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PTO Reduces Small and Micro-Entity Fees

by Amol Parikh | Mar 30, 2023 | Patents

The US Patent & Trademark Office (PTO) issued a final rule reducing certain patent fees for small and micro-entities on March 22, 2023. The Federal Register notice can be found here. Small entity filing fee discounts are increased to 60% (from 50%) and micro-entity filing fee discounts are increased to 80% (from 75%). The fee reductions apply to PTO fees for filing, searching, examining, issuing, appealing and maintaining patent applications and patents.

The fee reductions were mandated by the Consolidated Appropriations Act, 2023 (the Act), which included the Unleashing American Innovators Act of 2022. The Act was signed into law by President Biden on December 29, 2022. The new PTO fee schedule can be found here.

No One Likes a Sore Winner: IPR Prevailing Party Can’t Appeal

by Kathleen Lynch | Mar 23, 2023 | Patents

Reaffirming precedent, the US Court of Appeals for the Federal Circuit reiterated the rule that the prevailing party in an inter partes review (IPR) cannot appeal a Patent Trial & Appeal Board decision. Termax Co. v. Illinois Tool Works, Inc., Case Nos. 23-1252; -1254 (Fed. Cir. Mar. 8, 2023) (Dyk, Reyna, Chen, JJ.)

Illinois Tool Works (ITW) asserted that Termax had infringed a patent directed to an automobile fastener. Termax challenged the asserted patent by filing a petition for IPR. The petition was granted, and ultimately the Board agreed with Termax that all the challenged claims of ITW were unpatentable. Both parties appealed.

ITW moved to voluntarily dismiss its own appeal and to dismiss Termax’s cross-appeal. Termax opposed, arguing that the Board erred in its construction of certain claim limitations that have also been incorporated into a new ITW patent.

The Federal Circuit dismissed both appeals. Citing what it called a “familiar rule,” the Court stated that the winner in a lower court or other tribunal cannot ordinarily seek relief in the appellate court. The Court was not persuaded by Termax’s argument that the Board erred in its construction of certain claim limitations, noting that Termax sought to appeal the constructions in the hopes that a Federal Circuit decision in its favor would “collaterally estop Illinois Tool Works from asserting those newly issued claims.” However, the Court refused to hear the appeal prematurely, stating that if ITW asserts the claims of its new patent against Termax in the future, Termax can address the issue at that time.

Practice Note: While an IPR can be a powerful tool for accused infringers, it is not without future risks.

Prior Art Coherency and Cache Incoherency: “Known-Technique” Rationale for Motivation to Combine

by Jake B. Vallen | Mar 23, 2023 | Patents

The US Court of Appeals for the Federal Circuit, addressing the issue of whether certain factual and legal conclusions relating to obviousness were supported by substantial evidence, held that the Patent Trial & Appeal Board improperly rejected evidence of “known-technique” rationale to provide a motivation to combine. Intel Corp. v. PACT XPP Schweiz AG, Case No. 22-1037 (Fed. Cir. Mar. 13, 2023) (Newman, Prost, Hughes, JJ.)

PACT owns a patent that “relates to multiprocessor systems and how processors in those systems access data.” The claimed multiprocessor system addressed cache incoherency, a problem associated with the use of multiple cache memories to store data, particularly local copies of the same data stored on multiple processors. Cache incoherency (i.e., inconsistencies among different cache processors) “may arise if one processor changes its local copy of the data and that change isn’t propagated to the other copies of that data.”

Intel petitioned for inter partes review of claims 4 and 5 of the patent, relying on two prior art references, Kabemoto and Bauman. Kabemoto and Bauman both address the problem of cache incoherency. As the Federal Circuit explained, Kabemoto maintains cache coherency “by ‘snooping’ along a shared ‘bus,’” while Bauman “us[es] a global, segmented secondary cache.”

The Board upheld the patentability of the challenged claims, concluding that “Intel failed to prove the obviousness of each limitation of [independent] claim 4,” from which claim 5 depended. Intel had contended that a person of ordinary skill in the art would combine Kabemoto and Bauman to teach all limitations in claim 4 by “replac[ing] Kabemoto’s secondary caches” with “Bauman’s segmented global [secondary cache],” which is a separate cache. PACT did not dispute that the combination of Kabemoto and Bauman taught each limitation of claim 4 but argued that Intel failed to demonstrate a motivation to combine Kabemoto and Bauman.

The Board nevertheless found that Intel failed to demonstrate that the prior art disclosed the segment-to-segment limitation and concluded that Intel failed to show that a person of ordinary skill in the art would have been motivated to combine the teachings of Kabemoto and Bauman. Intel appealed.

The Federal Circuit first addressed Intel’s contention “that substantial evidence d[id] not support the Board’s determination that the prior art fails to disclose the segment-by-segment limitation” of claim 4. The Court found that “Bauman’s Figure 6 teaches—if not plainly illustrates—the segment-to-segment limitation of the claims interconnect system” and reversed the Board’s contrary conclusion.

Next, the Federal Circuit addressed Intel’s contention that the Board’s determination that there was no motivation to combine Kabemoto and Bauman was not supported by substantial evidence. On this issue, the Court reasoned that under KSR, it was “enough for Intel to show that there was a known problem of cache incoherency in the art, that Bauman’s secondary cache helped address that issue, and that combining the teachings of Kabemoto and Bauman wasn’t beyond the skill of an ordinary artisan.” As the Court put it, “[n]othing more is required to show a motivation to combine under KSR.”

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Show Your Work: PTO Director’s Procedure for Issuing Instructions Is Reviewable

by Rodney Swartz, PhD | Mar 23, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed the district court’s finding under the Administrative Procedure Act (APA) that the substance of the US Patent & Trademark Office (PTO) Director’s instructions is unreviewable but reversed the finding that the cloak of unreviewability extended to the procedure used in issuing the instructions. Apple v. Vidal, Case No. 22-1249 (Fed. Cir. Mar. 13, 2023) (Lourie, Taranto, Stoll, JJ.)

The creation of the inter partes review (IPR) program opened new avenues for reviewing the validity of patents following issuance. Since the program’s inception, Congress has recognized that there is a possibility of parallel proceedings at the Patent Trial & Appeal Board and in the district court, that such proceedings could result in conflicting decisions and reduced efficiency in the system. However, Congress left it to the discretion of the two branches to work out such situations among themselves.

As one lever to overcome these issues, Congress provided the Director with unreviewable discretion in deciding whether to institute an IPR. Recently, the Director attempted to leverage this power to increase efficiencies and reduce gamesmanship by instructing the Board on what to consider when instituting an IPR.

Apple and four other companies challenged these instructions in the district court. Apple argued that the Director’s instructions violated the APA by being contrary to the IPR provisions, arbitrary and capricious, and issued without the notice-and-comment rulemaking required under the APA.

Following a motion to dismiss, the district court concluded that Apple’s challenges were directed at the Director’s actions, making them unreviewable by the court. Apple appealed.

On appeal, the Federal Circuit considered all three of Apple’s APA challenges to the instructions, along with whether Apple had standing to bring the suit. The Court agreed with the district court that the question of whether an instruction violates the APA by being contrary to the IPR provisions or by being arbitrary and capricious is directed to the substance of the Director’s action and is not reviewable: “§ 314(a) invests the Director with discretion on the question whether to institute review . . . : The determination by the Director whether to institute an inter partes review . . . shall be final and nonappealable.” As the Federal Circuit noted, this conclusion rests on the well-supported need for the PTO Director to give guidance to delegatees on how to make institution determinations.

The Federal Circuit disagreed that the announcement procedure the Director used for issuing the instructions to the Board was unreviewable, however. As the Court noted, the procedure employed by an agency to announce guidelines is “quite apart” from the substance of those guidelines. Given this distinction, the Court concluded that the procedure the Director used to announce the instructions was reviewable: “The government here has not shown that anything in § 314(d) or elsewhere in the IPR statute supplies clear and convincing evidence that there was to be no judicial review of the choice of announcement procedure, a matter for which generally applicable standards exist.”

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PTO Adds Green Energy Category to Patents for Humanity Program

by Amol Parikh | Mar 16, 2023 | Patents

On March 6, 2023, the US Patent & Trademark Office (PTO) introduced a new green energy category to its Patents for Humanity Program. This new award category provides business incentives for patent applicants, holders and licensees whose inventions address the challenges of climate change through green energy innovations, including wind, solar, hydrogen, hydropower, geothermal and biofuels technologies. The green energy category joins five other categories of inventions in the Patents for Humanity Program: medicine, nutrition, sanitation, household energy and living standards.

The Patents for Humanity green energy category joins other recent PTO initiatives designed to address climate change, including a joint work-sharing program with the National Oceanic and Atmospheric Administration, expedited examination procedures under the Climate Change Mitigation Pilot Program, and a partnership with the World Intellectual Property Organization’s WIPO GREEN program.

The Patents for Humanity Award is the top award for applicants best representing the Patents for Humanity principles. Award recipients receive public recognition at an awards ceremony sponsored by the PTO. They also receive a certificate to accelerate any of the following matters before the PTO: a patent application, an ex parte reexam or an ex parte appeal to the Patent Trial & Appeal Board. Winners may transfer their acceleration certificates to third parties.

The PTO is now accepting applications for the Patents for Humanity green energy category. For more information about how to apply, visit Patents for Humanity: Green Energy. The deadline for submitting applications is June 1, 2023.

Transfer Motions Take Priority Regardless of Target District

by Jodi Benassi | Mar 16, 2023 | Patents

The US Court of Appeals for the Federal Circuit granted a writ of mandamus and ordered the district court to decide a motion for intra-district transfer before proceeding to further substantive matters, explaining that both intra-district and inter-district transfer motions must be prioritized. In re: Apple Inc., Case No. 23-120 (Fed. Cir. Mar. 6, 2023) (per curiam) (nonprecedential).

SpaceTime3D sued Apple for patent infringement in February 2022 in the Western District of Texas, Waco Division. In July 2022, Apple moved to transfer the action within the Western District to Austin. The motion was fully briefed by the parties on November 7, 2022. The claim construction hearing was scheduled for November 17, 2022, based on an agreement between the parties. The day before the hearing, Apple moved to stay the hearing and all other proceedings until the district court ruled on Apple’s pending motion to transfer. The district court deferred claim construction, then denied Apple’s stay motion. The district court acknowledged that it was required to prioritize a motion for inter-district transfer but stated that “it does not have to stay the proceedings or decide whether to transfer the case intra-district until closer to trial.” Apple filed a writ of mandamus with the Federal Circuit.

The Federal Circuit noted that although the remedy of mandamus is drastic and should be invoked only in extraordinary situations, it has previously granted mandamus “to correct a clearly arbitrary refusal to act on a longstanding pending transfer motion.” The Federal Circuit stated that under Fifth Circuit law, precedent entitles parties to have their transfer motions prioritized. The Federal Circuit was not swayed by the trial court’s reliance on a statement in an unpublished, nonprecedential Fifth Circuit decision in Sundell v. Cisco Systems, Inc., because the Fifth Circuit did not suggest any discretion in the prioritization of transfer motions based on the type of transfer. The Federal Circuit explained that the Fifth Circuit does not require that inter-district transfer motions be prioritized to the exclusion of intra-district transfer motions. The Federal Circuit granted Apple’s petition for mandamus and ordered the district court to timely decide the transfer motion before proceeding with further substantive matters beyond the claim construction hearing.

A Maze-Like Path and Laundry List Don’t Provide Written Description

by Cecilia Choy, Ph.D. | Mar 16, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision that there was insufficient written description in the asserted priority applications to support a genus claim because of a lack of ipsis verbis disclosure and insufficient blaze marks. The Court concluded that the priority applications did not support an early priority date. Regents of the University of Minnesota v. Gilead Sciences, Inc., Case No. 21-2168 (Fed. Cir. March 6, 2023) (Lourie, Dyk, Stoll, JJ.)

Gilead filed a petition for inter partes review (IPR) challenging Minnesota’s patent directed to phosphoramidate prodrugs preventing virus reproduction or cancerous tumor growth. Gilead’s US Food & Drug Administration-approved drug, sofosbuvir, is marketed by Gilead to treat chronic hepatitis C infections and falls within claim 1 of the patent.

The 2014 application that issued as the challenged patent claimed priority to four applications. In the IPR, Gilead argued that the claims were anticipated by a Gilead-owned patent publication (Sofia). The publications used in the decision are as follows:

NP3 and NP2 have the same disclosure. NP2 and P1 contain similar disclosures, which the Board called NP2-P1. The broader claim in NP2-P1 has a relationship of genus to the narrower subgenus claims in the patent at issue. There was no dispute that Sofia disclosed every limitation of each challenged claim. The Board held that NP2-P1 failed to provide a sufficient written description to support the asserted priority date of the challenged claims, which were therefore found to be anticipated by Sofia. Minnesota appealed.

Minnesota argued the following to the Federal Circuit:

The Board erred in holding that the NP2-P1 applications have insufficient written description.
The Board ran afoul of Administrative Procedure Act (APA) requirements.
Minnesota is a sovereign state entity immune from IPR.

35 U.S.C. § 120 sets forth requirements for a patent application to benefit from a filing date of an earlier application. Minnesota asserted that the NP2-P1 priority applications literally described or provided blaze marks to the challenged subgenus claims. The Federal Circuit disagreed, explaining that written description for a genus claim of chemical compounds raises “particular issues,” requiring a description of the outer limits of the genus and either a representative number of members or structural features common to the members of the genus. The Court found that the asserted priority applications (NP2-P1) did not provide such description and the challenged claims were not entitled to the filing dates of those applications.

The Federal Circuit found that the asserted priority applications did not provide ipsis verbis disclosure of the challenged subgenus claim. The Court quoted an oft-noted saying associated with Yogi Berra, a catcher for the New York Yankees some 50 years ago, about a notable failure to provide direction: “when one comes to a fork in the road, take it.” The Court also cited its 1996 decision in [...]

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Claim Duality: Multiple Dependent Claims Can Be Both Patentable and Unpatentable

by Tim Dunker | Mar 9, 2023 | Patents

Addressing, for the first time, the issue of patentability of multiple dependent claims under 35 U.S.C. § 112, fifth paragraph, the Director of the US Patent & Trademark Office (PTO) granted rehearing and modified the Patent Trial & Appeal Board’s (Board) Final Written Decision after finding that the patentability of a multiple dependent claim should be considered separately as to each of the claims from which it depends. Nested Bean, Inc. v. Big Beings US Pty. Ltd. et al., IPR2020-01234 (PTO Feb. 24, 2023) (Vidal, Dir.) (precedential).

Nested filed a petition for inter partes review challenging claims 1 through 18 of a patent owned by Big Beings. Claims 1 and 2 were independent, and claims 3 to 16 were multiple dependent claims, which depended directly from either claim 1 or 2. The Board granted institution and ultimately issued a Final Written Decision finding that Nested did not establish that claims 1, 17 and 18 were unpatentable, but that Nested had established that claims 2 through 16 were unpatentable.

Big Beings filed a Request for Director review, noting that each of claims 3 to 16 were multiple dependent claims that depended from both claims 1 and 2. Big Beings argued that because the Board found that Nested failed to show that claim 1 was unpatentable, the Board should have also found that Nested failed to show that claims 3 through 16, as depending from claim 1, were unpatentable. The Director granted review.

35 U.S.C. § 112, fifth paragraph, states, in relevant part, “[a] multiple dependent claim shall be construed to incorporate by reference all the limitations of the particular claim in relation to which it is being considered.” Big Beings argued that the statute requires the Board to separately consider the patentability of alternative dependencies of a multiple dependent claim. Nested responded by arguing that the statute should be read so that if any version of a multiple dependent claim is found unpatentable over the prior art, then all versions of the claim should be found unpatentable.

The Director found that this was an issue of first impression. Relying on 37 C.F.R. § 1.75(c) and 35 U.S.C. § 282, the Director concluded that “a multiple dependent claim is the equivalent of several single dependent claims. Thus, in the same way that the unpatentability of multiple single dependent claims would each rise or fall separately, so too should the dependent claims covered by a multiple dependent claim.” The Director also noted that the Federal Circuit in Dow Chemical and Dayco Products explained that “not addressing claim validity on an individual basis is an error and contravenes 35 U.S.C. 282[.]” The PTO Director concluded, quoting the Manual of Patent Examining Procedure (MPEP), that “a multiple dependent claim must be considered in the same manner as a plurality of single dependent claims.”

Patent Law Principles Apply to Claim Scope: Orange Book Delisting and Listing and Regulations

by Benjamin Ediger, Ph.D. | Mar 9, 2023 | Patents

The US Court of Appeals for the Federal Circuit ordered that the only Orange Book patent asserted in a lawsuit must be delisted since its claims were directed to the computer-implemented distribution system and not a method of use. Jazz Pharms., Inc. v. Avadel CNS Pharms., LLC, Case No. 23-1186 (Fed. Cir. Feb. 24, 2023) (Lourie, Reyna, Taranto, JJ.)

Jazz Pharmaceuticals holds a new drug application (NDA) for Xyrem, an oral sodium oxybate solution prescribed to help those with certain narcolepsies manage cataplexy. Sodium oxybate itself is no longer covered by patents because it has been used in relation to narcolepsy since the 1960s. For this reason, Jazz built its patent portfolio around Xyrem’s formulation, use and distribution.

Jazz uses a single-pharmacy distribution system for Xyrem, known as a risk evaluation mitigation strategy (REMS). Implementing REMS was a condition of Xyrem’s US Food & Drug Administration (FDA) approval because it mitigates safety risks of dangerous active pharmaceutical ingredients such as sodium oxybate. One of Jazz’s patents is directed to this REMS distribution system. Abbreviated New Drug Application (ANDA) 505(b)(2) NDA (Hybrid NDA) approval is similarly conditioned on implementing a REMS that is sufficiently comparable to any that the NDA holder must implement. The FDA eventually determined that single-pharmacy systems were unnecessary for Xyrem and potentially detrimental.

Avadel submitted a hybrid NDA for a drug that requires only a single nightly dose, unlike Xyrem, which requires a patient to wake up during the night to ingest a second dose. Avadel’s application also proposed a more lenient REMS that utilizes multiple pharmacies. In view of these differences, Avadel believed that it could avoid a lengthy FDA approval process because all of Jazz’s Xyrem Orange-Book-listed patents seemed addressable without making any Paragraph IV certifications. As for the REMS patent, Avadel filed a statement under 21 U.S.C. § 355(b)(2)(B) because the patent was listed as claiming a method of use and Avadel was not seeking approval for the REMS system to which that patent’s claims were directed.

Jazz sued Avadel asserting seven patents, of which the REMS patent was the only Orange-Book-listed patent. Avadel asserted a counterclaim requesting that the district court order Jazz to delist the REMS patent from the Orange Book. The district court subsequently held a Markman hearing finding that the REMS patent’s claims were directed to a system and not a method. The district court granted Avadel’s motion for judgment on the pleadings, finding that the REMS patent did not claim “the drug for which the application was approved” and thus had to be delisted from the Orange Book. Jazz appealed.

Jazz argued that because the FDA permitted the REMS patent to be Orange Book listed, Avadel was prohibited from availing itself of the statutory delisting provision. The Federal Circuit disagreed, concluding that the language of the delisting provision was only concerned with whether a listed patent met the provisions’ conditions at the time of the triggering litigation.

Jazz also argued that there was no evidence that Congress imported patent-law [...]

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Compelling Clarity: PTO Director Explains Compelling Merits Test

by Alexander Piala, PhD | Mar 9, 2023 | Patents

US Patent & Trademark Office (PTO) Director Katherine K. Vidal issued a precedential opinion clarifying the standard under which the Patent Trial & Appeal Board (Board) can institute on an inter partes review (IPR) petition despite the Fintiv factors militating toward denial. CommScope Techs. LLC v. Dali Wireless, Inc., IPR2022-01242 (PTO Feb. 27, 2023) (Vidal, Dir.) (precedential).

This opinion follows the Director’s Interim Procedure for Discretionary Denials memorandum (Guidance Memo) and her opinion in OpenSky Indus. v. VLSI Tech. In the guidance memo, the Director explained that when there is “compelling evidence of unpatentability,” the Board may decline to exercise its discretion to deny IPR institution.

In this case, Dali Wireless sued CommScope in the district court, alleging infringement of its patent. CommScope filed a petition to institute an IPR proceeding against the asserted patent. The Board granted the petition and instituted an IPR proceeding while the district court litigation was ongoing.

In granting the petition, the Board acknowledged that it would normally perform a Fintiv analysis to determine whether it should deny the petition in light of the parallel district court proceeding. However, considering the Guidance Memo and the “compelling invalidity challenge” presented by the petitioner, the Board skipped the Fintiv analysis and instituted on the petition. The Director instituted sua sponte review.

Recognizing some ambiguity in both OpenSky and the guidance memo, the Director made her decision precedential to clarify:

My Guidance Memo states that “the PTAB will not deny institution based on Fintiv if there is compelling evidence of unpatentability.” Although I now recognize that this instruction could be read to allow for a compelling merits determination as a substitute for a Fintiv analysis, that was not my intent. By that instruction, I intended for PTAB panels to only consider compelling merits if they first determined that Fintiv factors 1–5 favored a discretionary denial . . . . In circumstances where . . . the Board’s analysis of Fintiv factors 1–5 favors denial of institution; the Board shall then assess compelling merits. In doing so, the Board must provide reasoning sufficient to allow the parties to challenge that finding and sufficient to allow for review of the Board’s decision.

A determination of whether the petition presents a compelling merits case for invalidity requires a merits case that meets a higher standard than the “reasonable likelihood” test required by 35 U.S.C. § 314(a).

The Director found that the Board’s decision was deficient in both parts of the analysis. The Board did not perform any analysis of the Fintiv factors but instead went straight to a determination of whether the petition presented a compelling invalidity challenge. In connection with that determination, the Board failed to provide any reasoning that explained why it found the merits case presented in the petition compelling.

Finding that the Board’s reasoning was conclusory, the Director vacated the Board’s decision to institute IPR review and remanded for further proceedings consistent with her decision.

Practice Note: Less [...]

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