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Federal Circuit Won’t Rescue Parachute Patent

by Sarah J. Fischer | Mar 24, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision that claims to a ballistic parachute were obvious over the prior art based on knowledge attributable to artisans and denying the patentee’s motion to substitute proposed amended claims, finding that they lacked written description. Fleming v. Cirrus Design Corp., Case No. 21-1561 (Fed. Cir. Mar. 10, 2022) (Lourie, Hughes, Stoll, JJ.)

Cirrus Design filed a petition for inter partes review on certain claims of Fleming’s patent related to ballistic parachute systems on an aircraft. The challenged claims relate to an autopilot system that increases the aircraft’s pitch, reduces the aircraft’s roll or changes the aircraft’s altitude when a ballistic parachute deployment request is made. Fleming moved to amend some of the challenged claims, effectively cancelling those claims. In its final written decision, the Board found the remaining original claims obvious over the prior art and found that the amended claims lacked written description and were indefinite. Fleming appealed both the obviousness determination and the denial of the motion to amend.

Fleming argued that the Board’s obviousness determination was incorrect because the prior art did not disclose the commands to the autopilot to alter the aircraft’s pitch, roll or altitude. The Board acknowledged that neither of the primary prior references included the claimed commands upon the receipt of a deployment request, but nevertheless, concluded that a person of ordinary skill in the art would have had the motivation to combine the prior art disclosures to arrive at the claimed invention. The Federal Circuit concluded that the Board’s findings were supported by substantial evidence, citing to the Supreme Court’s 2007 KSR decision for the proposition that it is appropriate to consider a person of ordinary skill in the art’s knowledge, creativity and common sense, so long as they do not replace reasoned analysis and evidentiary support. Here the Court noted with approval the Board’s finding that aircraft autopilots are programmable and can perform flight maneuvers and deploy a parachute. The Court also noted that an artisan would have understood that certain maneuvers, such as stabilizing at an appropriate altitude, should be performed prior to deploying a whole-aircraft parachute. The Board concluded that a person of ordinary skill in the art would be motivated to reprogram the autopilot to take Fleming’s proposed actions prior to releasing the parachute to improve safety outcomes.

Fleming also appealed the Board’s rejection of his argument that the prior art taught away from claimed invention because a person of ordinary skill in the art would deem the combination unsafe. He argued that the prior art taught that autopilot systems should not be used in the sort of emergency situations that would lead to the deployment of a ballistic parachute. The Board rejected that argument, and the Federal Circuit found that the substantial evidence supported the Board’s determination that the prior art did not teach that a person of ordinary skill in the art would never use an autopilot system during [...]

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Apply That Formulation: Presumption of Obviousness Based on Overlapping Ranges

by Vincent Li, PhD | Mar 24, 2022 | Patents

The US Court of Appeals for the Federal Circuit found a method of treatment claims pertaining to topical formulations to be obvious, applying the presumption of obviousness of overlapping ranges theory. Almirall, LLC v. Amneal Pharmaceuticals LLC & Amneal Pharmaceuticals of New York, LLC, Case No. 020-2331 (Fed. Cir. Mar. 14, 2022) (Lourie, Chen, Cunningham, JJ.)

Almirall’s patent generally claims methods of treating acne or rosacea with formulations containing certain concentrations or concentration ranges of dapsone and acryloyldimethyl taurate (a type of thickening agent known as A/SA). The claims also contain a negative claim limitation of “wherein the topical composition does not comprise adapalene.”

In a final written decision, the Patent Trial & Appeal Board (Board) relied on three main references in its finding that the challenged claims would have been obvious. One reference (Garrett) disclosed dapsone formulations with a different type of thickening agent (Carbopol®). Garrett did not disclose any formulations that contained adapalene. Another reference (Nadau-Fourcade) described formulations containing exemplary types of thickeners, including both Carbopol® and A/SA agents. The last reference (Bonacucina) disclosed dispersions containing sodium acryloyldimethyl taurate that can be used for topical administration. All three references disclosed formulations with thickening agents within the claimed ranges.

The Board applied a presumption of obviousness based on the overlapping ranges of the thickening agents and ultimately concluded that it would have been obvious to a person of ordinary skill in the art (POISTA) to substitute the A/SA agents taught in either Nadau-Fourcade or Bonacucina for the Carbopol® agent disclosed in Garrett. The Board found that the claimed range of thickening agents overlapped with Garrett, Nadau-Fourcade and Bonacucina. The Board also relied on an expert presented by Amneal who testified that a POSITA would have appreciated that the different gelling agents are interchangeable to find a reasonable expectation of success in terms of a rationale for combing the prior art.

Almirall appealed, contending that the Board erred in presuming obviousness based on the overlapping ranges found in the prior art references. Almirall argued that the presumption of obviousness only applies when a single reference discloses all the claimed ranges, whereas the Board relied on different references to create the presumption (Garrett with either Nadau-Fourcade or Bonacucina). Citing the evidence showing the interchangeability of the two different types of thickeners, the Federal Circuit found that the Board did not err in applying the presumption, citing to its 2018 case of E.I. du Pont de Nemours & Co. v. Synvina: “[t]he point of our overlapping range cases is that, in the absence of evidence indicating that there is something special or critical about the claimed range, an overlap suffices to show that the claimed range was disclosed in—and therefore obvious in light of—the prior art.” The Court also noted that this case did not turn on the presumption, since the combination of prior art was simply involved the substitution of one known thickening agent for another as there was no evidence to challenge the substitutability.

The Federal Circuit [...]

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Hypothetical Device Doesn’t Meet Domestic Industry Requirement

by Thomas DaMario | Mar 17, 2022 | Patents

In a consolidated appeal from the International Trade Commission (Commission) and two inter partes review (IPR) proceedings before the Patent Trial & Appeal Board (Board), the US Court of Appeals for the Federal Circuit affirmed the Commission’s findings that a hypothetical device does not meet the domestic industry requirement, as well as findings by the Board and the Commission that asserted claims of the involved patents were invalid as obvious. Broadcom Corp. v. ITC, Case Nos. 20-2008; 21-1260, -1362, -1511 (Mar. 8, 2022) (Lourie, Hughes, Stoll, JJ.)

Broadcom filed a complaint at the Commission alleging a violation of 19 U.S.C. § 1337 based on products imported by many respondents, including Renesas Electronics, that allegedly infringed two patents. The first patent is directed to reducing power consumption in computer systems, and the second patent is directed to a memory access unit that improves upon conventional methods of requesting data located at different addresses within a shared memory. The Commission’s administrative law judge issued an initial determination that Broadcom failed to satisfy the technical prong of the domestic industry requirement for the power consumption patent and that one of the asserted claims of the memory access patent was obvious over the prior art. The Commission affirmed both findings.

During the course of the Commission investigation, Renesas petitioned for IPR of both patents. The Board found that two asserted claims of the power consumption patent were obvious but Renesas failed to show that six other asserted claims would have been obvious. The Board also found that all petitioned claims of the memory access patent would have been obvious over the cited art.

Both parties appealed. Renesas appealed the Board’s ruling that six claims of the power consumption patent would not have been obvious in light of the cited art, and Broadcom appealed the Board’s ruling that two claims of the power consumption patent and five claims of the memory access unit patent would have been obvious. Broadcom also appealed the Commission’s decision that there was no violation with respect to the power consumption patent and that the asserted claims of the memory access unit patent would have been obvious.

The Federal Circuit first addressed the Commission’s decision that there was no domestic industry for the power consumption patent. Citing its 2013 decision in Microsoft Corp. v. ITC, the Court explained that a complainant must show that a domestic industry product exists that actually practices at least one claim of the asserted patent. Broadcom identified its System on a Chip (SoC) as a domestic industry article, but there was no dispute that the SoC did not contain a “clock tree driver” required by the asserted claims. To overcome this admitted deficiency, Broadcom argued that a domestic industry existed because Broadcom collaborates with customers to integrate the SoC with external memory to enable retrieval and execution of the clock tree driver feature. The Court rejected this argument, finding that Broadcom posited only a hypothetical device and failed to identify a specific integration [...]

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Count On It, Plural Term Means More Than One

by Yoshiko Ito | Mar 17, 2022 | Patents

The US Court of Appeals for the Federal Circuit affirmed Patent Trial & Appeal Board (Board) patentability decisions after determining that the Board did not err in construing multiple terms within the challenged patents. Apple Inc. v. MPH Technologies Oy, Case Nos. 21-1532; -1533; -1534 (Fed. Cir. Mar. 9, 2022) (Moore, C.J.; Prost, Taranto, JJ.)

MPH owns three patents related to a method for forwarding a message from a first computer to a second computer via an intermediate computer via a network and provides secure message forwarding without relying on any extra encapsulation overhead. Apple petitioned for inter partes review (IPR) of MPH’s patents, challenging the claims in the three patents as obvious over a combination of non-patent literature (RFC3104) and a US patent (Grabelsky). During the proceedings, a series of claim construction disputes were raised. The Board issued final written decisions, finding that Apple failed to show that some claims would have been obvious over the combination of RFC3104 and Grabelsky. Apple appealed.

In seeking to overturn the Board’s decision, Apple raised four claim construction disputes. First, Apple argued that the Board erred in finding that the claim limitation “information fields” requires “two or more fields.” Apple argued that “a plural term covers one or more items” and thus the claim limitation was taught by Grabelsky, which uses a single field. Apple further argued that a word such as “plurality” must be used to clarify that the limitation requires more than one item. The Federal Circuit rejected Apple’s argument, explaining that common English usage presumes that a plural term refers to two or more items. The Court found that the Board did not err in construing the claim limitation because the term “information fields” is plural, thus requiring more than one field, and nothing in the claim language or written description suggested otherwise.

Second, Apple argued that the Board’s interpretation that the message was sent from the mobile computer directly to the first address was inconsistent with the claim limitation “intermediate computer configured to receive from a mobile computer a secure message sent to the first network address” in one of MPH’s patents. Apple argued that the passive language of the claim limitation suggested that “the mobile computer need not send the message to the first network address so long as the message is sent there eventually,” and thus the claim limitation was taught by RFC3104, in which a message sent to a first network address is received at another address before being forwarded to the first network address. The Federal Circuit rejected Apple’s arguments, finding that the Board did not err in construing the claim limitation because the plain language established direct sending of the message from the mobile computer to the first address, and nothing in the remainder of the claims or written description suggested otherwise.

Third, Apple argued that the Board erred in construing the term “substitute” in the claim limitation “substitute the unique identity read from the secure message with another unique identity prior to [...]

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Judge Albright Issues Another Round of Updated Patent Rules for WDTX

by Cecilia Choy, Ph.D. | Mar 17, 2022 | Patents

As previously reported, Judge Albright issued standing orders for his patent cases. On March 7, 2022, Judge Albright issued another set of rules applicable to his large portfolio of patent cases in the Western District of Texas, with some modifications to his prior rules.

This round of new orders includes the following:

In the “Amended Standing Order Regarding Coronavirus (COVID-19) and Other Court Proceedings,” Judge Albright stated that all non-pretrial conference hearings will default to video conference unless otherwise requested by the parties.
Under the “Standing Order Governing Proceedings (OGP) 4.0—Patent Cases,” defendants must serve preliminary invalidity contentions seven weeks after the case management conference, with the below requirements:
- The contentions must be in chart form identifying where in the prior art references each element of the asserted claims is found.
- The contentions must identify limitations that defendants contend are indefinite or lack written description under § 112.
- The contentions must identify any claims that defendants contend are directed to ineligible subject matter under § 101. This requirement has additional sub-requirements. The § 101 contentions must “(1) identify the alleged abstract idea, law of nature, and/or natural phenomenon in each challenged claim; (2) identify each claim element alleged to be well-understood, routine, and/or conventional; and (3) to the extent not duplicative of 102/103 prior art contentions, prior art for the contention that claim elements are well-understood, routine, and/or conventional.” The defendants must also produce all prior art referenced in the invalidity contentions and technical documents (which includes software) sufficient to show the operation of the accused products.
If there is a discovery dispute, the new rules require the requesting party to send an email with a maximum of 500 words for one issue, or a combined 1,000 words for multiple issues, to opposing counsel. The responding party has three business days to respond with an email with the same word limitations. Judge Albright encouraged use of a table to organize the disputed issues and provided an example.
The orders include additional rules for venue discovery, including a requirement that venue or jurisdictional discovery be completed no later than 10 weeks after the filing of an initial venue motion. The Federal Circuit recently decided against Judge Albrights’ justification of venue using car dealerships.
A separate “Standing Order Regarding Notice of Readiness for Patent Cases” provides an example Case Readiness Status Report with further guidelines on timing.

Self-Dealing Lawyer Held Jointly and Severally Liable in Trade Secret Misappropriation

by Paul Devinsky | Mar 17, 2022 | Trade Secrets

The US Court of Appeals for the Fifth Circuit affirmed a judgment holding a lawyer jointly and severally liable for trade secret misappropriation and fraudulent transfer and enjoining any further use of the trade secrets until a money judgment against the lawyer-purchased client business was satisfied. Thomas v. Hughes, Case No. 20-50671 (5th Cir. Mar. 3, 2022) (Wilson, J.)

James Pearcy founded Performance Products, Inc., (PPI) to develop and sell probiotics for livestock. In 2006, Pearcy sold PPI to his lawyer, Lou Ann Hughes. Hughes paid cash for PPI’s stock and agreed that PPI would pay Pearcy a 14% licensing royalty for use of his proprietary formulations, up to $1.35 million over five years, at the end of which PPI would have the option to purchase Pearcy’s formulations for $100,000. When PPI did not fully pay the royalties, Pearcy brought a Texas state court action against Hughes and PPI for breach of contract, misappropriation of trade secrets and breach of fiduciary duty. The jury found for Pearcy, and the Texas court entered judgment against PPI in the amount of $1 million. Hughes and PPI appealed the Texas judgment and posted a supersedeas bond, but the appeal was unsuccessful. Pearcy received the supersedeas bond, but PPI never paid the balance of the judgment. Pearcy sought post-judgment discovery and set a hearing on a motion to compel. The day before the hearing, PPI filed for bankruptcy.

Earlier, in 2006, Hughes had formed a second entity called Performance Products International, LLC. At the time of the Texas judgment, the LLC had no assets. During pendency of the Texas appeal, Hughes changed the second entity’s name to Performance Probiotics, LLC, and obtained a license to sell and distribute commercial livestock feed. In January 2012, Hughes ceased selling products through PPI and began selling them through the LLC. Hughes also formed a third entity called Advance Probiotics International, LLC (API).

Shortly after PPI declared bankruptcy, Pearcy’s widow (also Pearcy) and PPI’s bankruptcy trustee (Thomas) sued Hughes, Performance Probiotics and API in federal court for misappropriation of trade secrets and fraudulent transfer of PPI’s assets in violation of the Texas Uniform Fraudulent Transfer Act (TUFTA). The plaintiffs sought to pierce the corporate veil of both Performance Probiotics and API, alleging that Hughes had used them to commit fraud. Thomas further alleged that Hughes had breached her fiduciary duty to PPI. At trial, the jury found for Pearcy and Thomas, awarding about $1.4 million plus interest in actual damages, which was derived from the amount then due under the Texas judgment. The jury further awarded $1.2 million in exemplary damages., The district court entered final judgment, further ordering Hughes to disgorge $860,000 in compensation from Performance Probiotics. The district court enjoined Hughes and Performance Probiotics from using Pearcy’s trade secrets until the judgment was fully satisfied and held Hughes and Performance Probiotics jointly and severally liable for “all relief granted” and “all amounts due” under the Texas judgment. The district court retained jurisdiction over API in case [...]

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Copyright Claims Board Clarifies Service Rules and Opt-Outs

by Jodi Benassi | Mar 17, 2022 | Copyrights

The US Copyright Office issued two final rules for how companies can designate agents to receive claims and how libraries can preemptively opt out of claims before the Copyright Claims Board (CCB). The agency has been drafting rules governing the CCB since it was established in 2020. The new venue is designed to serve as an alternative forum where parties may voluntarily seek to resolve certain copyright claims regarding any category of copyrighted work.

Companies Can Designate Subsidiaries as Agents of Service

Section 37 CFR § 222.6 (Designated service agents) becomes law effective April 7, 2022. This forthcoming rule will allow corporations, partnerships and unincorporated associations to use the same designated agent for process of service for separate legal entities under their direct or indirect common control. This rule will also allow companies with many subsidiaries to designate one service agent for each of its affiliates.

Libraries and Archives Can Preemptively Opt Out

Section 37 CFR § 223.2 (Libraries and archives opt-out procedures) becomes law effective April 8, 2022. Under this new law, a library or archive that wishes to preemptively opt out of participating in CCB proceedings may do so by submitting written notification to the CCB. The notification must certify that the library or archive qualifies for the limitations on exclusive rights under 17 U.S.C. 108, which provides that it is not an infringement of copyright for a library or archive, or any of its employees acting within the scope of their employment, to reproduce a single copy of a work under certain conditions.

Class Action Opt-Out Procedures

Section 37 CFR § 223.3 (Class action opt-out procedures) becomes law effective April 8, 2022. Under the new law, if a party to an active CCB proceeding receives notice of a pending or putative class action arising out of the same transaction or occurrence as the proceeding before the CCB in which the party is a class member, that party may either opt out of the class action or seek written dismissal of the proceeding before the CCB within 14 days of receiving notice of the pending class action.

Dude, Where’s My Venue? Texas Car Dealerships Aren’t Distributor Agents

by Paul Devinsky | Mar 17, 2022 | Patents

The US Court of Appeals for the Federal Circuit vacated a district court’s denial of motions made by two car distributors to transfer cases out of the Western District of Texas for improper venue, finding that the patent owner failed to establish that franchised car dealerships in the judicial district were agents of the manufacturers for venue purposes under § 1400(b). In re Volkswagen Grp. of Am., Inc., Case Nos. 22-108; -109 (Fed. Cir. Mar. 9, 2022) (Dyk, Reyna, Chen, JJ.) (per curiam).

StratosAudio filed complaints in the Western District of Texas against Volkswagen and Hyundai, asserting infringement of infotainment-related patents. Volkswagen and Hyundai are car distributors incorporated in New Jersey and California, respectively. Both distributors moved to dismiss or transfer their cases for improper venue under § 1406(a). The district court denied the motions, concluding that venue was proper because independently owned Volkswagen and Hyundai car dealerships operated in the district. The district court found that franchise agreements gave the car distributors sufficient control over their respective dealerships such that they constituted regular and established places of business in the district. The district court reached this finding despite the fact that Texas law prohibited direct or indirect operation or control of a franchise by a car manufacturer or distributor. Volkswagen and Hyundai petitioned the Federal Circuit for writ of mandamus to vacate the district court’s order or transfer for improper venue.

The Federal Circuit first considered whether mandamus review was appropriate. The Court explained that it may only issue a writ if the petitioner has no other means adequate to attain the desired relief. In contrast to a motion to transfer to a more convenient venue under § 1404(a), denial of a motion to dismiss or transfer for improper venue under § 1406(a) can be remedied on appeal from final judgment. The Court explained that mandamus relief is therefore only available for a ruling on a § 1406(a) motion where the issue presented doing so is important to “proper judicial administration.” Citing to its ruling in In re. Google LLC, the Court explained that this condition may be met when there are a significant number of district court decisions that adopt conflicting views on a basic legal issue. The Court described the disagreement among district courts over whether independent car dealerships establish venue over vehicle manufacturer and distributors and determined that the situation warranted immediate review.

The Federal Circuit turned to the merits to analyze the factors for determining whether a defendant has a “regular and established place of business” for the purposes of establishing proper venue under 28 U.S.C. § 1400(b). There was no dispute that the car dealerships were physically located in the Western District of Texas, and that the defendants did not have any employees at these locations. The Court thus identified the three operative statutory requirements that StratosAudio had the burden of establishing:

Whether the dealerships were the agents of the defendants
Whether the dealerships conducted the defendants’ [...]

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Lawyers Scolded but Not Sanctioned for Violating Federal Circuit’s COVID-19 Rules

by Paul Devinsky | Mar 10, 2022 | Uncategorized

The US Court of Appeals for the Federal Circuit decided not to impose sanctions for violation of its COVID-19 restrictions on the number of counsel permitted to attend oral argument, citing the involved lawyers’ “earnest remorse.” In re Violation of the Revised Protocols for In-Person Arguments and Related Order, Case No. 22-9000 (Fed. Cir. Feb. 25, 2022) (per curiam).

When the Federal Circuit reopened for in-person oral arguments in September 2021, it continued to restrict public access to the National Courts Building and set out strict protocols governing appearances at oral argument. Under those protocols, only arguing counsel and up to one additional attendee whose presence was necessary to assist or supervise the arguing counsel could attend. All persons entering the building had to sign a form certifying that they were either arguing counsel or assisting or supervising arguing counsel. Arguing counsel had to sign an additional form taking personal responsibility for ensuring that all individuals attending argument with the arguing counsel had read and would comply with the COVID-19 protocols.

Several senior lawyers from one law firm wanted to attend a junior colleague’s oral argument. The junior lawyer moved for permission for two lawyers and two other individuals to attend the oral argument in addition to arguing counsel and the one permitted assistant/supervisor. The Federal Circuit denied the motion. Nonetheless, on the day of argument, four lawyers (each carrying the required form) went to the courthouse and entered the assigned courtroom. The two non-arguing, non-assisting/supervising lawyers sat in the back corner of the courtroom until they were summoned to the front by a deputy clerk and told to leave the courtroom. The lawyers returned to the lobby area and were subsequently escorted out of the building.

The matter was referred to the Federal Circuit’s standing panel on attorney discipline, which ordered all four lawyers to show cause why they should not be sanctioned. The lawyers stated that they had gone to the courthouse notwithstanding the denial of their motion for leave to attend the hearing merely to seek clarification on any potential changed circumstances that might permit their attendance. They also argued that the Court’s COVID-19 restrictions were ambiguous. Finally, they expressed remorse for having violated the rules.

The Federal Circuit criticized the lawyers for trying to attend the oral argument even though their motion for leave to attend was denied. The Court noted that the lawyers might have sought clarification or reconsideration of the denial in writing but stated that it was inappropriate for the lawyers to have sought such clarification or reconsideration in person at the time of the hearing. The Court also called the lawyers’ argument that the protocols were ambiguous “wholly without merit.” Nonetheless, on a finding that the lawyers’ remorse was earnest, the Court decided not to impose sanctions.

Practice Note: Anyone might make an occasional error in judgment. While remorse does not undo such an error, it can at least help prevent sanctions from being imposed. Then again, the Federal Circuit has now [...]

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California, I’m Coming Home: Transfer to Venue Where Products Were Designed Is Appropriate

by Paul Devinsky | Mar 10, 2022 | Patents

The US Court of Appeals for the Federal Circuit denied a patent owner’s petition for writ of mandamus, finding that the district court properly transferred a case from the Eastern District of Virginia to the Northern District of California because the center of the alleged infringing activities occurred in California. In re: SunStone Information Defense, Inc., Case No. 2022-121 (Fed. Cir. Feb. 11, 2022) (Moore, Dyk, Stoll, JJ). (non-precedential).

SunStone filed a patent infringement suit against F5 Networks and one of its customers in the Eastern District of Virginia. F5 Networks moved to transfer the case to the Northern District of California pursuant to 28 U.S.C. § 1404(a), arguing that at the time of filing, SunStone was headquartered in Northern California, and the F5 Networks subsidiary that designed and developed the accused products was also located in the area. F5 Networks also noted that essentially all of the relevant documents and knowledgeable employees were in Northern California.

The district court granted F5 Networks’ motion, explaining that F5 Networks satisfied its burden of proving that transfer was warranted based on convenience of the parties and witnesses and because California was the “center of the alleged infringing activities.” The district court also noted that neither party disputed that the action “might have been brought” in the Northern District of California. SunStone petitioned for writ of mandamus.

The Federal Circuit applied the law of the regional circuit (the Fourth Circuit), which requires finding a clear abuse of discretion in order to overturn a district court’s transfer decision. The Court found that SunStone failed to meet this “stringent standard.” The Court also found that SunStone’s choice of forum was not entitled to significant weight because it was not SunStone’s home forum and had no specific connection to the infringement claims. The Court therefore denied SunStone’s petition.

Practice Note: This is another decision in a long line of recent Federal Circuit rulings relating to venue, which are summarized in an article related to a string of transfer denials in the Western District of Texas and our 2022 IP Outlook Report: The Developments Shaping Patent Law.