2021 Q2 Patent Defenses Update
We summarize below selected substantive patent law Fed. Cir. and S. Ct. decisions since Apr. 1—from Klarquist’s free, mobile-friendly legal research tool Patent Defenses (www.patentdefenses.com), updated frequently.
Prosecution Laches: New Life
Long-delayed broadening of claims in ancestor applications remains a problem for patent-infringement defendants.
While (1) Mr. Hyatt’s use of the patent system is unparalleled (he filed 381 placeholder applications at GATT bubble, later expanded number of claims to 115,000, delayed between 12 to 28 years (based on asserted priority dates) to present his claims for prosecution, and “adopted an approach to prosecution that all but guaranteed indefinite prosecution delay”), and (2) this panel decision is on appeal of a § 145 action against the Patent Office, the decision breathes new life into this defense by creating a presumption of intervening rights and prejudice if there were six or more years of unreasonable prosecution delay. Hyatt (Fed. Cir. 06/01/21).
Assignor Estoppel Restricted: Prohibits One In Privity With Assignor Contradicting Assignor’s Implied (Or Express) Representations Of Patentability, Claim By Claim
Assignor estoppel (now) ”applies when, but only when, the assignor’s claim of invalidity contradicts explicit or implicit representations he made in assigning the patent.” Minerva Surgical (U.S. 06/29/2021) (5-4), vacating Hologic (Fed. Cir. 04/22/20).
There is no contradiction (or estoppel) when (1) the “assignment occurs before an inventor can possibly make a warranty of validity as to specific patent claims” (as in assignment of future inventions in an employment agreement), (2) intervening law renders the claims invalid, or (3) later claims in a patent are “materially broader” than the claims at the time of the assignment.
Abstractness Angst When Invention Involves Physical Components Of Physical Machines
Last year, it was claims directed to a “method for manufacturing a shaft assembly of a driveline system” that were declared patent ineligible, to much ridicule. See American Axle (Fed. Cir. 07/31/20) (2-1). This quarter it is claims on an improved digital camera:
Claim: “An improved digital camera comprising: a first and a second image sensor …; two lenses, each being mounted in front of one of said two image sensors; …; an analog-to-digital converting circuitry coupled to said first and said second image sensor …; an image memory, …; and a digital image processor, coupled to said image memory and receiving said first digital image and said second digital image, producing a resultant digital image from said first digital image enhanced with said second digital image.”
Ruling: Patent ineligible for being directed to abstract idea of “taking two pictures (which may be at different exposures) and using one picture to enhance the other in some way”. Yu (Fed. Cir. 06/11/21) (2-1) (aff’g R. 12(b)(6) dismissal; claims’ enhanced image is created by conventional digital camera components performing their basic functions and recited at high degree of generality, and what Spec. identifies as advance over prior art is not required by the claims).
See https://patentdefenses.klarquist.com/patent-eligible-subject-matter-sec-101/ (includes table quoting the “abstract idea” for each of 124 post-Alice Fed. Cir. opinions ruling that claims are directed to an abstract idea).
Contributory Infringement: Merely Hypothetical Non-Infringing Uses Unhelpful
Bio-Rad (Fed. Cir. 05/28/21) (aff’g contributory infringement and ITC finding that each proposed design-around is a “hypothetical system that is not yet available to 10X’s customers,” as consistent with precedent, “which focuses on the real way in which the accused product is made, used, and sold”).
Unsettled: Who Has Burden On Whether Prior Art Non-Patent Publication Is Enabled?
In late June, a Fed. Cir. panel, in a non-precedential decision, declared that in the context of district court litigation, patent prosecution, and AIA trial proceedings, “prior art patents and publications enjoy a presumption of enablement, and the patentee/applicant has the burden to prove nonenablement for such prior art.” Apple (Fed. Cir. 06/23/21) (non-precedential) (PTAB (harmless) error to put burden of persuasion on challenger to prove prior art published Japanese application enabled.)
But this appears to extend prior precedents. In particular, In re Antor Media (Fed. Cir. 07/27/12) held that during patent prosecution, an Examiner may presume that a non-patent prior art publication is enabling unless shown otherwise, but its reasoning did not extend to district court litigation or even AIA trials.
Unsettled: Does AIA Trial Estoppel Arise Upon Board’s Final Written Decision Or When Appeals Exhausted?
Court has not decided when AIA trial-based estoppel arises, although has held that for inter partes reexamination “whose language is similar but not identical to § 325(e)(2)—estoppel rights arose when all appellate rights were exhausted.” Olaplex (Fed. Cir. 05/06/21) (non-precedential) (aff’g application of PGR-based estoppel against written description and obviousness defenses).
Patent Defenses Q1 2021 Highlights
Williamson and Fools’ Gold: Purely Functional Claim Elements
This quarter the Federal Circuit repeatedly found indefiniteness based on claim terms triggering interpretation under section 112(f). “Means-plus-function claiming is fools gold—especially for anyone with a thin disclosure. The claims appear broad, but are narrowly interpreted and regularly invalidated.” Crouch, Patently O (03/02/21).
- “user identification module configured to control access of . . .” Rain Computing (Fed. Cir. 03/02/21) (aff’g quoted claim element nested in method claim triggers Sec. 112(6/f) as “module” is nonce term, “user identification” describes function, “the purely functional claim language reciting what the ‘user identification module’ is configured to do provides no structure,” the claim term is not a term of art for structure, and term not used in Spec.);
- “user identifier module” Synchronoss (Fed. Cir. 02/12/21) (aff’g Summ. J. quoted claim element triggers Sec. 112(6/f), and claims indefinite);
- “wireless means of on-demand allocation of a passenger . . . ” and “wireless means of detecting the proximity of the passenger . . .” RideApp (Fed. Cir. 03/25/21) (non-precedential) (aff’g Markman ruling of indefiniteness because Spec. did not “describe how the system analyzes different passenger transportation requests and vehicle availability to assign a particular route or vehicle to a given user”).
Nautilus: So Many Ways to Be Unclear
Post-Nautilus, the Federal Circuit has found patent claims “indefinite” for a wide range of reasons, including this quarter.
- Unclear boundary between two elements: Infinity Computer (Fed. Cir. 02/10/21) (aff’g indefiniteness ruling at Markman hearing of “passive link” (not used in Spec.) and “computer” in “via a passive link between the facsimile machine and the computer,” for a lack of reasonable certainty as to where passive link ends and computer begins, ivo applicants’ plainly inconsistent positions in original prosecution and reexamination proceedings on another patent in family);
- Unclear how to measure compliance: Saso Golf (Fed. Cir. 02/10/21) (non-precedential) (aff’g indefiniteness of claim’s description of shape of golf club head as skilled artisan would not know where to make measurements for applying claimed formula; no clear error in finding of fact that an artisan would not know the precise bounds of the toe and heel of a golf club);
- Nonsensical claims: Synchronoss (Fed. Cir. 02/12/21) (aff’g Summ. J. indefiniteness of claims reciting a single file comprising a directory of multiple files as claiming an impossibility rendering them nonsensical); Horizon Pharma. (Fed. Cir. 01/06/21) (non-precedential) (aff’g Summ. J. indefiniteness; meaning of “target” (in “the AM and PM unit dose forms target . . .”) is unambiguous: “set as a goal,” which renders claim nonsensical because “reading the claim literally, a dose form, which is an inanimate object, cannot set a goal,” despite cursory conclusion by expert as to how skilled artisan would understand term).
Intersection of PTAB Decision and Defenses in Court
Particularly since the PTAB adopted the Phillips claim construction standard, petitioners for PTAB review need to worry about judicial estoppel and issue preclusion in addition to statutory estoppel arising from a Final Written Decision in the PTAB. The first case below removes one cause for concern while the second reinforces the risk of issue preclusion (despite applying issue preclusion to a second PTAB proceeding).
- Final Written Decision Declining To Decide Prior Art Invalidity Due To Indefiniteness Not Likely To Create Estoppel: Dictum: “To be clear, in cases in which the Board cannot reach a final decision as to the patentability of certain claims because it cannot ascertain the scope of those claims with reasonable certainty, the petitioner would not be estopped by 35 U.S.C. § 315(e) from challenging those claims under sections 102 or 103 in other proceedings.” Samsung (Fed. Cir. 02/04/20).
- Issue Preclusion (Collateral Estoppel): Same Issue: Synqor (Fed. Cir. 02/21/21) (2-1) (applying issue preclusion to reverse PTAB finding of obviousness in inter partes reexamination (based on finding motivation to combine two references and finding the references were not incompatible) based on another PTAB ruling in inter partes reexamination initiated by same petitioner of different patents in same patent family, that same prior art references were incompatible and hence there was no motivation to combine).
More Examples of an “Abstract Idea”
Patent Defenses quotes the “abstract idea” to which the court found the claims directed in every post-Alice Fed. Cir. opinion finding a claim directed to an “abstract idea.” This quarter’s entries are:
|Abstract Idea Decision||“Abstract Idea” To Which Claims Directed||Ruling|
|In re Board of Trustees (Stanford) (Fed. Cir. 03/25/21) (Reyna, J.)||“mathematical calculations and statistical modeling”, specifically, a “computerized method of inferring haplotype phase in a collection of unrelated individuals”||aff’g ex parte rejection
|In re Board of Trustees (Stanford) (Fed. Cir. 03/11/21) (Reyna, J.)||“mathematically calculating alleles’ haplotype phase”||aff’g ex parte rejection
|Enco (Fed. Cir. 03/08/21) (non-precedential) (Taranto, J.)||“automating the AV-captioning process”||aff’g R. 12(b)(6)
|Veripath (Fed. Cir. 02/08/21) (non-precedential) (Lourie, J.)||“an improvement to the abstract notion of exchanging privacy for functionality that utilizes an API to achieve the desired result”||aff’g R. 12(b)(6)
|cxLoyalty (Fed. Cir. 02/08/21) (Prost, C.J.)||“facilitating, or brokering, a commercial transaction (i.e., the sale and purchase of goods and services) between a purchaser using a first form of value (i.e., a rewards program participant using points in whole or in part) and a seller transacting in a second form of value (i.e., a vendor system which transacts purchases in currency)”||aff’g PTAB ineligibility and rev’g PTAB eligibility in CBM
|In re Mohapatra (Fed. Cir. 02/05/21) (non-precedential) (Bryson, J.)||“enabling a credit card user to change the security code on the card by using a web application”||aff’g ex parte rejection
|iLife Tech. (Fed. Cir. 01/13/21) (non-precedential) (Moore, J.)||“gathering, processing, and transmitting information”||aff’g post-trial JMOL
|Boom! Payments (Fed. Cir. 01/13/21) (non-precedential) (Lourie, J.)||“payment escrow”
|aff’g R. 12(b)(6)
|In re Sturgeon (Fed. Cir. 01/12/21) (non-precedential)||“simulating a floral arrangement by creating a digital collage”||aff’g ex parte rejection
|Mortgage Application (Fed. Cir. 01/12/21) (non-precedential) (Clevenger, J.)||“information exchange in an online loan application process”
“exchanging information from XML to PDF format”
|aff’g R. 12(c)
|In re Abel (Fed. Cir. 01/07/21) (non-precedential) (Taranto, J.)||“generating a mailer defined by a set of rules for controlling the sender’s access to the receiver’s mailing address”||aff’g ex parte rejection
Assignor Estoppel Before the S. Ct.
- Broadening of claims does not negate assignor estoppel, but estopped party may introduce evidence of prior art to narrow the scope of claim “so as to bring its accused product ‘outside the scope of’” of the claim. Hologic (Fed. Cir. 04/22/20) (aff’g application of assignor estoppel), cert. granted (U.S. 01/08/2021) (Question Presented: “whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.”)
Patent Defenses Q4 2020 Highlights
Do More in Markman: No Patentable Weight: Many litigants seek too little in Markman proceedings. One often neglected issue is whether language in the body of a patent claim has patentable weight.
“[P]rinted matter encompasses any information claimed for its communicative content, and the doctrine prohibits patenting such printed matter unless it is ‘functionally related’ to its ‘substrate,’ which encompasses the structural elements of the claimed invention.” “[T]he questions of whether certain claim elements are directed to printed matter and whether such printed matter is functionally related to other claim elements may properly be resolved during claim construction.” C R Bard (Fed. Cir. 11/10/20) (aff’g that “the content of the information conveyed by the claimed markers—i.e. that the claimed access ports are suitable for injection at the claimed pressure and flow rate—is printed matter not entitled to patentable weight,” but nevertheless vacating summary judgment of anticipation).
Inducing Acts Need Not Be Shown With Direct Evidence To Be Cause of Direct Infringement: Being a tort, causation is an element of inducement patent infringement. But it need not be shown by direct evidence.
“[W]hen the provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement are met.” GlaxoSmithKline (Fed. Cir. 10/02/20) (2-1) (rev’g grant of non-infringement JMOL where doctors already knew the (claimed) use of brand name drug, and generic marketed its drug as being comparable to brand name drug, despite generic having carved out that infringing use from its “skinny label” approval (later adding that use at FDA’s direction); rejecting trial court and dissent’s reasoning that plaintiff had failed to prove that defendant’s advertising was cause of any direct infringement).
A Defendant May Know It Is Infringing Even if the Patent Owner Has Stipulated to Non-infringement Under a (Later Overturned) Narrow Claim Construction: This is another case illustrating the inherent difficulty in asking a jury to decide whether the defendant knew it was infringing (for willfulness) or causing infringement (for indirect infringement). Such intent often turns on whether the defendant believed that the trial judge’s current (or, as in this case, former) claim construction is wrong, which is inherently problematic and not what a trial judge wants a jury to hear.
TecSec (Fed. Cir. 10/23/20) (rev’g D. Ct. grant of a motion in limine precluding evidence of inducement after date of reasonable narrow claim construction ruling (followed by stipulation of non-infringement) later reversed by Fed. Cir.; “[A] defendant may have the liability-supporting subjective state of mind even if a person could believe, with objective reasonableness (though wrongly), that the induced conduct was not infringing.”).
The Power of Comparable Patent License Agreements in Patent Damages Determinations: A patent owner can embrace a comparable patent license agreement to satisfy the apportionment requirement and then seek damages much higher than would have been paid under that comparable agreement.
Vectura (Fed. Cir. 11/19/20) (aff’g $89.7 MM damages award based on 3% royalty on total product sales based on expired license between parties covering same invention: “when a sufficiently comparable license is used as the basis for determining the appropriate royalty, further apportionment may not necessarily be required…. Built-in apportionment effectively assumes that the negotiators of a comparable license settled on a royalty rate and royalty base combination embodying the value of the asserted patent.” Permitting damages theory based on that that earlier license even though theory omitted the royalty cap present in earlier license, based allegedly on changed circumstances).
Where Did That Artificial (ANDA) Act of Infringement Take Place?: Under TC Heartland, a domestic corporation may be sued for patent infringement only in judicial districts in the state in which it is incorporated and those in which it has a regular and established place of business and an act of infringement has occurred. Where does the act of infringement associated with filing an Abbreviated New Drug Application occur?
Valeant Pharma. (Fed. Cir. 11/05/20) (“[I]n cases brought under 35 U.S.C. § 271(e)(2)(A) [Hatch-Waxman Act], infringement occurs for venue purposes only in districts where actions related to the submission of an Abbreviated New Drug Application (‘ANDA’) occur, not in all locations where future distribution of the generic products specified in the ANDA is contemplated.”).
Commonsense Check Before Filing a Patent Suit: We’ve all heard of trademark owners sending a cease and desist letter alleging that a competitor’s mark is confusingly similar, only to receive in response a counter demand to cease and desist use citing evidence that the competitor used its mark first. One patent-world corollary is a patent owner whose complaint cites a defendant’s manual for proof of infringement, without checking the prior-art versions of that manual (which described the same features):
WPEM (Fed. Cir. 12/09/20 (non-precedential) (aff’g fees award where infringement was based on features in version 11 of product manual but version 10 of same manual was prior art and described same features).
Abstract Ideas Identified by Fed. Cir. Post Alice: Patent Defenses quotes what the Fed. Cir. has identified as the “abstract idea” to which patent claims are directed, in its 107 post-Alice opinions (thus not counting R. 36 affirmances) holding patent claims invalid or unpatentable under Alice. This is a useful listing to scan whenever assessing patent eligibility under Alice. Here are this quarter’s entries:
|Abstract Idea Decision||“Abstract Idea” To Which Claims Directed||Ruling|
|Netsoc (Fed. Cir. 12/31/20) (non-precedential) (Stoll, J.)||“automating the conventional establishment of social networks to allow humans to exchange information and form relationships”||aff’g R. 12(b)(6) [in two separate actions on related patents]
at least 2 claims
|Simio (Fed. Cir. 12/29/20) (Prost, CJ)||“using graphics instead of programming to create object-oriented simulations”||aff’g R. 12(b)(6)
at least 1 claim
|Adaptive Streaming (Fed. Cir. 12/14/20) (non-precedential) (Taranto, J.)||“collecting information and transcoding it into multiple formats”
“format conversion, from an incoming signal’s format to a variety of formats suited to different destination devices”
|aff’g R. 12(b)(6)
|Fast 101 PTY (Fed. Cir. 11/25/20) (non-precedential) (Chen, J.)||“an intermediated settlement system that employs a discount for early payment”||aff’g R. 12(b)(6)
|Gree (Fed. Cir. 11/19/20) (non-precedential) (Stoll, J.)||“creating and applying a template of positions of one or more game contents”||aff’g and rev’g PTAB PGR decision
17 claims (3 claims upheld under Step Two)
|Tenstreet (Fed. Cir. 10/19/20) (non-precedential) (Hughes, J.)||“collecting, organizing, and storing data on a conventional computer network”||aff’g R. 12(b)(6)