Viewpoints

At Steinfl + Bruno, we take a different approach to how we observe our professional surroundings, thinking from the end to deliver the best possible work product. As patent designers, we challenge the traditional ways of viewing our environment, looking beyond what is given. We focus on taking a different point of view to get a deep understanding of how to protect the innovation. Our goal is that of thinking from the end so to provide the innovators with IP protection that can become an engine of growth for their operation, opening possibilities and always, always striving for excellence.

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S+B

May 04, 2018

The difference between theoretically and practically: Correcting Assignment Coversheets at the USPTO

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S+B - May 04, 2018

The difference between theoretically and practically: Correcting Assignment Coversheets at the USPTO

Mistakes happen. Either on the USPTO’s side or the practitioner’s side, the quest for perfection is an asymptote: mistakes can only be minimized but never entirely reduced to zero.

This is why the USPTO rules and guidelines provide procedures to correct mistakes, in particular typos and other mistakes of clerical nature at various stages of the prosecution (see, for examples, 37 CFR 1.76(c) Correction of ADS, PCT Rule 91.1 Rectification of Obvious Mistakes, 37 CFR 1.121(b) Amendments to Specification, 37 CFR 1.323 Certificate of Correction of Applicant’s Mistake, and 37 CFR 3.34 Correction of Cover Sheet Errors).

These procedures typically work well unless one has to deal with correction of assignment cover pages. In those situations, a user is faced with an apparent disconnect between how the MPEP instructs that the USPTO handle requests for a correction to an assignment coversheet and how the USPTO Assignment Branch actually handles those requests.

In theory (i.e., MPEP 323.01(a); 37 CFR 3.34), the requirements for correcting a cover sheet are to provide a) a copy of the originally recorded assignment document, b) a corrected cover sheet, and c) the payment of a fee. Also the request can be filed by mail (see MPEP 302.08) or fax (see MPEP 302.09). If you want to file the correction electronically with EPAS, the MPEP instructs to check the box marked “other” under “nature of conveyance” and fill in reel/frame and the nature of the correction. Simple, right?

Not quite.

In practice, requests for correction of Notices of Recordation of Assignment (NORA) by mail and fax and request filed by EPAS checking the box marked “other” in accordance with the MPEP procedure can be inexplicably rejected by the USPTO Assignment Branch.

It appears from exchanges with the USPTO Assignment Branch Examiners that the main reason is the presence of a de facto EPAS-centered procedure at the USPTO Assignment Branch and an EPAS configuration that makes the option indicated by the MPEP impractical.

In particular, it appears that the only practical way to perform the correction of a NORA incorrect due to information of the cover page, is to file the related request as a request for a “corrective assignment”, which is a different option than “other” and refers to a completely different situation (an error in the recorded assignment, see MPEP 323).

This is inexplicable because EPAS is a system that is specifically tailored for Assignment Branch requests, and yet EPAS cannot handle a type of request that is so common that the request has its own MPEP section.

There should be no difficulty in having a separate button under “nature of conveyance” labeled “Correction to Cover Sheet” with text fields for the required information, just like the “Corrective Assignment” button.

This would aid the public in having an evident-on-its-face selection for addressing that specific request and it would aid the Assignment Branch in removing the ambiguity in the rules regarding how they should process such requests.

Regardless, USPTO Assignment Branch’s practice should allow Applicants to file requests by mail and/or fax as these routes are specifically indicated in the MPEP.

If that turned out to be impractical, a modification of the USPTO guidance, rules (MPEP and CFR) and/or practice so that they align and clearly address different situations (such as a correction of a cover page and a correction of an assignment) would also help users and Examiners.

Meanwhile, it seems that the best way to handle these corrections is to communicate with the USPTO Assignment Branch to ensure streamlining of a procedure that should only be a minor bump on the road.

We surely hope to soon see an improved EPAS system for a speedy processing of recordation requests in line with the USPTO rules.

Technology

Feb 27, 2018

Frontiers of Technology in Implantable Medical Devices: Neuromodulation

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Technology - February 27, 2018

Frontiers of Technology in Implantable Medical Devices: Neuromodulation

One of the biggest challenges in the development of medical devices is the reduction of physical size of the devices and instruments. One technology area that has met this challenge is neuromodulation. Neuromodulation devices may be applied to affect the five senses, muscle control and other functions within the body. These devices included an array of evolving technology, such as computer chips, electrodes, hardware, electrical signals and other synthetic items that interact with the human body. The problems facing entrepreneurs and start-ups and established medical device companies are myriad, the physical size being only one factor.

Technological developments have blurred the line between traditional electrical, chemical, mechanical, biological and applied physics academics. Accordingly, the material science integrates into physics, the chemistry integrates into electronics and the biology integrates into computer algorithms. Medical devices for neuromodulation are pushing the boundaries of technology to produce safe and effective devices beyond traditional physiological areas, such as into the brain, spine and peripheral organs.

Example technological breakthroughs currently being commercialized include a bionic eye having a retinal implant providing electrical stimulation of the retina to induce visual perception in blind individuals with severe to profound Retinitis Pigmentosa. Although the resolution does not match that of a CCD camera or CMOS image sensors popular in camera phones, the pixel array in the bionic eye is sufficient for the user to see and recognize another human, traverse a predefined walking path and even snow ski. Second Sight Medical Products, Inc. of Sylmar, CA has made significant strides in this area.

Interesting examples can be found in two videos about patients using their new bionic eyes and a captivating interview with a blind skier.

Other technologies are focused on the design and development of devices to help restore function and movement in patients with paralysis, for example, non-invasive spinal cord neuromodulator systems. NeuroRecovery Technologies, Inc. is at the forefront in this area, providing patients the ability to restore voluntary movement to their hands and legs and to stand on his/her own feet after catastrophic spinal injury.

Other companies, such as Boston Scientific, are using advanced micro stimulation technologies to develop devices related to spinal cord stimulation for the treatment of chronic pain and deep brain stimulation for movement disorders.

Related research at the University of California, Irvine is being directed to neural engineering, biomedical signal processing and pattern recognition, biological neural network modeling, and biomedical devices and sensors.

As a result of the technological advancements in neuromodulation, companies are developing medical device products and technologies that transform patients’ lives – in our view, a laudatory goal of medical device innovation and a major benefit to society. We commend these researchers, entrepreneurs and medical device companies in bringing their passion to advance technology that surely excites us all and provides hope for a better future in applied medicine directed to neuromodulation.

In November 2017, the Caltech Entrepreneurs Forum in Pasadena produced the program “Neuromodulation – Changing Lives with Direct Nerve-to-Device Connections”. The program explored the near and intermediate term prospects for researching, developing and implementing devices that interact with the body’s neural network. The speakers shared their views on the opportunities and challenges of the field and provided their views of the future in medical devices directed to neuromodulation.

There is much work to be done to bring neuromodulation devices into the mainstream of medicine. Barriers still exist in size reduction, doctor adoption and recommendation, patient acceptance and financial reimbursement. At Steinfl+Bruno, we will be monitoring and participating, as the occasion arises, in this and other exciting technological fields of medicine.

S+B

Feb 09, 2018

S+B Best Practices: Filing Drills

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S+B - February 09, 2018

S+B Best Practices: Filing Drills

Filing electronically with the USPTO has become the standard practice for nearly all patent practitioners these days (over 98% in 2016, according to https://www.uspto.gov/learning-and-resources/newsletter/inventors-eye/using-efs-web-5-electronic-filing-pitfalls-and-how).

Not only does this practice line up nicely with today’s focus on electronic communications and data transfer, the USPTO provides some financial incentives in the form of some reduced fees. Even with the numerous issues and complaints about the current electronic filing system (EFS), most would agree it is better than the old method of putting printouts of the documents in an envelope and mailing it to Alexandria, VA. The EFS method is clearly the best way to file your application.

Unless the system goes down.

On December 22, 2016, it did just that in a major way. Not only did EFS go down, and stay down for a long time, but the sudden inrushes of attempts to file office action responses by fax caused the fax filing system to go down as well. Electronically, the USPTO was a black hole for filing.

Suddenly, law firms all across the US were facing the realization that they would have to file these applications by post office. The problem was, many of these firms haven’t filed by post office since the early 2000’s. How do you even do it? What are the rules? What post office can I use that will be open late enough? What do I need to do to ensure that I get my filing date?

The outage was so bad that the USPTO retroactively declared the day to count as a federal holiday, so as to give people an extra day to file any last-minute responses. This, however, does not help all cases. Some new application filings were running against a bar date on the 22nd, and the “holiday” clause would not have saved them.

In a time crunch lack of familiarity with even elementary steps can make the difference between being able to correctly complete the filing in a timely fashion.

Here at S+B, not only did we manage to file everything in time, but the situation also inspired the firm to implement a system where everyone, including the attorneys and partners, would periodically run one filing every other month as if we had to file it by mail.

We go through every step necessary to mail out a filing, including driving to the post office, printing documents, counting pages to make sure none are missing, as well as preparing the addressed packages and postcards. Because these steps are time-consuming and are not typically experienced on a daily basis by patent professionals of recent generations, each filing is timed to ensure we are prepared the next time the EFS is unavailable.

By periodically practicing these protocols, our team forms a familiarity with the specific tasks to be performed, so that everyone is trained to timely complete the filing.

Thinking from the end requires considering all possible scenarios, preparing for them, challenging ourselves, and always aiming at providing the best possible work product no matter the circumstances.

Patents

Jan 26, 2018

Biosoftware eligibility at USPTO: mere computations or improvement in technology?

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Patents - January 26, 2018

Biosoftware eligibility at USPTO: mere computations or improvement in technology?

Bioinformatics has become an increasingly important tool in understanding biological processes and promoting and supporting progresses in molecular biology and many other areas of biology.

The related software involves massively complex calculations that predict the actions – folding, bonding, membrane translocation – of molecules. These software products are incredibly important in the biotech field – for example, drug design or protein folding.

And yet, in the wake of the Alice decision, we are observing a constant barrage of rejections from the USPTO under 35 USC 101 claiming that since bioinformatics methods are computational in nature and do not “improve the computer”, they are not eligible for patentability even if they are novel and non-obvious. A common point made in these 35 USC 101 rejections is that the software does not “improve the computer or computer technology.” However, it is important to remember that Alice also notes that method steps that “effect an improvement in any other technology or technical field” can satisfy the “significantly more” criteria for patentable subject matter. There is no apparent basis in Alice or other court decisions that would support a conclusion that if a method does not improve the computer” is not eligible for patent protection if it provides “an improvement in other technology or technical field”. Clearly, bioinformatics software improves the technical field of molecular biology.

Still, rejections of bioinformatics might be due to the way claims are written (of course) as well as due to the uncertainty or a narrow reading of what “effect and improvement in any other technology or technical field” means. Does it require a hardware component, like the thermocouple of Diamond v. Diehr? This seems unlikely, because the court in Alice didn’t say “effect an improvement in a machine of any other technology”. And wouldn’t an improvement to a “technological field” be broader than that?

Therefore, we draft claims in which the steps of an inventive biosoftware method are characterized by transformative technical features so that the steps and related combination are tailored to the specific features of the biological environment that is simulated, such as molecule modeling, changes in the related residues or moieties in view of environmental conditions, molecule interactions and the like.

However, what we sadly observe is that some Examiners of the USPTO look at bioinformatics software and can’t view the claims as being anything more than being “directed to” computations, data manipulations, and math – no matter how the claims are written.

The Examiner dismisses technical features such as representation of spatial locations of a biomolecule in a biological environment or representation of changes in such location due to molecule interactions with the environment, and just interprets those claims as processing information and converting one form of numerical representation into another by organizing information through “mathematical concepts such as mathematical algorithms, mathematical relationships, mathematical formulas, and calculations.

Such an approach de facto ignores looking at the claims “as a whole” and misses seeing the technical features of the claims – method steps that detail bioinformatics computations that specifically produce a result useful only to predicting the behavior of molecules – that lead the claim to actually being directed to an improvement to a technical field.

Additionally, the USPTO puts this software claims into a catch-22 scenario whereby the technical features included in the steps of the method claims are ignored and adding steps of using the results of the software (such as drug production) is dismissed as merely stating “apply it” to method, and the omission of such a step is pointed out as lacking some sort of “transformation” in the technical field.

If only the USPTO examiners would take a step back and look at how integrated claims written as indicated above and considered as a whole, are in the technical fields of bioinformatics and molecular biology, then they would agree that this type of software should be observed as satisfying the two-part test of Alice. Even if the Examiners still disagree, they need to point to the court cases that support their position, since the USPTO does not have the power to create new forms of judicial exception to patent eligibility.

Thankfully, there has been a recent indication that the USPTO might be going in this direction. In late November of 2017, there was a USPTO PTAB appeal decision (2017-003914; for application 13/822,231) where the Board stated that the examiners “”must be careful to avoid oversimplifying the claims” by looking at them generally and failing to account for the specific requirements of the claims” (quoting McRO). They also pointed out that the bioinformatics software claims were “focused on a specific articulated improvement in protein modeling” and were “distinguishable from those in Alice and related cases, in which the computer-implemented method was responsible for merely “organizing [existing] information into a new form” or carrying out a previously-known and fundamental economic practice.” Hopefully, this type of analysis will extend to other applications as well.

The IP portfolio of an entire sector of industry and R/D is being wiped out for no valid reason other than the grey morass that was left in the wake of Alice.

As USPTO Director Andre Iancu wrote in his paper “Machines and Transformations: The Past, Present, and Future Patentability of Software” (concerning the Bilski case), “Whatever the merits of various arguments regarding the patentability of business methods, the patentability of software processes, which are at the heart of innovation in our Information Age, at least deserves separate consideration.” And, likewise, we hope that the exclusion of economics-based software in Alice does not impede the patentability of technologically based software methods.

S+B

Dec 12, 2017

What has Design to do with Patents and Innovation? EVERYTHING.

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S+B - December 12, 2017

What has Design to do with Patents and Innovation? EVERYTHING.

Design challenges assumptions. Design questions what is given. Design takes a different point of view. Design requires a deep understanding of how it works. Design seeks to constantly improve how it works. Design breaks barriers. Design opens possibilities. Design re-defines the existing. Design strives for excellence. Design is inherently innovative.

A patent designed to support the innovators’ needs and vision will have innovative power in itself and will become engine of growth for the innovators’ R&D and business.

Principles of Patent Design

 

Never Assume

Do not take the invention and the innovator for granted. Be aware that you need to learn and unlearn before drafting. Make room for the innovator’s vision.

Sharpen Your Insight

Use your knowledge to gain an accurate and deep understanding of the invention and the innovator. Understand what features are key to their inner workings and objectives.

Improve Functionality

Build a patent frame which operates on the invention’s and innovator’s key features to maximize their strengths and operability. Aim to remove limits and open possibilities.

Think from the End

Shape patent protection to fit the innovator’s ultimate goals. Don’t be afraid to ask questions and take a different point of view.

Strive for Excellence

Never settle for anything other than the best possible work product.

Patents

Oct 12, 2016

Patent cases in the Supreme Court’s October 2016 term

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Patents - October 12, 2016

Patent cases in the Supreme Court’s October 2016 term

The Supreme Court will decide two patent cases on the merits in the October 2016 term of the Court. These cases are:
1. Samsung Electronics Co. v. Apple, Inc., ___ U.S. ___, 136 S. Ct. 1453, 194 L. Ed. 2d 549 (March 21, 2016) (granting petition for certiorari “limited to Question 2 presented by the petition”); and
2. SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, ___ U.S. ___, 136 S. Ct. 1824, 194 L. Ed. 2d 829 (May 2, 2016) (granting petition for certiorari).
The Court heard oral argument in the Samsung case on October 11, 2016. The official transcript of the argument is available here. The question presented for review is “[w]here a patented design is applied only to a component of a product, should an award of infringer’s profits be limited to profits attributable to that component?” This is the case in which Samsung’s entire profits from selling its accused smartphones were awarded to Apple for infringing Apple’s design patents for the front face of the iPhone and its graphical user interface. We published a news item, about the case when the Supreme Court decided to grant review earlier in 2016. We published an earlier news item, about the billion-dollar jury verdict in favor of Apple.

The SCA Hygiene case is set for oral argument on November 1, 2016. The question presented for review is “[w]hether and to what extent the defense of laches may bar a claim for patent infringement brought within the Patent Act’s six-year statutory limitations period, 35 U.S.C. § 286.” We published a news item, about the Supreme Court’s decision earlier in 2016 to take this case up for review. We also published a news item, about the decision en banc of the U.S. Court of Appeals for the Federal Circuit in this case. The Federal Circuit decided that the affirmative defense of laches (due to unreasonable delay by the plaintiff in bringing suit) was available in patent infringement lawsuits despite the existence of a six-year statute of limitations for collecting damages due to patent infringement.

Patents

Oct 06, 2016

Inter partes review 6: Cuozzo at the Supreme Court

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Patents - October 06, 2016

Inter partes review 6: Cuozzo at the Supreme Court

The Supreme Court affirmed the judgment of the United States Court of Appeals for the Federal Circuit in a case concerning the conduct of inter partes review proceedings. Cuozzo Speed Technologies, LLC v. Lee, 579 U.S. ___, 136 S. Ct. 2131, 8195 L. Ed. 2d 423 (No. 15-446, June 20, 2016).

The Court heard argument (the argument’s audio is available here) on April 25, 2016 and less than two months later issued its judgment and opinion. Justice Breyer wrote the opinion for a unanimous Court with respect to parts I and III and for the Court for part II.

The Court addressed two issues in deciding the case. First, does 35 U.S.C. § 314(d) bar a court from considering whether the Patent Office wrongly determined to institute an inter partes review when it did so on grounds not specifically mentioned in a third party’s review request? The Court concluded that the first provision, though it may not bar consideration of a constitutional question, does bar judicial review of the kind of “mine-run” claim at issue in Cuozzo Speed Technologies, involving the Patent Office’s decision to institute inter partes review. (The Court sometimes uses the term “mine-run” when others likely would use the term “run of the mill.” The first time the Court did so was in Monroe v. Pape, 365 U.S. 167 (1961) (opinion for the Court written by Douglas, J.), and in forty-four cases since then).

The second issue is whether 35 U.S.C. § 316(a)(4) authorizes the Patent Office to issue a regulation stating that the agency, in inter partes review, shall construe a patent claim according to its broadest reasonable construction in light of the specification of the patent in which it appears. The Court concluded that the Patent Office was authorized to issue the regulation.
With respect to the first issue, Garmin’s petition for inter partes review asked the Patent Trial and Appeal Board (PTAB) to institute review of claim 17 of the Cuozzo patent. The PTAB ordered inter partes review of claims 10 and 14 as well and on the basis of the same prior art as for claim 17. The Patent Office argued that the claims 10, 14, and 17 were logically interlinked (claim 17 depends on claim 14 which in turn depends on claim 10) and “a petition need not simply repeat the same argument expressly when it is so obviously implied” even though 35 U.S.C. § 312 requires that a petition for inter partes review must identify, “in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based.

The Court agreed, citing the language of 35 U.S.C. § 314(d), which states that the “determination by the [Patent Office] whether to institute an inter partes review under this section shall be final and nonappealable [emphasis added].” The Court also was persuaded by what it considered an important Congressional objective, namely, “giving the Patent Office significant power to revisit and revise earlier patent grants” which would be undercut if the “agency’s final decision could be unwound under some minor statutory technicality related to its preliminary decision to institute inter partes review.” Furthermore, “the existence of similar provisions in this, and related, patent statutes reinforces our conclusion,” namely the non-appealability of determinations concerning petitions for inter partes reexamination.

The Court noted that it applies a “strong presumption” in favor of judicial review when it interprets statutes, including statutes that may limit or preclude review. Nevertheless, the “No Appeal” provision’s language forbids an appeal that attacks a determination whether to institute review because it is “an ordinary dispute about the application of certain relevant patent statutes concerning the Patent Office’s decision to institute inter partes review.” Thus, “we emphasize that our interpretation applies where the grounds for attacking the decision to institute inter partes review consist of questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review.”

The Court left open appeals from determinations whether to institute review based upon disputes that are not ordinary. “[W]e need not, and do not, decide the precise effect of §314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” Thus, the Court does not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does its interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under §112” in inter partes review. (A petition for inter partes reviews must be based only on a ground under 35 U.S.C. §§ 102 or 103 and only on the basis of prior art. 35 U.S.C. § 311(b).)

Justice Alito, joined by Justice Sotomayor, filed an opinion concurring in part but dissenting in part with respect to whether the Patent Trial and Appeal Board’s decision to institute inter partes review is subject to judicial review. The Court dismissed the argument in Justice Alito’s opinion that the “No Appeal” provision forbids only interlocutory appeals but permits review of the decision to grant a petition during a final appeal from a decision on the merits.

With respect to the second issue, Cuozzo argued that the Patent Office lacked the legal authority to issue its regulation requiring the agency, when conducting an inter partes review, to give a patent claim “its broadest reasonable construction in light of the specification of the patent in which it appears.” 37 C.F.R. § 42.100(b). (The Patent Office amended this regulation on April 1, 2016 to add this alternative:“[a] party may request a district court-type claim construction approach to be applied if a party certifies that the involved patent will expire within 18 months from the entry of the Notice of Filing Date Accorded to Petition.”) Cuozzo contended that the Patent Office should, like the courts, give claims their “ordinary meaning . . . as understood by a person of skill in the art.”

The Court, however, pointed out that the statute contains a provision that grants the Patent Office authority to issue “regulations . . . establishing and governing inter partes review under this chapter.” 35 U.S.C. § 316(a)(4). The Court held that this statute gives the Patent Office the legal authority to issue its broadest reasonable construction regulation. The Court interpreted Congress’ grant of rulemaking authority in light of the Court’s decision in Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, 842 (1984).

The “Chevron deference” doctrine requires that when a statute is clear, an agency must follow the statute, but when a statute leaves a gap or is ambiguous, the Court typically interprets it as granting the agency leeway to enact rules that are reasonable in light of the text, nature, and purpose of the statute. The Court has “recognized a very good indicator of delegation meriting Chevron treatment in express congressional authorizations to engage in the process of rulemaking or adjudication that produces regulations or rulings for which deference is claimed.” United States v. Mead Corp., 533 U. S. 218, 229 (2001). The statute allows the Patent Office to issue rules “governing inter partes review,” 35 U.S.C . § 316(a)(4), and the broadest reasonable construction regulation is a rule that governs inter partes review.

The Court therefore found an express delegation of rulemaking authority, a “gap” that rules might fill, and “ambiguity” in respect to the boundaries of that gap. Applying Chevron deference, the Court concluded that that the regulation represented a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.

Cuozzo and the Federal Circuit judges that dissented from the denial of en banc review argued that an inter partes review was like (or a surrogate for) patent litigation in the district courts because of similarities in procedure and the fact that a decision to cancel patent claims normally has the same effect as a district court’s determination of invalidity of patent claims. They argued the PTAB should apply the standard of construction of patent claims used in court, namely, the ordinary meaning construction. The Court disagreed with this argument because “in other significant respects, inter partes review is less like a judicial proceeding and more like a specialized agency proceeding” and the “purpose of the [inter partes review] proceeding is not quite the same as the purpose of district court litigation.”

In the examination of patent applications the broadest reasonable construction is properly employed to protect the public from overly broad claims and give the applicant a fair chance to draft a precise claim that will qualify for patent protection. Cuozzo argued that in inter partes review the broadest reasonable construction standard may help protect certain public interests, but the patent owner has no absolute right to amend any challenged patent claims. The Court was not impressed with this argument because “[t]he process however, is not as unfair as Cuozzo suggests. The patent holder may, at least once in the process, make a motion to do just what he would do in the examination process, namely, amend or narrow the claim.” That motions to amend claims in inter partes review proceedings are rarely granted “may reflect the fact that no amendment could save the inventions at issue, i.e., that the patent should have never issued at all” (at least with those claims).

Cuozzo also argued that the use of the broadest reasonable construction standard in inter partes review, together with use of an ordinary meaning standard in district court, might produce inconsistent results and cause added confusion. Thus, a district court may find a patent claim to be valid, and the agency may later cancel that claim. The Court agreed that this could happen but its possibility, however, has long been present in the patent system with its different tracks for the review and adjudication of patent claims. The different burdens of proof on the challenger in the courts as compared to inter partes review mean that “the possibility of inconsistent results is inherent to Congress’ regulatory design.”

Justice Thomas filed a concurring opinion in Cuozzo expressing his desire (expressed previously, see, e.g., Michigan v. Environmental Protection Agency, 576 U.S. ___, 135 S. Ct. 2699, 2712, 192 L. Ed. 2d 674 (2015) (Thomas, J. concurring)) that “this Court should reconsider that fiction of Chevron and its progeny.” He concurred in the judgment in Cuozzo, however, because he believed the Court effectively asked whether the rulemaking was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” in conformity with the Administrative Procedure Act, 5 U. S. C. § 706(2)(A).

Patents

Oct 06, 2016

Inter partes review 7: Motions to amend study and cases

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Patents - October 06, 2016

Inter partes review 7: Motions to amend study and cases

The United States Patent and Trademark Office (USPTO) has studied how the Patent and Trial and Appeal Board (PTAB) has decided motions to amend the claims in inter partes review proceedings. The report of the study is dated April 30, 2016 and is available here. The study shows that the PTAB rarely grants such motions at trial. This was a point made by Cuozzo Speed Technologies, LLC in the eponymous case decided by the Supreme Court on June 20, 2016. (Cuozzo submitted a brief that claimed the TTAB granted only five out of 86 motions to amend that it had decided as of June 30, 2015.)

The study concluded that the TTAB had conducted 192 trials of inter partes review proceeding in which the patent owner filed motions to amend the claims. Due to settlement, original claims being held patentable, and the motions being solely to cancel claims (easily granted), the TTAB actually decided motions to amend in 118 trials. Two of those motions were granted and four granted in part. The TTAB therefore denied ninety-five percent of the motions to amend.

The Federal Circuit recently decided for the first time that the PTAB was wrong to deny a motion to amend the claims. In Veritas Techs. LLC v. Veeam Software Corp., ___ F.3d ___, 2016 U.S. App. LEXIS 15978 (Fed. Cir. August 30, 2016) the court vacated the PTAB’s denial of the patent owner’s motion to conditionally amend the claims because the Board’s decision was “arbitrary, capricious, or otherwise not in accordance with the law” under the Administrative Procedures Act (specifically, 5 U.S.C. § 706(2)(A)).

The standards for motions to amend the claims in inter partes review actions, and how the PTAB should act if the patent challenger does not contest such a motion or does so inadequately, are the subject of a rehearing en banc by the Federal Circuit. In re Aqua Products, Inc., 2016 U.S. App. LEXIS 14862, 119 U.S.P.Q. 2d (BNA) 1882 (Fed. Cir. August 12, 2016)(vacating the panel opinion reported at 823 F.3d 1369 (Fed. Cir. May 25, 2016) and granting motion for rehearing en banc). The questions for briefing are:

  • When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?
  • When the petitioner does not challenge the patentability of a proposed amended claim, or the Board thinks the challenge is inadequate, may the Board sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?

Patents

Oct 06, 2016

Supreme Court overrules Seagate Test for awarding enhanced damages

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Patents - October 06, 2016

Supreme Court overrules Seagate Test for awarding enhanced damages

The Supreme Court reversed the United States Court of Appeals for the Federal Circuit on the issue of when to award enhanced damages in patent infringement cases. Halo Electronics, Inc. v. Pulse Electronics, Inc., ___ U.S. ___, 136 S. Ct. 1923, 195 L. Ed. 2d 278, 118 U.S.P.Q. 2d (BNA) 1761 (No. 14-1513, June 13, 2016).

This decision concerns two patent infringement cases that were linked for argument on February 23, 2016. The Federal Circuit affirmed the district court’s decision to not grant enhanced damages in Halo Electronics, Inc. v. Pulse Electronics, Inc. and vacated the district court’s decision to award enhanced damages in Stryker Corp. v. Zimmer, Inc. The oral argument audio is available here.

Chief Justice Roberts wrote for a unanimous Court.

The Court’s opinion began with a survey of the history of enhanced damages in patent infringement cases from as far back as 1793. The Court then provided a description of the test of the United States Court of Appeals for the Federal Circuit for deciding when a district court may enhance damages under 35 U.S.C. § 284 (“the court may increase the damages up to three times the amount found or assessed”). This test is known by the name of the Federal Circuit case in which it was established, to wit: In re Seagate Technology, LLC, 497 F.3d 1360 (2007) (en banc).

The Seagate test has two parts: the patent owner must first show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent and second, the patent owner must demonstrate, again by clear and convincing evidence, that the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Furthermore, an award of enhanced damages is subject to trifurcated appellate review: the result of the first step is reviewed de novo, the result of the second step is reviewed for substantial evidence, and the ultimate decision to award enhanced damages is reviewed for abuse of discretion.

The Court pointed out that “[e]nhanced damages are as old as U. S. patent law” and held that the Seagate test is not consistent with 35 U.S.C. § 284 because it is “unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts,” and “can have the effect of insulating some of the worst patent infringers from any liability for enhanced damages” because it “excludes from discretionary punishment many of the most culpable offenders, such as the ‘wanton and malicious pirate’ who intentionally infringes another’s patent—with no doubts about its validity or any notion of a defense—for no purpose other than to steal the patentee’s business.” Thus, ”[u]nder Seagate, a district court may not even consider enhanced damages for such a pirate, unless the court first determines that his infringement was “objectively” reckless. In the context of such deliberate wrongdoing, however, it is not clear why an independent showing of objective recklessness—by clear and convincing evidence, no less—should be a prerequisite to enhanced damages.”

The Court referred to its decision in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. ___, 134 S. Ct. 1749, 1755, 188 L. Ed. 2d 816 (2014), in which the Court “rejected a [similar two-part] test [for deciding whether to award attorney’s fees] on the ground that a case presenting ‘subjective bad faith’ alone could ‘sufficiently set itself apart from mine-run cases to warrant a fee award.”

Patents

May 06, 2016

Inter partes review 4: Burden of proof

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Patents - May 06, 2016

Inter partes review 4: Burden of proof

The party challenging the validity of patent claims in an inter partes review (IPR) proceeding must prove its case by a preponderance of the evidence (which means “more likely than not”). This burden of proof is lower than the “clear and convincing” standard for proving a patent claim is invalid in a district court lawsuit. The recent case of Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., ___ F.3d ___, 2016 WL 1128083 (Fed. Cir. March 23, 2016) illustrates the difference.

Automated Creel Systems, Inc. (ACS) sued Shaw Industries Group, Inc. (Shaw) for infringement of ACS’s U.S. Patent no. 7,806,360, which relates to “creels” for supplying yarn and other stranded materials to a manufacturing process.  ACS voluntarily dismissed the action without prejudice.  “Without prejudice” means that ACS retained the right to sue Shaw later for infringement of the ‘360 patent.

Shaw ultimately filed two petitions for IPR with respect to the claims of the ‘360 patent.  Shaw presented a number of grounds for invalidation of each claim.  The Patent Trial and Appeal Board (PTAB) instituted two IPR proceedings on a subset of the grounds presented for invalidation (we will discuss “redundancy” in a related post).  The PTAB consolidated the proceedings and concluded that Shaw (1) had not shown by a preponderance of the evidence that the “interposing claims” were unpatentable, and (2) had shown by a preponderance of the evidence that the “non-interposing claims” (including claim 4) were unpatentable.

The preponderance of the evidence standard is used by the PTAB in contested proceedings.  See 37 C.F.R. 42.1(d) (“The default evidentiary standard [in a proceeding before the PTAB] is a preponderance of the evidence”).  The Federal Circuit accepted this standard without question when considering, for example, “Shaw’s challenges to the Board’s determination that Shaw had not shown by a preponderance of the evidence that the interposing claims would have been obvious over Munnekehoff or Barmag in view of Ligon.”  The court reviews the Board’s ultimate conclusion of obviousness de novo and its factual findings for substantial evidence.

The court decided to vacate the PTAB’s decision that Shaw had not shown that the “interposing claims” were unpatentable because the decision was ambiguous as to a finding about what the Munnenkehoff reference disclosed.  The court remanded to the PTAB to reconsider its decision on this issue.

The lesson from ACS v. Shaw and similar cases is that the petitioner for IPR faces the lowest possible burden of proof in the final determination.  The situation in a district court case is different.  The Supreme Court confirmed in the case of Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. ___, 131 S. Ct. 2238 (2011) that a defense of patent invalidity must be proved by “clear and convincing evidence.” The lower standard of proof is an appealing feature of IPR proceedings for parties that are threatened by a patent.

Patents

May 06, 2016

Inter partes review 5: Redundancy

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Patents - May 06, 2016

Inter partes review 5: Redundancy

In our fourth story on inter partes review (IPR) we discussed Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., ___ F.3d ___, 2016 WL 1128083 (Fed. Cir. March 23, 2016). In addition to illustrating the standard of evidence applied in such proceedings, the United States Court of Appeals for the Federal Circuit held that it lacks the power to review decisions of the Patent Trial and Appeal Board (PTAB) to grant petitions for IPR on some grounds but not others.

The court decided, on appeal by Shaw, that “[w]e have no authority, however, to review the Board’s decision to institute IPR on some but not all grounds” and thus “[w]e thus lack jurisdiction to review the Board’s decision not to institute IPR on the Payne-based ground, which includes its decision not to consider the Payne-based ground in its final written decision.”  The reason is that the court lacks jurisdiction to “review the Board’s decisions instituting or denying IPR.”

The court was not happy with the way the PTAB made its decision because the PTAB did not make any specific findings that the ground was “redundant” of the other two grounds and the PTAB’s decision did not make the proceeding more efficient, “particularly given that the Payne-based ground was alleged anticipation by a single reference while the two instituted grounds were alleged obviousness over combinations of references.”

The court had “no authority, however, to review the Board’s decision to institute IPR on some but not all grounds” because “‘[d]enial of a ground is a Board decision not to institute inter partes review on that ground.’  37 C.F.R. §42.108(b).”

Shaw also petitioned for a writ of mandamus to have the Payne-based ground considered if its appeal failed.  “Shaw’s argument is predicated on its concern that the statutory estoppel provisions would prevent it from raising the Payne-based ground in future proceedings.”  In brief, the court denied the writ because the statutory estoppel of 35 U.S.C. § 315(e) did not apply.  That statute reads as follows: “[t]he petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not request or maintain a [proceeding before the Office, a civil action under 28 U.S.C. § 1338, or an International Trade Commission proceeding] with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”  The word “during” in the statute was key because “Shaw did not raise—nor could it have reasonably raised—the Payne-based ground during the IPR” even though it did in its petition for an IPR.

The court concluded: “[t]he plain language of the statute prohibits the application of estoppel under these circumstances.  In light of our construction of the statute, mandamus is not warranted.”