Author: Holmes IV

A complicated decision by the Federal Circuit gives us all an opportunity to review the MedImmune standard. Prior to MedImmune a licensed party could not bring an invalidity suit because it need not fear infringement (i.e., no case or controversy). MedImmune loosened that standard and essentially set forth a “look at all the circumstances” test.

So what if a party kinda asserts patent claims, but it’s really not clear, and then later gives a covenant not to sue. Somewhat predictably the “all the circumstances” test leads to a 2-1 split in ArcelorMittal v. AK Steel. The panel ends up disagreeing on whether the circumstances of a “covenant not to sue” moot the underlying controversy.

Aaaaaand… that’s really all you need to know unless you want the complicated details of this case.

In Phigenix, Inc. v. Immunogen, Inc., a Federal Circuit panel concluded that a company can have standing to initiate an IPR against a patent, but not have standing to appeal the results of that IPR to the Federal Circuit. This standing gotcha arises because the Article III “case or controversy” requirement requires that a party:

must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], (3) that is likely to be redressed by a favorable judicial decision.

In this case Phigenix was a third-party biotechnology company in the same space as the patent owner, and initiated an IPR that the PTO ultimately closed after concluding that the claims were not obvious. Phigenix then of course sought to appeal that decision to the Federal Circuit under the relevant statute that says, “A party to an inter partes review . . . who is dissatisfied with the final written decision of the [PTAB] . . . may appeal the [PTAB]’s decision only to the . . . Federal Circuit.”

Not so fast. The Federal Circuit held that Phigenix could appeal the result, but that didn’t mean it had standing to actually get a decision:

Phigenix does not contend that it faces risk of infringing the ’856 patent, that it is an actual or prospective licensee of the patent, or that it otherwise plans to take any action that would implicate the patent.

Phigenix tried some other arguments surrounding standing, but the Federal Circuit methodically shut these down as well based on relatively solid Supreme Court jurisprudence. It’s hard to say this case is wrong given the case law, but it is no doubt frustrating to see patent decisions dodging the merits of patent validity. These decisions have major public consequences even if they are (very) technically advisory with respect to the advocating party.

Sonix owns a patent on using a “graphical indicator” on a surface such as a children’s book to subtly encode information about the surface. It can be used with an optical reader to allow the reader to play, for example, a pig sound when placed over the image of a pig.

The claims say that the graphical indicator has to be “visually negligible.” When Sonix sued someone on that patent, they (eventually) said that term was indefinite.

The district court agreed, and as seems to be common in these indefinite cases, the Federal Circuit reversed:

a skilled artisan would understand, with reasonable certainty, what it means for an indicator in the claimed invention to be “visually negligible.”

The decision cites examples of visually negligible indicators called out in the patent specification. But the decision also states that the parties’ own behavior during the litigation supports the result.

• No one involved in either the first or the second reexamination had any apparent difficulty in determining the scope of “visually negligible.”
• During the second reexamination, the examiner was able to understand and apply the term in performing a search for prior art and make an initial rejection.
• The parties’ experts also had no difficulty in applying “visually negligible.”

I’m not a fan of citing litigant behavior in support of legal conclusions. Litigants make many complex decisions about which arguments to pursue and which to drop, and it’s impossible to reconstruct that calculus on a cold record. Courts should stick to the law and focus on providing predictable guidance on that basis. But it does seem common for courts to cite such behavior so you have to be careful.

Ameranth owns a few patents related to the automatic generation of menus, like in a restaurant setting where subsequent menu choices change depending on initial selections. These patents got involved in a Covered Business Method review by the PTO, which found that some of the claims were unpatentable under section 101.

On appeal to the Federal Circuit, the panel decided that in fact all the claims were unpatentable under 101.

Some claims already ineligible. The PTO had decided that some of the claims were directed to the abstract idea of generating a second menu from a first menu, and sending the second menu to another location. According to the Federal Circuit panel, the claims:

• “do not claim a particular way of programming or designing the software”;
• “are directed to certain functionality” (emphasis mine); and
• “are not directed to a specific improvement in the way computers operate”

Thus the claims were generic enough to qualify as an abstract idea.

Any other claimed steps (input/output, network communications, etc.) were “insignificant post-solution activity” of a type already known in the case law.

Even more claims ineligible. Most significantly, the PTO had found a few claims eligible because they required linking a menu to a specific customer at a specific table. The PTO had decided this functionality was novel (at least for mobile devices) in 2001. But the Federal Circuit reversed, citing in part a concession made at oral argument that restaurants have always been able to keep track of which customer at which table ordered which meal: “Merely appending this preexisting practice to those independent claims does not make them patentable.”

My views. On the whole, I agree with the outcome here: these claims are generic, don’t solve a truly technical problem, and simply involve automation of well-known activities. But as a side note, I dislike some formulations of this argument.

Petitioners argued that the table-linking claims were ineligible because they were a “classic example of manual tasks that cannot be rendered patent eligible merely by performing them with a computer.” There are many, many manual tasks performed by humans that would be amazing if computers could do them. We go much too far if we make this kind of argument without the appropriate qualifications.

Covered Business Method (CBM) Patent Review is a special PTO procedure designed to allow reexamination of a certain class of patents popularly criticized for their overbreadth and lack of “true innovation.” These are the so-called “business method patents.”

By statute a patent is eligible for CBM review if it claims a method for “data processing . . . used in the practice, administration, or management of a financial product or service” but specifically excepting patents for “technological inventions.” This is sort of vague, and that leads us to the Unwired Planet v. Google decision.

Unwired Planet sued Google on a patent for restricting an app’s access to location information. Google asked the PTO to reexamine the patent in a CBM proceeding because the patent says the app might be associated with sales services such as a restaurant or store. The PTO decided that the patent was in fact “incidental or complementary to the financial activity” because location services could involve an eventual sale of services.

This analysis didn’t work for the Federal Circuit panel.

The main problem was the PTO never adopted this “incidental or complementary” language in a formal regulation. That language isn’t in the statue, and applying it now against Unwired Planet was improper.

But perhaps more importantly, the panel emphasized:

[I]t cannot be the case that a patent covering a method and corresponding apparatuses becomes a CBM patent because its practice could involve a potential sale of a good or service. All patents, at some level, relate to potential sale of a good or service.

(emphasis added)

Thus, “[i]t is not enough that a sale has occurred or may occur, or even that the specification speculates such a potential sale might occur.”

Net result: the PTO should not have accepted the patent for CBM review. Reversed and remanded.

Patents filed before March 16, 2013 are governed by the “first-to-invent” standard. The inventor can try to prove she was the first to invent (even if second to file) and still get a patent, even if prior art already disclosed the invention when the patent was filed.

But there’s a catch. We don’t want inventors making things and then waiting years before filing a patent. We require inventors be diligent in working on their invention and filing for the patent. But this standard for diligence is a little loose and hard to apply.

In a 2-1 decision, a Federal Circuit panel reversed a PTO decision that found no diligence in the critical time period. The panel concluded (entertainingly) that continuous exercise of reasonable diligence is different from reasonably continuous diligence:

A patent owner need not prove the inventor continuously exercised reasonable diligence throughout the critical period; it must show there was reasonably continuous diligence.

(emphasis original)

In this case the inventor of a surgical tool tried to prove he invented the tool before the publication of a certain Japanese patent application. The Japanese patent application predated his own patent filing by about three months. The inventor testified that he was “reasonably diligent” in working on his invention and patent during that time period, but the PTO found his explanations lacking for some gaps of time during those three months.

The majority said the PTO was too strict by unduly focusing on the gaps:

[T]he point of the diligence analysis is not to scour the patent owner’s corroborating evidence in search of intervals of time where the patent owner has failed to substantiate some sort of activity. It is to assure that, in light of the evidence as a whole, “the invention was not abandoned or unreasonably delayed.”

Basically the PTO couldn’t see the forest for the trees.

Judge Schall, writing in dissent, disagreed and argued (1) those gaps still needed to be explained; and (2) the PTO wasn’t clearly wrong, which is what the Federal Circuit needs to determine.

In any case, this kind of esoteric dispute is one of the primary reasons patent law is so unpredictable and expensive. This isn’t even an opposed proceeding. Imagine the litigation.

What exactly is the test for 101 eligibility? The Federal Circuit is still trying to figure that out.

In a 61 page opinion, a Fed. Cir. panel reversed invalidation of four patents on 101 grounds. These patents described a system that allows network providers to more easily bill for use of their networks. The system works by capturing network load information in a distributed manner, and this obviates the need for all network load information to flow through a specific point.

The decision was 2-1, and the central dispute was over the test for patent eligibility. Is there a single, articulated test for eligibility as the dissent urged? Or should these cases be taken on case-by-case basis and compared to all prior decisions to determine which they most closely resemble? The latter view prevailed.

Here the claims were eligible because the generic components operated in an unconventional manner, even though they were generic:

[The claims purposefully arrange] . . . the components in a distributed architecture to achieve a technological solution to a technological problem specific to computer networks.

Interestingly, the dissent focuses on the claims’ functional language and concludes that they therefore recite only abstract ideas:

Rather than reciting structure, claim 1 defines the program product using only functional limitations. Looking at those limitations, I find no specific process for accomplishing the abstract goal of combining data from two sources.

Functional claiming is rampant and insufficiently policed, but the remedy is application of means-plus-function limitations, not patent ineligibility.

These claims are probably eligible, and I particularly like the “technological solution to a technological problem” language that is being used more often. In any case, the fall out from Alice continues.