No Standing and No Vacatur for Patent Licensee Seeking Review of IPR Decisions
| December 28, 2021
Apple Inc. v. Qualcomm Incorporated
Decided on November 10, 2021
Newman, Prost, and Stoll. Opinion by Prost. Dissent by Newman.
Summary
For a second time involving the same parties who had entered a license agreement as part of settlement of global patent litigation, the Federal Circuit denied standing to appeal from the Patent Trial and Appeal Board (PTAB) where the underlying facts were identical to those in the previous case, except for the identity of patents at issue. The Federal Circuit also rejected the licensee’s request to vacate the PTAB decision which was found unappealable for lack of standing. The dissent argued that the mere existence of a license should not negate the licensee’s right to challenge the patent validity in Article III court.
Details
“Flashback” to Apple I
The Opinion begins by referring to Apple Inc. v. Qualcomm Inc., 992 F.3d 1378, 1385 (Fed. Cir. 2021) (“Apple I”), where Qualcomm sued Apple in a district court for infringement of patents; Apple sought an inter partes review (“IPR”) of those patents; the two companies settled all their litigation and entered a license agreement, leading to dismissal of the infringement action with prejudice; thereafter, Apple appealed a final decision of the IPR issued in favor of Qualcomm.
At issue in Apple I was Apple’s standing before the Article III court. There, Apple was found to lack standing because:
- No sufficient evidence or argument was presented that invalidity of any specific patent would change any aspect of the contractual relationship or royalty imposed on Apple.
- Apple’s evidence failed to identify any particular patent or potentially infringing activity that is tied to a risk of litigation after the license has expired.
- Apple’s invocation of the estoppel provision was insufficient to warrant standing.
Rehearing was denied en banc in Apple I.
No Standing in Deference to Apple I
The Federal Circuit dismissed for lack of standing following the precedent. Since “the operative facts are the same,” the difference in the patents between the two cases was “irrelevant.” Further, the court rejected Apple’s assertion that the previous case did not articulate the reason why a threat of litigation that would potentially result from Apple’s failure to pay the license fee and termination of the agreement does not suffice to establish standing.
Vacatur Denied
Apple asserted that if it lacks standing, the PTAB decisions should be vacated, which would otherwise frustrate future litigation involving the same patents. In so doing, Apple relied on the principle in United States v. Munsingwear, Inc., which allows vacatur of a judgement below where the case has become moot on appeal.
The Federal Circuit disagreed. First, Munsignwear was distinguished because it concerns mootness, rather than standing. The difference between the two doctrines resides in the timing: Standing relates to existence of controversy “at the outset” of the appeal whereas mootness considers existence of controversy “throughout the proceedings.” To the extent the dispute between the parties had disappeared before the appeal was filed, the case cannot “become moot.” Second, even if the mootness doctrine were applicable, the court stated that vacatur would still not be appropriate. Because the alleged mootness was caused by Apple’s own voluntary action (i.e., settlement), it could not claim the equitable remedy of vacatur.
Dissent
The dissenting opinion noted that continuing controversy existed where Apple, although agreeing to settlement and license, still disputed the validity of the licensed patents, and the potentially infringing products will likely remain on the market after the termination of the contract, which does not cover the entire life of the patents as a result of Qualcomm’s refusal of Apple’s request otherwise. The dissent also argued that denial of the standing is contrary to the statutory purposes of estoppel and right of appeal provisions under the AIA. Furthermore, citing United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021) (see Cindy Chen’s previous report), which required vacatur of PTAB decisions that are unreviewable by a principle agency officer, the dissent argued that the IPR decisions in the present case should be vacated if Apple is denied the constitutional right of judicial review.
Takeaway
- In addition to confirming that the patent licensee seeking appeal from the IPR lacks Article III standing in the circumstances of the case, the Federal Circuit found that such a party also forfeited its right to vacatur of the underlying IPR decision.
- Potential consequences of settlement and license where an IPR is pending could be grave; not only could it limit the party’s ability to prove a requisite injury for standing to appeal, but also it could foreclose the remedy of vacatur, thereby affecting future re-litigation.
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.
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).
Proprietary interest is not required in seeking cancellation of a trademark registration
| August 31, 2020
Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC
July 27, 2020
O’Malley, Reyna, Wallach (Opinion by Reyna; Dissent by Wallach)
Summary
The Trademark Trial and Appeal Board (the “TTAB”) determined that Australian Therapeutic Supplies Pty. Ltd. (“Australian”) lacked standing to bring a cancellation proceeding against a trademark registration of Naked TM, LLC (“Naked”), because Australian lacked proprietary rights in its unregistered marks. The United States Court of Appeals for the Federal Circuit (the “CAFC”) reversed and remanded, holding that proprietary interest is not required in seeking cancellation of a trademark registration. By demonstrating real interest in the cancellation proceeding and a reasonable belief of damage, statutory requirement to bring a cancellation proceeding under 15 U.S.C. § 1064 is satisfied.
Details
Australian started using the mark NAKED and NAKED CONDOM for condoms in Australia in early 2000. Australian then began advertising, selling, and shipping the goods bearing the marks to customers in the United States starting as early as April 2003.
Naked owns U.S. Trademark Registration No. 3,325,577 for the mark NAKED for condoms. In 2005, Australian became aware of the trademark application filed on September 22, 2003 by Naked’s predecessor-in-interest. On July 26, 2006, Australian contacted Naked, claiming its rights in its unregistered mark. From July 26, 2006 to early 2007, Australian and Naked engaged in settlement negotiations over email. Naked asserts that the email communications resulted in a settlement, whereby Australian would discontinue use of its unregistered mark in the United States, and Australian consents to Naked’s use and registration of its NAKED mark in the United States. Australian asserts the parties failed to agree on the final terms of a settlement, and no agreement exists.
In 2006, Australian filed a petition to cancel registration of he NAKED mark, asserting Australian’s prior use of the mark, seeking cancellation on the grounds of fraud, likelihood of confusion, false suggestion of a connection, and lack of bona fide intent to use the mark. Naked responded, denying the allegations and asserting affirmative defenses, one of which was that Australian lacked standing, as Australian was contractually and equitably estopped from pursuing the cancellation.
Following trial, on December 21, 2018, the Board concluded that Australian lacked standing to bring the cancellation proceeding, reasoning that Australian failed to establish proprietary rights in its unregistered mark and therefore, lacked standing. The Board found that while no formal written agreement existed, through email communications and parties’ actions, the Board found that Australian led Naked to reasonably believe that Australian had abandoned its rights to the NAKED mark in the United States in connection with condoms. While the Board made no finding on whether Australian agreed not to challenge Naked’s use and registration of the NAKED mark, the Board concluded that Australian lacked standing because it could not establish real interest in the cancellation or a reasonably basis to believe it would suffer damage from Naked’s continued registration of the mark NAKED.
The statutory requirements to bring a cancellation proceeding under 15 U.S.C. § 1064 are 1) demonstration of a real interest in the proceeding; and 2) a reasonable belief of damage. The CAFC held that the Board erred by concluding that Australian lacked standing because it had no proprietary rights in its unregistered mark. Australian contracting away its rights to use the NAKED mark in the United States could bar Australian from proving actual damage, the CAFC clarified that 15 U.S.C. § 1064 requires only a belief of damage. In sum, establishing proprietary rights is not a requirement for demonstrating a real interest in the proceeding and a belief of damage.
Next, the CAFC considered whether Australian has a real interest and reasonable belief of damage such that is has a cause of action under 15 U.S.C. § 1064. Here, Australian demonstrates a real interest because it had twice attempted to register its mark in 2005 and 2012, but was refused registration based on a likelihood of confusion with Naked’s registered mark. The USPTO has suspended prosecution of Australian’s later-filed application, pending termination of the cancellation proceeding, which further demonstrates a belief of damage.
Naked argued that Australian’s applications do not support a cause of action because Australian abandoned its first application. It also argued that ownership of a pending application does not provide standing.
With regard to the first point, the CAFC stated that abandoning prosecution does not signify abandoning of its rights in a mark. As for the second point, Australian’s advertising and sales in the United States since April 2003, supported by substantial evidence, demonstrate a real interest and reasonable belief of damage.
While Naked questions the sufficiency of Australian’s commercial activity, the CAFC stated that minimum threshold of commercial activity is not imposed by 15 U.S.C. § 1064.
Therefore, the CAFC held that the Board erred by requiring proprietary rights in order to establish a cause of action under 15 U.S.C. § 1064. The CAFC also held that based on the facts before the Board, Australian had real interest and a reasonable belief of damage; the statutory requirements for seeking a cancellation proceeding is thereby satisfied. The CAFC reversed and remanded the case to the Board for further proceedings.
Dissenting Opinion
While Judge Wallach, in his dissenting opinion agreed that proprietary interest is not required, he disagreed with the majority’s finding that Australian met its burden of proving a real interest and a reasonable belief in damages. In this case, any “legitimate commercial interest” in the NAKED mark was contracted away, as was any “reasonable belief in damages”.
Takeaway
Proprietary interest is not required in seeking cancellation of a trademark registration. Statutory requirement to bring a cancellation proceeding under 15 U.S.C. § 1064 is satisfied by demonstrating real interest in the cancellation proceeding and a reasonable belief of damage.
BEWARE OF A SURPRISE CO-OWNER OF A PATENT WHO DOES NOT WANT TO ENFORCE ITS PATENT
| June 12, 2014
STC.UNM v. Intel Corp.
June 6, 2014
Panel: Rader, Dyk, and Newman. Opinion by Rader. Dissent by Newman
Summary:
The ‘998 patent was a CIP of the ‘312 patent, which was jointly owned by STC.UNM and Sandia. Because a terminal disclaimer (which required a common ownership of both patents) was filed during prosecution of the ‘998 patent, STC.UNM and Sandia are co-owners of the ‘998 patent even if Sandia did not make any contribution to the ‘998 patent. STC.UNM filed an infringement suit concerning the ‘998 patent against Intel, and Sandia refused to join the lawsuit. The district court dismissed the case for a lack of standing, and the CAFC affirmed by holding that all co-owners must ordinarily consent to join as plaintiffs in an infringement suit. Furthermore, both the district court and the CAFC refused to involuntarily join Sandia to the case as a necessary party (FRCP Rule 19).
본사건은연방지방법원뉴멕시코지원의판결에불복하여 STC/UNM이연방순회항소법원 (CAFC)에항소한사건이다. CAFC는연방지방법원과같이‘312 특허를바탕으로일부계속출원된특허 (continuation-in-part)인‘998 특허심사도중원고STC/UNM가존속기간포기서 (terminal disclaimer)를제출함으로써특허심사거절을극복하였으므로, STC/UNM과 Sandia는‘998 특허의공동소유자(co-owners)라고판단하였다 (Sandia는‘998 특허발명에공헌을하지않았다). 또한CAFC는 Sandia의소송참여의사에상관없이 STC/UNM이인텔을상대로‘998 특허침해소송을제기한것에대해STC/UNM은원고적격(standing)이없다고판단하여소송을기각하였다. 왜냐하면특허침해소송에서는특허의모든공동소유자가원고로참여해야하지만Sandia는소송참여를하지않기로결정하였기때문이다. 마지막으로CAFC는연방지방법원과마찬가지로본사건은연방민사소송규칙 19조의involuntary joinder rule이적용되지않아Sandia를원고로강제참여시킬수없다고판단하였다.
Tags: Continuation-in-part-application > Joinder > Rule 19 > Standing > terminal disclaimer
