detail what a user identifier module consists of or how it operates. The specification fails to disclose an “adequate” corresponding structure that a person of ordinary skill in the art would be able to recognize and associate with the corresponding function in the claim. The Federal Circuit held that the term “user identifier module” is indefinite and affirmed the district court’s decision that asserted claims are invalid.
iii. The ‘757 Patent – Infringement
The ‘757 patent is the only one focused on the infringement issue. Synchronoss argued that the asserted claims recite hardware not as a claim limitation but merely as a reference to the “location for the software.” However, the Federal Circuit affirmed the district court’s founding that the hardware term limited the asserted claims’ scope.
The Federal Circuit explained that “Supplying the software for the customer to use is not the same as using the system.” Dropbox only provides software to its customer but no corresponding hardware. Thus, the Federal Circuit affirmed the district court’s summary judgment of non-infringement.
Takeaway
- Make sure patent claims do not contain an impossibility
- Supplying software alone does not infringe claims directed to hardware.
- “Adequate” structures in the specification are required to support the functional terms in the claims.
Sorry Doc, no Patent Term Adjustment under the C-delay Provision!
| March 1, 2021
Steven C. Chudik vs., Andrew Hirshfeld (performing the functions & duties of the under Secretary of Commerce for IP and Director of the US.PTO).
February 8, 2021
Bryson, Hughes, and Taranto (author).
Summary:
i. Background:
Dr. Chudik filed his patent application before the USPTO on September 29, 2006.
After the issuance of a second rejection in 2010 “Dr. Chudik took a step that would turn out to have consequences for the patent term adjustment awarded under 35 U.S.C. § 154(b)” by requesting continued examination rather than “immediately taking an appeal to the Patent Trial and Appeal Board.”
Then in 2014, the Examiner again rejected the claims and Dr. Chudik appealed to the Board. As a result, the Examiner reopened prosecution and issued a subsequent office action rejecting the claims as unpatentable on a different ground.
Two more times Dr. Chudik appealed and each time the Examiner reopened prosecution and issued a new rejection.
In December 2017, while a fourth notice of appeal was pending, the Examiner withdrew several rejections; and after some claim amendments, the Examiner issued a Notice of Allowance in 2018. The application issued as a patent on May 15, 2018, eleven and a half years (11.5 yrs) after the patent application was originally filed.
Dr Chudick was given a patent term adjustment of 2,066 days under 35 U.S.C. § 154(b). The PTO rejected Dr. Chudik’s argument that “he was entitled to an additional 655 days, under 35 U.S.C. § 154(b)(1)(C)(iii) (C-delay), for the time his four notice of appeals were pending.
ii. Issues:
Is Dr. Chuick entitled to patent term adjustment under 35 U.S.C. § 154(b)(1)(C)(iii) (C-delay) for the time his four notice of appeals were pending, even though each time prosecution was reopened, and the case never proceeded to the Board?
iii. Holding
No, the CAFC agreed with the United States District Court for the Eastern District of Virginia in affirming that Dr. Chudick was not entitled to the additional PTA under the C-delay provision. Chudik v. Iancu, No. 1:19-cv-01163 (E.D. Va. March 25, 2020), ECF No. 33.
The C-delay provision covers delays due to “appellate review by the Patent Trial and Appeal Board or by a Federal court in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability.” 35 U.S.C. § 154(b)(1)(C)(iii).
The District Court held and the CAFC affirmed that the provision does not apply here because the Examiner reopened prosecution after each Notice of Appeal and so (1) the Board did not review the patent at issue and thus “the Board’s jurisdiction over the appeal never attached,” and as a consequence “(2) there was no reversal of the rejection by the Board.”
Dr. Chudick “argued that [the] C-delay applies in situations of “appellate review,” which, he urged, refers to the entire process for review by the Board, beginning when a notice of appeal is filed.”
The District Court rejected this argument and the CAFC agreed holding that the statutory language for “appellate review” requires a “decision in the review reversing an adverse determination of patentability.” 35 U.S.C. § 154(b)(1)(C)(iii), and that language is both “reasonably” and “best interpreted” to require an actual “reversal decision made by the Board.” Consequently, the language excludes the “time spent on a path pursuing such a decision when, because of an examiner reopening of prosecution, no such decision is ever issued.”
The CAFC noted that “[W]hen adopting its 2012 regulations, the PTO explained that the limitations on C-delay adjustments… may be offset by an increased availability of B-delay adjustments.” However, for Dr. Chudik a B-delay increase fails to apply because rather than appealing his initial 2010 final rejection, a request for continued examination was filed and so the statutory exclusion was triggered. See 35 U.S.C. § 154(b)(1)(B)(i) (excluding “any time consumed by continued examination of the application requested by the applicant under [35 U.S.C. § 132(b)]”).
The CAFC concluded that “[T]he unavailability of B-delay for nearly two years (655 days) of delay in the PTO illustrates what applicants should understand when deciding whether to request a continued examination rather than take an immediate appeal. The potential benefit of immediate re-engagement with the examiner through such continued examination comes with a potential cost.”
Additional Note:
Congress set forth three broad categories of delay for which a patent may receive a patent term adjustment. See 35 U.S.C. § 154(b)(1)(A)–(C).
First, under § 154(b)(1)(A), a patent owner may seek an adjustment where the PTO fails to meet certain prescribed deadlines for its actions during prosecution.
Second, under § 154(b)(1)(B), adjustment is generally authorized for each day that the patent application’s pendency extends beyond three years (B-delay), subject to certain exclusions, such as for “time consumed by continued examination of the application requested by the applicant under section 132(b).”
Third, under § 154(b)(1)(C), a patent owner may seek an adjustment for “delays due to derivation proceedings, secrecy orders, and appeals,” including “appellate review by the [Board] . . . in a case in which the patent was issued under a decision in the review reversing an adverse determination of patentability” (C-delay).
Take-away:
- Where no new amendments and/or evidence is to be presented, carefully consider the balance between “[T]he potential benefit of immediate re-engagement with the examiner through such continued examination” and the “potential cost” thereof with respect to lost PTA under the B-delay exclusion.
- C-delay provision only applies when “the Board’s jurisdiction over the appeal” attaches and there is a reversal of the Examiner’s rejection.
