Patently-O Law Blog
By Dennis Crouch
Retractable Tech v. Becton Dickinson and Co (Fed. Cir. 2014)
This patent infringement lawsuit is now in its seventh year. The case revolves around a set of patents owned by Retractable that cover a form of retractable safety-syringe. The original jury found that BDs 1mL and 3mL syringes both infringe with the result of $5 million for past damages and the district court ordered a permanent injunction. In the 2011 appeal, the Federal Circuit altered that claim construction and concluded that there was no infringement of the 3mL devices. On remand, the district court then altered the injunction (to only focus on the 1mL device). However, the district court refused to reconsider the damage award – finding that the damage award was subject to a final judgment that had not been directly appealed nor the subject of an order for reconsideration from the prior appeal. Now, the Federal Circuit affirms that judgment – finding that the lower court properly precluded BD from re-raising the damages issue on remand. This case is a bit of a civil procedure oddity. The jury awarded damages for infringement based on a finding that two different products infringe and final judgment was entered. The appellate court then partially reversed the decision – finding that only one of the products infringed. But, the infringer is not able to get the damage award modified.
In Verizon Services v. Vonage, 503 F.3d 1295 (Fed. Cir 2007), the court wrote that “where the jury rendered a single verdict on damages, without breaking down the damages attributable to each patent, the normal rule would require a new trial as to damages.” That case appears on-point to the present situation. However, both the district court and appellate panel have disagreed – finding that a district court is not permitted “to revisit damages in the absence of a reversal or remand of a damages determination. . . . [T]here is no ‘normal rule’ giving district courts the authority to regularly revisit or recalculate damages that fall within our mandate.”
Conceding that the rule here is very much a technicality, the court writes that the whole case outcome would be different had BD included one additional phrase in its prior appeal brief that requested a remand on the damages issue. Although a technicality, it appears that the decision not to include that phrase was a strategic decision made by BD’s appellate attorneys from WilmerHale and not any sort of oversight. In particular, BD wanted (and asked for) a bigger outcome (complete reversal or new trial) rather than simply a reduction in the damage award. I don’t believe that anyone will go home feeling sorry for BD.
This decision here was written by Judge Linn and joined by Judge Lourie. Judge Rader had been on the original panel but has now retired and thus did not participate in the final determination.
USPTO is looking for technical experts willing to volunteer their time to help train patent examiners: http://www.uspto.gov/patents/pettp.jsp. Many high-patenting companies like to participate in this system to help improve the examination process.
By Dennis Crouch
New Castle Beverage, Inc. v. Spicy Beer Mix, Inc. (California App. Ct. 2014)
New Castle sells a “spice cup” known as the “Micheladas Antojitos.” The Styrofoam cups are factory-dipped in a secret spice blend that is “carefully selected to enhance the flavor of your favorite beer or cocktail .” While an employee of New Castle, Robert Montiel learned the “secrets” behind the spicy-mix-cup and later sold that information to Greg Murkijanian who began to develop a competing product known as Cheveladas. New Castle then sued for trade secret misappropriation under California law and demanded preliminary injunctive relief. (New Castle did not have any patent rights).
The trial court rejected the claim for preliminary relief and here the California appellate court affirms – finding that the trade secret mix was has not been sufficiently described in order to warrant protection.
Unlike patent rights, trade secrets need not be expressly defined on paper prior to the establishment of those rights. Rather, it is enough that a valuable and protectable secret exist. However, the law does typically require trade secret owners to provide some written description of its asserted trade secret at the point of enforcement.
The California Code of Civil Procedure provides that:
Any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act, before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.
CODE OF CIVIL PROCEDURE SECTION 2019.210. See also, Mark Lemley, The Surprising Virtues of Treating Trade Secrets as IP Rights, 61 Stan. L.Rev. 311 (plaintiff should be required to “clearly define[ ] what [trade secret] it claims to own, rather than (as happens all too often in practice) falling back on vague hand waving”).
Here, the plaintiff only generally alluded to the “process of applying a secret solution to the inner and outer surfaces adjacent the lip of a beverage cup to permit a first mixture of spices to adhere to those surfaces.” According to the courts, that general allusion is insufficient to meet the burden required by California law .
The trial court questioned whether New Castle and Monugian had any trade secrets because of the lack of details in their trade secret designation and their failure to describe their trade secrets with sufficient particularity. The court expressed concern that “what we need is a description with sufficient particularity,” and the court asked, “If I were [to] grant your [requested] preliminary injunction on the record as it stands right now, how would we ever know whether it was violated or not?” On appeal, New Castle and Monugian do not address these concerns by making a well-reasoned argument that their trade secret designation was sufficiently specific to justify an injunction prohibiting use of their claimed trade secret information. New Castle and Monugian assert in their reply brief, without citing to any evidence, that “the sufficiency of the disclosure could have been resolved by simply viewing the device” and that “had the trial court viewed the device, the boundaries of an injunction would have been easier to fashion.” They do not explain, however, how a physical inspection of the device would reveal the precise nature and description of their secrets or guide the court in crafting an appropriate injunction, nor how such an inspection would be relevant to the alleged trade secrets in the spice mixture and blending.
Obviously, without proof of a trade secret, no preliminary injunction could issue.
For those of us coming from the patent field, it easily makes-sense that someone wanting to protect information as a trade secret should be able to at least describe the information to the court in a way that is reasonably precise and complete. That burden is somewhat less than what is placed on patent applicants and is not applied until the point of enforcement. However, an important and unique element of this case is that the written description requirement noted above comes from California Civil Procedure law. It is unique to California law and not generally an aspect of the Uniform Trade Secret Act that has been adopted across the nation. See, Graves & Range, Identification of Trade Secret Claims in Litigation: Solutions for a Ubiquitous Dispute, 5 Nw. J. Tech. & Intell. Prop. 68 (2006).
California is absolutely on the right path here and some courts have caught-on: Engelhard Corp. v. Savin Corp., 505 A.2d 30 (Del.1986), DeRubeis v. Witten Technologies, Inc., 244 F.R.D. 676 (N.D.Ga.2007); Automed Techs., Inc. v. Eller, 160 F .Supp.2d 915 (N.D.Ill.2001); Dura Global Technologies, Inc. v. Magna Donnelly, Corp., 2007 WL 4303294 (E.D.Mich.2007); Del Monte Fresh Produce Co. v. Dole Food Co., Inc., 148 F.Supp.2d 1322 (S.D.Fla.2001); and Ikon Office Solutions v. Konica Minolta Business Solutions, 2009 WL 4429156, *4–*5 (W.D.N.C.2009); and Switch Comm’n Group v. Ballard, 2012 WL 2342929, *5 (D. Nev. June 19, 2012). Judge Cote wrote the following in her 2008 Sit-Up decision:
A corollary requirement of specificity for claimed trade secrets is inferable from this holding: If a particular piece of information, or a formula, is not entitled to trade secret protection because it is “so vague and indefinite” at the time it is divulged, then it cannot be granted protection as a trade secret by a court during litigation if it is “vague and indefinite.” Specificity is required at the moment of divulging so that the party to whom the secret is revealed understands the contours of the secret information and does not inadvertently or purposefully transgress its boundaries. Similarly, specificity is required before the court so that the defendant can defend himself adequately against claims of trade secret misappropriation, and can divine the line between secret and non-secret information, and so that a jury can render a verdict based on a discriminating analysis of the evidence of disclosure and misappropriation.
Sit-Up Ltd. v. IAC/InterActiveCorp., 05 CIV. 9292 (DLC), 2008 WL 463884 (S.D.N.Y. Feb. 20, 2008). See also, Big Vision Private Ltd. v. E.I.DuPont De Nemours & Co., 2014 WL 812820 (S.D.N.Y. Mar. 3, 2014); Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 265 (5th Cir.2007); SL Montevideo Tech., Inc. v. Eaton Aerospace, LLC, 491 F.3d 350, 354 (8th Cir.2007) (“[s]imply to assert [that] a trade secret resides in some combination of otherwise known data is not sufficient, as the combination itself must be delineated with some particularity in establishing its trade secret status”).
Federal Circuit: To Satisfy the Written Description Requirement, a patent “must at least describe some species representative” of the accused product.
By Dennis Crouch
AbbVie v. Janssen Biotech and Centocor Biologics (Fed. Cir. 2014)
This decision is important in the way that it confirms a strong Post-Ariad Written Description requirement – especially with regard to genus-species claim situations. The decision also includes a key (but preliminary) discussion on the preclusive effect of PTAB decisions and also attempts to justify Federal Circuit decisions that extend beyond questions necessary for the judgment. Hal Wegner has already classified this opinion – written by Judge Lourie – as “unnecessary judicial activism.”
In 2013, Abbot Labs spun-off AbbVie as a separate company with a focus on biopharmaceutical research and a current Market Cap of $90 Billion US (ABBV). In the split, AbbVie obtained ownership of a number of valuable patents. In this case, AbbVie asserted various claims of U.S. Patent Nos. 6,914,128 and 7,504,485. These patents broadly cover antibodies that can bind to and neutralize activity of human interleukin 12 (IL-12). These antibodies have been found useful in the treatment of autoimmune disorders, including psoriasis and rheumatoid arthritis.
A key asserted claim is listed as follows:
29. A neutralizing isolated human antibody, or antigen-binding portion thereof that binds to human IL-12 and disassociates from human IL-12 with a Koff rate constant of 1×10−2s−1 or less, as determined by surface plasmon resonance.
A jury found the claim invalid for lacking a sufficient written description, lacking enablement, and also for obviousness. AbbVie appealed the §112(a) claims (WD & enablement) and, as for obviousness, AbbVie argued that that issue should never have been decided by the district court since it had already been fully litigated during the prior interference contest. On appeal, the court affirmed – agreeing that the patent was properly held invalid for lack of written description and that the collateral estoppel did not apply to the obviousness question because the interference proceeding was not sufficiently “final” at the time of the complaint filing.
Written Description: In Ariad, the Federal Circuit confirmed that the written description requirement is separate and distinct from that of enablement and that it serves an important role of ensuring that the patent is based upon an actual describable invention and that the patent scope does not overreach beyond the scope of the inventor’s contribution.
– Genus-Species: By design, patent claims generally cover a set of a variety of potential embodiments. Likely, most claims cover an infinite variety of potential embodiments each involving a minor tweak in one way or another. The courts have never required that all potential embodiments be disclosed – however, the written description doctrine has been applied to invalidate patent claims that do not disclose a sufficient representative sample of embodiments. This is generally known as part of a genus-species problem – with the operative question here being how many different species (embodiments) of an invention must be described in a patent document before the applicant can properly claim rights to the genus of all related species. A key case on point is Regents of the University of California v. Eli Lilly & Co., 119 F.3d 1559 (Fed. Cir. 1997) (Lourie, J.) that was also affirmed in Ariad Pharm., Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1355 (Fed. Cir. 2010) (en banc; Lourie, J.) (“[No] bright-line rules govern the number of species that must be disclosed to describe a genus claim, as this number necessarily changes with each invention, and it changes with progress in a field.”). Rather than simply listing various embodiments, the usual approach is to also describe common structural features of the species.
Here, AbbVie’s generic claim can be classified as a set of human antibodies defined functionally by their high affinity and neutralizing activity to the human IL-12 antigen. However, AbbVie did not disclose any structural features common to the members of the genus. Rather, AbbVie’s patent described only one type of structurally similar antibodies rather than antibies representative of the full scope of the genus.
In the decision, Judge Lourie focuses particularly on the alleged infringing antibodies and notes that:
[While] AbbVie’s patents need not describe the allegedly infringing [compound] in exact terms . . . [t]he patents must at least describe some species representative of antibodies that are structurally similar to [the accused compound].
Because the patent document lacked any such structural description, the court confirmed that the corresponding claims were invalid under 112(a).
Functional Patent Claims Are Inherently Vulnerable: In discussing the case, Judge Lourie was clear that one problem here is that the invention was described in terms of its function rather than its structure. Lourie writes:
Functionally defined genus claims can be inherently vulnerable to invalidity challenge for lack of written description support, especially in technology fields that are highly unpredictable, where it is difficult to establish a correlation between structure and function for the whole genus or to predict what would be covered by the functionally claimed genus.
With functional claims, the patentee must establish “a reasonable structure-function correlation” either within the specification or by reference to the knowledge of one skilled in the art. Of importance, the court is clear that functional claim limitations are patentable, but, in order to be patentable, they must be linkable to structure by PHOSITA. An interesting distinction though is that, unlike many written description issues, the linkage between the function and structure need not necessarily be found in the patent document itself.
Patent attorneys will also note that Judge Lourie’s reference to “highly unpredictable” arts is designed to refer primarily to bio-related sciences. We shall see whether the subsequent case law is so limited.
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Collateral Estoppel applies to preclude a court from re-deciding issues. Generally collateral estoppel only applies when the same issue was actually litigated and decided by a final and binding judgment in a way that was essential to the judgment. It is also generally true that collateral estoppel applies even when the first case is still pending on appeal – so long as the original court’s judgment was a final judgment being appealed.
Here, a prior interference proceeding between the parties had resulted in a determination that the AbbVie claims were not-obvious. Following the PTAB interference decision, Centocor filed a civil action under 35 U.S.C. § 146 that was pending at the time the present infringement litigation began. In the present appeal, the Federal Circuit held that the PTO decision should not be considered a “final judgment for the purposed of collateral estoppel” since the district court decision was still pending and during that case the parties have the opportunity to expand the factual record. The court left open the possibility that collateral estoppel would apply once the decision is final and that collateral estoppel may have applied if Centocor had appealed directly under § 141 instead of filing a civil action.
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Because AbbVie did not appeal the substance of the obviousness question, the collateral estoppel question fully decided the case. However, in its decision, the court offered an explanation for its reasons for going ahead and deciding the written description question.
AbbVie did not substantively challenge the district court’s holding of obviousness of the asserted claims. It might therefore be concluded that we could affirm that court’s obviousness holding and proceed no further. However, as an “inferior” court, we are well-advised to review more than one issue raised before us on appeal, lest higher authority find error in any basis for a more limited review. Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 97–98 (1993) (“[T]he Federal Circuit is not a court of last resort. . . . [Its] decision to rely on one of two possible alternative grounds (noninfringement rather than invalidity) did not strip it of power to decide the second question, particularly when its decree was subject to review by this Court.” (emphasis in original)); see also Wm. Wrigley Jr. Co. v. Cadbury Adams USA LLC, 683 F.3d 1356 (Fed. Cir. 2012) (affirming invalidity based on anticipation and obviousness); Verizon Servs. Corp. v. Cox Fibernet Va., Inc., 602 F.3d 1325 (Fed. Cir. 2010) (same); Union Pac. Res. Co. v. Chesapeake Energy Corp., 236 F.3d 684 (Fed. Cir. 2001) (affirming invalidity based on indefiniteness and lack of enablement). Because the written description issue constituted the principal basis of AbbVie’s appeal to this court, we proceed to consider the written description issue rather than affirm merely on any procedural defect or omission relating to the obviousness issue.
In her concurring opinion, Judge O’Malley did not sign-on to the “thoughtful written description analysis” of the majority – finding it not “necessary or dispositive ot the outcome of the case.”
Federal Circuit: Now is Not the Time to Judge the Constitutionality of the First-to-File Patent Regime
By Dennis Crouch
MadStad Enginering v. USPTO (Fed. Cir. 2014)
In 2012, MadStad and its owner Mark Stadnyk filed a declaratory judgment lawsuit against the USPTO alleging that the new first-to-file regime implemented by the America Invents Act of 2011 (AIA) was unconstitutional. See Crouch, Constitutional Challenge to the First-to-Invent Rule
(2012), and Crouch, Constitutionality Question Looms as USPTO Implements Regime that favors a “Filers” over “Inventors”
(2013). In discussing the case, I wrote:
MadStad’s basic argument is that when the U.S. Constitution speaks of exclusive rights for “inventors” it should be interpreted to mean “first and true inventor.” Under this analysis, the AIA fails because it purposefully rewards the first-to-file a patent application rather than the first-to-invent.
Further, MadStad argues that the new law allows non-inventors to obtain patents on inventions that they learned-of because the law no longer requires that the applicant be an inventor.
Rather than reaching the merits of MadStad’s allegations, the district court rejected the case for lack of standing. The Federal Circuit has now affirmed that decision — holding that MadStad’s potential injury due to the legal change is too speculative. MadStad’s alleged injuries due to the change are creative, but ultimately the court determined that they lacked sufficient concreteness. The alleged injury included increase cost of computer security to avoid hacking that – if not blocked – could result in stolen ideas that the thief could patent under the new regime. A second alleged injury is increased time and effort to file additional patent applications before the invention’s value is properly understood.
The key precedent relied upon by both the Federal Circuit and the District Court is the secret FISA court case of Clapper v. Amnesty International USA, __ U.S. __, 133 S. Ct. 1138 (2013). In that case Amnesty Int’l did not have proof that the NSA was tapping its conversations (because the activity is secret) and the Supreme Court held that the threat was too speculative. In my view, the direct applicability of Clapper here is somewhat attenuated because it is clear that MadStad’s new patent applications would be governed under the new regime and the separation-of-powers issues are not so great.
Next steps: Regardless of the merits of this decision, by now there should be at least some patent applications that have been rejected due under the new first-to-file regime that would not have arguably been patentable under the old regime. Applicants injured in that way would certainly have standing to bring this challenge.
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The decision by Judge O’Malley also includes an interesting discussion of Federal Circuit Jurisdiction. The law provides that the Federal Circuit has jurisdiction over appeals that arise under the patent law statutes. Here, however, the claim is based upon the U.S. Constitution.
- An Open Letter from Judge Rader (Crouch)
- Taming the Mongrel: Aligning Appellate Review of Claim Construction with its Evidentiary Character in Teva v. Sandoz (Menell, Anderson, Rai)
- Panel asks Highmark Litigants for Additional Briefing on Remand (Rantanen)
- Federal Circuit will again review the Subject Matter Eligibility of Ultramercial’s Internet Advertising Patent (Crouch)
- Alice in Patent Land (Powles)
- Opening of the Rocky Mountain Patent Office Raises Denver’s Profile as Center of Innovation (Posthumus)
- Tom Bell on Copyright
- Teva v. Sandoz: Teva’s Opening Merits Brief (Rantanen)
- Teva v. Sandoz: Standard of Review for Claim Construction(?) (Rantanen)
June 30, 2014 is Judge Rader’s final day on the bench. Judge Rader has – and I suspect will remain – a lightning rod for both criticism and support. What I love is that his continued focus is on the law and what we can do to improve its function. Judge Rader forwarded the following letter to his Federal Circuit colleagues and gave me permission to distribute its contents to Patently-O readers.
My Dear Colleagues (for the last time I presume to call you “colleagues”),
Over three and a half decades ago, I sat across from Howard Markey, Chief Judge of the Court of Customs and Patent Appeals, in my Senate Judiciary Committee office. In a meeting I recall with stunning clarity, he showed me the vision of a court dedicated to the uniformity, consistency, and strength of vital areas of commercial law to be entrusted to the new Federal Circuit. Inspired by his dreams, I set out to work vigorously for the enactment of the Federal Courts Improvement Act of 1981. To this day, I regret that I allowed judges from the Ninth Circuit to dissuade me from offering an amendment to include copyright and trademark cases within the jurisdiction of the Federal Circuit. To this day, however, I rejoice that I obeyed Chief Judge Markey’s request that I hear cases every month without a break as a circuit judge.
Less than a decade after that first meeting with Chief Judge Markey, after two years as a trial judge, I took a seat on the court that I had helped to create. You can imagine my feelings of awe as I took a seat on the bench beside the legends, Howard Markey, Giles Rich, and Daniel Friedman. As the years passed, I delighted to recount both in my own private deliberations and in public events the great wisdom I absorbed from those masters of the judicial office.
Time flies on wings of lightning. Before you can comprehend, many of you will be delighted to recount both in your own private deliberations and in public events the great wisdom you absorbed at the feet of the legends, Polly Newman, Alan Lourie, and Bill Bryson. Yet another page will turn and some of our current law clerks and interns will occupy judge’s chairs and recount both in their own private deliberations and in public events the great wisdom of the legends, Evan Wallach, Ray Chen, and Todd Hughes.
With the passing of each judicial generation, I hope that the Federal Circuit perpetually renews Markey’ s vision of a judicial institution unlike any other in the world. To no other court does a nation, let alone the most powerful economic nation in the world, entrust legal decisions that shape world trade, innovation, and core commercial policies. Yet I can vigorously attest that this vast responsibility could not rest in more secure and capable hands. At some distant point in the future, I hope to sit again across from Howard Markey; I will assure him that his vision has been realized. . . and sustained!
Now in a few minutes, I will start my car and ascend the ramp to H Street for the last time. At the top of the ramp, I will step out of my car for a moment to embrace my law clerks. With that embrace, I wish to symbolically embrace and commend the greatest bar in the world. No practicing lawyers anywhere in the world contribute more to the competent jurisprudence of their court than the lawyers who make up the Federal Circuit bar. Just as legendary judges pass perpetually the torch to new judges, so too Don Dunner, Bill Lee, Seth Waxman and others have set standards of excellence that will be matched by newer attorneys who will become themselves legends of reason and persuasion.
Then, there at the top of the ramp, I will slap a “high five” to the security officers on duty at the gate. With that salute, I wish to symbolically honor and recognize the entire staff of the Federal Circuit — the Administrative Services personnel under Dale Bosley, the Technical officers under Mona Harrington, the Library staff under Pat McDermott, the General Counsels under Doug Steere, the Clerk’s office and the entire staff led so marvelously by Circuit Executive Admiral Dan O’Toole. No court staff anywhere can exceed these incomparable professionals who, as much as any judge, have contributed to the superb reputation that the Federal Circuit will carry into coming decades.
With eyes misted over with magnificent memories, I will then turn my gaze to the horizon. I will hope to find new ways to contribute to the uniformity, efficiency, and predictability of the law. No matter what opportunities I receive in my next legal “life,” I know that no honor can ever exceed the opportunity that I had to contribute to the United States Court of Appeals for the Federal Circuit. Thank you, brothers and sisters, for the vast honor of sitting at your side. God save this honorable court!
Your friend for life, rrr
Taming the Mongrel: Aligning Appellate Review of Claim Construction with its Evidentiary Character in Teva v. Sandoz
In its seminal Markman decision, the Supreme Court sought to usher in a more effective, transparent patent litigation regime through its ruling that “the construction of a patent, including terms of art within its claim, is exclusively within the province of the court.” Markman v. Westview Instruments, Inc. (Markman II), 517 U.S. 370, 372 (1996). Notwithstanding the constitutional right to patent jury trials, the Court ruled that claim construction would no longer be conducted by lay jurors in shrouded deliberations. Rather, based on historical analysis of the role of juries in patent cases, characterization of the nature of claim construction, and a comparative assessment of judicial institutional capabilities, the Court concluded that the Seventh Amendment right of trial by jury did not extend to claim construction and that trial judges were better equipped than juries to resolve the mixed fact/law controversies inherent in construing disputed patent claim terms.
In the aftermath of Markman II, the Federal Circuit adhered to its Markman decision, Markman v. Westview Instruments, Inc. (Markman I), 52 F.3d 967 (1995) (en banc) – that claim construction is a “purely legal issue” subject to plenary de novo review, see Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc) – downplaying the Supreme Court’s more nuanced description of claim construction as a “mongrel practice” merely “within the province of the court.” Markman II, 517 U.S. at 372, 378. Over nearly two decades of experience in the post-Markman era, it has become apparent that the Federal Circuit’s adherence to its Markman I plenary de novo appellate review standard has frustrated district courts’ distinctive capabilities to apprehend and resolve the factual disputes inherent in claim construction determinations, undermined the transparency of the claim construction process, discouraged detailed and transparent explanations of claim construction reasoning, and produced unusual and at times alarming levels of appellate reversals. These effects have cast doubt on the predictability of patent litigation, discouraged settlements, delayed resolution of patent disputes, and run up the overall costs of patent litigation.
The Supreme Court’s Markman II decision points toward a balanced, structurally sound, legally appropriate, hybrid standard of appellate review that would promote more accurate and efficient patent dispute resolution. Factual determinations underlying claim construction rulings should be subject to the “clearly erroneous” standard of review, while the Federal Circuit should retain de novo review over the ultimate claim construction decision. In this manner, district court judges, in their capacity as fact-finders, could better surmount the distinctive challenges posed by the technical, mixed fact/law controversies inherent in patent claim construction. A hybrid standard would encourage district judges to identify the “person of ordinary skill in the art” and, where appropriate, build fuller, more transparent records to support their claim construction decisions. These effects would promote clearer substantive analysis, more settlements following claim construction and trial, more effective appellate review, and fewer reversals and remands.
A hybrid appellate standard is unlikely to undermine the national uniformity of the patent system. In any event, concerns about national uniformity and clarity of patent claims are more appropriately addressed through improvements to the patent prosecution process, meaningful implementation of the 35 U.S.C. §112(b) claim indefiniteness standard, post-grant review and reexamination procedures, consolidation of claim construction through multi-district litigation, and adjustments to substantive claim construction jurisprudence.
Our brief filed in Teva v. Sandoz can be accessed at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457958
Peter S. Menell is the Koret Professor of Law and Director of the Berkeley Center for Law & Technology at the University of California at Berkeley School of Law (Boalt Hall), J. Jonas Anderson is an Assistant Professor of Law at American University Washington College of Law, and Arti K. Rai is the Elvin R. Latty Professor of Law and Co-Director of the Duke Center for Innovation Policy at Duke Law School.
Federal Circuit will again review the Subject Matter Eligibility of Ultramercial’s Internet Advertising Patent.
By Dennis Crouch
For the second time, the Supreme Court has issued a GVR decision in the patent subject-matter-eligibility case of WILDTANGENT, INC. v. ULTRAMERCIAL, LLC. The first GVR asked the Federal Circuit to review its pro-patentability decision based upon Mayo v. Promethius. Following that, the Federal Circuit reaffirmed the subject-matter-eligibility of Ultramercial’s patent claims. Now, the Supreme Court has ordered the Federal Circuit to re-review its decision based upon the recent outcome in CLS Bank v. Alice Corp.
The petitioner (accused infringer) asked:
When is a patent’s reference to a computer, or computer-implemented service like the Internet, sufficient to make an unpatentable abstract concept patent eligible under 35 U.S.C. § 101?
Here, Ultramercial’s patent claim covers an eleven step process for “distribution of products over the internet via a facilitator.” None of the eleven steps are particularly innovative or technologically sophisticated. However, taken as a whole, they offer at least a detailed program of operation. Claim 1 is written as follows:
1. A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
a third step of providing the media product for sale at an Internet website;
a fourth step of restricting general public access to said media product;
a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;
a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;
an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;
a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and
an eleventh step of receiving payment from the sponsor of the sponsor message displayed.
John Posthumus has been instrumental making the Denver Office of the USPTO a reality – having spent more than 1,000 pro bono hours on this effort. I asked him to write a guest post to commemorate the June 30 opening. D.C.
By John Posthumus
The opening of the Rocky Mountain Regional Satellite office in Denver on June 30 marks an unprecedented and historic moment for the U.S. Patent and Trademark Office. Never in its history has the USPTO had a base of operations that extended beyond the Eastern Time zone. The USPTO has operated exclusively for more than 200 years in the Washington, D.C. area until July 2012, when the USPTO opened its first satellite office in Detroit.
While the Detroit office was a small step geographically speaking (Detroit is 525 miles from Washington, D.C.), the Denver office is a huge step toward a national presence by the USPTO. Its central U.S. location will provide unprecedented access to inventors and entrepreneurs in the western part of the country, satisfying an important Section 23 objective of the America Invents Act (AIA) – better connecting patent filers and innovators with the patent office. The Denver office is expected to have state-of-the-art video conferencing facilities available to applicants. Thus, a significant part of the U.S., and the entire Rocky Mountain region, will be able to travel to Denver to complete examiner interviews and return home the same day.
The opening of the Denver office will also enable the USPTO to recruit examiners and board judges from pools of talented individuals they cannot access in Alexandria, VA. Colorado, for example, is the second-most highly educated state in the nation, is among the top 10 for adults with degrees in science and engineering, has four major research universities, and is home to 24 federally funded research laboratories. The opening of the Denver office provides a great opportunity to recruit candidates that have recent and relevant technical and industry experience that they will bring to the examining and board judging roles. As a result, the Denver office is expected to provide better quality examinations and decrease the number of patent applications waiting for examination, and satisfy another criteria in Section 23.
The new office is also expected to improve recruitment of patent examiners, another Section 23 factor, because of Colorado’s favorable cost of living and quality of life factors. As Acting Director Michelle Lee stated recently, “In addition to creating jobs for intellectual property professionals throughout the region, the permanent Denver satellite office will be an indispensable resource for regional inventors, entrepreneurs and businesses.” The benefits of the new USPTO satellite office will extend beyond creating jobs. The opening of the office will also have a positive economic impact in the region. According to a study by the University of Colorado Leeds School of Business, the Denver-based office is expected to provide a $440 million economic impact to the region in the first five years of operation.
The Denver office also gives the USPTO an opportunity to think outside the box and presents an historic opportunity to set aside the baggage that comes from operating in one location for over 200 years. For example, the Denver satellite patent office could be used to run small-scale pilot projects in conjunction with local public/private partners, such as a one-month filing to issuance pilot or a collaborative examination by two examiners, that if successful could be scaled ultimately changing how the USPTO operates. In this regard, perhaps the most exciting prospects of the satellite offices are yet to come.
Professor Bell provides his view on “Intellectual Privileges” rather than “Intellectual Property.” Although Bell’s ideas are directed at copyright law, it does not take an inventive step to to cross them over into patent law policy.
Bell’s book fully covers the topic from his perspective: http://mercatus.org/intellectualprivilege/Intellectual-Privilege.html.
HT to Stephan Kinsella
By Jason Rantanen
Teva recently filed its merits brief in Teva v. Sandoz (previous PatentlyO discussion here and here). It’s main argument on the issue of claim construction is that claim construction involves making findings of fact and Rule 52(a)(6) of the Federal Rules of Civil Procedure states that “[f]indings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous.” In support of the first part of this argument, the brief points to determinations about the perspective offered by a person of ordinary skill in the art and the use of extrinsic evidence to resolve ambiguities; these, the brief argues, are inherently factual determinations for which deference should be given to the district court.
A key issue will be whether these types of judicial determinations are actually factual findings, or whether they are something else. Certainly reviewing courts make determinations about some types of historical evidence all the time – one need only look at Justice Breyer’s discussion of legislative history and Congressional intent in Aereo for recent example – without invoking deference. These determinations aren’t limited to “purposivists”: Justice Scalia’s originalist approach to interpreting legal statutes, for example, involves looking to how the text would have been understood at the time it was issued, something that can involve historical linguistic research. Figuring out whether the “facts” involved in claim construction are akin to something like legislative history or the historical determinations involved in an originalist approach, or instead are the type of “facts” encompassed by Rule 52 is central to the invocation of that rule. Much of Teva’s brief seeks to tackle this challenge, arguing that the facts involved in claim construction are exactly the kinds of facts that are encompassed by Rule 52.
Of these arguments, I found the most compelling to be the point that even as determinations such as the knowledge of a person of ordinary skill in the art are factual and reviewed with deference in one context (such as obviousness and enablement), they are reviewed without deference in claim construction. It will be interesting to see how Sandoz responds.
One important tension that the brief fails to resolve, however, is the key question of how deference on factfinding plays into decisions about claim construction. If the ultimate determination of the meaning of claim terms remains one of law, does that basically invite an obviousness-like determination wherein certain subsidiary issues – such as the knowledge possessed by a PHOSITA and content of extrinsic evidence – are reviewed with deference, but the reviewing court makes the final determination, weighing each of the various pieces of information, without deference? Or is it something else?
The brief does seem to indirectly offer a vision of how deference to factual findings should work, but it strikes me as leaving no place for the other side of the mongrel practice: the legal component. The vision offered by the brief appears in Part IV., on pages 53-54, where Teva argues that the Federal Circuit erred by not granting deference to the district court on the “understanding of Figure 1, of SEC technology,
and of the prosecution history.” In other words, Teva’s view of deference manifests as the lens through which the interpreter of the legal doctrine looks at not just the extrinsic evidence (the SEC technology), but also the patent document itself and the prosecution history. If this is the correct approach to deference – that the reviewing court must give deference to the district court’s interpretation of the patent document and prosecution history – it is hard for me to see anything left that isn’t entitled to deference. (Maybe the ordinary meaning of the claims themselves? But that’s “the ordinary meaning to a person of skill in the art,” so that doesn’t work.). This “lens” approach to deference seems to go too far, in my mind, and is fundamentally at odds with the way other factual findings and deference work in patent law doctrines such as nonobviousness and enablement.
The brief also challenges the various rationales for reviewing factual issues in claim construction de novo: “Markman requires it” argument, the interpretation of legal documents is a question of law argument, and the uniformity argument. It also argues that allowing de novo review of facts on appeal produces poorer decisions and is costly to the patent system, citing to the reversal rate data. (Although this latter point seems to depend heavily on how deference is actually implemented – it would seem that the de novo review of certain subsidiary elements of claim construction, alone, would have only a very marginal effect on decision quality and litigation cost).
You can download a copy of the brief here: Teva’s Opening Brief
By Jason Rantanen
While many eyes will be on the Supreme Court on Monday when it releases its decision in Hobby Lobby v. Sebelius, the term is over for patent cases. Over the past few months, the Court issued an astonishing six patent law-related opinions (almost 10% of the Court’s docket), covering ground from claim definiteness (Nautilus) to the exceptional case standard in Section 285 (Octane, Highmark) to multi-actor infringement (Limelight) to the burden of proof in noninfringement declaratory judgment actions (Medtronic) to the ever-present patentable subject matter case (Alice). Three of these opinions (Alice, Highmark, and Limelight) resolved deep intra-circuit splits at the Federal Circuit. Altogether, this term profoundly altered the landscape of patent law jurisprudence. Perhaps more important than the substance of the Court’s opinions was the change itself: through opinions such as Nautilius and Alice, the court made it clear to participants that the law of patents can be a dynamic, changing thing, an organicness that forward-thinking patent attorneys and agents – even more than litigators – will be forced to grapple with.
I’ll be talking more about this year’s developments in patent law at the Wisconsin State Bar Association’s annual Door County Intellectual Property Academy in a few weeks, and the Supreme Court will certainly take center stage. Dennis will be there as well.
For now, though, the next major event in patent law jurisprudence is likely to be the Court’s opinion in Teva v. Sandoz, in which the Petitioner posed the question:
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.
But this case is more complex than the (relatively) simple issue of deference in appellate review of claim constructions. At the trial court level, the district judge did not simply construe the claim in a way unfavorable to Sandoz, the accused infringer. Rather, the district judge rejected Sandoz’s argument that the claim term “Average Molecular Weight” was indefinite and construed the claim in Teva’s favor. On appeal the Federal Circuit reviewed the issue of claim definiteness without deference and concluded that the term was indefinite (applying it’s pre-Nautilus standard of “not amenable to construction” or “insolubly ambiguous”).
Herein lies the sticky part: If one takes the view that questions of claim definiteness and claim construction are effectively one and the same, then this case squarely presents a question about the appropriate standard of review for claim construction. This seems intuitive: both revolve around determining claim meaning.
But treating issues of claim definiteness and construction as if they are just different sides of the same coin runs into a glitch if there is a factual component: one issue (definiteness) arguably comes with a “clear and convincing” evidentiary standard while the other (claim construction) does not. (While there is a canon that claims should be interpreted to preserve their validity, it’s a weak one that only operates as a last resort. See Phillips v. AWH Corp., 415 F.3d 1303, 1327 (Fed. Cir. 2005) (“While we have acknowledged the maxim that claims should be construed to preserve their validity, we have not applied that principle broadly, and we have certainly not endorsed a regime in which validity analysis is a regular component of claim construction.”).) If different evidentiary standards are being applied to the factual components of each, then claim definiteness and claim construction must be separate issues.
If this logic is sound and claim definiteness and construction are distinct issues, then Teva v Sandoz is really only about the standard of review on the issue of claim definiteness, not about the standard of review of claim construction. But the observation about evidentiary standards notwithstanding, it seems counterintuitive to say that the question of whether “a patent’s claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty” is somehow different from how those skilled in the art would interpret the claims. And Teva’s Brief, which I’ll summarize tomorrow, treats indefiniteness and claim construction as if they were the same thing.
How, then, could the Court escape this conundrum of different evidentiary standards for what is essentially the same determination, aside from concluding both are pure issues of law, a position that would be at odds with Markman and probably Nautilus? First, the Court could conclude that indefiniteness does not implicate the clear-and-convincing evidence standard. The Court went halfway there in Nautilus, observing that the “presumption of validity does not alter the degree of clarity that §112, ¶2 demands from patent applicants,” but left open the question of whether subsidiary issues of definiteness trigger the clear-and-convincing evidence standard. A second possibility would be for the Court to implement a “clear-and-convincing” evidentiary standard for issues of fact in claim construction (although how that would work in a form other than the current pro-validity canon, I have no idea).
There are also some less-than-helpful options that would further churn up the muddy bottom of patent law. It’s entirely possible that the Court could issue an opinion solely addressing the issue of whether or not the appellate court must grant deference to district court factual findings on the issue of indefiniteness, and leave unanswered the question of whether deference is appropriate in the context of claim constructions. Or, it could avoid discussing the appropriate evidentiary standards for claim construction and indefiniteness (as it did in Nautilus), instead leaving folks to ponder whether they are the same or different.
I’ll also make the observation that after the Court granted certiorari in this case, it issued Nautilus v. Biosig, which lowered the standard for finding claims indefinite. Even if the Court were to reverse in this case – ruling that factual issues in claim construction and claim definiteness are entitled to deference – it would seem that the inevitable result would be a remand to the Federal Circuit, and then probably to the district court, to apply the new standard.
By Jason Rantanen
Today, the patent office issued new instructions (download: PTO Alice Instructions) for patent examiners to follow when examining claims for compliance with Section 101. This practice is similar to those it followed after the Court issued other substantive patent law opinions. One important component of the new instructions are that they make it clear that going forward, the PTO will be applying the Mayo v. Prometheus framework to all types of inventions:
[T]he following instructions differ from prior USPTO guidance in two ways:
1) Alice Corp. establishes that the same analysis should be used for all types of judicial exceptions, whereas prior USPTO guidance applied a different analysis to claims with abstract ideas (Bilski guidance in MPEP 2106(1I)(B)) than to claims with laws of nature (Mayo guidance in MPEP 2106.01).
2) Alice Corp. also establishes that the same analysis should be used for all categories of claims (e.g., product and process claims), whereas prior guidance applied a different analysis to product claims involving abstract ideas (relying on tangibility in MPEP 2106(Il)(A)) than to process claims (Bilski guidance).
In addition, the PTO provides a bit of guidance for determining whether a claim will fail one of the two steps. For the first step (determine whether the claim is directed to an abstract idea), the memorandum provides four examples of abstract ideas referenced in Alice:
- Fundamental economic practices;
- Certain methods of organizing human activities;
- “[A]n idea of itself; and
- Mathematical relationships/formulas
If an abstract idea is present in the claim, the examiner should proceed to the next step, determining whether any element or combination of elements in the claim sufficient to ensure that the claim amounts to significantly more than the abstract idea itself. Examples of limitations that may be sufficient to qualify as “significantly more” include:
- Improvements to another technology or technical fields;
- Improvements to the functioning of the computer itself;
- Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.
Examples of limitations that are not enough to qualify as “significantly more” include:
- Adding the words “apply it” (or an equivalent) with an abstract idea, or mere instructions to implement an abstract idea on a computer;
- Requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry.
wait until you read Aereo.
By Jason Rantanen
American Broadcasting Cos., Inc. v. Aereo, Inc. (2014) Download ABC v Aereo
This morning the Supreme Court issued the much-awaited opinion in American Broadcasting Cos. v. Aereo, in which a 6-3 majority concluded that Aereo’s subscription television service, which uses thousands of small antennas and other equipment housed in a warehouse, violates the petitioners’ exclusive rights to perform their copyrighted works publicly within the meaning of the Transmit Clause. Writing for the majority, Justice Breyer eschewed formal distinctions, instead reasoning that if it’s basically the same as a duck, it’s a duck:
In other cases involving different kinds of service or technology providers, a user’s involvement in the operation of the provider’s equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act. But the many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here. We conclude that Aereo is not just an equipment supplier and that Aereo “perform[s].”
Much of the critiques and discussion immediately following the release of the opnion focused on the difficulty in applying this “looks-like-cable-TV” rule to the vast ecosystem of current and emerging content access, distribution and dissemination technologies. These criticisms mirror points made by Justice Scalia in dissent (who used the “looks-like-cable-TV” term):
III. Guilt By Resemblence
The Court’s conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs.  That reasoning suffers from a trio of defects
(Internal citation omitted).
While Aereo unquestionably has profound implications for the technology sector generally, for patent law purposes it offers another insight into how the Judges might approach the issue of claim construction that is currently being briefed in Teva v. Sandoz. Aereo involved a question of statutory interpretation – itself undeniably a question of law. Here, the majority adopted a legislative history/legislative intent/legislative purpose that resulted in something akin to the “essence” of the statute being what was really important. The dissent would have applied a much more formal textualist approach in ascertaining its scope. It is the first of these two approaches that seems to me to be strikingly similar to how the Court has approached patent claims in recent opinions when directly confronted with substantive issues in cases such as KSR, Bilski, and Alice. If the Court does embrace a more purposivist approach to claim construction in Teva, it would be dramatically alter the landscape of patent claims even more than its decisions on substantive doctrines such as nonobviousness and patentable subject matter.
Of course, the question presented in Teva is nominally only about the question of whether deference to district courts on issues of claim construction is appropriate, not about claim construction philosophies generally. That said, it seems to me that it will be difficult for the Court to avoid interjecting its views on claim construction into whatever opinion it issues on deference.
Dennis is on vacation and said I could post so I’m running with it!
The analysis everyone suggests is right under 101 (recall I don’t think it’s an invalidity defense; not sure what impact, if any, it has on patentability) goes something like this:
Is the claim “directed to” some natural law/natural thing/abstract idea?
If so, there must be more than ‘conventional’ application of it.
Applying that to a lot of medical method claims (Ariosa v. Sequenom is discussed by others below), the problem is that, before the discovery of the natural thing/idea/law, no one knew that you could apply anything to do whatever the claim says. Nothing was “conventional” with respect to the newly discovered thing/law/idea.
By asking what’s conventional, we are importing hindsight.
Thoughts, or am I not yet awake and Dennis should come back and get this ship righted?
One last thought for those of you who think “invention” has meaning beyond 103. I think the legislative history is beyond clear, as is the statute, but here’s a committee report:“The major changes or innovations in the title consist of incorporating a requirement for invention in § 103 and the judicial doctrine of contributory infringement in § 271.”
Today continues our mini-symposium on Alice v. CLS Bank with a guest post by Jeffrey A. Lefstin, Professor at the University of California, Hastings College of the Law.
Alice Corp. marks the Supreme Court’s eighth subject-matter eligibility case since the 1952 Act. Without question, the most problematic aspect of the Supreme Court’s § 101 jurisprudence has been discerning the actual test for patent-eligibility. In Mayo v. Prometheus, the Court purported to establish a general framework for subject-matter eligibility: that to be patent-eligible, a claim must include an “inventive concept” beyond an underlying fundamental principle, such as a law of nature, natural phenomenon, or abstract idea. The Court’s omission of significant reference to Mayo in Association for Molecular Pathology raised some doubt as to whether Mayo defined a universal test for eligibility under § 101. Yet Alice Corp. appears to confirm that Mayo is a universal framework for discriminating between ineligible principles and patent-eligible applications.
Mayo’s ambiguity led to the Federal Circuit’s fracture when it heard CLS Bank en banc. Mayo suggested three possible tests for patent-eligibility, without committing definitively to any one of them: inventive application, pre-emption, and “more than just apply it.” Justice Thomas’s opinion in Alice does not expressly commit to a single interpretation of Mayo. Yet Thomas’s presentation of Mayo, his framing of the Court’s prior precedent, and his application of Mayo to Alice’s claims all indicate that Alice endorses the last aspect of Mayo: that a claim must do more than set forth a fundamental principle and add a generic instruction to “apply it.” If this interpretation is correct, then Alice may in the long run be more significant for fields such as biotechnology, where Mayo’s “inventive application” aspect has cast doubt on the patent-eligibility of many discovery-based inventions.
Mayo’s first test of patent-eligibility is a test for inventive, or non-obvious, application of a fundamental principle. Drawing from Flook, where Justice Stevens wrote that “conventional and obvious” post-solution activity cannot transform an unpatentable principle into a patentable process, and Funk Brothers, where Justice Douglas held that a composition of matter was not patentable because the patentee’s application was “a simple step” once his discovery was assumed away, Justice Breyer invalidated Prometheus’s claims because the steps of the claimed method beyond the underlying natural law were merely “well-understood, routine, conventional activity already engaged in by the scientific community.” Breyer contrasted those steps with the additional steps claimed in Diamond v. Diehr, which in context were not “obvious, already in use, or purely conventional.” The Mayo Court drew support for this test from the Court of Exchequer’s 1843 opinion in Neilson v. Harford, where the patent was said to have been sustained because the patentee implemented his newly discovered principle “in an inventive way.”* This view of Mayo – that obvious applications of fundamental principles are not patent-eligible – was the one taken by the Northern District of California in the Ariosa v. Sequenom litigation, where Judge Ilston invalidated Sequenom’s claims largely because once Sequenom’s discovery of cell-free fetal DNA in the maternal bloodstream was assumed to be known, the application in the form of a test for fetal abnormalities required only routine and well-known methods of DNA amplification.
The second test of eligibility suggested by Mayo is a test of pre-emption. The Court explained that subject-matter exclusions were grounded in pre-emption, echoing Benson’s concern that patents should not monopolize “the basic tools of scientific and technological work.” Mayo seemed to state that pre-emption was analytically secondary to categorical exclusion: the concern that Prometheus’s claims would tie up too much future use of the underlying natural laws “simply reinforces our conclusion” that the claimed processes were not patent-eligible. Yet Breyer’s opinion intertwined pre-emption with inventive application as a criterion for patent-eligibility: Diehr was described as a case where the patentee had not sought to pre-empt the use of the Arrhenius equation. While the patentee in Flook had failed to “limit the claim to a particular application,” the supposedly unconventional steps in Neilson had “confined the claims to a particular, useful application of the principle.” This interpretation of Mayo was followed by the majority of the Federal Circuit when it heard CLS Bank en banc. Both Judge Rader and Judge Lourie rejected the notion that Mayo’s “inventive concept” demanded “inventiveness” in the sense of a non-obvious application. And while they disagreed on the proper framework, both Judge Lourie and Judge Rader founded their analyses on the question of whether Alice’s claims would pre-empt every practical application of the underlying abstract idea.
But Mayo suggests a third test beyond inventive application or pre-emption: that a claim must represent more than a mere direction to apply a fundamental principle. According to Justice Breyer, one could not transform a law of nature into a patent-eligible application by simply disclosing the law of nature, and adding the words “apply it;” Einstein or Archimedes, for example, could not have patented their famous discoveries by merely appending an instruction to apply them. This aspect of Mayo has received the least attention in subsequent cases and commentary. And yet in Justice Thomas’s opinion in Alice, it is this aspect of Mayo that becomes the core of the doctrine.
In Alice’s framework, once it has been determined that a claim is drawn to an abstract idea, ‘step two’ of the Mayo test is to determine whether it contains an “inventive concept” sufficient to transform the claim into a patent-eligible application. But in contrast to Flook and Mayo, “inventive concept” in Alice bears little trace of “inventiveness.” Justice Thomas does describe the computer implementation in Alice as “conventional.” But nowhere does he label it non-inventive, and the word obvious is conspicuously lacking from the opinion. And while Alice hardly addresses the Federal Circuit’s opinions at all, it may be significant that Thomas never contradicts Judge Lourie’s and Judge Rader’s rejection of “inventiveness” as an aspect of “inventive concept” in their CLS Bank opinions.
The contrast between Alice and Mayo is most apparent in their treatment of Diehr. In Mayo, the claims in Diehr represented an inventive application of the Arrhenius equation, and were not “obvious, already in use, or purely conventional.” But in Alice, the claims in Diehr were sustained not because they were non-obvious, but because “they improved an existing technological process,” and achieved a result the industry had not been able to obtain. Likewise, in Mayo, the failing of the Flook claims was that the steps of the claim were well-known, conventional or obvious; in Alice, while Thomas notes that the Flook implementation was purely conventional, Flook primarily stands for the proposition that limitation to a particular technological environment does not render an abstract idea patent eligible.
As for pre-emption, which intertwined so closely with inventive application in Mayo, is hardly present for ‘Mayo step two’ in Alice. Again the characterization of precedent is telling: in Mayo, the claim in Benson was vulnerable because it was “overly broad.” In Alice, Benson requires a “new and useful” – but not inventive – application of an idea for patent eligibility, but the lesson of Benson is that simply implementing a principle on a computer is not a patentable application.
For Justice Thomas, the ‘step two’ inquiry involves neither inventiveness nor pre-emption, but revolves around Mayo’s proscription against “more than just apply it.” Alice follows Flook and Mayo in holding that “conventional” activity cannot transform a principle into a patent-eligible application, but in Alice “conventional” seems to connote generic more than it connotes obvious. Thus Thomas introduces ‘step two,’ the search for an inventive concept, by invoking the third aspect of Mayo: patent-eligible application requires more than a statement of the abstract ideas plus the words ‘apply it.’ And while Thomas notes that the measuring steps in Mayo were “well known in the art,” he again quotes the ‘more than apply it’ language from Mayo to establish that those steps adding nothing of significance to the underlying natural law.
Most significantly for the Alice analysis, Thomas ends his summary of Mayo by quoting language that played little role in Mayo itself: it was not that conventional steps cannot supply an ‘inventive concept,’ but “conventional steps, specified at a high level of generality” (emphasis added) could not supply an inventive concept. For it is genericness, not lack of invention or pre-emption, that dominates the remainder of Thomas’s opinion. His summary of the Court’s § 101 jurisprudence touches upon the notion of pre-emption, but emphasizes above all else the requirement of “more than generic” application:
These cases demonstrate that the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while adding the words ‘apply it’” is not enough for patent eligibility. Nor is limiting the use of an abstract idea “‘to a particular technological environment.’ ” Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Thus, if a patent’s recitation of a computer amounts to a mere instruction to “implemen[t]” an abstract idea “on . . . a computer,” that addition cannot impart patent eligibility. This conclusion accords with the pre- emption concern that undergirds our §101 jurisprudence. Given the ubiquity of computers, wholly generic computer implementation is not generally the sort of “additional featur[e]” that provides any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.”
Similarly, Alice’s application of the test to the claims in suit emphasizes “more than apply it” and generic application; the question for Justice Thomas “is whether the claims here do more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” Thomas does describe the functions performed by the computer as “routine, conventional, and well-known in the field,” but his characterization serves to support the conclusion that the claimed steps do nothing more than define generic computer implementation. And taken as a whole, the claims at issue fail not because they lack inventiveness, nor because they reach too broadly, but because they amount to “’nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.
So Alice may fail to provide clear boundaries for the eligibility of computer-implemented inventions. But it could clarify something more important. As I have described in a recent paper, the actual test for patent-eligibility in cases like Neilson v. Harford, and in American jurisprudence for the next century, was a requirement that the patentee claim a specific mode of application of a fundamental principle, rather than a generic claim to the principle as applied. If Alice does indeed endorse the third aspect of Mayo, then the test for patent-eligibility is not a question of non-obvious application, nor a question of pre-emption, but a question of whether the claim does significantly more than state a fundamental principle coupled with an instruction to “apply it.” Embracing that aspect of Mayo could signal a return to the historical standard of patent-eligibility.
*As I discussed in a previous post, the Court’s reliance on Neilson in Mayo and Flook was entirely misplaced. The patent in Neilson was sustained not because the patentee’s implementation was inventive, but precisely because it was entirely conventional and well-known in the art.
The Supreme Court’s Alice Decision on Patent Eligibility of Computer-Implemented Inventions: Finding an Oasis In the Desert
Guest Post by Donald S Chisum, Director of the Chisum Patent Academy and author of Chisum on Patents.
In Alice (June 19, 2014), the Supreme Court held that the two step framework for determining the Section 101 patent-eligibility of a patent claim, which the Court previously articulated in the 2012 Mayo decision on the patentability of a diagnostic method, applied to computer-implemented inventions. Thus, one determines: (1) does the claim recite an ineligible concept (natural phenomena, natural law or abstract idea), and (2) if so, does the claim recite sufficient additional elements to make the claim one to an application of the concept, rather than to the concept itself?
On Mayo step one, Alice held that the claims at issue were to an abstract idea, an “intermediated settlement.” On step two, it held that “merely requiring generic computer implementation” did not “transform that abstract idea into a patent-eligible invention.” Thus, claims to a method, a computer system configured to carry out the method, and a computer-readable medium containing program code for performing the method all fell invalid under Section 101.
I considered but then reconsidered entitling this comment “Alice in Wonderland.” For, indeed, the Supreme Court’s chain of decisions creating a judicial exception to the statute defining patent eligible subject matter (35 U.S.C. § 101) and holding unpatentable claims to algorithms and abstract ideas, stretching from Benson in 1972 to Alice in 2014, is wondrous. But I will not here review the “big picture,” including the fundamental flaws in the chain; I and others have already done that.
Instead, my focus is on the “small picture,” the every day problem: does the Alice opinion provide some meaningful guidance to fill the near void left by the Court in its prior Mayo and Bilski decisions? Those decisions provided no definition of an “abstract idea” (or “law of nature”) and little direction on, precisely, how much “more” was required for the transformation.
The Court’s fuzz left stranded in a desert of uncertainty an array of feet-on-the-ground decision makers, from inventors to rights owners to patent professionals drafting and amending claims to examiners to PTO officials to licensing negotiators to litigators to district court judges to federal circuit judges to treatise authors.
Positive news. At least on first analysis of Alice, I find some additional guidance, perhaps enough to lead us toward an oasis in the desert.
In particular, the Alice opinion supports the following proposition: a novel and unobvious solution to a technical problem is not an “abstract idea,” and a claim drawn to such a solution, even if broad, is not subject to the Mayo framework (though, of course, it is subject to scrutiny for disclosure support).
The Alice opinion does not state the proposition directly. The Court expressly indicated that it did not need to “delimit the precise contours of the `abstract ideas’ category” because the concept at issue was so similar to that in Bilski. But the proposition is fairly inferred from the Court’s rejection of the patent owner’s argument that the intermediated settlement concept in its claims was not an “abstract idea” within the implicit exception to Section 101 and from its novel description of the prior Diehr decision.
Based on prior Supreme Court cases and language in Mayo, the patent owner argued that the definition of “abstract ideas” for Section 101 was: “preexisting, fundamental truths that exist in principle apart from any human action.” The Court disagreed because that definition did not fit Bilski, which held that risk hedging was an abstract idea. Hedging was a “longstanding commercial practice” and a “method of organizing human activity,” but not a “truth” about the natural world that “always existed.” Hedging and the similar concept of intermediated settlement were abstract ideas because they were “fundamental economic practices.”
Thus, concepts that constitute abstracts ideas fall into two categories. First are mathematical equations, mathematical formulae and algorithms (at least ones of a mathematical nature, and, I would emphasize, not all algorithms are mathematical or numerical). Second are methods of “organizing human activity,” at least if they constitute a fundamental economic practice “long prevalent in commerce.”
What’s left out of the “abstract idea” category? The Court in Alice declined to say explicitly, but there are hints in its discussion of the 1981 Diehr decision in connection with the second Mayo step. The Court noted that Diehr had held a computer-implemented process for curing rubber was patent eligible, not because it involved a computer but rather because “it used that equation in a process designed to solve a technological problem in `conventional industry practice.” It reiterated: “the claims in Diehr were patent eligible because they improved an existing technological process, not because they were implemented on a computer.” In contrast, the claims in Alice did not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.”
The Court had discussed and distinguished the Diehr case before, in both Bilski and Mayo, but never on the basis that Diehr entailed a technological improvement. Thus, the Alice discussion of Diehr in terms of a solution to a technical problem is important new ground.
Hence there are strong grounds for the proposition that a patent claim reaches a safe harbor from Section 101 abstract idea scrutiny, including the Mayo second question for an “inventive concept,” if the claimant establishes that the claim is directed to a solution of a technological problem. This definition of abstract idea as excluding applied technology accommodates the case law treating pure mathematical statements, economics and finance, and schemes of a non-technical character (“methods of organizing human activity”) as “abstract ideas” that must be include additional elements to achieve patent eligibility (Mayo step two).
Is this shift in focus to “technological” an oasis of greater clarity? No doubt there will be arguments about what is technological and what is not. But there are at least three advantages to the verbal change. First, technology is the historic core of the patent system, especially given the Constitutional phrase “useful Arts,” which is 18th century terminology for “technology” in 21st century terminology. Thus, an inquiry about the technological is much less of an alien intruder than prior Supreme Court language about the abstract idea exception to Section 101. Second, evaluating the Section 101 abstract idea prohibition in terms of technological versus non-technological conforms to the language Congress used in Section 18 of the America Invents Act in setting up special PTO review of business method patents. Finally, a technology test aligns the United States standard with the language used in Europe and elsewhere to address exceptions to patent eligible subject matter.