Fifth Circuit Ruling May Impact Venue Transfer for Patent Cases in the Western District of Texas

In recent years the Western District of Texas has become an increasingly popular destination for patent litigation, in large part due to the litigant friendly rules propagated by Judge Albright. The Western District of Texas (as well as the Eastern District of Texas, another popular district for patent litigation) is part of the 5th Circuit.

Where venue is proper Defendants have limited options for changing to a different location, one way of doing so is through venue provision 28 U.S.C. 1404(a), which allows for change of venue “for the convenience of parties and witnesses.” However, changing for convenience is not given as a matter of right, and the district judge overseeing the case has significant discretion in determining whether the transfer is allowed. How much discretion the district judge has is a matter of some debate among the district courts, and mandamus petitions for venue cases are not commonly taken up by the 5th circuit. However, the 5th circuit did recently take just such a case in re Planned Parenthood Fedn. On Am., Inc. 52 F.4th 625 (5th Cir. 2022).

The Planned Parenthood case was originally filed in Amarillo (N.D.Tex.), and Planned Parenthood moved for a transfer of venue to Austin (W.D.Tex) as a much more convenient forum. The district court denied the motion and planned parenthood filed a mandamus petition.

The circuit court further denied the petition, citing several grounds. Of particular note the court frequently hit on the broad discretion given to the district court in deciding whether to grant a transfer for convenient venue, for example the court opened by stating “we have often said that a writ of mandamus is an ‘extraordinary remedy’ reserved for ‘extraordinary causes”. Later in the opinion the court further “reiterate[s] that district courts have broad discretion in deciding motions to transfer; they need only grant such a motion where the evidence demonstrates that the destination venue is ‘clearly more convenient’ than the chosen venue. [the court] review that decision ‘only for clear abuses of discretion that produce patently erroneous results.’ The district court carefully considered each of the private and public interest factors, ultimately concluding that they do not weight in favor of transfer. The standard for reversing that holding is high” (emphasis added). While citing that the district judges have broad discretion in these cases is not new, and is taken from the precedent, the frequency and emphasis in which the court repeated this may indicate that the circuit is raising the bar on the showing required to reverse a judge’s denial of transfer.

The Circuit court also noted to other factors that weighed in favor of upholding the district courts denial of transfer, (1) was that the judge for this case had particular familiarity with the law at issue, (2) Amarillo (where the district court was located) is less expensive than Austin (where the case would be transferred to), finally (3) the district court found that the Amarillo Division is less congested than the Austin division. At least the first two points could potentially apply to patent cases under Judge Albright as well, Judge Albright definitely has familiarity with patent law, and Waco (where Judge Albright is located) is cheaper than many other locations that defendants are likely to want to transfer to (for example California, Delaware, Etc.).

One other factor that contributed to the denial as well was Planned Parenthood’s “inexcusable delay” in filing a motion to transfer. Specifically, Planned Parenthood waited until after resolution of an earlier motion to dismiss the case was denied before filing for transfer, so future defendants would be advised to make any planned transfer motions as early as possible.

In total this decision may cement Judge Albright’s (and any other patent friendly judges in districts under the 5th circuit) ability to retain the plethora of patent cases filed in their courts. This may continue to enable patent litigants to take advantage of the friendly rules of these specific Districts.


Federal Circuit Overturns Summary Judgment Based on §101 Ineligibility

In a new precedential decision released September 28, 2022, the Federal Circuit overturned a decision from the Northern District of California. The lower court’s decision granted summary judgement for defendant Kollective Technology, finding all claims of plaintiff-complainant Cooperative’s ‘452 patent ineligible under 35 U.S.C. §101.

Cooperative’s ‘452 Patent relates to systems and methods for structuring a peer-to-peer (P2P) dynamic network for distributing large files, namely for videos and video games. The District Court had found that the ‘452 patent failed §101 at step 1 of the Alice test, specifically that the focus of the patent was the abstract idea of “the preparation and transmission of content to peers through a computer-network.” Furthermore, the lower court ruled that the ‘452 patent failed step two of Alice because the patent was “merely implementing the abstract idea of preparing and transmitting data over a computer network with generic computer components using conventional technology.”

The Court of Appeals overturned the lower court rejection on the basis that the ‘452 patent did in fact meet part two of the Alice test on two different bases. The first issue was a matter of claim construction, Cooperative argued that the claims required trace routes to be used in content segmentation, while Kollective argued that the segmentation was optional, and therefore irrelevant for the purposes of determining eligibility. The District Court had not conducted claim construction yet and the Federal Circuit held “under these circumstances we proceed by adopting the non-moving party’s construction”. Since the construction was the only thing at issue for the trace routes, this alone was enough to overturn the dismissal under §101.

However Cooperative also claimed that the patent was inventive because the ‘452 patent required a dynamic P2P network wherein multiple peer nodes consume the same content and are configured to communicate outside the CDN’s. Kollective argued that all components used in this feature are routine and well known, and this is simply a rearrangement of existing components. Cooperative did not dispute that the components themselves were well known in the art, but rather that it was the arrangement and structure of these components that was itself inventive, and therefore patent eligible. The Federal Circuit agreed with Cooperative, “we conclude that claim 1 recites a specific technical solution … it recites a particular arrangement of peer nodes for distributing content … which did not exist in the prior art”.

The Federal Circuit therefore completely overturned the lower courts decision on both points, stating “at a minimum, the district court should have denied the motion to dismiss because Cooperative’s allegations in the complaint regarding the claims and the ‘452 patent’s written description create a plausible factual issue regarding the inventiveness of the dynamic P2P configuration of claim 1.”

This case could have larger implications on §101 policy going forward. Software patents like the one at issue in this case have been notoriously susceptible to §101 rejections, but the Federal Circuit’s decision here is a win for software patents.


USPTO Transitions to New Online Search Tool, Patent Public Search

On September 30, 2022, the United States Patent and Trademark Office (USPTO) consolidated and replaced four legacy search tools with a single Patent Public Search tool. The new tool is intended to streamline the search process for users and to incorporate new, useful features.

The legacy tools that were phased out include:

  • Public-Examiner’s Automated Search Tool (PubEAST)
  • Public-Web-based Examiner’s Search Tool (PubWEST)
  • Patent Full-Text and Image Database (PatFT), and
  • Patent Application Full-Text and Image Database (AppFT).

The new Patent Public Search tool can be accessed here.


Design Day 2022 Highlights

On April 21, 2022, the United States Patent and Trademark Office hosted its annual Design Day event, featuring speakers discussing recent developments in design patent practice. The virtual event was joined by over 600 attendees.

The amount of design patents filed in FY2021 increased by 17.6% over the previous year, to a total of 54,201 applications, a new record for the USPTO. The increase in design patent applications shows the recognition of the value of design patent protection by inventors and rights holders. Of those filings, 40.4% originated in the United States, while 30.5% were from China. As a consequence of the increased volume of filings, first action pendency increased to 16.6 months, while total pendency remained relatively flat at 21 months.

The next presentation focused on the anticipated entry of China into the Hague system in May 2022. The Hague system allows an applicant to file a single international application for a single international registration, which is then examined according to the laws of each contracting party designated in the registration. With China’s entry on May 5, 2022, the Hague system will include 76 contracting parties, covering 94 countries.

To align with the requirements of the Hague Agreement, China has updated its design laws to increase the patent term from 10 to 15 years, and to include protection of partial designs. Prior to this update, the entire article of manufacture was required to be claimed in a Chinese design patent application. After May 5, applicants for Chinese design protection will be able to disclaim subject matter in broken line, allowing the claiming of only the desired portions of an article.

Subsequent speakers discussed suggestions for effective appeal briefs and examiner’s answers, particularly for obviousness rejections. For examiners, it was recommended to construe the claim when helpful, create a composite of multiple references, and address the differences and their effect on overall similarity. For practitioners, it was recommended to determine the differences and the overall visual impression created by the differences alone and when viewed in the composite of multiple references. The visual impression of the composite can then be compared to the claimed design and the difference between the two determined.

The Patent Trial and Appeal Board’s views on the obviousness of changes in proportion were also discussed. With respect to changes in proportion, many examiners have relied on In re Stevens, 173 F.2d 1015 (1949), which stated that changes in proportion as per se obvious. However, the PTAB has now been giving consideration as to how mere changes in proportion can create a significant difference in the overall visual impression of an article. In particular, in In re Salas, 2019 WL 7790867 (2019) the PTAB declined to view Stevens as a per se rule that all changes in arrangement and proportion are unpatentable. Rather, board referred to In re Blum, 364 F.2d 904 (1967) which stated that  there are no portions of a design that are immaterial or not important.

 In re Surgisil was a 2021 Federal Circuit decision that changed long-standing anticipation analysis for design patents. Prior to this case, examiners relied on In re Glavas, 230 F.2d 447 (1956), which stated that anticipation of a design does not require that the prior art and the claim design were from analogous art. In the Surgisil case, the examiner rejected the design of a lip implant based on the appearance of an art tool. The applicant appealed to the PTAB, which affirmed the rejection, stating that only minor differences exist between the two designs, and the article of manufacture can be ignored for the purposes of determining the claim scope. However, the Federal Circuit reversed, holding that the board decision was erroneous, and that the claim language should match the article that is identified. Consequently, the art tool could not anticipate a design of a lip implant. Subsequent to Surgisil, the test for applicable prior art for designs would now depend on the particular article of manufacture to which the design is applied.

In re Maatita: in this 2018 case, the Federal Circuit held that some designs, for example shoe bottoms, are capable of being enabled by a single plan view drawing. This has led to filings where complex, three-dimensional objects, such as ceiling fans, are depicted by a single, perspective-view drawing, with examiners rejecting those as non-enabled and indefinite. Board decisions have considered this scenario to be a different factual inquiry than that in Maatita. For example, foreshortening distortions due to perspective can introduce uncertainty to the design claim in certain circumstances. At this point, the sufficiency of a single perspective view is not dictated by Maatita, but rather is decided based on a case-by-case analysis.

For more information and analysis regarding design patent protection in the United States and abroad, as well as analysis regarding the impact of these recent developments on your IP rights, please feel free to reach out to us.


USPTO Deferred Subject Matter Eligibility Response (DSMER) Pilot Program to Launch February 1, 2022

A new Deferred Subject Matter Eligibility Response (DSMER) Pilot Program will launch at the USPTO on February 1, 2022. This Pilot Program is designed to address issues currently present in examination of applications for eligibility under 35 U.S.C. 101.

The Pilot Program will allow applicants to defer examination under Section 101, such that the application is first examined under all grounds of patentability under Sections 102, 103, and 112. Under the Pilot, applicants will first amend claims to overcome rejections under the more objective patentability standards of these Sections, which may also have the benefit of informing the examiner that the claims are eligible under Section 101 as well. Subsequent to examination under these Sections, the examiner will conduct an eligibility analysis under Section 101. It is intended that such an examination sequence will result in stronger, more reliable, and higher quality patents.

Participation in this program is by invitation only. The criteria for participating in this program are listed on the DSMER Pilot Program page of the USPTO website.


Additional Filing Fee for Non-DOCX Format Delayed Until 2023

An additional filing fee for any nonprovisional utility patent application filed under 35 U.S.C. 111, including continuing applications, that are not filed in DOCX format was set to take effect on January 1, 2022.  However, on November 22, 2021, the USPTO issued a final rule delaying the effective date of the new fee until January 1, 2023.  The reason for the delay is to give both the USPTO and applicants more time to adjust to DOCX filing procedures and to address known issues.


United States Patent and Trademark Office Expands Prioritized Examination (Track One) Program

The United States Patent and Trademark Office (USPTO) has further expanded their Track One prioritized examination program by increasing the annual limit on accepted requests. Previously, the USPTO only accepted 12,000 Track One requests per fiscal year, but this announcement increases the limit to 15,000 requests per year.

Track One expedites the patent prosecution process by allowing applicants to receive a final disposition (such as a notice of allowance or final rejection) of a patent application within twelve months from the date of the Track One request.

This is an important development, since Track One allows applicants to avoid lengthy prosecution with less requirements than other prioritized examination programs. An application under Track One typically receives a final disposition in under six months on average. Non-track one applications, however, don’t even receive a first office action for over 16 months, and remain pending for an average of 23.2 months.

At Maier & Maier we take pride in developing sophisticated patent portfolios for our clients and are well equipped to navigate and take advantage of the Track One, Patent Prosecution Highway, or other programs offered by the USPTO.


U.S. District Judge Alan Albright Provides Informative Update at the 2021 IPO Annual Meeting

Judge Alan Albright assumed the bench in September of 2018 and has quickly made the Western District of Texas a premier venue for patent litigation. 24% of all patent cases filed so far in 2021 were filed in the WDTX, up from just 3% of patent cases filed in 2018. This significant increase in filings is mainly due to the unique rules Judge Albright implements in all his patent cases.

In a speech this morning to the annual meeting of the Intellectual Property Owners Association, Judge Albright emphasized his firm belief that intellectual property is a vital component of our country, and that he therefore has a personal duty to be a fair judge. Judge Albright believes he can accomplish this by providing clear rules which lead to efficient resolutions, thus saving valuable time and costs for all parties to a dispute. Lawyers and their clients can both benefit from Judge Albright’s process which provides certainty and predictability to what can otherwise be lengthy and expensive trials.

Judge Albright prides himself on creating a patent dispute resolution system where a Markman hearing is typically reached within 8 months and a trial 14-16 months after that. Judge Albright has had twice as many Markman hearings as any other Texas division- including 40 in just this past summer.

The COVID-19 pandemic has not diminished WDTX’s efficiency. Instead, Judge Albright took advantage of the flexibility and transparency of Zoom. Hearings taking place over Zoom save time and money for both parties and can also give the public immediate access to the hearing. Anyone can listen to a patent trial in Judge Albright’s court (except for certain confidential portions, such as during the damages stage). Access to the Judge’s hearings can provide a major insight to understanding how the Judge will handle certain issues, providing even more predictability for the parties as well as useful strategies to take advantage of.

The Maier & Maier litigation team is well equipped to take advantage of Judge Albright’s procedures, which allowed us to settle a recent case in just 43 days from the filing of the complaint. By monitoring Judge Albright’s cases and other trends in the case law, Maier & Maier continues its track record of successful patent cases in the Western District of Texas.

 


Maier & Maier Wins Contested Institution Decision for Petitioner in Inter Partes Review

The Maier & Maier litigation team scored another victory at the Patent Trial and Appeal Board (PTAB), securing an institution order on behalf of the Petitioner, Eve Energy Co., Ltd. (“Eve”).  Despite Patent Owner Varta Microbattery GmBH’s Patent Owner Preliminary Response, the PTAB has determined that Maier & Maier, on behalf of Eve, demonstrated a reasonable likelihood that it will prevail with respect to at least one of the challenged claims.

On behalf of Eve, Maier & Maier challenged claims of U.S. Patent No. 9,496,581 on obviousness grounds.  Maier & Maier’s strategic use of testimonial evidence appears to have greatly benefited its position, while the Patent Owner Preliminary Response was limited to attorney argument without testimonial evidence.  In reaching its decision, the PTAB also agreed with Eve’s asserted level of ordinary skill in the art and Eve’s assertions regarding claim construction.

On August 9, 2021, the PTAB ordered that the inter partes review be instituted for all challenged claims.

If you or your company need similar assistance, please contact Maier & Maier’s litigation team here.


Arthrex: Supreme Court Upholds PTAB Judges

After facing extreme uncertainty at the Federal Circuit, the Patent Trial and Appeal Board’s (“PTAB”) judges have avoided calamity as the Supreme Court upheld their appointment process as constitutional in Arthrex v. Smith & Nephew. In their final decision, the Court held that while their appointment was upheld, the review process for their decisions was not and remanded the case down to the acting USPTO Director for further consideration.

The case began in an inter partes review proceeding at the PTAB and was appealed to the Federal Circuit on the basis that the Administrative Patent Judges comprising the Board are principal officers, who need Presidential appointment with the advice and consent of the Senate. This was premised on the lack of review their decisions receive from the USPTO Director, who is a duly appointed principal officer. According to 35 U. S. C. §6(c), “only the Patent Trial and Appeal Board may grant rehearings”. By insolating the APJs from Director’s review, Arthrex argued that they were converted to principal officers and their appointment was unconstitutional.

At the Federal Circuit, the panel agreed. Because the review process vested the APJ’s with power that exceeded that of an inferior officer, their appointment by the U.S. Secretary of Commerce was insufficient to satisfy the constitutional requirement. To cure this, the Federal Circuit declared that the tenure provision of the APJ’s was unconstitutional. This allowed the USPTO Director to fire them at their discretion and imbued the Director with a form of review over their processes. By giving the Director this authority, the Federal Circuit believed the APJ’s were satisfactorily inferior officers and their appointment could be upheld.

After the denied en banc rehearing, the Supreme Court disagreed in a splintered decision by the Justices. The opinion of the Court was authored by Justice Roberts and joined for Parts I and II by Justices Gorsuch, Alito, Barrett, and Kavanaugh. The crux of the decision rests on the review process itself being unconstitutional and curing it by remanding the case to the Director for their constitutionally mandated authority to review. As the Court explains, the statute “is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on his own. The Director may engage in such review and reach his own decision.”

By striking the limitation on the Director, the Supreme Court has upheld the validity of the PTAB and its proceedings and prevented what could have been an extreme period of uncertainty for patent owners with the review process in total flux.

If you have any questions or concerns about how this or any other recent news may affect your portfolio or interests, please reach out to one of our attorneys here.