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UK High Court Issues Landmark Global FRAND Rate Decision

by | Apr 6, 2023 | ,

The UK High Court of Justice issued its long-anticipated decision establishing a global Fair, Reasonable and Non-Discriminatory (FRAND) royalty rate for a patent portfolio essential to 3G, 4G and 5G cellular technologies. InterDigital Tech. Corp. et al. v. Lenovo Group Limited, Case No. HP-2019-000032, [2023] EWHC 529 (Pat) (Mar. 16, 2023) (Mellor, J.)

InterDigital owns a portfolio of standard essential patents (SEPs) that have been declared essential to the European Telecommunications Standard Institute’s (ETSI) 3G, 4G and 5G cellular technology standards. InterDigital sought to license the SEPs to Lenovo, which implements these cellular standards in its mobile phones, tablets and PCs. After the parties could not agree on the terms under which Lenovo should take a license, InterDigital filed a lawsuit. The High Court held several technical trials in which it found that Lenovo infringed certain of the patents.

Based on the result of the technical trials, the High Court determined that InterDigital had established the right to a FRAND determination of its portfolio. The parties presented two issues regarding FRAND. The first issue was whether the InterDigital license offer was FRAND, and if not, what terms would be FRAND for a license to Lenovo of the InterDigital patent portfolio. The second issue was whether InterDigital was entitled to an injunction based on the parties’ negotiation conduct, including whether InterDigital acted as a willing licensor and whether Lenovo acted as a willing licensee.

The High Court concluded that Lenovo should pay InterDigital a FRAND rate of $0.175 per cellular unit for a worldwide license to InterDigital’s portfolio. The $0.175 rate yields a lump sum payment of $138.7 million for sales from 2007 to the end of 2023. The Court’s FRAND rate determination was closer to Lenovo’s offered rate of $0.16/unit than to InterDigital’s demand of $0.498/unit.

In determining the appropriate FRAND rate, the High Court analyzed whether InterDigital’s proposed rate was comparable to the rate in InterDigital’s other license agreements for SEPs. InterDigital argued that its license offer to Lenovo was consistent with “program rates” under which it had already licensed its SEPs to other companies. The Court, however, rejected InterDigital’s program rates as comparable because the other licenses included volume discounts ranging from 60% to 80% of InterDigital’s program rate. InterDigital argued that Lenovo was not entitled to the same type of steep volume discount and, therefore, those licenses with discounts applied were not comparable licenses for Lenovo. The Court disagreed, finding that the volume discounts applied to those licenses “do not have any economic or other justification” and that their primary purpose was to “shore up InterDigital’s chosen program rates.” The Court further observed that the primary effect of the volume discount in the other licenses was to discriminate against smaller licensees, which is exactly what FRAND is supposed to avoid.

InterDigital tried to bolster its argument that its program rate was FRAND by applying a top-down cross-check. The top-down approach starts with the cumulative value of all royalties that should be paid on FRAND [...]

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PTO Reduces Small and Micro-Entity Fees

by | Mar 30, 2023 |

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.



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

by | Mar 23, 2023 |

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.



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

by | Mar 23, 2023 |

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.”

Explaining [...]

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Actual or Potential Consumers in Related Goods Context Doesn’t Require PURE Overlap

by | Mar 23, 2023 |

The US Court of Appeals for the Federal Circuit reminded us that, in the context of related goods, the likelihood of confusion analysis does not require that actual or potential consumers of the goods be the same, but only that there be sufficient overlap. In re Oxiteno S.A. Industria e Comercio, Case No. 22-1213 (Fed. Cir. Mar. 9, 2023) (Dyk, Bryson, Prost, JJ.)

Oxiteno filed an intent-to-use trademark application for OXIPURITY, with its goods and services statement ultimately amended to include dozens of chemical products “for use in the pharmaceutical, veterinary, flavor and fragrance, and cosmetic fields.” The application was refused on likelihood of confusion grounds in view of FMC Corporation’s registered OXYPURE mark, largely because the hydrogen peroxide products covered by the OXYPURE registration moved through the same channels of trade as products recited in the Oxiteno application.

Oxiteno appealed the refusal to the Trademark Trial & Appeal Board. The Board analyzed likelihood of confusion using the DuPont factors and found the first four factors most relevant:

  • Factor 1: The similarity of OXIPURITY and OXYPURE. The Board concluded (as had the Examiner) that the two marks were “similar in sound, meaning and commercial impression,” and found that this factor strongly favored a likelihood of confusion.
  • Factor 2: The similarity of the covered goods. The Board agreed with the Examiner that the respective goods, while not the same, were sufficiently related to favor a likelihood of confusion finding.
  • Factor 3: The similarity of channels of trade. The Board reviewed the third-party websites that the Examiner considered particularly dispositive. The websites sold hydrogen peroxide goods covered by the OXYPURE mark and the chemicals Oxiteno intended to sell under the OXIPURITY mark. The Board concluded that the same sources manufactured FMC’s established products and Oxiteno’s intent-too-use products, and directly sold these products to largely overlapping industries.
  • Factor 4: “[t]he conditions under which and buyers to whom sales are made.” Of the four most relevant factors in this case, this was the only factor that the Board found to favor registration. The Board concluded that the consumers of the established and intent-to-use products would be sophisticated and not act on impulse.

Despite the potential consumers’ presumed sophistication, the Board found that factors 1 through 3 “rendered confusion likely” and thus affirmed the Examiner’s refusal. Oxiteno appealed.

Oxiteno argued that likelihood of confusion could not be found when the actual or potential consumers of the respective products covered by two marks were not the same, as with the relevant products here.

The Federal Circuit affirmed the Board, noting statements made by a company selling Oxiteno’s products that explained why almost every business is a potential purchaser of FMC’s OXYPURE hydrogen peroxide products. The Court also noted that FMC’s brochures stated that it sold its hydrogen peroxide products under OXYPURE and other brand names to the same key industries to which Oxiteno sold its products. The Court, therefore, concluded that substantial evidence supported that at least some [...]

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Not Today, HAL: Copyright Still Requires Human Input

by | Mar 23, 2023 |

The US Copyright Office (USCO) issued a policy statement on March 16, 2023, clarifying its position on the use of artificial intelligence (AI) in copyrighted materials. This statement came in the wake of the USCO’s recent decision to revoke partial copyright protection over AI-generated images in a graphic novel.

The USCO had previously issued copyright registration to Kris Kashtanova for a graphic novel. Upon learning that the images had been generated using Midjourney, an AI that produces images based on text prompts, the USCO revoked copyright protection over the images consisting of mixed text and images. Zarya of the Dawn, Registration No. VAu001480196 (USCO, Feb. 21, 2023) (Kasunic, Asso. Register of Copr.)

The USCO explained that the images lacked the requisite “minimum creative spark” required to make the images copyrightable. The USCO further emphasized that a human author with ultimate creative control is necessary for copyright protection and that providing an AI with word prompts is insufficient to qualify. Therefore, the copyright registration for the images in Kashtanova’s novel was revoked. However, because the work consisted of images and text and the text was all written by Kashtanova, that aspect of the work did satisfy the requirements for copyright protection and retained its registration. The USCO did allow that if Kashtanova could exhibit “substantive edits” to an AI-generated image, those edits could prove human authorship and therefore qualify the image for copyright protection.

In its March 16 policy statement, the USCO reiterated that non-humans are firmly excluded from authorship and, therefore, solely AI generated works are ineligible for copyright registration. Applicants should not list AIs as authors, but authors do have a duty to disclose the use of AI in their work and provide an explanation of their own human contribution compared to that of the AI. The USCO explained that the use of AI tools does not necessarily exclude a work from copyright registration. The salient issue in such cases would be the extent of creative control that the human author had over the work and its creative expression. As long as the human-made modifications to the AI-generated work meet the “minimum creative spark” requirement, such works could be subject to copyright protection.



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

by | Mar 23, 2023 |

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.”

The [...]

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The Fondues and Don’ts of Certification Marks

by | Mar 16, 2023 |

The US Court of Appeals for the Fourth Circuit affirmed a summary judgment grant in favor of the opposers of a certification mark application for the trademark GRUYERE to designate cheese that originates in the Gruyère region of Switzerland and France. The Court found that the term “gruyere” is generic because consumers of cheese understand the term to refer to a category of cheese that can come “from anywhere.” Interprofession du Gruyere; Syndicat Interprofessionnel du Gruyere. v. U.S. Dairy Export Council; Atalanta Corporation; Intercibus, Inc., Case No. 22-1041 (4th Cir. March 3, 2023) (Gregory, Thacker, Rushing, JJ.)

In the United States, a certification mark is a type of trademark used to show consumers that particular goods or services, or their providers, have met certain standards. Unlike a typical trademark, a certification mark is not used by the owner of the mark (the certifier) but instead controls how others use the mark.

In an approach similar to the preceding certifiers of ROQUEFORT® and REGGIANO®, the Swiss Consortium Interprofession du Gruyère (IDG) and French consortium Syndicat Interprofessionnel du Gruyère believed that the term “gruyere” should only be used to label cheese produced in the Gruyère region of Switzerland and France. In 2010, IDG applied to the US Patent & Trademark Office (PTO) to register LE GRUYERE as a certification mark but was refused registration on grounds that “gruyere is a generic designation for cheese.” In 2013, the PTO granted IDG a certification mark registration for LE GRUYERE in a specific design form, paired with the word “Switzerland,” the letters “AOC” and a stylized Swiss cross. IDG undertook efforts to enforce the mark and sent letters to several US cheese retailers and manufacturers demanding that they cease labeling their non-Swiss cheeses as gruyere.

In 2015, IDG again attempted to register the term GRUYERE on its own as a certification mark. The U.S. Dairy Export Council, Atalanta Corporation and Intercibus melted together to throw a wedge in the process, opposing the application for the mark on grounds that “gruyere” was generic for cheese and, therefore, ineligible for protection as a certification mark. The Trademark Trial & Appeal Board (Board) found that the term “gruyere” was generic because cheese consumers understand it to be a designation for “a category within the genus of cheese that can come from anywhere.” IDG filed a complaint in the US District Court for the Eastern District of Virginia challenging the Board’s decision. Ultimately, the district court granted the opposers’ motion, finding that the factual record demonstrated that “gruyere” refers to a generic type of cheese without reference to the geographic region where the cheese is produced. IDG appealed.

The Fourth Circuit began by explaining that certification marks, like typical trademarks, include a bar on the registration of terms that are generic for the applied-for product or service category. The Court framed the genericness inquiry as whether “members of the relevant public primarily use or understand the term sought to be protected to refer to the genus of goods . [...]

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PTO Adds Green Energy Category to Patents for Humanity Program

by | Mar 16, 2023 |

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.



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Transfer Motions Take Priority Regardless of Target District

by | Mar 16, 2023 |

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.



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