Maier & Maier Secures IPR Victory for Foxrun Development before the PTAB

Maier & Maier

The internationally recognized Maier & Maier PLLC law firm won a major IPR victory for Foxrun Development securing a non-institution decision from the PTAB, overcoming 4 challenges to their network security patent asserted by Terralink in IPR2017-02102.

The patent reviewed (9,460,319 B1) relates to enhancing computer network security by physically blocking unused computer ports with “linear actuators” and a “securing member”. Terralink challenged the patent on two counts of obviousness, one count of anticipation and one count under 35 U.S.C. § 112(f) by referencing two patent applications (US 2016/0294098 and US 2015/0020189 A1), which also related to physically blocking unused computer ports.

In response to the September 13, 2017 Petition by Terralink, Maier & Maier argued that the § 112(f) ground was invalid for an IPR proceeding, while the other three grounds failed to meet the statutory standard. As the PTAB decision explained, Terralink neglected to explain “where each element of the claim is found in the prior art patents or printed publications relied upon” by failing to identify both corresponding components and corresponding functionality.

Maier & Maier successfully argued that none of the asserted grounds for unpatentability demonstrated a reasonable likelihood of success as discussed above, and obtained the PTAB’s non-institution decision for Foxrun Developments on March 6, 2018-less than six months after the petition was filed.

Federal Circuit Rules on Patent Term Adjustment (PTA) in PCT Cases

Maier & Maier

In Actelion Pharms., Inc. v. Matal, the USPTO granted a Patent Term Adjustment (PTA) of 40 days for Actelion’s patent relating to pyridine derivatives.  The patent at issue was a national stage application filed under the Patent Cooperation Treaty.  Actelion contended that it should have been entitled to either 41 days from the 30-month deadline for filing or 45 days from the application’s actual filing date.

When filing the application, Actelion did not mark the check box on the USPTO form to expressly request early commencement of the national stage examination.  However, Actelion did submit a statement in a Preliminary Amendment that “Applicant earnestly solicits early examination and allowance of these claims.”  The USPTO determined that this statement did not comply with 35 U.S.C. § 371(f), which requires an express request for early commencement.  The Federal Circuit affirmed the USPTO determination, indicating that it is possible to request early commencement without using the optional USPTO form, but that Actelion’s statement failed to expressly request early commencement, particularly since it failed to even referenced § 371(f).

In the alternative, Actelion argued that even if the PTA was calculated from the 30-month deadline, it should have resulted in 41 days rather than 40 days.  The 30-month deadline happened to fall on a federal holiday and therefore examination did not commence until the following day.  Actelion argued that the federal holiday should have been included in the PTA calculation from the 30-month deadline, which would have resulted in 41 days rather than 40 days.  The Federal Circuit agreed with the USPTO calculation of 40 days because PCT regulations prohibited national stage commencement on a federal holiday.  Therefore, the additional day was not “undue delay” caused by the PTO, which would warrant PTA.

The USPTO determination of 40 days was affirmed.  Based on this ruling, it is advisable to ensure that § 371(f) is expressly invoked or the appropriate box is checked when requesting to commence national stage examination at an earlier date.

Federal Circuit Extends §101 to Cover Graphical User Interfaces in Core Wireless v. LG

Maier & Maier

In Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc., 2016-2684, 2017-1922 (Fed. Cir. Jan. 23, 2018), a panel of the U.S. Court of Appeals for the Federal Circuit (Moore, O’Malley, Wallach) upheld patent claims directed to a graphical user interface under 35 U.S.C. §101, concluding that the claims were not directed to a patent-ineligible abstract idea.

Core Wireless brought an action against LG in the Eastern District of Texas alleging infringement of U.S. Patent Nos. 8,713,476 and 8,434,020, having claims dealing with an application summary screen that is displayed while the one or more applications summarized are in an un-launched state. The District Court denied summary judgment based on 35 U.S.C. §101, and LG appealed.

The Federal Circuit began its analysis by determining that the claims of the two patents in question were directed to an “improved user interface,” a non-abstract idea, rather than the abstract idea of an index. Specifically, these claims were “directed to a particular manner of summarizing and presenting information in electronic devices.” For example, claim 1 required “an application summary that can be reached directly from the menu” and further limiting the application summary (such as having the application summary list a limited set of data with each of the data in the list being selectable to launch the respective application and enable the selected data to be seen within the respective application) as well as a particular manner of accessing the summary window and certain other limitations.

The Court analogized the case to other cases in which a computer-implemented claim was found eligible, such as Enfish, LLC v. Microsoft Corp., Thales Visionix Inc. v. U.S., Visual Memory LLC v. NVIDIA Corp., and Finjan, Inc. v. Blue Coat Systems, Inc., specifically noting that the claims in each of these cases were found to improve a computer or technological system, and were thus not abstract. (Just like in many of these cases, the Court looked to the patent specifications in order to determine what aspects of a computer the claims were directed toward improving.)

Once the §101 matter was resolved, the Court also heard the issue of non-infringement. This turned, in large part, on the Court’s interpretation of the phrase “unlaunched state” in the claims, which LG had (unsuccessfully) argued in the District Court should refer to a situation in which the applications were “not running” rather than “not displayed.” LG argued that it would not infringe if the applications were required to be “not running.” The court (minus Judge Wallach, who dissented on this point) sided with the District Court, finding that the District Court correctly construed “unlaunched state” as “not displayed.”

Importantly, the claims in this case were considered to be an improvement to computer technology because they improved the ability of a user to use the computer. In order to use prior art systems, users had to “drill down through many layers to get to desired data or functionality [which] could seem slow, complex and difficult to learn, particularly to novice users,” while the claimed invention, by contrast, was much more user-friendly. This effectively adds “user-friendliness” or “usability” to the list of innovations which can be an improvement to computer technology, significantly expanding the list of patent-eligible subject matter.

It has also historically been a little unclear as to how graphical user interface designs can be protected by intellectual property rights. There is a circuit split between the Ninth Circuit and other circuits as to whether GUIs are copyrightable subject matter, and past Federal Circuit jurisprudence as to their patentability has come down on both sides of the line. However, the vast majority of cases (such as, for example, Intellectual Ventures I LLC v. Erie Indemnity Co., Intellectual Ventures I LLC v. Capital One Bank (USA), and Internet Patents Corp. v. Active Network, Inc.) have found GUIs to be ineligible, while the one case that upheld a GUI patent claim (Trading Technologies Int’l v. CQG Inc) was a non-precedential opinion that dealt with an extremely detailed claim. This case provides applicants with a clear model to follow for future applications on interface technology or any similar technology.

IPR Time-Bar Institution Decision Is Appealable

Maier & Maier

In Wi-Fi One, LLC v. Broadcom Corp., 15-1944 – 2018-01-08, the Federal Circuit reviewed whether an inter partes review (IPR) Institution Decision can be appealed based on a time-bar under 35 U.S.C. § 315(b).  Sitting en banc, the Federal Circuit ruled Institution Decisions made under 35 U.S.C. § 315(b) are appealable.

35 U.S.C. § 315(b) states “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

In 2010, the owner of the patents at issue, Ericsson, filed a complaint against three defendants in the Eastern District of Texas.  Broadcom was not a named defendant.  Ericsson prevailed on the infringement claims.  In 2013, Broadcom filed three separate petitions with the Patent Trial and Appeal Board (PTAB) for inter partes review (IPR) against the individual patents at issue.  Wi-Fi One, LLC acquired the patents at issue from Ericsson while the IPRs were pending.  Wi-Fi argued that Broadcom was time-barred from filing the IPRs because Broadcom was in privity with the defendants of the previous lawsuit filed more than 1 year prior.  Wi-Fi filed a motion with the PTAB seeking indemnity agreements, defense agreements, payments, and communications as evidence of such privity.  The PTAB denied Wi-Fi’s motion, instituted the IPR proceedings, and found the claims unpatentable.

Wi-Fi One appealed the Final Written Decisions to the Federal Circuit including arguments that the PTAB’s time-bar determination be overruled.  On appeal, the Federal Circuit affirmed the Decisions relying precedent from Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652, 658 (Fed. Cir. 2015), which ruled § 315(b) time-bar determinations are final and nonappealable under 35 USC § 314(d).

Despite this ruling, Wi-Fi again sought relief by petitioning for a rehearing en banc.  This petition was granted.

On January 8, 2018, the Federal Circuit, sitting en banc, ruled that PTAB institution decisions made based the statutory timing provisions of 35 U.S.C. § 315(b) of the America Invents Act are appealable.  In the majority Opinion, Judge Reyna emphasized the “strong presumption” for judicial review, noting “[i]n view of this strong presumption, we will abdicated judicial review only when Congress provides a ‘clear and convincing’ indication that it intends to prohibit review.” Wi-Fi One, LLC v. Broadcom Corp., 15-1944 – 2018-01-08 (citing Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131, at 2140 (2016)).

35 U.S.C. § 314(d) states “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.”  The en banc Federal Circuit determined the natural reading of “under this section” limits its reach to institution determinations made under § 314.  Since the time-bar provision is found in section 315(b) of the statute and not § 314, the en banc Federal Circuit ruled that 35 U.S.C. § 314(d) did not apply and consequently the institution decision was appealable.  This decision overruled the prior Federal Circuit holding in Achates.

Oral Arguments in Oil States Show a Divided Supreme Court

Maier & Maier

On November 27, 2017, the Supreme Court of the United States heard oral arguments in Oil Sates Energy Services, LLC v. Greene’s Energy Group, LLC. This much anticipated case is set to determine whether inter partes review proceedings at the United States Patent and Trademark Office (USPTO) Patent Trial and Appeal Board (PTAB) violate the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
Over 50 amicus briefs were filed leading up to oral arguments in the widely anticipated and heavily scrutinized case.  The amicus briefs showed a relatively even split in support for the positions of the Petitioner and the Respondent.  Similarly, there appeared to be a split among the Supreme Court Justices during oral arguments.  The Justices asked tough questions of all parties and it will be interesting to see how they ultimately rule.
A large portion of the questions directed to the Petitioner, Oil States, centered around whether ex parte reexam and inter partes reexam proceedings are constitutional, and, if so, how inter partes review is distinguishable.  Counsel for Oil States conceded that ex parte reexam and inter partes reexam are constitutional, calling out that those proceedings are examinational and not adjudicational in nature.  In other words, those proceedings are between the USPTO and the Patent Owner, whereas inter partes review proceedings are between two private parties.
Questions for the Respondent, Greene’s Energy, included a focus on due process, whether patents are a public or private right, and whether a patent owner’s rights could ever vest due to reliance on the patent’s presumed validity.  Lastly, counsel on behalf of the federal government faced questions on the USPTO’s ability to decide infringement and concerns of panel stacking at the USPTO.
While it is dangerous to speculate on the ultimate ruling based merely on oral arguments, it does appear unlikely that the Court will rule unanimously.

Federal Circuit Opens the Door for IPR Amendments

Maier & Maier

In Aqua Products, Inc. v. Matal, No. 2015-1177 (Fed. Cir. Oct. 4, 2017), an en banc Federal Circuit determined that it was improper for the Patent Trial and Appeal Board (PTAB) to place the burden of establishing the patentability of mid-IPR claim amendments on the patent holder.  Instead, the ruling determined that the burden should be placed on the petitioner to prove any amended claims are unpatentable.
Previous panels of the Federal Circuit had held that, if the patent owner in an inter partes review proceeding (IPR) wanted to amend the claims of the patent, the patent owner was required to show that the amended claims would be patentable over the prior art.
The en banc Federal Circuit in Aqua Products instead held that the AIA’s statutory language in 35 USC §316(e), which places the burden of proving a proposition of unpatentability by a preponderance of the evidence onto the petitioner in an IPR case, would likewise extend to claim amendments. While the en banc court produced five different opinions, a majority of judges held that the statute that establishes the evidentiary standard for IPRs, 35 U.S.C. § 316(e), was ambiguous with regard to whether the burden of persuasion of establishing the unpatentability of substitute claims should be on the petitioner. As such, the court was required to reach step two of Chevron. From this, the court reached two legal conclusions: first, that the PTO has not adopted a rule that is entitled to deference that would place the burden of persuasion on the patent owner, and, second, that in the absence of such a rule entitled to deference, the PTO was not entitled to place that burden on the patent owner.
However, even though this decision is likely to result in many more patents being able to survive the inter partes review process in some form or another, it is unlikely to be a permanent solution. The en banc decision is narrow and makes clear that the Patent Office would have the ability to again place the burden of persuasion for claim amendments back on the patent owner. The Federal Circuit noted that, because a majority of the judges in the en banc proceeding only overturned the PTO’s present amendment practice because they believed that the statute was ambiguous with regard to amendments, if an official interpretation of the statute was made by the Director of the Patent and Trademark office, the court would be required to give deference to it under the Chevron standard. However, to do this, the USPTO would have to first go through proper notice and comment stages for such rule-making.
There are also certain downsides to filing claim amendments for the patent owner. Any amended claim will likely be subject to “intervening rights,” where the change in scope of the claim restricts its applicability to past or present infringement. Because many if not most patents in IPR proceedings will also be involved in concurrent district court litigation, if an IPR can be used to force the patent owner to make an amendment to the asserted claims, the litigation may not be able to continue.

Federal Circuit Clarifies How Venue Under TC Heartland Will Be Applied

Maier & Maier

In In re Cray Inc., No. 2017-129 (Fed. Cir. Sept. 21, 2017) the Federal Circuit issued a decision clarifying the Supreme Court’s ruling in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017). This Supreme Court case had rejected long-standing patent venue precedent, clarifying that, for the purposes of the patent venue statute, a domestic corporation “resides” only in its state of incorporation. As such, a patent plaintiff is restricted to suing a domestic corporate defendant in its state of incorporation, or in a judicial district where the defendant allegedly has committed acts of infringement and has a “regular and established place of business”.

In the district court decision below, Raytheon Co. v. Cray, Inc., No. 2:15-cv-01554-JRG, 2017 WL 2813896 (E.D. Tex. June 29, 2017), Judge Gilstrap of the Eastern District of Texas had outlined a four-factor test for whether the defendant had a “regular and established place of business” in a district, requiring consideration of the following four factors:

(1) The extent to which a defendant has a physical presence in the district, including but not limited to property, inventory, infrastructure, or people.

(2) The extent to which a defendant represents, internally or externally, that it has a presence in the district.

(3) The extent to which a defendant derives benefits from its presence in the district, including but not limited to sales revenue.

(4) The extent to which a defendant interacts in a targeted way with existing or potential customers, consumers, users, or entities within a district, including but not limited to through localized customer support, ongoing contractual relationships, or targeted marketing efforts.

Applying this test, Judge Gilstrap found that venue was proper over the defendant, Cray, in the Eastern District, based on the fact that two sales employees of Cray worked from their homes within the district.

The Federal Circuit somewhat unsurprisingly overturned this determination, holding that venue was improper and the four-factor test was “not sufficiently tethered to [the] statutory language” and thus “fail[ed] to inform each of the necessary requirements of the statute.” Instead, the Federal Circuit set forth its own venue factors under TC Heartland, requiring that each element of a three-prong test be met before venue would be proper. Specifically:

“(1) there must be a physical place in the district;” (that is, there must be some physical, geographical location within the district in which the business of the defendant is carried out)

“(2) it must be a regular and established place of business;” (that is, business must be conducted in more than a sporadic fashion) and

“(3) it must be the place of the defendant” (that is, the defendant corporation rather than a mere employee of the defendant must operate or exercise control over that location).

Applying this test, the Federal Circuit found that the factors were not met, and an employee working from home on their own does not sufficiently “establish or ratify” the place of business as being a place of business of the defendant corporation.

Tribal Sovereign Immunity: Defense Against Inter Partes Review

Maier & Maier

On September 8, 2017, Allergan PLC (“Allergan”), a global pharmaceutical company, publicly announced the assignment of all Orange Book-listed patents for its dry-eye drug RESTASIS® to the Saint Regis Mohawk Tribe (“Tribe”) in upstate New York. In a unified statement about the transaction, the Tribe Council stated, “This is a viable and sound opportunity for the Saint Regis Mohawk Tribe to enter into the patent, technology and research sector as part of our overall economic diversification strategy.” Under the terms of the agreement, Allergan retains an exclusive license in the patents related to the product, while the Tribe receives an initial payment of $13.75 million and up to $15 million in annual royalties for the life of the patents. The patents are set to expire on August 27, 2024.

Allergan’s Chief Legal Officer, Bob Bailey, stated, “The Saint Regis Mohawk Tribe and its counsel approached Allergan with a sophisticated opportunity to strengthen the defense of our RESTASIS® intellectual property…” With the unorthodox transfer of ownership, Allergan aims to shield the RESTASIS patents from invalidity challenges at the Patent Trial and Appeals Board (“PTAB”) by asserting the Tribe’s sovereign immunity. In fact, on September 22, 2017, the Tribe did just that – filing a Motion to Dismiss the IPR proceedings for lack of jurisdiction based on tribal sovereign immunity.

Inter Partes review (“IPR”) is an adjudicatory proceeding conducted by the Patent Trial and Appeals Board (“PTAB”) in which a petitioner can challenge the validity of any issued patent.[1] The proceeding became an available vehicle for post-grant opposition of patents one year after the enactment of the Leahy-Smith America Invents Act in 2011. An IPR proceeding is initiated by the filing of a petition requesting to cancel as unpatentable one or more claims of the patent in dispute.[2] While there is no time limit for requesting an IPR during the life of a patent, certain limitations may bar a party from utilizing the process. For instance, under 35 USC §315 (b), a party cannot file a petition more than one year after the date on which “the petitioner is served with a complaint alleging infringement of the patent.”[3] Furthermore, a party is barred from filing a petition if “before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.”[4] Congress implemented both of these statutory bars to avoid the redundant and costly expenses of parallel USPTO and district court proceedings.[5]

On June 3, 2016, Mylan Pharmaceuticals Inc. petitioned for an IPR of U.S. Patent 8,685,930, then owned by Allergan, Inc., covering RESTASIS. The PTAB rendered a Decision to institute IPR on December 8, 2016. Mylan was later joined by Teva Pharmaceuticals USA, Inc. and Akorn Inc. (additional competitor generic drug manufacturers) in the IPR proceeding.

On September 8, 2017, Allergan filed a Patent Owner’s Updated Mandatory Notices to inform the PTAB that the Saint Regis Mohawk Tribe (“Tribe”) had become a real party-in-interest based on an Assignment. In the Patent Owner’s Updated Mandatory Notices, the Tribe made a special appearance to request the PTAB to stay all proceedings in the IPR pending resolution of the Tribe’s motion to dismiss the IPR based on sovereign immunity.

As a federally recognized, sovereign Indian Tribe, the Tribe asserts inherent sovereign immunity.[6]  Sovereign immunity is codified in the Eleventh Amendment to the U.S. Constitution, providing “Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” The broad doctrine prohibits actions against foreign states in federal courts and administrative tribunals. Legal precedent also favors a successful defense.[7]

On September 19, 2017, the PTAB rendered an Order concluding that “briefing on the issue of Tribe’s alleged tribal sovereign immunity from these proceedings is warranted.” The Order authorized the Tribe to file a motion to terminate the IPR on the basis of sovereign immunity and the petitioners to file an opposition to the motion.

[1] See 35 U.S.C. §311.

[2] Id. Patentability of claims may only be contested on grounds under 35 U.S.C. §102 or §103, and only on the basis of prior art consisting of patents or printed publications. Id. Additionally, a petition may only be filed after the later of either nine months after the grant of the patent or the termination of a post-grant review proceeding. Id.

[3] 35 USC §315 (b)

[4] 35 USC 315(a)(1). Notice, however, that this provision does not bar a petitioner from filing both an IPR and a declaratory judgment action in federal court on the same day.

[5] See Rules of Practice for Trials Before the Patent Trial and Appeal Board, 77 Fed. Reg. 48,663 (Aug. 14, 2012).

[6] See Motion to Dismiss

[7] See Covidien LP v. University of Florida Research Foundation Incorporated; Neochord, Inc. v. University of Maryland Baltimore; Reactive Surfaces Ltd., LLP v. Toyota Motor Corporation

Federal Agencies Have Standing to File CBM

Maier & Maier

In Return Mail, Inc. v. USPS, 16-1502, the Federal Circuit ruled that the United States Postal Service had standing to challenge Return Mail’s patent claims in a Covered Business Method proceeding (CBM), despite not being sued for patent infringement under the Patent Act.  Under 37 CFR 42.302, a petitioner may not file to institute covered business method review, unless the petitioner, real party in interest, or a privy of the petitioner has been sued for infringement of the patent or has been charged with infringement under the patent.  Being “charged with infringement” is defined as a real and substantial controversy regarding infringement, such that the petitioner would have standing to bring a declaratory judgment action.
Return Mail sued the USPS under 28 U.S.C. § 1498(a), a provision providing a cause of action against the federal government when a patented invention is used or manufactured by or for the United States without a license or right do so.  The Federal Circuit ruled that the claim under 28 U.S.C. § 1498(a) qualified as a suit for infringement for purposes of standing.  The opinion noted that infringement is a prerequisite to § 1498(a) liability.
The CBM raised other concerns regarding estoppel, since the current CBM estoppel provision only applies to petitioners litigating in district court or the ITC, not the United States Court of Federal Claims, where a claim under § 1498(a) is litigated.  However, the Federal Circuit indicated that this concern should be addressed by Congress, not the courts.
On review, the Patent Trial and Appeal Board found Return Mail’s claims covering methods of processing undeliverable mail items to be patent-ineligible.

Iancu Nominated for USPTO Director

Maier & Maier

It was announced on Friday, August 25, 2017, that Andrei Iancu has been nominated for Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).   Iancu will replace Joseph Matal, who has been serving as interim Director since Michelle Lee’s resignation in June.

Andrei Iancu comes from a successful career in private practice, where he currently serves as managing partner of Irell & Manella LLP.  Iancu is also currently an adjunct professor at UCLA School of Law. He has handled all aspects of intellectual property, including prosecution and litigation.  His primary focus has been intellectual property litigation, where he has extensive experience representing both patent owners and alleged infringers in Federal Courts and in post-grant proceedings at the USPTO.  In addition to his representative matters, Iancu has been recognized for his publications, including several on the patent eligibility of software.

Some members of the IP community are touting his experience representing patent owners against large technology companies as reflecting a pro-patent ideology.  Some of his more notable casework includes the successful representation of TiVO Corporation enforcing patent rights against tech giants including AT&T, Motorola, Microsoft, Cisco, and EchoStar.  The cases led to over $1.5 billion in payments to TiVo.  Iancu has also successfully represented defendants of patent infringement claims, such as Ariosa Diagnostics, Inc. in Ariosa Diagnostics, Inc. v. Sequenom, Inc, resulting in cancellation of Sequenom’s patent as an ineligible natural phenomenon under 35 U.S.C. 101.

The nomination of Andrei Iancu, ends a long period of speculation over the new Administration’s plans for the USPTO, which were amplified by Michelle Lee’s resignation as Director in June.  However, the confirmation process is likely to endure for several months to come.