Eligibility of Patents for CBM Review is Narrowed: Unwired Planet v. Google

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.

A Fight Over Reasonable Diligence: Perfect Surgical Techniques v. Olympus America

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.

Fed. Cir. Permits Trademark Registration with “De Minimis” Sales: Christian Faith Fellowship v. Adidas

A unanimous Federal Circuit panel concluded that the sale of just two hats across state  lines will trigger the “use in commerce” provision for purposes of trademark registration.

A prerequisite for Federal trademark registration under the Lanham Act is “use in commerce.” But is there some minimum threshold, like “substantial use”?

Nope. The decision reviews Commerce Clause jurisprudence (including the infamous Wickard v. Filburn teaching case about a farmer growing wheat for personal use) and finds that even small sales are “part of an economic ‘class of activities’ that have a substantial effect on interstate commerce.” That’s all that’s required.

Meeting the “use in commerce” test for Federal trademark registration isn’t that difficult.

Federal Circuit narrowly reverses another 101 invalidation (Amdocs v. Openet Telecom)

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.

Third Circuit: Product hopping not per se illegal

“Product hopping” occurs when a drug maker creates a new version of their drug. The drug maker “hops” from one version (a 75mg tablet) to a new version (a 150mg tablet). The changes are not usually related to the efficacy of the drug. Perhaps the new version has to be taken less often.

But the hop can complicate generic substitutions. A generic (cheaper) drug must be shown bioequivalent to receive fast approval and allow pharmacists to make substitutions. The alleged goal of many product hops is to complicate the ability of generics to compete.

Does product hopping violate antitrust laws? Not without good evidence of monopoly power.

In a Sept. 28, 2016 decision the Third Circuit concluded there was insufficient evidence that the makers of Doryx acne medication had sufficient market power to support a claim for antitrust.

Takeaway: product hopping isn’t per se illegal and won’t necessarily be analyzed any differently from other alleged antitrust violations. Indeed the Third Circuit echoed concerns by the District Court that product hopping allegations could discourage routine innovation:

The prospect of costly and uncertain litigation every time a company reformulates a brand-name drug would likely increase costs and discourage manufacturers from seeking to improve existing drugs.