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A Review of Significant Recent IP Decisions and Coming Attractions Group 3 November 20, 2014.

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1 A Review of Significant Recent IP Decisions and Coming Attractions Group 3 November 20, 2014

2 Karl Quackenbush

3  Electrodes mounted in “a spaced relationship with each other.” Meaning what? 

4  District Court: granted SJ on indefiniteness  Doesn’t tell anyone what the space in “spaced relationship” should be or supply parameters for determining what it is.  Fed. Cir: reversed  Claim, read with the spec and the history, discloses “certain inherent parameters”, somewhere between “infinitesimally small” and the width of a hand.

5  Claim is indefinite if it is not amenable to claim construction, or “insolubly ambiguous”  Indefiniteness judged on claim by claim basis

6  Unanimous decision; Reversed and remanded  “Insolubly ambiguous” standard inconsistent with Sec 112.  Not enough that a court could “ascribe some meaning” to the terms.  Fed. Cir. standard breeds lower court confusion

7  The claims, viewed in light of the specification and the history, must “inform those skilled in the art about the scope of the invention with reasonable certainty”  To those skilled in the art at the time the patent was filed  Some uncertainty is tolerable given the inherent limitations of language.  Did not adopt Nautilus’ proposed standard that more than one reasonable interpretation = indefinite.  Declines to apply the new standard to the case. Remanded to Fed Cir.

8  Too soon to tell. Numerous post-Nautilus decisions going both ways on indefiniteness. Not as impactful as Alice.  Likely more assertions of indefiniteness.  Cases will likely include an expert (or two) on indefiniteness. Patents not “addressed to lawyers, or even to the public generally”  Most D. Cts. have been unwilling to address before Markman stage.

9  Is clear and convincing evidence of indefiniteness required?  Deference to PTO’s resolution of disputed issues of fact?  Is definiteness a legal issue? The Fed. Cir. treated it as a legal issue without deference.  “We leave these questions for another day”

10 10 Kaustuv M. Das

11 11  Bilski v. Kappos, 130 S. Ct. 3218 (2010)  Method claim directed to hedging risks between a commodity provider and consumers of said commodity based on identifying market participants.  Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014)  Method and system claims directed to hedging risks based on creating “shadow” credit and debit records (account ledgers) with an intermediary who facilitates exchange of credit between relevant financial institutions.

12 12  Whether business methods are unpatentable.  “[P]etitioners’ claim is not a ‘process’ within the meaning of § 101 because methods of doing business are not, in themselves, covered by the statute.” Justice Stephens joined by Justices Ginsburg, Breyer, and Sotomayor in Bilski v. Kappos.  Whether software as a whole is unpatentable.  Whether claims to computer-implemented inventions—including claims to systems and machines, processes, and items of manufacture—are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?

13 13

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15 15  Whether business methods are unpatentable.  NOPE. In Alice Justice Stevens’s almost-majority opinion is reduced to Justices Sotomayor’s concurrence (joined by Justices Ginsburg and Breyer): “I adhere to the view that any ‘claim that merely describes a method of doing business does not qualify as a “process” under § 101.’”  Whether software as a whole is unpatentable.  NOPE.

16 16  First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.  At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law.... Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept.  At Mayo step two, we must examine the elements of the claim to determine whether it contains an “ ‘inventive concept’ “ sufficient to “transform” the claimed abstract idea into a patent-eligible application.... Mayo made clear that transformation into a patent- eligible application requires “more than simply stat[ing] the [abstract idea] while adding the words ‘apply it.’”

17 17  Using a computer to create and maintain “shadow” accounts amounts to electronic recordkeeping—one of the most basic functions of a computer.  The same is true with respect to the use of a computer to obtain data, adjust account balances, and issue automated instructions; all of these computer functions are “well-understood, routine, conventional activit[ies]” previously known to the industry.  Each step does no more than require a generic computer to perform generic computer functions.

18 18  In the en banc Federal Circuit decision there was a lot of dissension as to whether method claims and system claims should be treated the same way.  This Court has long “warn[ed]... against” interpreting § 101 “in ways that make patent eligibility ‘depend simply on the draftsman's art.’”

19 19  buySAFE Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014)  Claims directed to computer implementation of underwriting online transactions not statutory subject matter.  Planet Bingo, LLC v. VKGS LLC, 2014 WL 4195188 (Fed. Cir. Aug. 26, 2014)  Claims directed to managing a game of bingo (including ten separate limitations) not statutory subject matter.  Digitech Image Techs., LLC v. Electronics for Imaging, 758 F.3d 1344 (Fed. Cir. 2014)  Claims directed to describing color content and spatial information in a digital image reproduction system not statutory subject matter.

20 20 Ultramercial, Inc. v. Hulu, LLC, Slip Op. 2010-1544 (Fed. Cir. Nov. 14, 2014)  Third time back to the Federal Circuit (previously the Federal Circuit had reversed the district court’s dismissal on 12(b)(6) grounds - twice ).  This decision is interesting because it shows that at least some judges on the Federal Circuit see Alice as having set a different standard than Mayo.  After Mayo, the Federal Circuit remanded to the district court. After Alice the claims are found to be non-statutory subject matter.  A method claim for accessing copyrighted materials in exchange for watching an advertisement. Claim 1 included eleven separate steps, but that was not enough to get it over the Mayo second step.

21 21  Thirty-five district court decisions that have cited Alice. Seventeen of the cases, however, involve the same patents (found invalid).  Of the 31 decisions that reached the merits (the others referenced Alice with reference to non-substantive motions), only four have denied the challenges (and one did so without prejudice).  In only one was the Mayo second step implicated.  In at least three cases district courts have granted motions to dismiss under Rule 12(b)(6) or 12(c) based on the claims being directed to unpatentable subject matter.

22 22  Two decisions at the PTAB: one affirming a software patent because it was not directed to an abstract idea, the other canceling all claims under the Mayo two-step.  PNC Bank v. Secure Axcess LLC (CBM2014-00100) – not directed to an abstract idea.  Inc. v. VirtualAgility, Inc. (CBM2013–00024) – all claims canceled.

23 23  LexMachina has released data that the number of new patent cases being filed has dropped precipitously. Professor Lemley conjectures that this is attributable to Alice, but it is like far too early to tell.

24 24 Expiration of Boom Patents IPRs/CBMs/PGRs Twombly/Iqbal and the Demise of Form 18 Easier to Prevail on 1404(a) Motions Alice v. CLS Bank

25  Judy Jennison  Partner, Perkins Coie

26  Seattle IP Inn of Court Exceptional cases Octane Fitness v. Icon Health & Fitness  Issue: What is an exceptional case? Highmark v. Allcare  Issue: What is the standard of review? 26

27 27  Seattle IP Inn of Court Brooks framework:  Material inappropriate conduct or  Brought in subjective bad faith *and* objectively baseless  Clear and convincing evidence SCOTUS says: Too restrictive  Exceptional = stands out from others  Preponderance of the evidence

28 28  Seattle IP Inn of Court District Court awarded fees to defendant Fed Circuit reviewed do novo and reversed as to one claim  “objective baselessness” is a question of law based on mixed questions of fact and law SCOTUS says No: Standard is Abuse of Discretion

29 David Binney

30 Akamai vs. Limelight Can patent infringement be induced if no single entity is liable for direct infringement? SUPREME COURT: NO! (But maybe we should look at what direct infringement is…)

31 1. A method for... comprising: generating... ; transmitting... ; receiving... ; playing.... A Induced Infringement B 35 U.S.C. § 271(b): “Whoever actively induces infringement of a patent shall be liable as an infringer”

32 1. A method for... comprising: generating... ; transmitting... ; receiving... ; playing.... A B No single entity performs all of the limitations. No one is liable for direct infringement.

33 1. A method for... comprising: generating... ; transmitting... ; receiving... ; playing.... A B What if B induces A to perform all of the method steps that B does not itself perform? Limelight

34  “Indirect infringement requires, as a predicate, a finding that some party amongst the accused actors has committed the entire act of direct infringement.”  BMC Resources, Inc. v. Paymentech, LP, 498 F.3d 1373 (Fed. Cir. 2007)

35  BMC Resources overruled  “[T]hat there can be no indirect infringement without direct infringement... is well settled.”  “[But] [r]equiring proof that there has been direct infringement... is not the same as requiring proof that a single party would be liable as a direct infringer.”  “[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.”

36  Opinion by Justice Alito for unanimous court  Holds that you can’t have inducement unless another entity would be liable for direct infringement.

37  To be liable for inducement there must be direct infringement. … our case law leaves no doubt that inducement liability may arise "if, but only if, [there is]... direct infringement." Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U. S 336, 341, 81 S.Ct. 599, 5 L.Ed.2d 592, 1961 Dec. Comm'r Pat. 635 (1961) [134 S.Ct. 2117]81 S.Ct. 599

38  The Federal Circuit has said there is no direct infringement unless one entity commits it. “The Federal Circuit held in Muniauction that a method's steps have not all been performed as claimed by the patent unless they are all attributable to the same defendant, either because the defendant actually performed those steps or because he directed or controlled others who performed them. See 532 F.3d, at 1329-1330.” [ Id. ]

39  Therefore, since no one party infringes directly, there cannot be liability for inducement. “Assuming … Muniauction is correct, there has simply been no infringement of the method in which respondents have staked out an interest, because the performance of all the patent's steps is not attributable to any one person. And, as both the Federal Circuit and respondents admit, where there has been no direct infringement, there can be no inducement of infringement under § 271(b).” [ Id. ]

40  The opinion appears to assume as a given one of the key issues underlying the Federal Circuit opinion: that infringement and liability for infringement are essentially the same thing.

41  The opinion pointedly does not address whether Muniauction was correct in holding that direct infringement requires a single actor. Assuming without deciding that the Federal Circuit's holding in Muniauction is correct … [134 S.Ct. 2117] Muniauction (which, again, we assume to be correct) instructs … [134 S.Ct. 2118]

42 “Respondents ask us to review the merits of the Federal Circuit's Muniauction rule for direct infringement under § 271(a). We decline to do so today. … on remand, the Federal Circuit will have the opportunity to revisit the § 271(a) question if it so chooses.” [134 S.Ct. 2120]

43 Stacie Foster

44  Coca Cola’s Product:  a MINUTE MAID branded drink labeled “Pomegranate Blueberry Flavored Blend of 5 Juices” (“Juice Drink”).  99.4% Apple & Grape Juices .3% pomegranate juice .2% blueberry juice .1% raspberry juice

45  POM’s Product:  POM WONDERFUL branded drinks including pomegranate and pomegranate blueberry juices. Each contains 100% of the labeled juices.

46  11/ 26/08: POM sued Coca Cola in C.D. Cal.  False advertising (Lanham Act & Cal. BPC)  Statutory Unfair Competition (Cal. BPC)  POM: Coca Cola’s product misled consumers into believing it was mostly made of pomegranate and blueberry juices

47  District Court & 9 th Circuit:  The District Court & 9 th Circuit held that the Federal Food, Drug, & Cosmetic Act (FDCA) preempted POM’s Lanham Act claims against Coca Cola’s Juice Drink (as well as state law claims to the extent they conflicted with the FDCA).

48  SCOTUS issue: whether 9 th Circuit Court erred in holding that a private party cannot bring a Lanham Act claim challenging a product label regulated under the Federal Food, Drug, & Cosmetic Act.

49  POM’s Arguments:  The Lanham Act and FDCA are not in “irreconcilable conflict”  Circuit Split:  3 rd, 8 th, and 10 th recognize false labeling & advertising claims under the Lanham Act  9 th : FDCA preempts these claims

50  Coca Cola’s Argument:  Circuits are not in conflict -- the cases POM relies on outside the 9 th Circuit did not address the FDCA’s preemption of the Lanham Act.  Government has adequate resources to regulate food and beverage labels and should be permitted to do so.

51  Solicitor General’s Amicus Brief:  Urged the Supreme Court not to grant Certiorari  FDCA is not “privately enforceable” and permits manufacturers to use truthful flavoring names on food and beverage labels.

52  SCOTUS: June 12, 2014: Justice Kennedy  Held: Competitors may bring Lanham Act claims like POM’s challenging food and beverage labels regulated by the FDCA.  This is not a pre-emption case, for it does not raise the question whether state law is pre- empted by a federal law, but instead concerns the alleged preclusion of a cause of action under one federal statute by the provisions of another federal statute.

53  Neither the Lanham Act nor the FDCA limits claims challenging labels that are regulated by the FDCA. The absence of such a textual provision when the Lanham Act and the FDCA have coexisted for over 70 years is “powerful evidence that Congress did not intend FDA oversight to be the exclusive means” of ensuring proper food and beverage labeling.  The Lanham Act protects commercial interests, while the FDCA protects public health and safety

54  The Government’s position is flawed, as it assumes that the FDCA and its regulations are a ceiling on the regulation of food and beverage labeling when Congress intended the Lanham Act and the FDCA to complement each other with respect to labeling.  Reversed and remanded.  Implications beyond pomegranate juice?

55  Mark P. Walters  Member, Lowe Graham Jones PLLC

56 Petrella v. MGM, No. 12-1315  1963: Jake LaMotta wrote story with Frank Petrella  1976: rights assigned to MGM  1980: MGM releases Raging Bull  1981: Frank Petrella dies, renewal rights passed to his heirs  1991: Paula Petrella renews  1998: Paula advises MGM of infringement  2009: Paula sues MGM seeking damages after 2006 (i.e., the 3-year limitation period)

57 Petrella v. MGM, No. 12-1315  Summary Judgment Granted for MGM (laches)  18 year delay in filing suit was unreasonable  Affirmed by 9 th Cir.  MGM Argues that FRCP 8(c) includes laches as an affirmative defense, so it should be “available in every civil action” to bar all forms of relief (including money damages)  HELD: Laches is not available to preclude assertion of a copyright lawsuit seeking damages within the statutory period of limitations LaMotta v. Billy Fox in 1947

58 Shannon Jost

59 B & B Hardware, Inv. v. Hargis Industries, Inc., Dkt. 13- 352 Appealed from: 8 th Circuit Oral Argument set for: Dec. 2, 2014 Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., Dkt. 13-854 Appealed from: Fed. Circuit Oral Argument held: Oct. 15, 2014

60 PartyB&B HardwareHargis Industries MarkSEALTIGHTSEALTITE Goodsindustrial fasteners for the aerospace industry fasteners (self-drilling, self-taping screws) for construction industry First use19901992 PTO statusRegistered 1993 Application filed 1996; PTO Refused:2(d) rejection based on B&B, and merely descriptive

61  Lengthy PTO proceedings resulted in TTAB finding that confusion was likely between the parties’ marks  Overlapping federal litigation resulted in rulings that:  TTAB likelihood of confusion finding not preclusive  No likelihood of confusion

62 (1) Whether the Trademark Trial and Appeal Board’s finding of a likelihood of confusion precludes respondent from re-litigating that issue in infringement litigation, in which likelihood of confusion is an element. (2) Whether, if issue preclusion does not apply, the district court was obliged to defer to the Board’s finding of a likelihood of confusion absent strong evidence to rebut it.

63  Unless SCOTUS holds that PTO decisions are never entitled to deference or preclusive effect, the ultimate ruling may not provide much guidance  Issue preclusion will probably continue to require fact-specific analysis of whether the same issues were adjudicated, etc.

64 Patent infringement case based on Teva patent for Copaxone medication for MS patients.  District court concluded, based on factual findings, that Teva’s patent has a definite meaning  Relying on expert testimony, the district court found that claim term “average molecular weight” was not indefinite because skilled artisans would have understood its meaning  Federal Circuit reviewed the evidence de novo and found the patent indefinite

65 Question presented (Petitioners): 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 Rule 52(a) requires.

66 Question presented (Respondents): Whether the court of appeals properly concluded that claim construction involves a pure question of law, and thus the standard of appellate review of the lower court’s interpretation of a patent’s claims is de novo. If claim construction could entail factual findings that are reviewed for clear error, whether the court of appeals correctly concluded that the language of the claims, specification, and prosecution history rendered the patent claims at issue “insolubly ambiguous” and thus, a fortiori, indefinite under this Court’s recent decision in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014).

67  Oral argument suggests Justices may be focusing on what is fact vs. law, and whether, for claim construction, they should be treated differently.  But what would happen if everything a district court decided could be subject to full, independent review by the CAFC?  Should patent law really be an exception to FRCP 52?

68 Dan Royalty

69  744 F.3d 1272 (Fed. Cir. 2014)  Fed. Cir. upheld Cybor en banc, 6-4  Upheld on stare decisis grounds  De novo review needed to provide “national uniformity, consistency, and finality to the meaning and scope of patent claims”  Dissent: overrule Cybor to “(1) avoid[] undermining the legitimacy of district courts and (2) prevent[] unnecessary appeals by discouraging appellate retrial of factual issues.”

70 LIGHTING BALLASTTEVA  Jan 2013 – panel decision  Mar 2013 – PFR granted  Feb 2014 – en banc decision  Jun 2014 – cert petition filed  Jul 2013 – panel decision  Oct 2013 – PFR denied  Jan 2014 – cert petition filed  Mar 2014 – cert granted  Oct 2014 – argued  Jun 2015 – decision expected Leapfrogging Lighting Ballast

71  Lighting Ballast Control LLC v. Universal Lighting Techs., No. 13-1536  Gevo, Inc v. Butamax Advanced Biofuels LLC, No. 13-1286  Shire Development, LLC v. Watson Pharmaceuticals, Inc., No. 14-206  Takeda Pharmaceutical Co. Ltd v. Zydus Pharmaceuticals USA, Inc., No. 14-217  Stryker Corporation v. Hill-Rom Services, Inc., No. 14-358

72  Questions?

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