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New Guidance Addresses Use of AI Systems, Tools in Practice Before the PTO

by Peter Brunovskis, PhD | Apr 18, 2024 | Technology

The US Patent & Trademark Office (PTO) issued new guidance on the use of artificial intelligence (AI) tools in practice before the PTO. The new guidance is designed to promote responsible use of AI tools and provide suggestions for protecting practitioners and clients from misuse or harm resulting from their use. This guidance comes on the heels of a recent memorandum to both the trademark and patent trial and appeal boards concerning the applicability of existing regulations addressing potential misuse of AI and recent guidance addressing the use of AI in the context of inventorship.

Patent practitioners are increasingly using AI-based systems and tools to research prior art, automate the patent application review process, assist with claim charting, document reviews and gain insight into examiner behavior. The PTO’s support for AI use is reflected in patent examiners’ utilization of several different AI-enabled tools for conducting prior art searches. However, because AI tools are not perfect, patent practitioners are potentially vulnerable to misuse or misconduct. Therefore, the PTO’s new guidance discusses the legal and ethical implications of AI use in the patent system and provides guidelines for mitigating the risks presented by AI tools.

The guidance discusses the PTO’s existing rules and policies for consideration when applying AI tools, including duty of candor, signature requirement and corresponding certifications, confidentiality of information, foreign filing licenses and export regulations, electronic systems’ policies and duties owed to clients. The guidance also discusses the applicability of these rules and policies with respect to the use of AI tools in the context of document drafting, submissions, and correspondence with the PTO; filing documents with the PTO; accessing PTO IT systems; confidentiality and national security; and fraud and intentional misconduct.

AI tools have been developed for the intellectual property industry to facilitate drafting technical specifications, generating responses to PTO office actions, writing and responding to briefs, and drafting patent claims. While the use of these tools is not prohibited, nor is there any obligation to disclose their use unless specifically requested, the guidance emphasizes the need for patent practitioners to carefully review any AI outputs generated before signing off on any documents or statements made to the PTO. For example, when using AI tools, practitioners should make a reasonable inquiry to confirm that all facts presented have evidentiary support, that all citations to case law and other references are accurately presented, and that all arguments are legally warranted. Any errors or omissions generated by AI in the document must be corrected. Likewise, trademark and Board submissions generated or assisted by AI must be reviewed to ensure that all facts and statements are accurate and have evidentiary support.

While AI tools can be used to assist or automate the preparation and filing of documents with the PTO, care must be taken to ensure that no PTO rules or policies are violated and that documents are reviewed and signed by a person, not an AI tool or non-natural person. AI [...]

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Late Expert Report Dooms Copyright Case

by Karen Gover | Apr 18, 2024 | Copyrights

The US Court of Appeals for the Sixth Circuit weighed in for a third time on an eight-year copyright battle, this time finding that a district court did not abuse its discretion in excluding the plaintiff’s proposed expert or granting summary judgment to the defendant with respect to a copyright claim related to software. RJ Control Consultants, Inc., et al. v. Multiject, LLC, et al., Case No. 23-1591 (6th Cir. Apr. 3, 2024) (Siler, Cole, Mathis, JJ.)

This case concerns a copyright infringement claim filed by Paul Rogers through his company RJ Control Consultants (RJC) against his former friend Jack Elder, sole owner of Multiject. Multiject engineers and sells industrial accessories related to plastic injection molding. Rogers developed technical diagrams and software source code for a rotary turntable control system for Multiject. After Elder obtained copies of the code and drawings, he fired Rogers and hired a different company, RSW, to implement the technology. Rogers obtained copyright registrations for the code and drawings and filed suit against Elder, Multiject and RSW for copyright and trademark infringement, as well as certain state law claims.

The district court granted summary judgment to the defendants on RJC’s copyright infringement and trademark infringement claims and declined to exercise supplemental jurisdiction over the state law claims. RJC appealed the dismissal of its copyright infringement claim. In December 2020, in RJ Control I, the Sixth Circuit affirmed the decision regarding the technical drawings but reversed and remanded the copyright claim to the district court, finding that the software technology was complex and required an expert to answer material questions related to the functionality of the code.

On remand, the district court established deadlines for expert disclosures and for filing dispositive motions and motions challenging experts. Both parties timely served expert disclosures in which they identified the names of their respective experts, but neither side produced an expert report with their disclosures.

In April 2021, the district court extended the discovery and motions deadlines but not the expert disclosure deadline. The defendants moved to exclude RJC’s expert on the grounds that RJC failed to properly disclose the expert because RJC did not produce an expert report. The defendants also filed motions for summary judgment. The district court granted the defendants’ motions, finding that RJC “failed to put forth any expert evidence that identifies any specific portions of the code that they claim are protectible.” RJC appealed.

The Sixth Circuit dismissed the second appeal for lack of appellate jurisdiction, finding that the district court’s decision was not final because the court had not disposed of Multiject and Elder’s counterclaim (RJ Control II). The case was remanded again. On remand, the district court dismissed the then-pending counterclaim. RJC appealed again.

RJC argued that the Sixth Circuit lacked jurisdiction to decide RJ Control I, just as it did in RJ Control II, because at that time the counterclaim remained pending in district court. The Court agreed and vacated its decision in RJ Control I, but then affirmed [...]

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Drawing Can Teach Claim Limitations If “Clear on Its Face”

by Connor M. Larson | Apr 18, 2024 | Patents

Addressing when a drawing in a prior art reference includes a teaching that is “clear on its face,” the Director of the US Patent & Trademark Office vacated and remanded a Patent Trial & Appeal Board decision denying institution of an inter partes review (IPR) petition. MAHLE Behr Charleston Inc. v. Catalano, IPR2023-00861 (PTAB Decision Review, Apr. 5, 2024) (Vidal, PTO Dir.)

MAHLE Behr filed a petition requesting institution of an IPR, challenging claims of a patent owned by Catalano. The patent is directed to a device known as a sacrificial anode that prevents corrosion in motor vehicle radiators caused by electrolysis. One of the claim terms at issue requires the anode to be “within 10 inches” of another element. MAHLE argued that a figure in a prior art reference anticipated or rendered obvious several challenged claims.

The Board denied the institution after determining that MAHLE did not establish a reasonable likelihood that it would prevail with respect to at least one of the challenged claims. The Board cited the Federal Circuit’s 2000 decision in Hockerson-Halberstadt v. Avia Group International to explain that “[p]atent drawings do not define the precise proportions of the elements and may not be relied on to show particular sizes if the specification is completely silent on the issue.” The Board concluded that the figure relied on by MAHLE did not provide exact dimensions and thus could not be sufficient to render the claims invalid.

MAHLE filed a request for Director Review, which was granted. In its request, MAHLE argued that the Board erred in its application of Federal Circuit case law on the use of patent drawings as prior art teachings. The Director agreed, explaining that “the Board did not adequately address [MAHLE’s] arguments regarding what [the figure in the prior art] clearly shows or would have reasonably suggested to a person of ordinary skill in the art.” Federal Circuit case law established that a claim may be anticipated or rendered obvious by a figure in the prior art if the drawing clearly discloses the claim limitation. If “a person of skill in the art could derive the claimed dimensions from the patent’s disclosure, there is no additional requirement that the specification must explicitly disclose the precise proportions or particular sizes.”

The Director further explained that “the Board did not adequately address MAHLE’s arguments regarding what [the prior art figure] clearly shows or would have reasonably suggested to a person of ordinary skill in the art.” While the prior art figure did not disclose the precise proportions or measured quantity specified in the challenged claims, the figure showed the elements being located as claimed (necessarily within the 10 inches recited). The Director explained that the Board should have considered whether a person of ordinary skill in the art would have understood the figure to disclose the claimed elements being within 10 inches of each other.

The Director vacated the Board’s decision and remanded the petition with instructions to consider both what the prior art figure [...]

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International Trade Commission Seeks Feedback on Proposed Updates to Practice and Procedure

by Thomas DaMario | Apr 18, 2024 | Uncategorized

The US International Trade Commission issued a Federal Register notice of proposed rulemaking related to 19 C.F.R. Parts 201, 205, 207 and 210, which govern the Commission’s Rules of Practice and Procedure. The Commission seeks feedback by May 20, 2024. Proposed Rules, 89 Fed. Reg. 61, 22012-39 (Mar. 28, 2024).

The notice specifies that the “amendments are necessary to make certain technical corrections, to clarify certain provisions, to harmonize different parts of the Commission’s rules, and to address concerns that have arisen in Commission practice.” The proposed amendments are intended to “facilitate compliance with the Commission’s Rules and improve the administration of agency proceedings.”

Proposed global updates to the rules include the replacement of gender-specific language with gender-neutral terminology. The Commission’s proposals also include permanent adoption of the rules related to filing electronic (in lieu of paper) copies of documents, which were put in place as a temporary measure during the COVID-19 pandemic.

In addition to the global measures, the Commission proposes specific changes to the procedures associated with commencement of investigations and the discovery process during an investigation. With respect to commencement of investigations, the Commission proposes the following changes:

Amending 210.8(c) to allow members of the public, interested government agencies or proposed respondents to file comments that address not only the public interest but also other issues in response to a complaint filed with the Commission
Amending 210.12(a)(8)(i) to require alleging specific facts that show the existence of each element of the cause of action underlying complaints based on an unfair act or method of competition under § 337(a)(1)(A)
Adding a new mechanism to 210.14(g) that allows the Chief Administrative Llaw Judge to consolidate investigations that are before different administrative law judges

The notice also proposes updates to the discovery process that are largely designed to conform the Commission’s rules to those found in the Federal Rules of Civil Procedure. Such changes include:

Aligning the scope of discovery found in 210.27 with that of Fed. R. Civ. Pro. 26. In particular, the proposed changes include deleting the reference to information that “appears reasonably calculated to lead to the discovery of admissible evidence” and inserting language emphasizing that discovery must be proportional to the needs of the investigation.
Updating 210.28, which governs the procedures and limits associated with depositions. Proposed updates include adding language that clarifies that third-party depositions count toward a party group’s overall deposition limit, changing the number of depositions a complainant may take from five fact depositions per respondent to 20 total fact depositions, and limiting deposition time to one day of seven hours per witness (which may be altered upon agreement of the parties or order of the presiding administrative law judge).
Adding a clarification to 210.30, which governs the production of documents, to conform with Fed. R. Civ. Pro. 34 by requiring that if a party is withholding documents based on an objection, it must affirmatively state that it is doing so.
Codifying 210.32 to provide that the administrative law judge, [...]

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Fifth Circuit Rejects Recruiter’s Trade Secret Misappropriation and Contract Defenses

by Amol Parikh | Apr 18, 2024 | Trade Secrets

The US Court of Appeals for the Fifth Circuit affirmed a district court’s decision finding trade secret misappropriation and breach of contract based on a recruiter’s improper use of confidential client information. Counsel Holdings, Incorporated v. Jowers, Case No. 22-50936 (5th Cir. Apr. 1, 2024) (King, Ho, Engelhardt, JJ.) (per curiam).

In April 2006, Evan Jowers was hired by MWK (whose successor is Counsel Holdings) as a legal recruiter. Jowers signed an employment agreement with noncompete and nonsolicitation covenants. During his employment, Jowers relocated to Hong Kong, where he began recruiting for law firms in Asia. Jowers resigned from MWK in December 2006, after which he began working for another recruiting firm in Hong Kong called Legis Ventures.

MWK sued Jowers for trade secret misappropriation and breach of the restrictive covenants in the employment contract. MWK alleged that while Jowers was still employed with MWK, he submitted its candidates for employment through Legis Ventures. After a bench trial, the district court found in favor of MWK on both claims. As to the trade secret claim, the district court concluded that MWK’s customers’ “names, their clients, how much their practices were worth, their language skills, their goals for switching firms, and their law school records” constituted trade secrets. As for the contract claim, the district court found that enforcement of the restrictive covenants was justified because MWK’s client information was a legitimate business interest. Jowers appealed.

The Fifth Circuit affirmed. As to the trade secret claim, the Court explained that Jowers’s employment agreement explicitly required confidentiality and that MWK’s customers requested that Jowers keep their information secret. Despite the restrictions, Jowers divulged MWK’s customer information to others, including a competing recruitment firm, without authorization. The Fifth Circuit agreed with the district court’s determination that Jowers’s actions constituted trade secret misappropriation.

As to the breach of contract claim, Jowers argued that MWK lacked a “legitimate business interest.” The Fifth Circuit found no clear error with the district court’s determination that MWK’s client information was a legitimate business interest that justified enforcement of the restrictive covenant.

Easy Tiger: Docuseries Summary Judgment Remanded for Further Fair Use Consideration

by Sarah Bro and Eleanor B. Atkins | Apr 11, 2024 | Copyrights

Addressing copyright fair use in the wake of the Supreme Court’s recent guidance in Warhol, the US Court of Appeals for the Tenth Circuit partially reversed the district court’s grant of summary judgment in favor of the defendants. The Tenth Circuit held that the first fair use factor (the purpose and character of the use) weighed in favor of the plaintiffs and remanded for further consideration of the accused infringing work’s effect on the potential market for the copyrighted work. Whyte Monkee Productions, LLC; Timothy Sepi v. Netflix, Inc.; Royal Goode Productions, LLC, Case No. 22-6068 (10th Cir. Mar. 27, 2024) (Holmes, C.J.; Hartz, Carson, JJ.)

In 2020, Netflix and Royal Goode Productions (the defendants) released the popular multipart documentary Tiger King: Murder, Mayhem and Madness. Tiger King included eight videos filmed by Timothy Sepi (the plaintiff), seven of which were filmed while Sepi was employed by the zoological park featured in the docuseries. The eighth video, a 24-minute recording of the funeral of Travis Maldonado (who was the husband of Joe Exotic, aka the Tiger King) was filmed by Sepi after his employment ended. After the release of Tiger King, the plaintiffs registered the copyrights for the eight videos and sued the defendants for copyright infringement.

The district court granted summary judgment in favor of the defendants, holding that Sepi did not own the copyright for the seven videos he filmed during his employment because they were “works made for hire” and that the defendant’s use of the eighth video was permissible fair use. The plaintiffs appealed.

On appeal, the plaintiffs argued that the district court erred in holding that seven of the videos were works made for hire because Sepi’s scope of employment “did not extend to cinematography and film editing conducted on his own time.” The plaintiffs also argued that the district court incorrectly assessed each of the fair use factors in connection with the eighth video.

The Tenth Circuit swiftly affirmed the grant of summary judgment on the first seven videos, noting that the plaintiffs’ argument regarding the scope of Sepi’s employment was a new theory on appeal and therefore had been waived. Nonetheless, the Court reversed the grant of summary judgment in favor of the defendants with respect to the eighth video, stating that the district court erred in concluding that the first and fourth fair use factors weighed in favor of the defendants.

As set forth in the Copyright Act, there are four nonexclusive factors to consider in assessing whether the use of a copyrighted work is protected fair use:

The purpose and character of the use
The nature of the copyrighted work
The amount and substantiality of the portion used
The effect of the use on the potential market for or value of the copyrighted work.

Important here, the Tenth Circuit noted that all four factors should be weighed together “in light of the aim of copyright, which is ‘to promote the progress of science and the arts, [...]

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ITU Applicants Beware: Federal Courts Have Jurisdiction Over Pending Trademark Applications

by Cecilia Choy, Ph.D. | Apr 11, 2024 | Trademarks

The US Court of Appeals for the Ninth Circuit affirmed in part a district court’s ruling in a trademark dispute, upholding its decision to invalidate trademark applications. The Ninth Circuit held that district courts have jurisdiction to alter or cancel trademark applications in an action properly brought under 15 U.S.C. § 1119, and that in the context of challenges to intent-to-use (ITU) applications, proof of a lack of bona fide intent can invalidate. BBK Tobacco & Foods LLP v. Central Coast Agriculture, Inc., Case Nos. 22-16190; -16281 (9th Cir. Apr. 1, 2024) (Hurwitz, Desai, JJ.) (Bumatay, J., dissenting).

BBK sells and distributes smoking-related products with BBK’s “RAW” branding. Central Coast Agriculture (CCA) sells cannabis products using “Raw Garden” branding. BBK filed a complaint against CCA including claims of trademark infringement and a petition to void several ITU trademark applications owned by CCA for lack of a bona fide intent to use the relevant trademarks in commerce. Instead of disputing the merits of BBK’s claims, CCA argued that the district court had no jurisdiction to adjudicate this issue. The district court granted summary judgment in favor of BBK on its claims to invalidate the trademark applications. CCA appealed.

The Ninth Circuit affirmed the summary judgment in favor of BBK on its claims to invalidate CCA’s trademark applications. The Court explained that “when an action involves a claim of infringement on a registered trademark, a district court also has jurisdiction to consider challenges to the trademark application of a party to the action.” The Lanham Act, at 15 U.S.C. § 1119, provides that “[i]n any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, . . . restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action.” The Lanham Act, at § 1051, defines an application for use of trademark as a “request for registration of a trademark on the principal register.” Because a challenge to an application affects the applicant’s right to the registration, the Court reasoned that § 1119 authorizes a district court to resolve disputes over trademark applications.

The Ninth Circuit held that a “lack of bona fide intent to use a mark in commerce is a valid basis to challenge a trademark application,” aligning with decisions in sister circuits and the Trademark Trial & Appeal Board. An applicant can seek to register a mark if the mark is already being used in commerce or if the applicant has a bona fide intention, under circumstances showing the good faith of such person, to use a trademark in commerce. While applicants filing under the ITU provisions may begin the registration process based on a bona fide intent to later use the mark in commerce, the Lanham Act requires such applicants to either subsequently file a verified statement of actual use of the mark or convert their application into a use application. As a result, the Ninth Circuit affirmed the district court’s ruling [...]

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Reasonable Royalty Available for Foreign Activities (But Not This Time)

by Amol Parikh | Apr 11, 2024 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to preclude a patent owner from seeking damages based on method claims infringed outside of the United States but confirmed that reasonable royalties are available based on foreign activities. Harris Brumfield v. IBG LLC, Case No. 22-1630 (Fed. Cir. Mar. 27, 2024) (Prost, Taranto, Hughes, JJ.)

Trading Technologies International (TT), whose successor is Harris Brumfield, filed a lawsuit against IBG in 2010 alleging infringement of four patents directed to graphical user interfaces for commodity trading and methods for placing trade orders using those interfaces. During the underlying proceeding, the district court issued several orders. The district court granted IBG’s motion for summary judgment that the claims of two of the patents were invalid. The district court also excluded one of TT’s damages theories concerning foreign activities. Prior to trial, the district court found that two of the patents were invalid as patent ineligible and that the other two patents contained patent eligible subject matter. The district court also excluded one of TT’s damages theories concerning foreign activities.

The case proceeded to trial on the two remaining patents, and the jury found the asserted claims of those two patents infringed. IBG proposed $6.6 million in damages, which corresponds to the total demanded by IBG using IBG’s proposed royalty rate measured against domestic usage, rather than global users. By contrast, TT proposed damages of $962 million, which included all worldwide users of the accused product, regardless of whether they performed the claimed method. The jury agreed with IGB and awarded TT $6.6 million. the district court denied TT’s post-verdict motion for a new trial on damages, a motion in which TT alleged that IBG had misrepresented how it calculated the damages figures it presented to the jury. TT appealed.

Under the Supreme Court’s 2018 decision in WesternGeco v. Ion Geophysical, a patent owner can recover damages in the form of foreign lost profits when infringement is found under 35 U.S.C. § 271(f)(2) of the Patent Act. TT argued that under WesternGeco, it can seek damages in the form of a reasonable royalty based on IBG “making” the accused product in the US, even though the products were used overseas. The Federal Circuit engaged in a detailed description of WesternGeco, concluding that the Court must examine the particular acts alleged to constitute infringement under particular statutory provisions to determine if the allegations focus on domestic conduct. The Court explained that under § 271(a), the making, using, offering to sell and selling provisions are limited to domestic acts. The Court acknowledged that the WesternGeco framework applies to reasonably royalty awards (not just lost profits) and that a reasonable royalty would be the amount a hypothetical infringer would pay to engage in the domestic acts constituting the infringement.

Despite finding that reasonable royalties are permitted under WesternGeco, the Federal Circuit affirmed the district court’s exclusion of TT’s damages theory because TT’s infringement theory about making the accused product [...]

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ITC Shines Light on DI: Complainant Can’t Aggregate Investments Across Patents, Prongs

by Alexander P. Ott | Apr 11, 2024 | Patents

Addressing a determination by its chief administrative law judge (CALJ) finding a violation of § 337, the US International Trade Commission reversed and held that the complainant had not satisfied the economic prong of the domestic industry (DI) requirement by aggregating its investment across multiple asserted patents. Certain Replacement Automotive Lamps (II), Case No. 337-TA-1292 (USITC Mar. 22, 2024).

In late 2021, Hyundai filed a complaint seeking an investigation under 19 U.S.C. § 337 based on alleged infringement of 21 design patents, each covering a different automotive headlamp or taillamp. In response, two of the proposed respondents filed a request seeking early disposition of the economic prong of the domestic industry under the Commission’s 100-day program. Hyundai filed a response opposing the 100-day program request based on the complexity of the issues. The Commission instituted the investigation and denied the 100-day program request, but when setting the procedural schedule, the CALJ scheduled an early evidentiary hearing on the economic prong of the domestic industry pursuant to the Commission’s pilot program for interim initial determinations. Following that initial hearing, the CALJ issued an interim initial determination finding that Hyundai had satisfied the economic prong of the domestic industry requirement. After the full evidentiary hearing, the CALJ issued a final initial determination finding a violation of § 337 by the respondents based on infringement of all asserted patents. The Commission decided to review both the initial and final determinations.

On review, the Commission reversed the finding that the complainant had satisfied the economic prong of the domestic industry requirement. As the Commission explained, where DI products do not have overlapping protection across common asserted patents, a complainant must treat each product as requiring a separate DI showing. The Commission cannot aggregate investments in articles covered by one patent with investments in articles only covered by a different patent. Here, because each DI product practiced only one of the asserted design patents, to satisfy the economic prong Hyundai was required to demonstrate that the investments in each product were independently significant. The Commission also held that investments in plant and equipment (§ 1337(a)(3)(A)) cannot be combined with employment of labor or capital (§ 1337(a)(3)(B)) and concluded that Hyundai had mistakenly aggregated its investments from both prongs.

Commissioner Schmidtlein filed an opinion concurring with the outcome but declining to join the majority opinion based on her view that it went beyond what was necessary to dispose of the investigation.

PTO Stands by Patent Fee Increases

by Amol Parikh | Apr 11, 2024 | Patents

The US Patent & Trademark Office (PTO) issued a notice of rulemaking announcing proposed patent fee increases beginning next year. 89 Fed. Reg. 23226 (April 3, 2024). The proposed increases are generally consistent with the PTO’s May 2023 proposal.

The Notice states that the PTO needs the proposed fee adjustments to provide sufficient revenue to recover costs of patent operations in future years. To that end, the PTO proposes to set or adjust 455 patent fees, including 73 new fees. Complete information about the fee adjustments, including the Notice, is available on the PTO’s website.

The fee increases include higher amounts for routine fees necessary to obtain a patent, including filing, search, examination and issue fees. Excess claim fees will also increase to $200 for each claim over 20 and $600 for each independent claim over three. There will also be an escalating fee structure for terminal disclaimers, ranging from $200 if filed before the first office action to $1,400 if filed after the PTO grants the patent. The fees for filing requests for continued examination (RCE) will now use a tiered fee structure and will increase to $1,500 for the first RCE, $2,500 for the second RCE and $3,600 for the third RCE. Patent Trial & Appeal Board fees will increase by about 25%, and a new fee of $400 will be required for a Request for Director Review of a Board decision.

Written comments on proposed patent fees must be submitted by June 3, 2024, through the Federal eRulemaking Portal.