An Improvement in Computational Accuracy Is Not a Technological Improvement
Andrew Melick | May 20, 2021
In Re: Board of Trustees of the Leland Stanford Junior University
Decided on March 25, 2021
Prost, Lourie and Reyna. Opinion by Reyna.
Summary:
This case is an appeal from a PTAB decision that affirmed the Examiner’s rejection of the claims on the grounds that they involve patent ineligible subject matter. Leland Stanford Junior University’s patent to computerized statistical methods for determining haplotype phase were held by the CAFC to be to an abstract idea directed to the use of mathematical calculations and statistical modeling and that the claims lack an inventive concept that transforms the abstract idea into patent eligible subject matter. Thus, the CAFC affirmed the rejection on the grounds that the claims are to patent ineligible subject matter.
Details:
Leland Stanford Junior University’s (“Stanford”) patent application is to methods for determining haplotype phase which provides an indication of the parent from whom a gene has been inherited. The application discloses methods for inferring haplotype phase in a collection of unrelated individuals. The methods involve using a statistical tool called a hidden Markov model (“HMM”). The application uses a statistical model called PHASE-EM which allegedly operates more efficiently and accurately than the prior art PHASE model. The PHASE-EM uses a particular algorithm to predict haplotype phase.
Representative claim 1 recites:
1. A computerized method for inferring haplotype phase in a collection of unrelated individuals, comprising:
receiving genotype data describing human genotypes for a plurality of individuals and storing the genotype data on a memory of a computer system;
imputing an initial haplotype phase for each individual in the plurality of individuals based on a statistical model and storing the initial haplotype phase for each individual in the plurality of individuals on a computer system comprising a processor a memory;
building a data structure describing a Hidden Markov Model, where the data structure contains:
a set of imputed haplotype phases comprising the imputed initial haplotype phases for each individual in the plurality of individuals;
a set of parameters comprising local recombination rates and mutation rates;
wherein any change to the set of imputed haplotype phases contained within the data structure automatically results in re-computation of the set of parameters comprising local recombination rates and mutation rates contained within the data structure;
repeatedly randomly modifying at least one of the imputed initial haplotype phases in the set of imputed haplotype phases to automatically re-compute a new set of parameters comprising local recombination rates and mutation rates that are stored within the data structure;
automatically replacing an imputed haplotype phase for an individual with a randomly modified haplotype phase within the data structure, when the new set of parameters indicate that the randomly modified haplotype phase is more likely than an existing imputed haplotype phase;
extracting at least one final predicted haplotype phase from the data structure as a phased haplotype for an individual; and
storing the at least one final predicted haplotype phase for the individual on a memory of a computer system.
The PTAB determined that the claim describes receiving genotype data followed by mathematical operations of building a data structure describing an HMM and randomly modifying at least one imputed haplotype to automatically recompute the HMM’s parameters. Thus, the PTAB held that the claim is to patent ineligible abstract ideas such as mathematical relationships, formulas, equations and calculations. The PTAB further found that the additional elements in the claim recite generic steps of receiving and storing genotype data in a computer memory, extracting the predicted haplotype phase from the data structure, and storing it in a computer memory, and that these steps are well-known, routine and conventional. Thus, finding the claim ineligible under steps one and two of Alice, the PTAB affirmed the Examiner’s rejection as being to ineligible subject matter.
On appeal, the CAFC followed the two-step test under Alice for determining patent eligibility.
1. Determine whether the claims at issue are directed to a patent-ineligible concept such as laws of nature, natural phenomena, or abstract ideas. If so, proceed to step 2.
2. Examine the elements of each claim both individually and as an ordered combination to determine whether the claim contains an inventive concept sufficient to transform the nature of the claims into a patent-eligible application. If the claim elements involve well-understood, routine and conventional activity they do not constitute an inventive concept.
Under step one, the CAFC found that the claims are directed to abstract ideas including mathematical calculations and statistical modeling. Citing Parker v. Flook, 437 U.S. 584, 595 (1978), the CAFC stated that mathematical algorithms for performing calculations, without more, are patent ineligible under § 101. The CAFC determined that claim 1 involves “building a data structure describing an HMM,” and then “repeatedly randomly modifying at least one of the imputed haplotype phases” to automatically recompute parameters of the HMM until the parameters indicate that the most likely haplotype is found. The CAFC also found that the steps of receiving genotype data, imputing an initial haplotype phase, extracting the final predicted haplotype phase from the data structure, and storing it in a computer memory do not change claim 1 from an abstract idea to a practical application. The CAFC concluded that “Claim 1 recites no application, concrete or otherwise, beyond storing the haplotype phase.”
Stanford argued that the claim provides an improvement of a technological process because the claimed invention provides greater efficiency in computing haplotype phase. However, the CAFC stated that this argument was forfeited because it was not raised before the PTAB.
Stanford also argued that the claimed invention provides an improvement in the accuracy of haplotype predictions rendering claim 1 a practical application rather than an abstract idea. However, the CAFC stated that “the improvement in computational accuracy alleged here does not qualify as an improvement to a technological process; rather, it is merely an enhancement to the abstract mathematical calculation of haplotype phase itself.” The CAFC concluded that “[t]he different use of a mathematical calculation, even one that yields different or better results, does not render patent eligible subject matter.”
Under step two, the CAFC determined that there is no inventive concept that would transform the use of the claimed algorithms and mathematical calculations from an abstract idea to patent eligible subject matter. The steps of receiving, extracting and storing data are well-known, routine and conventional steps taken when executing a mathematical algorithm on a regular computer. The CAFC further stated that claim 1 does not require or result in a specialized computer or a computer with a specialized memory or processor.
Stanford argued that the PTAB failed to consider all the elements of claim 1 as an ordered combination. Specifically, they stated that it is the specific combination of steps in claim 1 “that makes the process novel” and “that provides the increased accuracy over other methods.” The CAFC did not agree stating that the PTAB was correct in its determination that claim 1 merely “appends the abstract calculations to the well-understood, routine, and conventional steps of receiving and storing data in a computer memory and extracting a predicted haplotype.” The CAFC further stated that even if a specific or different combination of mathematical steps yields more accurate haplotype predictions than previously achievable under the prior art, that is not enough to transform the abstract idea in claim 1 into a patent eligible application.
Comments
A key point from this case is that an improvement in computational accuracy does not qualify as an improvement to a technological process. It is merely considered an enhancement to an abstract mathematical calculation. Also, it seems that Stanford made a mistake by not arguing at the PTAB that the claimed invention provides the technological advance of greater efficiency in computing haplotype phase. The CAFC considered this argument forfeited. It is not clear if this argument would have saved Stanford’s patent application, but it certainly would have helped their case.
If it cannot be made, it does not exist!
Adele Critchley | May 11, 2021
Raytheon Technologies Corp. v. General Electric Co. (Fed. Cir. 2021)
Decided on April 16, 2021
Lourie, Hughes, and Chen (author).
Summary:
“A typical obviousness inquiry often turns on whether an asserted prior art reference teaches a particular disputed claim limitation or whether a skilled artisan would have been motivation at the time of the invention to combine the teachings of difference references.” In this case, the court tackled the question of enabling disclosure in the prior art reference, and what is required.
Raytheon owned U.S. Patent 9,695,751 (herein ‘751) directed to gas turbine engines. Raytheon appealed a final inter partes review decision of the Patent Trial and Appeal Board (the Board) finding claims 3 and 16 where unpatentable as obvious in view of the reference Knip. Claims 3 and 16 where the only pending claims after Raytheon disclaimed all other claims cited in the inter partes review.
“[T]he ‘751 patent generally claims a geared gas turbine engine with two turbines and a specific number of fan blades and turbine rotors and/or stages.” Further, the “key distinguishing feature of the claims is the recitation of a power density range that the patent describes as being ‘much higher than in the prior art.'”
Knip is a 1987 NASA technical memorandum that envisions superior performance characteristics for an imagined “advanced [turbofan] engine” “incorporating all composite materials.” Such a construction was undisputedly unattainable at that time, [but] an imagined application of these “revolutionary” composite materials to a turbofan engine allowed the author of Knip to assume aggressive performance parameters for an “advanced” engine including then-unachievable pressure ratios and turbine temperatures.” Although the reference discloses numerous performance parameters, it did not explicitly disclose SLTO thrust, turbine volume or power density as per the ‘751 patent. (SLTO = Sea Level Takeoff).
The Board ultimately found Knip rendered obvious the ‘751 patent because “it provided enough information to allow a skilled artisan to “determine a power density as defined in claim 1, and within the range proscribed in claim 1.” (Claim 3 was a dependent claim incorporating all limitation of claim 1; claim 16 depended on claim 15 which included the same argued limitations as claim 1).
The CAFC found that the PTAB erred by focusing on whether Knip enables a skilled artisan to calculate the power density of Knip’s contemplated “futuristic engine,” rather than considering “whether Knip enabled a skilled artisan to make and use the claimed invention.”
Specifically, “[i]n general, a prior art reference asserted under §103 does not necessarily have to enable its own disclosure, i.e., be ‘self-enabling,’ to be relevant to the obviousness inquiry.” That is, “a reference that does not provide an enabling disclosure for a particular claim limitation may nonetheless furnish the motivation to combine, and be combined with, another reference in which that limitation is enabled.” Thus, “[I]n the absence of such other supporting evidence to enable a skilled artisan to make the claimed invention, a standalone §103 reference must enable the portions of its disclosure being relied upon” This is “the same standard applied to anticipatory references.”
Here, the sole reference was Knip, and so the CAFC emphasized the question as being whether Knip enables the claimed invention not whether a skilled artisan “is provided with sufficient parameters in Knip to determine, without undue experimentation, a power density” as per the Boards focus. That CAFC noted that this position could have carried weight “if GE had presented other evidence to establish that a skilled artisan could have made the claimed turbofan engine with the recited power density. But no such other evidence was presented.”
Therefore, according to the CAFC, “Knip’s self-enablement (or lack thereof) is not only relevant to the enablement analysis, in this case it is dispositive.”
The CAFC discussed GE’s expert testimony finding it to be lacking, because its expert constructed “a computer model simulation of Knip’s imagined engine” rather than “suggesting that a skilled artisan could have actually built such an engine.” In contrast, Raytheon’s expert presented unrebutted evidence of non-enablement… detailing the unavailability of the revolutionary composite material contemplated by Knip.”
Lastly, GE had argued that a skilled artisan could achieve the claimed power density by optimizing Knip’s engine. The Board had affirmed this on the basis of “result-effective variable.” That CAFC rejected this, stating that “[i]f a skilled artisan cannot make Knip’s engine, a skilled artisan necessarily cannot optimize its power density.”
Accordingly, the CAFC reversed the PTAB’s finding.
Take-away:
- “[I]f an obviousness case is based on a non-self-enabled reference, and no other prior art reference or evidence would have enabled a skilled artisan to make the claimed invention, then the invention cannot be said to have been obvious.”
- If a single reference is used in a 103 rejection, and that single reference is non-self enabling, then allegations of optimization by the PTO is improper. That is, “if a skilled artisan cannot make..[it], a skilled artisan necessarily cannot optimize it…”
UNDERSTANDING STANDING IN AN IPR
Stephen G. Adrian | 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
Stephen G. Adrian | 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.
