Staying Current in The World of Patent Litigation: A Year (And More) In Review ABA IPL Spring Conference Friday, April 4, 2014 (10:15-11:45 am)

Staying Current in The World of Patent Litigation: A Year (And More) In Review

ABA IPL Spring ConferenceFriday, April 4, 2014(10:15-11:45 am)

Moderator

• Jonathan Muenkel

(IP Attorney – Currently In Transition)

Panelists

• Hon. Judge Paul Michel (Ret.)

(Chief Judge – U.S. Court of Appeals for Federal Circuit)

• Greg Castanias(Partner - Jones Day)

• Matthew Blackburn(Partner - Locke Lord)

• Ha Kung Wong(Partner - Fitzpatrick Cella Harper & Scinto)

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Agenda1. Patent Eligibility (35 U.S.C. §101)

2. Infringement (35 U.S.C. §271)

3. Remedies• §285 Exceptional Case, Injunctions, Damages

4. Claim Construction

5. Administrative Agency Decisions (Post-AIA)• In re Baxter Int’l, PTAB

6. Other• Appellate Jurisdiction, §112 Indefiniteness

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Patent Eligibility (35 U.S.C. § 101)

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Eligibility

•1952 Act:

▫Created a separate section 101 detailing four categories of inventions (“process, machine, manufacture, [and] composition of matter,” and “improvement[s] thereof”), and provided that an inventor “may obtain a patent therefor, subject to the conditions and requirements of this title.”

▫Created a new section 103 (“nonobviousness”) to codify the “invention” requirement of prior judicial decisions.

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Judicial (“implicit”) exceptions to §101

• “Phenomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.” Gottschalk v. Benson, 409 U.S. 63, 67 (1972), citing Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U. S. 127, 130 (1948)

▫ Rubber-Tip Pencil Co. v. Howard, 20 Wall. 498, 507 (1874) (“An idea of itself is not patentable.”)

▫ Le Roy v. Tatham, 14 How. 156, 175 (1853)(“A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.”)

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Supreme Court: §101 Has Muscle• Bilski v. Kappos, 561 U.S. __ (2010)—

reaffirms the implicit exceptions to §101 and holds business method claim ineligible because “abstract”

• Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012)—applies “law of nature” exception and holds diagnostic-method claim ineligible for lack of an “inventive concept” beyond the law of nature and several “well-understood, routine, and conventional” steps

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Myriad Genetics•Specific, defined DNA molecule isolated

from the human genome not eligible: “[S]eparating a gene from its surrounding genetic material is not an act of invention.”

•However, cDNA (DNA molecule with introns removed) is eligible for patenting: “creation of a cDNA sequence from mRNA results in an exons-only molecule that is not naturally occurring”

•Both involve acts of separation and removal; only one is “an act of invention”

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CLS Bank

• Fractured en banc Federal Circuit with no opinion speaking for the Court; 7 opinions in 135 pages▫Opinion 1: Per curiam holding of ineligibility;

no reasoning▫Opinion 2: Lourie, Dyk, Prost, Reyna, Wallach▫Opinion 3: Rader, Linn, Moore, O’Malley▫Opinion 4: Moore, Rader, Linn, O’Malley▫Opinion 5: Newman▫Opinion 6: Linn & O’Malley▫Opinion 7: Rader (“Additional reflections”)

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CLS Bank: Lourie opinion [2]

• Joined by Judges Dyk, Prost, Reyna, Wallach: ▫[1] Is claim within statutory class?▫[2] Does claim pose any risk of preempting

an abstract idea? If so— [a] identify the fundamental concept [b] determine whether other limitations “tie

down” the claim so that it does not cover the entire abstract idea

▫Conclusion: Adding computer to abstract idea does not show nontrivial “human contribution”

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CLS Bank: Rader opinion [3]

• Joined (in part) by Judges Linn, Moore, O’Malley: ▫System claims eligible▫Relevant inquiry: Does claim include

“meaningful limitations restricting it to an application” of an abstract idea, as opposed to the idea itself?

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CLS Bank: Moore opinion [4]

• Joined by Chief Judge Rader and Judges Linn and O’Malley: ▫ “I am concerned that the current interpretation of § 101,

and in particular the abstract idea exception, is causing a free fall in the patent system. * * * * Holding that all of these claims are directed to no more than an abstract idea gives staggering breadth to what is meant to be a narrow judicial exception. And let’s be clear: if all of these claims, including the system claims, are not patent-eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.”

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CLS Bank: Newman opinion [5]•For herself alone:

▫ “The ascendance of section 101 as an independent source of litigation, separate from the merits of patentability, is a new uncertainty for inventors. The court, now rehearing this case en banc, hoped to ameliorate this uncertainty by providing objective standards for section 101 patent-eligibility. Instead we have propounded at least three incompatible standards, devoid of consensus, serving simply to add to the unreliability and cost of the system of patents as an incentive for innovation. With today's judicial deadlock, the only assurance is that any successful innovation is likely to be challenged in opportunistic litigation, whose result will depend on the random selection of the panel.”

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CLS Bank: Linn opinion [6]

• Joined by Judge O’Malley:▫ “The method, media, and system claims we review today

must rise and fall together; either they are all patent eligible or they are not. This is so, not because, as Judge Lourie’s opinion concludes, they are all tainted by reference to the same abstract concept, but because the record we are presented makes clear that they are grounded by the same meaningful limitations that render them patent eligible.”

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CLS Bank: Rader opinion [7]

•“Additional reflections”:▫ “The statute offers a patent to both inventions and discoveries,

including simply an improvement on a known process or product. * * * * [T]he Supreme Court long ago held that Section 101 is not a ‘condition of patentability.’ * * * * Finally, the statute does not list Section 101 among invalidity defenses to infringement.”

▫ “And what about ‘exceptions’ like natural laws and natural phenomena? Of course, these are universal constants created, if at all, only by God, Vishnu, or Allah. But, for perspective, even gravity is not a natural law in Einsteinian theory, but a symptom of a curved universe. * * * * Moreover, to inject the patentability test of "inventiveness" into the separate statutory concept of subject matter eligibility makes this doctrine again ‘the plaything of the judges who, as they became initiated into its mysteries, delighted to devise and expound their own ideas of what it meant; some very lovely prose resulting.’ [quoting Judge Rich]”

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Other Recent Section 101 Decisions•Ultramercial v. Hulu (CAFC 2013)–GVR

after Mayo; reverses district court holding that claims not drawn to a “process” (Rader, C.J. & O’Malley, J.; Lourie, J., concurring in result)

•Accenture v. Guidewire (CAFC 2013)—business-method claim ineligible under §101 (Lourie & Reyna, JJ.; Rader, C.J., dissenting)

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A Once Viable Solution, No Longer•A simpler, more elegant solution was

proposed by the Solicitor General in Mayo: Use §101 as a categorical filter, and use the other sections (§102, §103, §112) to test for the presence of a “new” “invention”

•But Mayo “decline[d] the Government's invitation to substitute §§102, 103, and 112 inquiries for the better established inquiry under §101.”

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“The Better Established Inquiry” Yields A Regime Of Ex Post Judgments•“Natural phenomena” and “products of

nature” (how “unnatural” must it be to be an invention?)

•“Abstract ideas” (how “concrete” must it be to be an invention?)

•“Preemption” (how much “preemption” is acceptable before ineligibility will result?)▫No reliable ex ante answers until a

constellation of definitive decisions demonstrates a pattern

▫Will CLS Bank (argued March 31) provide some answers?

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Infringement(35 U.S.C. § 271)

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Infringement

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Direct Infringement

§ 271(a)

AActor

Induced Infringement

§ 271(b)

AActor

BActor

Divided Infringement

AActor

BActor

Akamai v. LimelightSmith & Nephew v. ArthrexCommil v. Cisco

Limelight v. AkamaiAsserted Claim 19 of U.S. Patent No. 6,108,703 covers a “content delivery service” that performs four steps:(1) replicating embedded objects across a

network of content services on the content delivery network (CDN);

(2) “tagging the embedded objects of the page so that requests for the page objects resolve to the [CDN provider’s] domain instead of the content provider domain;”

(3) serving the base page from the content provider domain; and

(4) serving at least one embedded object from the

CDN provider’s domain.

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customer


AActor

BActor

Limelight v. Akamai

22Divided

Infringement

AActor

BActor

per curiamen banc (6/11)

“[A]ll the steps of a claimed method must be performed … to find induced infringement, but … it is not necessary to prove that all the steps were committed by a single entity.”

HELD—Limelight liable for inducing infringement if (1) Limelight knew of Akamai patent; (2) Limelight performed all but one of the steps of the method; (3) Limelight induced customers to perform the final method step; and (4) customers performed that method step.

Limelight v. Akamai

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AActor

BActor

Linn Dissent (4)

No inducement without direct infringement.

Newman Dissent (1)

Decide direct infringement with principles of vicarious liability

“control or direction” test

Direct infringement where multiple parties perform process “in collaboration or interaction”

Dissents Agree

Limelight v. Akamai

Question Presented

Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under § 271(a).

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AActor

BActor

Cert. Granted

Limelight v. Akamai

25Divided

Infringement

AActor

BActor

Limelight—S.Ct. should reverse Federal Circuit and hold no indirect liability under § 271(b) because:Liability under § 271(b) requires proof that the

defendant has induced actionable direct infringement. See, e.g., Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 366, 341 (1961); Global-Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2065 (2011); Deepsouth Pacing Co. v. Laitram Corp., 406 U.S. 518, 526 (1972)

Neither Limelight nor its customers directly infringe Akamai’s patent

Criminal law and tort principles cannot expand the reach of § 271(b) when the statute’s terms are limited. Courts are bound by language that Congress adopted

Smith & Nephew v. Arthrex

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Induced Infringement § 271(b)

AActo

r

B

Actor

Global-Tech Appliances v. SEB S.A.,

563 U.S. __, 131 S.Ct. 2060, 2068 (2011)

Held: While inducement of infringement requires knowledge that the induced conduct itself infringes, that knowledge element can be met by showing “willful blindness”


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AActo

r

B

Actor

Arthrex knew of patent (president & owner; chief engineer & group director)

Instructions for use paralleled patented method steps and were drafted by group director

Arthrex did not compare accused products with patent claims

Majority—Substantial evidence supports Global-Tech “willful blindness” finding because:

Non-precedential


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AActo

r

B

Actor

Rebuttal testimony from Arthrex product designers establishes subjective belief of non-infringement

Clevenger dissent—No Global-Tech “willful blindness” because:

Non-precedential

Commil v. Cisco

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AActo

r

B

Actor

… If you find that a third party has directly infringed [one of the asserted claims] and that Cisco knew or should have known that its actions would induce direct infringement, you may find that Cisco induced another to infringe Commil’s patent if it provided instructions and directions to perform the infringing act ….

April 2011 Inducement

Jury Instruction (pre-Global-Tech)

Commil v. Cisco

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AActo

r

B

Actor

Panel Majority (Prost & O’Malley)— Jury instruction was erroneous because it permitted

inducement finding based on mere negligence (should have known) where knowledge is required

Good faith belief of patent invalidity may negate intent required to support an inducement charge

Dissent (Newman)— Global-Tech only requires “knowledge that the

induced acts constitute patent infringement” Belief of patent validity is not a requirement for

inducement

Declaratory Judgments

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Medtronic v. Mirowski Family Ventures

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MedImmune, Inc. v. Genentech, Inc.,

549 U.S. 118 (2007)

Held: Patent licensee is not required to breach license (and risk infringement litigation) before seeking a declaratory judgment that a patent is invalid, unenforceable, or that licensee’s products do not infringe


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Medtronic Inc. v. Boston Scientific Corp., 695 F.3d 1266 (Fed. Cir. 2012)

• MFV (owner) licensed patents to Medtronic• License permitted declaratory judgment

actions• Medtronic sought declaratory judgment of

non-infringement without terminating license HELD: when continued existence of a license forecloses infringement counterclaim by patentee, licensee seeking declaratory judgment of non-infringement bears burden of proof


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•Unanimous S. Ct. opinion overturns Federal Circuit decision

•Patent owner bears burden of proving infringement because:

Patentee ordinary bears burden of proving infringement

Shifting burden of persuasion based on form of action could create uncertainty

Burden shifting inconsistent with purpose of Declaratory Judgment Act

Remedies

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Exceptional Case Finding (35 U.S.C. §285)

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The court “in exceptional cases may award reasonable attorney fees to the prevailing party”

What is exceptional?

Willful infringement; Inequitable conduct; or Subjective bad faith + Objectively

baseless

Brooks Furniture Mfg., Inc. v. Dutailier Intl., Inc., 393 F.3d 1378 (Fed. Cir. 2005)

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“Section 285 of the Patent Act, as well as Rule 11 of the Federal Rules of Civil Procedure, give judges the authority they need to shift the cost burden of litigation abuse from the defendant to the troll. But remarkably, judges don’t do so very often: by our count, fees were shifted under Section 285 in only 20 out of nearly 3,000 patent cases filed in 2011.”

By RANDALL R. RADER, COLLEEN V. CHIEN and DAVID HRICIKPublished: June 4, 2013

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Exceptional Case Finding (35 U.S.C. §285)Octane Fitness v. Icon Health & Fitness

Question Presented

Whether the Federal Circuit’s promulgation of a rigid and exclusive two-part test for determining whether a case is “exceptional” under 35 U.S.C. § 285 improperly appropriates a district court’s discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court’s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants.

Cert. Granted

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Exceptional Case Finding (35 U.S.C. §285)Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.

Question Presented

Whether a district court’s exceptional-case finding under 35 U.S.C. § 285 (which permits the court to award attorney’s fees in exceptional cases), based on its judgment that a suit is objectively baseless, is entitled to deference.

Cert. Granted

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Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.

Octane Fitness v. Icon Health & Fitness

Octane—”Objectively baseless” substantive standard is too high

Icon—Brooks Furniture standard is correct. Absent other misconduct, the case must be at least “objectively baseless”

Highmark—This is a fact question (reasonableness of conduct), and subject to unitary abuse-of-discretion review

Allcare—Objective reasonableness is a legal issue, and subject to de novo review

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Exceptional Case Finding (35 U.S.C. §285) Highmark Inc. v.

Allcare Health Mgmt. Sys., Inc.

Octane Fitness v. Icon Health & Fitness

Octane—”Objectively baseless” substantive standard is too high

Icon—Brooks Furniture standard is correct. Absent other misconduct, the case must be at least “objectively baseless”

Highmark—This is a fact question (reasonableness of conduct), and subject to unitary abuse-of-discretion review

Allcare—Objective reasonableness is a legal issue, and subject to de novo review

Injunctions

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Apple, Inc. v. Samsung

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eBay Inc. v. MercExchange, L.L.C.,547 U.S. 388 (2006)

Held: Patent owner must satisfy a four-factor test before court may grant permanent injunction, namely: (1) it has suffered an irreparable injury; (2) remedies available at law, such as monetary

damages, are inadequate to compensate for that injury;

(3) considering the balance of hardships between patent owner and infringer, a remedy in equity is warranted; and

(4) the public interest would not be disserved by a permanent injunction.


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Pre-eBay injunction grant rate

Sources: www.docketnavigator.com; Kristy Downing & Gary Frischling, Injunctive Relief After eBay v. MercExchange, Presentation to the AIPLA 2007 Annual Patent Law Committee 12 (Oct. 19, 2007)

[n=127]


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Apple, Inc. v. Samsung (“Apple I”), 678 F.3d 1314, 1324 (Fed. Cir. 2012)—Affirming denial of preliminary injunction, and approving use of causal nexus requirement:“To show irreparable harm, it is necessary to show

that the infringement caused harm in the first place. Sales lost to an infringing product cannot irreparably harm a patentee if consumers buy that product for reasons other than the patented feature. If the patented feature does not drive the demand for the product, sales would be lost even if the offending feature were absent from the accused product. Thus, a likelihood of irreparable harm cannot be shown if sales would be lost regardless of the infringing conduct.”


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Apple, Inc. v. Samsung (“Apple II”), 909 F.Supp.2d 1147 (N.D. Cal. 2012)—Denying permanent injunction to Apple because Apple failed to prove causal nexus between infringement and alleged harm

Documents & testimony showing ease of use important in phone choice;

Deliberate copying by Samsung; and Hauser conjoint survey


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Apple, Inc. v. Samsung (“Apple III”), 735 F.3d 1352 (Fed. Cir. 2013)—Affirming denial of permanent injunction to Apple as to design patents but vacating as to utility patents. Casual nexus rulings from Apple I “appl[y]

equally” to permanent injunction analysis. Id. at 1361.

Patent owner not required to show patented feature is “sole reason” for consumer purchases, but must show “some connection.” Id. at 1364.

D. Ct. erred in rejecting Dr. Hauser’s survey evidence, which would be relevant if it shows “a feature significantly increases the price of a product.” Id. at 1368.

Hauser conjoint survey deficient because there is no way to directly compare consumer willingness to pay with overall value of device:


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Apple, Inc. v. Samsung (“Apple IV”), No. 11-cv-01846-LHK, Mar. 6, 2014 Order (N.D. Cal.)—Denying permanent injunction to Apple as to utility patents

Hauser price premium for 6 features

$422

Smartphone base price

$199

Hauser conjoint survey also deficient because: failure to test numerous other features

documents showed were important to consumers; failure to adequately account for non-infringing

alternatives; and undue emphasis on the patent features in

conducting survey


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Apple, Inc. v. Samsung (“Apple IV”), No. 11-cv-01846-LHK, Mar. 6, 2014 Order (N.D. Cal.)—Denying permanent injunction to Apple as to utility patents

Claim Construction

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My brackets are busted.

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What does this have to do with Claim Construction?

Lighting Ballast Control v. Philips, 2014 WL 667499 (Fed. Cir. 2014) en banc

In the recent en banc decision, the majority opinion decided to uphold Cybor Corp. in its entirety:

For the reasons we shall discuss, we apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law. After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of Markman II, and that the criteria for departure from stare decisis are not met. *7

Cybor Corp. v. FAS Techs, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc) (holding “as a purely legal question, we review claim construction de novo on appeal including any allegedly fact-based questions relating to claim construction.”)?

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Reasons—1. No authority post-Cybor from either the Supreme Court or

Congress to undermine the reasoning in Cybor. 2. No evidence after fifteen years that Cybor is “unworkable.”3. No change in policy concerning the uniformity concerns

underlying Cybor. 4. No uniform proposal or alternative standard of review provided,

nor is there any evidence that a deferential review would lead to “improved consistency” or “increased clarity.”

5. No evidence that Cybor increased the burdens on the courts or litigants conducting claim construction.

Given the above reasons, demands of stare decisis was observed.

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Lighting Ballast Control v. Philips, 2014 WL 667499 (Fed. Cir. 2014) en banc

Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.

• On March 31, 2014, the Supreme Court granted petition for certiorari in Teva v. Sandoz. The case is slotted for Oct. 2014 term.

• The Issue: Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Federal Rule of Civil Procedure 52(a) requires.

• Looks like the Supreme Court will have its say on the correct standard of appellate review on claim construction within a year of Lighting Ballast.

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Saffran v. Johnson & Johnson, 712 F.3d 549 (Fed. Cir. 2013)

• In Saffran, defendant Johnson & Johnson appealed a jury verdict awarding plaintiff $500 million for infringing Saffran’s patent on medical stents.

• Applying de novo review, while the judges agreed that the district court erred in claim construction, and that there is no infringement under the “correct” construction, all three concurring-in-part decisions disagreed regarding what the “correct” construction should be.

• Uniformity in claim construction is not easy.

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Administrative Agency Review

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What does this have to do with Administrative Agency

Review?

New IPR and CBM review

• AIA established two venues of challenging issued claims at the USPTO: ▫ Inter Partes Review (IPR) and▫ Transitional Covered Business Method review

(CBM).

• CBM patent is a patent “that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”

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Inter Partes Review Covered Business Methods

• Challengers limited to non-patent owners who has not previously filed a civil action challenging the validity of a claim of the patent.

• Claims may be challenged on grounds of anticipation (§102) and obviousness (§103) only.

• Relevant prior art limited to patents and printed publications.

• Challengers limited to parties charged with infringement.

• Claims may be challenged on any grounds, not just anticipation or obviousness.

• Transitional review process.

• Estoppel: Petitioners in both proceedings are estopped from challenging in any subsequent USPTO action, district court, or ITC action any claims challenged during the proceedings on any grounds raised or reasonably could have been raised during the proceedings.

• Board’s final decision can be appealed to the Federal Circuit.

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USPTO Review Court Review

Patent-challenger’s burden of proof

• No presumption that issued patent is valid

• Challenger needs to establish invalidity by a preponderance of evidence

• Patent is presumed valid• Challenger has burden

under 35 U.S.C. §282 to prove invalidity by clear and convincing evidence

A Question of Deference

• USPTO not bound by prior determinations of validity by Art. III courts even where the same arguments are presented. In re Baxter Int’l Inc., 678 F.3d 1357 (Fed. Cir. 2012)

• Final determinations by USPTO on invalidity do have binding effect on concurrent and subsequent litigations. In re Baxter Int’l Inc., 678 F.3d 1357 (Fed. Cir. 2012); Fresenius USA, Inc. v. Baxter Int’l Inc., 721 F.3d 1330 (Fed. Cir. 2013).

Two Routes to Challenge Patent Validity:

In re Baxter Int’l Inc., 678 F.3d 1357 (Fed. Cir. 2012)• At the N.D. California:

▫ Competitor brought declaratory judgment action against patent owner, asserting that the claims in the patent were invalid and not infringed. Patent-owner counterclaimed for infringement. Patent-owner prevailed on validity at both district court and at the Federal Circuit on appeal.

• At the USPTO: ▫ Parallel to the civil action, competitor also filed for re-

examination. Examiner found that the same references provided at trial rendered the same challenged claims invalid. Despite the different outcome at the Federal Circuit, the Board affirmed the examiner’s decision. On appeal, the Federal Circuit affirms the Board’s decision:

“fundamentally, the PTO in reexamination proceedings and the court system in patent infringement actions take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions.” In re Baxter Int’l Inc., 678 F.3d 1357, 1371 (internal citation omitted).

• Why are courts bound by USPTO decisions of invalidity, but the USPTO is not bound by a courts decision of validity*?

▫ USPTO and Federal Circuit explanation: The challenger at court has a higher burden (clear and

convincing evidence) than he does at the USPTO (preponderance of evidence).

▫ The Federal Circuit finds support in Congressional intent:“The fact is that Congress has provided for a

reexamination system that permits challenges to patents by third parties, even those who have lost in prior judicial proceedings.” 678 F.3d 1357, 1371.

▫ Convincing? Judge Newman, for one, thinks not.

• The fight continues…Baxter filed petition for certiorari at the Supreme Court on March 5, 2014.

*See also Fresenius USA, Inc. v. Baxter Int’l Inc., 721 F.3d 1330 (Fed. Cir. 2013) (holding that cancellation of claims by the USPTO is binding in pending district court infringement litigation).

In re Baxter Int’l Inc. 678 F.3d 1357 (Fed. Cir. 2012)

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What does this have to do withIPR & CBM?

Recent PTAB Decisions Post-AIA:IPR & CBM

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Both are popular, but IPR is more popular

• So far, PTAB has issued nine IPR and five CBM written decisions on the merits. In all, the petitioner-challenger were successful in invalidating the claims.

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Data from USPTO: http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_03_06_2014.pdf

http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_03_06_2014.pdf

http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_03_06_2014.pdf

IPR so far…6/9 for Challenger in Final Decisions on the Merit• Garmin Int’l Inc. v. Cuozzo Speed Technologies LLC, IPR 2012-

00001 (November 13, 2013)

▫ First IPR decision on the merits.

▫ Petitioner filed petition for review on September 16, 2012, and hearing was held on August 16, 2013 (11 months after filing). PTAB rendered decision on November 13, 2013 (14 months after filing).

▫ Petitioner prevailed in canceling all three challenged claims on grounds of obviousness. Patent owner's motion to amend claims were denied.

• Microsoft Corp. v. Proxyconn, Inc. , IPR2013-00109 (Feb 21, 2014)

▫ First IPR where USPTO did not invalidate all claims challenged.

▫ Microsoft challenged 12 claims, and PTAB only invalidated 11 on obviousness and anticipation grounds. One claim survived!

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• Intellectual Ventures Management LLC v. Xilinx, Inc. IPR2012-00018, -00019, -00020, and 00023 (February 24, 2014)

▫ All challenged claims cancelled.

• Motorola Mobility LLC v. Armouse Digital Devices Corp. (February 25, 2014)


• Synopsis, Inc. v. Mentor Graphics Corp. IPR2012-00042 (February 26, 2014)

▫ Only 3 out of 12 challenged claims cancelled. Nine claims survived!

• Illumina, Inc. v. The Trustees of Columbia Univ. in the City of N.Y. IPR2012-00006, -00007, -00011 (March 6, 2014)


IPR so far…6/9 for Challenger in Final Decisions on the Merit

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• Micron Tech., Inc. v. Board of Trustees of the Univ. of Ill. IPR2013-00005, 00006, 00008 (March 10, 2014)


• Xilinx v. Intellectual Ventures LLC IPR2013-00029 (March 10, 2014)


• Clearlamp LLC v. LKQ Corp. IPR 2013-00020 (March 27, 2014)

▫ Twelve challenged claims cancelled. Twelve claims survived!

IPR so far…6/9 for Challenger in Final Decisions on the Merit

• SAP America, Inc. v. Versata Development Inc., CBM2012-00001 (June 11, 2013)

▫ First CBM decision on the merits.

▫ Challenger filed petition on September 16, 2012. Hearing was held on April 17, 2013, and PTAB issued decision on June 11, 2013 canceling all claims challenged.

• Meanwhile...

▫ Federal Circuit affirms infringement in parallel litigation. Neither claim construction nor validity of the patent was issue on appeal.

▫ Patent owner has filed Notice of Appeal to the Federal Circuit. Amongst other grounds, patent owner challenges the Board's decision on claim and issue preclusion grounds, giving the Federal Circuit another chance to review the issues from In re Baxter. Decision awaiting.

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CBM so far… 5/5 for Challenger in Final Decision on the Merits

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CBM so far… 5/5 for Challenger in Final Decision on the Merits

• Since SAP v. Versata, PTAB has cancelled claims in all four subsequent CBM review determinations:

1. Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027 (January 7, 2014).

2. CRS Advanced Technologies, Inc. v. Frontline Technologies, Inc., CBM2012-000005 (January 21, 2014)

3. Interthinx, Inc. v. CoreLogic Solutions, CBM2012-00007 (January 30, 2014)

4. Liberty Mutual Insurance Co. v. Progressive Casualty Insurance Co., CBM2012-00002, 00003, 00004, 00009, 00010 (January 11, January 23, February 11, February 24, March 13)

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Hang in there…I’m almost done!

What does this mean for Litigation?

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IPRs and CBMs Can Be Resolved Quickly

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• IPR & CBM have a statutory limit of 2 years.▫ File Petition▫ 3 months for Opposition▫ 3 months for USPTO decision on petition▫ 1 year + 6 months for good cause for decision on IPR/CBM

Compare this to median district court time-to-trial…

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District Total # Identified Decisions w/ time-to-trial data

Years

E.D. Virginia 22 0.97

W. Wisconsin 10 1.07

D. Delaware 113 1.94

E.D. Texas 85 2.19

C.D. California 29 2.34

S.D.N.Y. 36 2.95

N.D. California 39 2.72

D.N.J. 27 2.70

N.D. Illinois 35 3.67

PwC 2013 Patent Litigation Study

Should you seek a Litigation Stay?

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Reasons for seeking a stay pending a USPTO proceeding

– USPTO review of critical prior art

– Potential resolution of discovery issues

– Cultivation of admissible USPTO proceeding record

– Potential dismissal of civil action (if patent found invalid)

– Increased potential for settlement

– Reduction of issues and costs

Reasons for opposing a stay pending a USPTO proceeding

– Avoid prejudice

Stale case (e.g., dim memories, missing witnesses)

Exhaustion of other stays (e.g., 30-month regulatory stay of generic drugs)

Post-AIA Standard Granting a Stay

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Statutory authority (35 U.S.C. § 318)

– Patent owner (but not third party) could obtain a stay, unless court determines “a stay would not serve the interest of justice.”

Inherent authority (for a court to manage its docket)

– Landis v. N. Am. Co., 299 U.S. 248 (1936)

IPR/PGR/EPX: Traditional three-factor test (case law)

– See, e.g., Star Envirotech v. Redline Detection, 2013 WL 1716068 (C.D. Cal 2013) (granting stay pending IPR)

CBM: Statutory four-factor test (AIA § 18(b)(1)) – NEW!!!

– Fourth factor: litigation burden

Three Factors (+one for CBM)

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1. Prejudice

• Delay alone is not unduly prejudicial. Post-AIA, shortened period for new USPTO proceedings may favor a stay.

2. Issue simplification

• Remove Arguments -- Estoppel provisions prevent a party from raising invalidity arguments in civil litigation that were rejected by USPTO.

• Remove Patent Claims –if USPTO proceedings may result in invalid claims (given the activity at the PTAB so far this seems increasingly likely).

3. Stage of Litigation

• Early cases favor a stay. Other factors may outweigh this factor including “complexity of the suit, the value of USPTO expertise, simplification of the issues, lack of hardship to the nonmovant, or the overall burden of [duplicative] litigation on the parties and on the court.” Ricoh v. Aeroflex, 2006 WL 3708069 (NDCal 2006)

4. For CBM only: Litigation Burden

New Factor 4 (CBM Only) – Litigation Burden

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With respect to CBM only, the AIA codified the three factors discussed above and introduced a fourth factor:

– “[W]hether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.” AIA § 18(b)(1).

Purpose: to place “a very heavy thumb on the scale in favor of a stay being granted.” 157 Cong. Rec. S1363 (Mar. 8, 2011)

Some courts have already been considering this factor as part of non-CBM analyses.

– See, e.g., Capriola Corp. v. LaRose Indus., 12-cv-2346, Slip Op. at 3 (M.D. Fl. Mar. 11, 2013)

Other(Appellate Jx / § 112 Indefiniteness)

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Robert Bosch v. Pylon Mfg.(Fed. Cir.) (en banc) (June 14, 2013)

• 28 U.S.C. §1292(c)(2): Fed. Cir. has exclusive jx of appealable patent case that “is final except for an accounting.”

• Issue #1: Does § 1292(c)(2) confer jx to entertain appeals from patent infringement liability determinations when a trial on damages has not yet occurred?

• Issue #2: Does § 1292(c)(2) confer jx to entertain appeals from patent infringement liability determinations when willfulness issues remain undecided?

• In 7-2 ruling, Federal Circuit says YES to both!

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Bosch v. Pylon (cont.)

• Key: D. Ct. bifurcated damages and willfulness from liability.

• Jury – Claims valid and infringed.

• Pylon – Appealed on infringement.

• Bosch – Motion to dismiss appeal for lack of appellate jx as decision not “final” under §1292(c)(2).

• Fed. Cir. Panel – Denied motion to dismiss & renewed motion

▫ “Accounting” – includes damages and willfulness phases.

• Fed. Cir. sua sponte requests briefing for en banc review.

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Bosch v. Pylon (cont.)

• Majority (Prost, Rader, Newman, Lourie, Dyk)▫ “Accounting” under §1292(c)(2) includes damages determination, even

where patentee requests jury trial.

▫ “Accounting” under §1292(c)(2) includes willfulness determination.

▫ District court has discretion to bifurcate damages/willfulness from liability.

• C-I-P / D-I-P (Reyna & Moore)▫ “Accounting” does not include willfulness determination but can

involve damages enhancement step following willfulness finding.

• Dissent (O’Malley & Wallach)▫ §1292(c)(2) should be interpreted narrowly.

▫ “Accounting” only applies to limited class of proceedings before special masters (versus matters before juries) (historical interpretation).

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Nautilus v. Biosig Instruments(Pending Before Supreme Court)

• 35 U.S.C. §112(b): The spec shall conclude with claims “particularly pointing out and distinctly claiming the subject matter which the inventor . . . regards as the invention.”

• Fed. Cir. Test: “A claim is indefinite only when it is ‘not amenable to construction’ or ‘insolubly ambiguous.’” Datamize v. Plumtree (Fed. Cir. 2005)

1. Is disputed claim term amenable to construction?

2. Even so, is claim term sufficiently clear (in light of intrinsic and extrinsic evidence) to one of ordinary skill in the art?

“[A] construed claim can be indefinite if the construction remains insolubly ambiguous”

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Nautilus v. Biosig (cont.)

1. A heart rate monitor for use by a user in association with exercise apparatus and/or exercise procedures, comprising . . . a first live electrode and a first common electrode . . . in spaced relationship with each other . . . .

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• D. Ct. – Grants sj invalidity (term “spaced relationship” indef.)

1. Term amenable to construction - Some defined relationship between the live electrode and the common electrode.

2. But Insolubly Ambiguous - What should space, or parameters of space, be? (Not specifically defined in intrinsic evidence)

• Fed. Cir. – Reverses and remands.

1. Term amenable to construction – see District Court.

2. Not Insolubly Ambiguous – patent’s claim language, spec, and figures “provide sufficient clarity to skilled artisans as to the bounds of this disputed term.”

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• Fed. Cir. (Not Insolubly Ambig - cont.)

▫ The patent discloses “inherent parameters of the claimed apparatus, which to a skilled artisan may be sufficient to understand the metes and bounds of ‘spaced relationship.’” (i.e., cannot be wider than hand since signals read, but not so narrow as to merge).

▫ See also functionality of invention as:

(1) cited in claim 1;

(2) disclosed in spec; and

(3) used to overcome PTO rejections during reexam. (i.e., detecting distinct ECG electrical signals while substantially removing EMG signals that interfere).

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• Fed. Cir. (Not Insolubly Ambig - cont.)

▫ “If the meaning of the claim is discernible, even though the task may be formidable and the conclusion may be one over which reasonable persons will disagree, we have held the claim sufficiently clear to avoid invalidity on indefiniteness grounds. In addition . . . the fact that some experimentation may be necessary to determine the scope of the claims does not render the claims indefinite.” (Citations and internal quotations omitted) (emphasis added).

▫ “By embracing this standard, we accord respect to the statutory presumption of patent validity, and we protect the inventive contribution of patentees, even when the drafting of their patents has been less than ideal.” (Id.)

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• Pet. for Cert. granted – January 10, 2014• Oral argument – April 28, 2014.

• QP #1: Whether the Federal Circuit’s acceptance of ambiguous patent claims with multiple reasonable interpretations – so long as the ambiguity is not “insoluble” by a court – defeats the statutory requirement of particular and distinct patent claiming.

• QP #2: Whether the presumption of validity dilutes the requirement of particular and distinct patent claiming.

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What has the Supreme Court said on this issue?

• Merrill v. Yoemans, 94 U.S. 568 (1876)

▫“The developed and improved condition of the patent law, and of the principles which govern the exclusive rights conferred by it, leave no excuse for ambiguous language or vague descriptions . . . . It seems to us that nothing can be more just and fair, both to the patentee and to the public, than that the former should understand, and correctly describe, just what he has invented, and for what he claims a patent.

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• General Electric v. Wabash Appliance, 304 U.S. 364 (1938)▫ Claim invalid on its face – indefinite.

▫ “Patents, whether basic or for improvements, must comply accurately and precisely with the statutory requirement as to claims of invention or discovery . . . The inventor must ‘inform the public during the life of the patent of the limits of the monopoly asserted, so that it may be known which features may be safely used or manufactured without a license and which may not.’. . . Patentees may reasonably anticipate that claimed inventions, improvements, and discoveries, turning on points so refined as the granular structure of products, require precise descriptions of the new characteristic for which protection is sought.”

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• United Carbon v. Binney & Smith, 317 U.S. 28 (1942)▫ Claims determined to be indefinite.

▫ “The statutory requirement of particularity and distinctness in claims is met only when they clearly distinguish what is claimed from what went before in the art and clearly circumscribe what is foreclosed from future enterprise. A zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims would discourage invention only a little less than unequivocal foreclosure of the field . . . . An invention must be capable of accurate definition, and it must be accurately defined, to be patentable.”

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Thank You!

for a copy of slides please e-mail

[email protected]

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Staying Current in The World of Patent Litigation: A Year (And More) In Review ABA IPL Spring Conference Friday, April 4, 2014 (10:15-11:45 am)

Documents

lourie opinion

wallach opinion

linn omalley opinion

newman opinion

reasoning opinion

pages opinion

patent eligibility

act of invention