IP UPDATE

An Odyssey of Timeliness: Appointments Clause Arguments Must Be Preserved

by Dexter Hamilton | Mar 13, 2025 | Patents

Citing forfeiture, the US Court of Appeals for the Federal Circuit upheld the dismissal of a complaint against the US Patent & Trademark Office (PTO). The complaint sought director review of a 2018 Patent Trial & Appeal Board decision that affirmed a rejection of claims in the subject patent application. In the initial appeal, no “appointments clause” argument was raised. Odyssey Logistics & Technology Corp. v. Stewart, Case No. 2023-2077 (Fed. Cir. Mar. 6, 2025) (Dyk, Reyna, Stoll, JJ.)

Background

In 2020, the Federal Circuit upheld a 2018 Board decision rejecting claims in a patent application owned by Odyssey Logistics. At that time, Odyssey did not raise an Appointments Clause challenge. However, following the Supreme Court’s 2021 ruling in United States v. Arthrex, Odyssey filed a request for PTO Director review of the 2018 Board decision, arguing that the decision was invalid under Arthrex. After its request was denied, Odyssey filed a district court complaint seeking to compel director review.

Arthrex addressed the Appointments Clause of the US Constitution, which provides that “Officers of the United States” must be appointed by the President with the advice and consent of the Senate, while Congress may permit the appointment of “inferior Officers” by the President, courts, or department heads. In that case, the plaintiff argued that the Board’s administrative judges were principal officers (rather than inferior) and should have been appointed by the President and confirmed by the Senate.

In 2019, the Federal Circuit ruled that there had been an appointments clause violation in Arthrex (coincidentally, this was during the time of Odyssey’s initial appeal to the Federal Circuit). In 2020, the Supreme Court agreed with the Federal Circuit’s ruling but provided a different remedy, holding that the Director “may review final PTAB decisions and, upon review, may issue decisions himself on behalf of the Board.”

Appeal

After Odyssey sought review of the 2018 decision, the PTO responded that it does not accept requests for Director review of ex parte appeal decisions. Odyssey then filed a district court complaint that was dismissed for lack of subject matter jurisdiction. The district court explained that judicial review of a decision committed to agency discretion was improper. Odyssey appealed.

The Federal Circuit affirmed the district court, not on the grounds of lack of jurisdiction but for failure to state a claim. The Federal Circuit ruled that the PTO did not abuse its discretion in denying review. Under Federal Rule of Civil Procedure 60(b), a district court can relieve a party from a final judgment even after an appeal mandate, as long as the relief sought does not fall within the scope of that mandate. The principles underlying this rule provide guidance for agencies regarding reconsideration of prior agency decisions.

Odyssey did not raise its Appointments Clause argument in its appeal of the 2018 Board decision. The Federal Circuit has consistently held that “a party’s failure to raise an Appointments Clause challenge in its opening brief constitutes forfeiture even when the argument was [...]

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PTO Reverts to Prior Post-Grant Guidelines for Cases Involving Parallel District Court Litigation

by Sarah Mezini | Mar 13, 2025 | Patents

On February 28, 2025, the acting director of the US Patent & Trademark Office (PTO) announced that the agency will revert to previous guidelines for discretionary denials of petitions for post-grant proceedings where there is ongoing district court litigation.

This announcement rescinds the PTO’s June 21, 2022, memorandum entitled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation.” The memorandum stated that the Patent Trial & Appeal Board “will not deny institution of an IPR or PGR under Fintiv (i) when a petition presents compelling evidence of unpatentability; (ii) when a request for denial under Fintiv is based on a parallel ITC proceeding; or (iii) where a petitioner stipulates not to pursue in a parallel district court proceeding the same grounds as in the petition or any grounds that could have reasonably been raised in the petition.” The memorandum effectively limited the discretion granted in Fintiv, which outlined six factors for the Board to consider when making decisions on post-grant proceedings involving parallel district court litigation.

Now that the 2022 memorandum has been rescinded, parties to post-grant proceedings should refer to Board precedent, including Fintiv and Sotera Wireless v. Masimo, for guidance when there are parallel district court proceedings. In accordance with prior guidelines, the PTO’s objective is to achieve greater consistency in its decision-making processes, especially in situations where patent validity is contested both in the courts and before the Board. The PTO emphasized that any portions of future Board decisions that rely on the 2022 memorandum will not be binding or persuasive.

Practice Note: Because of this action, the Board will now enjoy greater discretion when ruling on post-grant petitions, which may result in an increase of discretionary denials.

Inventor’s Motivation to Combine Does Not Control Obviousness

by Lois D. Mermelstein | Mar 13, 2025 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court decision rejecting claims of a patent application directed to a dosing regimen for a cancer treatment, finding the claims to be obvious where the motivation to use the claimed dosing was not the same as the inventor’s motivation. ImmunoGen, Inc. v. Coke Morgan Stewart, Case No. 23-1763 (Fed. Cir. Mar. 6, 2025) (Lourie, Dyk, Prost, JJ)

The claims at issue involved a dosing regimen for administering IMGN853, an already-patented antibody drug conjugate used for treating certain cancers, at a claimed dose of six milligrams (mg) per kilogram (kg) of adjusted ideal body weight (AIBW) of the patient.

ImmunoGen argued that it was undisputed that, at the time of the invention, a person of ordinary skill in the art would not have known that IMGN853 caused ocular toxicity in humans and that without a motivation to address the problem of ocular toxicity, the claimed dosing limitation could not have been obvious. Therefore, according to ImmunoGen, the district court erred in its motivation-to-combine analysis. The Federal Circuit disagreed, stating, “that the specific problem the inventors . . . purported to solve via the claimed dosing regimen was unknown does not necessarily mean that the dosing regimen itself was not obvious.” The Court also noted that because ocular toxicity was a well-known adverse event in the administration of drugs containing a payload included in IMGN853, “a person of ordinary skill in the art, despite not knowing of IMGN853’s ocular toxicity, would have nonetheless been motivated to monitor for those side effects when administering the drug to a human.”

ImmunoGen also argued that the district court erred in finding that a person of ordinary skill in the art would have been motivated to use AIBW dosing to eliminate ocular toxicity. The Federal Circuit again disagreed, reasoning that although AIBW dosing has not been used for drugs such as IMGN853, it would still have been within the range of knowledge of a person of ordinary skill in the art when addressing dosing-induced ocular toxicity. The Court explained that AIBW was well known, had been used for drugs both smaller and larger than IMGN853, and had proven effective in reducing ocular toxicity.

The Federal Circuit concluded that the district court did not clearly err in determining that a person of ordinary skill in the art would have been motivated to select the claimed dose of six mg/kg AIBW with a reasonable expectation of success. The claimed dose had already been described in the literature for patients at their ideal body weight, regardless of whether a doctor was aware of AIBW dosing specifically. The Court also noted that the district court was not required to find that a person of ordinary skill in the art would have had a reasonable expectation of eliminating ocular toxicity using the claimed dose, as “the obviousness inquiry is generally agnostic to the particular motivation of the inventor” and the claims made no reference to ocular toxicity.

Practice Note: [...]

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Economic Prong of Domestic Industry Requirement Includes All Sorts of Labor and Capital

by Connor S. Romm | Mar 13, 2025 | Patents

Addressing the economic prong of the domestic industry requirement under Section 337(a)(3)(B) of the Tariff Act of 1930, the US Court of Appeals for the Federal Circuit reversed a US International Trade Commission decision, finding that the Commission had applied an overly narrow interpretation of the requirement. The Court explained that expenses related to sales, marketing, warehousing, quality control, and distribution may qualify as “labor and capital” for establishing the existence of a domestic industry, even if there is no domestic manufacturing. Lashify, Inc. v. International Trade Comm’n, Case No. 23-1245 (Fed. Cir. Mar. 5, 2025) (Taranto, Prost, Chen, JJ.)

Lashify is a US-based company that sells eyelash extension products. Concerned about the importation of similar goods, Lashify filed a complaint with the Commission, alleging that certain importers were infringing its patents. As an importer itself, Lashify had its products manufactured abroad before selling them to customers in the United States. In doing so, Lashify incurred significant expenses related to warehousing, distribution, quality control, sales, and marketing. These expenses were critical to Lashify’s domestic industry case.

The Commission rejected Lashify’s claims, reasoning that it did not demonstrate the establishment of, or effort to establish, a domestic industry. This is known as the “economic prong” of the domestic industry requirement. One way to satisfy this prong is by showing the expenditure of significant labor or capital within the US. Lashify’s domestic expenses were limited to warehousing, distribution, quality control, sales, and marketing costs, and in the Commission’s view, these expenses did not constitute significant “labor or capital” under Section 337 (a)(3)(B). The Commission determined that these expenses were no greater than those any importer would incur once its products arrived in the US. Lashify appealed.

The Federal Circuit reversed, citing the text of the provision recognizing significant labor or capital as a means of establishing a domestic industry and noted that the statutory language did not exclude expenses related to warehousing, distribution, quality control, sales, and marketing. Considering the domestic industry requirement under Section 337(a)(3)(C), the Court noted that the reference to labor and capital in part (B) was analogous to investments in plant and manufacturing in part (C), which similarly did not limit the “enterprise functions” to which the investments must be directed.

The Federal Circuit cited its 2015 decision in Lelo, which defined “labor” as “human activity that produces goods or provides the services in demand in an economy” and “capital” as “a stock of accumulated goods,” not simply money to finance an enterprise. The Court held that complainants may satisfy the economic prong by demonstrating the “employment of a large enough stock of accumulated goods [i.e., capital] or of a significant amount of human activity for production goods or providing the services in demand in an economy [i.e., labor].” The Court determined that Lashify’s warehousing, distribution, quality control, sales, and marketing expenses fit within this definition and should therefore be considered in assessing whether Lashify had employed sufficient labor and capital within the US to satisfy the economic [...]

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Interesting Delay: Prejudgment Interest Accrues Despite Unreasonable Delay

by Taylor MacDonald | Mar 13, 2025 | Patents

The US Court of Appeals for the Federal Circuit upheld a decision on enhanced damages and prejudgment interest, concluding that the district court correctly applied the appropriate standard for enhanced damages in accordance with established precedent. Halo Electronics, Inc. v. Pulse Electronics, Inc., Case Nos. 23-1772; -1966 (Fed. Cir. Feb. 28, 2025) (Prost, Bryson, Reyna, JJ.) (nonprecedential).

In 2013, following a jury verdict in favor of Halo, the district court entered a $1.5 million verdict against Pulse for willful infringement but denied Halo enhanced damages. Halo appealed and, in 2016, engendered a new enhanced damages standard from the Supreme Court. In 2015, while the case was pending before the Supreme Court, Halo filed for an award of supplemental damages for direct infringement between 2012 and 2013, and prejudgment and post-judgment interest on the initial $1.5 million judgment and on the supplemental damages. The district court awarded supplemental damages and prejudgment and post-judgment interest.

In 2017, the district court determined that Halo was not entitled to enhanced damages or attorneys’ fees under the Supreme Court’s new standard. Although the parties still disagreed on which method to use for prejudgment interest calculation – and briefed their positions accordingly – the district court mistakenly ordered the clerk to enter a final judgment and close the case. After the Supreme Court decided WesternGeco v. ION Geophysical in 2018, Halo (in 2020) filed a motion seeking prejudgment interest and a new damages trial, arguing that the district court had not made a final ruling on the issue of prejudgment interest and that WesternGeco was intervening case law that permitted it to seek additional damages for Pulse’s activities outside the United States.

Halo argued that because the final order closing the case ignored an outstanding issue (prejudgment interest), the case was merely administratively closed. Although Pulse argued that the resurrected case should remain closed under Federal Rule of Civil Procedure 41(b), the district court awarded limited prejudgment interest in March 2023. The district court rejected Halo’s request for a new trial regarding additional foreign damages under WesternGeco.

Halo appealed, and Pulse counter appealed. Halo raised two main arguments:

Enhanced damages were appropriate because of the jury’s finding of willfulness.
The district court should have allowed a limited trial on the issue of foreign infringement.

Pulse argued that FRCP 41(b) should have barred any prejudgment interest because Halo did not address the court’s oversight until 2020.

The Federal Circuit rejected both of Halo’s arguments. It explained that a jury’s finding of willfulness is “but one factor” in an enhanced damages determination under the Supreme Court’s highly discretionary Halo test. Willful infringement does not require the more egregious intent that gives rise to enhanced damages, nor does it merge with enhanced damages analyses procedurally – willfulness is a jury issue, while enhanced damages is an issue for the court.

Addressing Pulse’s argument, the Federal Circuit found no abuse of discretion in either the district court’s refusal of a new trial [...]

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