1. hobbies and interests
2. inventors and patents

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)
2
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)
3
Agenda
1. 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
4
Patent Eligibility
(35 U.S.C. § 101)
5
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.
6
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.”)
7
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 diagnosticmethod claim ineligible for lack of an “inventive
concept” beyond the law of nature and several “wellunderstood, routine, and conventional” steps
8
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 exonsonly molecule that is not naturally occurring”
• Both involve acts of separation and removal;
only one is “an act of invention”
9
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”)
10
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”
11
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?
12
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 patenteligible, 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.”
13
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.”
14
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.”
15
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]”
16
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)—businessmethod claim ineligible under §101 (Lourie &
Reyna, JJ.; Rader, C.J., dissenting)
17
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.”
18
“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?
19
Infringement
(35 U.S.C. § 271)
20
Infringement
Divided Infringement
Direct Infringement
§ 271(a)
Actor
Induced Infringement
§ 271(b)
Actor
Actor
Actor
Actor
Smith & Nephew v. Arthrex
Commil v. Cisco
Akamai v. Limelight
21
Divided
Infringement
Actor
Limelight v. Akamai

customer



Actor
Asserted 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.
22
Divided
Infringement
Actor
Limelight v. Akamai
Actor
 “[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.”
per curiam
en banc (6/11)
 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.
23
Divided
Infringement
Actor
Limelight v. Akamai
Linn
Dissent (4)
Actor
Dissents Agree
 No inducement without direct
infringement.
 Decide direct infringement with
principles of vicarious liability
 “control or direction” test
Newman
Dissent (1)
 Direct infringement where multiple
parties perform process “in
collaboration or interaction”
24
Divided
Infringement
Actor
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).
Actor
25
Divided
Infringement
Actor
Limelight v. Akamai
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

Actor
26
Induced Infringement
§ 271(b)
Smith & Nephew v. Arthrex
Actor
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”
27
Induced Infringement
§ 271(b)
Smith & Nephew v. Arthrex
Actor
Actor
Majority—Substantial evidence supports GlobalTech “willful blindness” finding because:
 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
Non-precedential
28
Induced Infringement
§ 271(b)
Smith & Nephew v. Arthrex
Actor
Actor
Clevenger dissent—No Global-Tech “willful
blindness” because:
 Rebuttal testimony from Arthrex product
designers establishes subjective belief of
non-infringement
Non-precedential
29
Induced Infringement
§ 271(b)
Commil v. Cisco
… 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 ….
Actor
Actor
April 2011 Inducement
Jury Instruction
(pre-Global-Tech)
30
Induced Infringement
§ 271(b)
Commil v. Cisco
Actor
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
31
Declaratory Judgments
32
Medtronic v. Mirowski Family Ventures
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
33
Medtronic v. Mirowski Family Ventures
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 noninfringement without terminating license
HELD: when continued existence
of a license forecloses infringement
counterclaim by patentee, licensee
seeking declaratory judgment of noninfringement bears burden of proof
34
Medtronic v. Mirowski Family Ventures
• 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
35
Remedies
36
Exceptional Case Finding (35 U.S.C. §285)
 The court “in exceptional cases may award
reasonable attorney fees to the prevailing
party”
 What is exceptional?
Brooks Furniture Mfg., Inc. v. Dutailier Intl., Inc.,
393 F.3d 1378 (Fed. Cir. 2005)
 Willful infringement;
 Inequitable conduct; or
 Subjective bad faith + Objectively baseless
37
Exceptional Case Finding (35 U.S.C. §285)
“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 HRICIK
Published: June 4, 2013
38
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.
39
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.
40
Exceptional Case Finding (35 U.S.C. §285)
Octane Fitness v. Icon
Health & Fitness
Highmark Inc. v. Allcare
Health Mgmt. Sys., Inc.
Octane—”Objectively baseless”
substantive standard is too high
Highmark—This is a fact
question (reasonableness of
conduct), and subject to unitary
abuse-of-discretion review
Icon—Brooks Furniture
standard is correct. Absent other
misconduct, the case must be at
least “objectively baseless”
Allcare—Objective
reasonableness is a legal issue,
and subject to de novo review
41
Exceptional Case Finding (35 U.S.C. §285)
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 Inc. v. Allcare
Health Mgmt. Sys., Inc.
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
42
Injunctions
43
Apple, Inc. v. Samsung
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.
44
Apple, Inc. v. Samsung
Pre-eBay injunction
grant rate
[n=127]
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)
45
Apple, Inc. v. Samsung
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.”
46
Apple, Inc. v. Samsung
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
47
Apple, Inc. v. Samsung
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.
48
Apple, Inc. v. Samsung
Apple, Inc. v. Samsung (“Apple IV”), No. 11-cv01846-LHK, Mar. 6, 2014 Order (N.D. Cal.)—
Denying permanent injunction to Apple as to
utility patents
Hauser conjoint survey deficient because there is no way to
directly compare consumer willingness to pay with overall
value of device:
$422
$199
Hauser price premium
for 6 features
Smartphone base price
49
Apple, Inc. v. Samsung
Apple, Inc. v. Samsung (“Apple IV”), No. 11-cv01846-LHK, Mar. 6, 2014 Order (N.D. Cal.)—
Denying permanent injunction to Apple as to
utility patents
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
50
Claim Construction
51
My brackets are busted.
52
What does this have to do with
Claim Construction?
53
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.”)?
54
Lighting Ballast Control v. Philips,
2014 WL 667499 (Fed. Cir. 2014) en banc
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.
55
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.
56
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.
57
Administrative Agency Review
58
What does this have to do with
Administrative Agency Review?
59
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.”
60
Inter Partes Review
• 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.
Covered Business Methods
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.
61
Two Routes to Challenge Patent Validity:
USPTO Review
Court Review
Patentchallenger’s
burden of
proof
• No presumption that issued • Patent is presumed valid
patent is valid
• Challenger has burden under
• Challenger needs to
35 U.S.C. §282 to prove
establish invalidity by a
invalidity by clear and
preponderance of evidence
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).
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).
In re Baxter Int’l Inc. 678 F.3d 1357 (Fed. Cir. 2012)
• 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).
64
What does this have to do with
IPR & CBM?
65
Recent PTAB Decisions Post-AIA:
IPR & CBM
66
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.
Data from USPTO: http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_03_06_2014.pdf
67
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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IPR so far…6/9 for Challenger in Final
Decisions on the Merit
• 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)
▫ All challenged claims cancelled.
• 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)
▫ All challenged claims cancelled.
69
IPR so far…6/9 for Challenger in Final
Decisions on the Merit
• Micron Tech., Inc. v. Board of Trustees of the Univ. of Ill. IPR2013-00005,
00006, 00008 (March 10, 2014)
▫ All challenged claims cancelled.
• Xilinx v. Intellectual Ventures LLC IPR2013-00029 (March 10, 2014)
▫ All challenged claims cancelled.
• Clearlamp LLC v. LKQ Corp. IPR 2013-00020 (March 27, 2014)
▫ Twelve challenged claims cancelled. Twelve claims survived!
70
CBM so far… 5/5 for Challenger in Final
Decision on the Merits
• 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.
71
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)
72
Hang in there…I’m almost done!
73
What does this mean for Litigation?
74
IPRs and CBMs Can Be Resolved Quickly
• 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
75
Compare this to median district court timeto-trial…
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
76
Should you seek a Litigation Stay?


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)
77
Post-AIA Standard Granting a Stay

Statutory authority (35 U.S.C. § 318)
–

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)
–

Patent owner (but not third party) could obtain a stay, unless court determines “a
stay would not serve the interest of justice.”
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
78
Three Factors (+one for CBM)
1.
Prejudice
•
2.
3.
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).
Stage of Litigation
•
4.
Delay alone is not unduly prejudicial. Post-AIA, shortened period for new
USPTO proceedings may favor a stay.
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)
For CBM only: Litigation Burden
79
New Factor 4 (CBM Only) –
Litigation Burden

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)
80
Other
(Appellate Jx / § 112 Indefiniteness)
81
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!
82
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.
83
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).
84
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”
85
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 . . . .
86
Nautilus v. Biosig (cont.)
• 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.”
87
Nautilus v. Biosig (cont.)
• 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).
88
Nautilus v. Biosig (cont.)
• 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.)
89
Nautilus v. Biosig (cont.)
• 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.
90
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.
91
What has the Supreme Court said on this issue?
• 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.”
92
What has the Supreme Court said on this issue?
• 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.”
93
Thank You!
for a copy of slides please e-mail
[email protected]