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One Bite at the Apple Where State and Federal Jurisdiction Is Concurrent

by | Aug 15, 2024 |

The US Court of Appeals for the Second Circuit upheld a federal district court’s dismissal of a case on res judicata grounds after a state court issued a decision on different claims but had concurrent jurisdiction over the claims alleged in the federal case. Beijing Neu Cloud Oriental Sys. Tech. Co. v. Int’l Bus. Machs. Corp., Case No. 22-3132 (2d Cir. July 25, 2024) (Livingston, Menashi, Kahn, JJ.)

Beijing Neu Cloud Oriental System Technology filed suit in federal district court against several International Business Machines companies (collectively, IBM defendants) asserting a single claim for trade secret misappropriation under the Defend Trade Secrets Act (DTSA). Shortly thereafter, Neu Cloud also sued the IBM defendants in New York state court, alleging state law causes of action for unfair competition, unjust enrichment, breach of fiduciary duty, breach of contract and tortious interference.

The state court dismissed the claims. After the state court issued its decision, the IBM defendants moved to dismiss the federal action, arguing that:

  • Neu Cloud’s claim was time-barred.
  • Neu Cloud failed to state a plausible DTSA claim.
  • The judgment of the New York Supreme Court precluded the instant DTSA claim under res judicata.

The district court granted the motion to dismiss, agreeing with the IBM defendants on the DTSA claims but not on the effect of res judicata. Neu Cloud appealed the dismissal of its complaint. The Second Circuit only considered the arguments related to the IBM defendants’ res judicata defense.

Applying New York law to determine the preclusive effect of the state court’s judgment, the Second Circuit explained that under New York preclusion law “a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter.” This rule applies if the subsequent claim was “actually litigated” in the prior action or if it merely “could have been raised in the prior litigation.”

The Second Circuit found that the district court’s decision was on the merits and the trade secret claims could have been raised in the state court action. The Court held that the New York state court would have been competent to adjudicate the DTSA claim since jurisdiction for DTSA actions is not exclusive to federal courts. The Court noted that the plain text of the DTSA is strong evidence that Congress intended for jurisdiction over DTSA claims to be federal and state concurrent. Moreover, the Second Circuit found that the legislative history revealed no evidence that Congress affirmatively intended to confer exclusive jurisdiction over DTSA claims on the federal courts. The Court noted that many other circuit courts had come to the same conclusion.

Since the parties were clearly the same, the state court case involved the same subject matter, and the claims alleged the same injury and arose out of the same or related facts, the Second Circuit stated that the relevant question was whether Neu Cloud should have sought recovery in state court for its claim of trade secret [...]

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Not Just a Blip: Section 101 as Affirmative Defense

by | Aug 15, 2024 |

On appeal from a motion to dismiss based on subject matter eligibility, the US Court of Appeals for the Federal Circuit held that a district court appropriately analyzed certain claims as representative claims and that the claims were directed to an abstract idea and did not recite an inventive concept. Mobile Acuity, Ltd. v. Blippar Ltd., Case No. 22-2216 (Fed. Cir. Aug. 6, 2024) (Lourie, Bryson, Stark, JJ.)

Mobile Acuity sued Blippar for infringement of claims from two patents directed to software for accessing stored information with a captured image. Mobile Acuity’s operative second amended complaint asserted that Blippar infringed “at least Claims 9, 11, and 16” of one patent and “Claims 9, 11, and 16” of the other. Blippar asserted that claim 9 of each patent was “representative of the entire claim set in each respective Asserted Patent” and that the patents were invalid under 35 U.S.C. § 101. The district court granted Blippar’s motion and subsequently denied Mobile Acuity’s motion to amend the judgment and for leave to file a third amended complaint.

Mobile Acuity appealed, asserting that the district court committed several errors, including the treatment of claim 9 in each asserted patent as a representative claim and the holding that the asserted patents were invalid as claiming ineligible subject matter.

Mobile Acuity first argued that the district court erred in holding that a challenge under § 101 is not an affirmative defense. The Federal Circuit agreed that an eligibility challenge on § 101 grounds is an affirmative defense but found that the district court simply misspoke when it stated during oral argument “[w]e are not talking about an affirmative defense.” However, the Federal Circuit concluded that the “error in word choice was harmless because the district court applied the correct legal standard for evaluating an affirmative defense at the motion to dismiss stage.”

In support of its denied motion to amend, Mobile Acuity argued that “the district court required it to ‘anticipate [the] defendant’s affirmative defense in its complaint.’” The Federal Circuit rebuffed this argument, concluding that the district court did not grant the motion to dismiss on the grounds that Mobile Acuity failed to address patentable subject matter in its complaints but correctly dismissed based on an affirmative defense that “clearly appears on the face of the pleading.” The Court stated that “as we have repeatedly recognized, it is possible and proper to determine patent eligibility under 35 U.S.C. § 101 on a Rule 12(b)(6) motion.”

On the merits, the Federal Circuit first determined that the district court did not merely treat claim 9 of each of the asserted patents as representative of all claims. The Federal Circuit explained that “the court did more, separately analyzing all six claims Mobile Acuity specifically identified in the operative complaint,” as well as two additional claims. The Federal Circuit also agreed with the district court that the six claims were representative “of all claims of the two Asserted Patents.”

As to the merits of the motion to dismiss, [...]

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Go Home: No “Prevailing Party” Status After Voluntary Dismissal Without Prejudice

by | Aug 15, 2024 |

The US Court of Appeals for the Eleventh Circuit affirmed a district court’s ruling that a copyright holder’s voluntary dismissal of its claims did not render the defendant a prevailing party entitled to attorneys’ fees under the Copyright Act. Affordable Aerial Photography, Inc. v. Prop. Matters USA, LLC, Case No. 23-12563 (11th Cir. July 30, 2024) (Wilson, Grant, Lagoa, JJ.)

Affordable Aerial Photography (AAP) filed suit against Property Matters and Home Junction over alleged copyright infringement of a 2010 photograph titled “Presidential Place Front Aerial 2010 AAP,” which provides an aerial view of a residential condominium complex. AAP owns all real estate photos and related products (slide shows, virtual tours, stock photography) of Robert Stevens and licenses them for limited use by customers, such as luxury real estate companies. Property Matters is a real estate brokerage, and Home Junction is a real estate marketing solutions and services provider that designed and maintained Property Matters’ website.

The work was posted with copyright management information and registered with the Copyright Office in April 2018. During or before April 2017, the work appeared on Property Matters’ website without authorization, but AAP did not discover the alleged infringement until February 2022. After AAP filed suit, Property Matters filed a motion to dismiss arguing (in relevant part) that 17 U.S.C. § 507(b) sets a three-year statute of limitations from when the claim accrued (i.e., April 2017) to bring civil action and, therefore, AAP’s suit was untimely by more than two years. The district court denied the motion without prejudice. AAP then filed a notice of voluntary dismissal without prejudice under Rule 41(a)(1)(A)(i) with respect to its action against Property Matters and filed a joint notice of settlement with Home Junction soon after, which closed the case.

Property Matters then moved for attorneys’ fees under 17 U.S.C. § 505, asserting that “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” AAP argued that Property Matters was not the prevailing party because the voluntary dismissal was without prejudice and the limitations period had not yet expired. The district court found that the voluntary dismissal did not materially alter the legal relationship between the parties. The district court applied the “discovery rule” to conclude that AAP’s copyright infringement claim did not accrue until it discovered the alleged infringement in February 2022 and therefore AAP was not time-barred from raising its copyright infringement claim in a separate suit against Property Matters through February 2025. Property Matters appealed.

Reviewing the legal question on appeal de novo, the Eleventh Circuit affirmed. The Court reasoned that a defendant is not the prevailing party when a plaintiff’s action is voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i). This is true regardless of whether a statute of limitations has expired. The Court explained that a defendant does not attain prevailing party status merely because, as a practical matter, a plaintiff is unlikely or unable to refile its claims. Instead, the district court itself must act to reject [...]

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Missed Appropriation: Massive Trade Secret Verdict Vacated

by | Aug 8, 2024 |

The Court of Appeals of Virginia vacated a $2 billion award in a trade secret misappropriation case based on a series of evidential errors and improper jury instructions. Pegasystems Inc. v. Appian Corporation, Case No. 1399-22-4 (Va. Ct. App. 2024) (Beales, Friedman, Callins, JJ.)

Pegasystems and Appian are both companies in the business process management (BMP) industry and offer platforms that allow third parties to build software applications. Appian accused Pega of trade secret misappropriation, presenting evidence that Pega used the employee of a licensee of Appian’s technology to pass trade secrets to Pega, thereby enabling Pega to better market its own technology and exploit Appian’s weaknesses. Pega’s “spy,” Youyong Zou, recorded almost 100 videos of Appian’s platform and used them to demonstrate the strengths and weaknesses of Appian’s system in tutorials sent to Pega. Appian brough an action against Pega and Zou under the Virginia Uniform Trade Secrets Act (VUTSA) and the Virginia Computer Crimes Act. At trial, the jury returned a verdict in favor of Appian, finding that Pega and Zou misappropriated Appian’s trade secrets in violation of VUTSA. The jury awarded Appian damages in excess of $2 billion, which was the largest damages verdict in Virginia’s history. Pega appealed.

The Appellate Court found that although Appian did not fail as a matter of law to prove evidence of trade secret misappropriation, the trial court erred in instructing the jury by failing to place the burden of proximate causation on Appian, as required by both VUTSA and Virginia precedent. The Appellate Court found that this error resulted in a potentially excessive award that assumed all of Pega’s sales were tainted by the misappropriation. The Appellate Court instructed that on remand, Appian bears the burden of proving that the misappropriation caused the alleged damages and proving the amount of damages attributable to the trade secret with reasonable certainty. The Appellate Court also found that the trial court erroneously excluded key evidence that could have established that much of Pega’s revenue had nothing to do with the alleged misappropriation.

The Appellate Court further found that the trial court erred in excluding evidence that Pega argued would establish that many of the allegedly stolen features actually predated Pega’s contact with Zou. The trial court had excluded the evidence because the original laptop with this evidence had become inoperable. The trial court had refused to allow Pega the opportunity to authenticate the evidence and introduce the software on a new laptop. The Appellate Court found that this refusal was an abuse of discretion. The Appellate Court concluded that Pega was entitled to introduce a copy of this software under the rules of evidence, even if it was not on the original laptop.

Finally, the Appellate Court determined that the trial court erred in instructing the jury that the number of people with access to Appian’s trade secrets was “not relevant” to “any issue in this case.” The Appellate Court found that Pega’s evidence that “thousands” of people potentially had access to Appian’s [...]

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NO FAKES Act Would Create Individual Property Right to Control Digital Replicas

by | Aug 8, 2024 |

On July 31, 2024, a bipartisan group of US senators introduced the Nurture Originals, Foster Art, and Keep Entertainment Safe (NO FAKES) Act of 2024 to protect the voice and visual likeness rights of individuals from unauthorized use in the form of digital replicas, including digital replicas created by generative artificial intelligence (AI). The bill was introduced by Senators Chris Coons (D-DE), Marsha Blackburn (R-TN), Amy Klobuchar (D-MN) and Thom Tillis (R-NC) and follows a discussion draft released in October 2023. The press release from Senator Coons’ office makes note of the many organizations that support the proposed legislation and includes quotes from representatives of SAG-AFTRA, the Recording Industry Association of America, the Motion Picture Association, OpenAI, IBM and Creative Artists Agency.

Designed to protect all individuals (not just celebrities), the bill defines a digital replica as a newly created, computer-generated, highly realistic electronic representation that is readily identifiable as the voice or visual likeness of an individual and that is embodied in a sound recording, image, audiovisual work or transmission in which the actual individual did not perform or appear, or a version of such work in which the fundamental character of the performance or appearance has been materially altered. The bill would grant each individual or right holder the right to authorize the use of their voice or visual likeness in a digital replica, which the bill states is a property right. The bill also would establish the characteristics, requirements and duration of the license rights that can be granted in a digital replica. The right to authorize the use of an individual’s voice or visual likeness in a digital replica would not expire upon the death of the individual and would be transferable and licensable (subject to certain time limitations on the post-mortem right and registration requirements with the Register of Copyrights).

The bill would create a civil cause of action for a rights holder against any person that produces or makes available to the public an unauthorized digital replica and would provide for injunctive relief, actual or statutory damages, punitive damages and attorneys’ fees. There would be a limitations period, however, and any civil action would have to be commenced no later than three years after the date on which a rights holder discovered – or with due diligence should have discovered – the violation at issue. The bill provides certain exceptions and safe harbors for the production or use of digital replicas in news, public affairs, sports, documentaries, commentary, criticism, scholarship, satire or parody, or for online services that remove or disable access to unauthorized digital replicas upon receiving a notification from the rights holder.

The bill would preempt any cause of action under state law for the protection of voice and visual likeness rights in connection with a digital replica in an expressive work, except for certain existing state statutes or common law or state statutes regulating sexually explicit or election-related digital replicas.

On August 5, 2024, the US Patent & Trademark Office hosted [...]

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Unified Front: No Forfeiture by Failing to Raise Argument in Request for Rehearing

by | Aug 8, 2024 |

Addressing forfeiture of issues on appeal and sufficiency of the asserted prior art, the US Court of Appeals for the Federal Circuit upheld a Patent Trial & Appeal Board obviousness finding, explaining that a party does not waive arguments on appeal by failing to include them in a request for rehearing. Voice Tech Corp. v. Unified Patents, LLC, Case No. 22-2163 (Fed. Cir. Aug. 1, 2024) (Lourie, Chen, Cunningham, JJ.)

Unified Patents petitioned for inter partes review (IPR) of a Voice Tech patent that purported to improve upon the prior art by allowing a single mobile device to access and control various native applications and functions on a computer. Unified alleged that the challenged claims were unpatentable as obvious over three prior art references. The Board agreed and found that all of the challenged claims were unpatentable. Voice Tech appealed.

Voice Tech argued that Unified’s petition failed to identify any disclosure in the prior art that taught the “mobile device interface” claim limitation in the challenged claims because Unified’s claim analysis failed to expressly mention a “mobile device interface.” The Board dismissed this argument, finding that Unified properly mapped its analysis of other patent claims to the “mobile device interface” claim recitation and presented a sufficient argument regarding obviousness. The Federal Circuit agreed that one of the prior art references taught a “mobile device interface.” The Court found that the Board did not rely on a new theory not found in the IPR petition, but instead had mapped the “mobile device interface” limitations to the prior art because the petition itself raised the theory.

Voice Tech also argued that the Board had failed to properly interpret certain claim terms. Unified countered that Voice Tech forfeited the claim construction arguments because they were not included in Voice Tech’s request for rehearing to the Board. The Federal Circuit disagreed, finding that a party’s choice to not re-raise an argument in a request for rehearing will not, by itself, forfeit the argument for review on appeal. The Court found that since Voice Tech had raised the claim construction arguments to the Board in its patent owner’s response, it had not forfeited those arguments on appeal.

The Federal Circuit also addressed Unified’s argument that Voice Tech’s proposed claim constructions would not change the outcome of the patentability analysis given the Board’s findings that the prior art disclosed the claim terms. The Court agreed with Unified, finding that it only needed to construe claim terms as necessary to resolve the controversy. The Court found that because Voice Tech’s responsive arguments were conclusory and failed to address how Voice Tech would be prejudiced by the Board’s adopted claim construction, the Federal Circuit did not need to consider Voice Tech’s claim construction arguments.

Finally, the Federal Circuit addressed Voice Tech’s arguments that the Board erred in finding that the prior art taught certain claim limitations and that Unified’s obviousness analysis was based on hindsight bias. The Court upheld the Board’s obviousness determinations as to all challenged claims, [...]

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Private Sale Means Public Fail

by | Aug 8, 2024 | ,

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board decision that a private sale of a product embodying the claimed invention did not qualify as a “public disclosure” under 35 U.S.C. § 102(b)(2)(B). Sanho Corp. v. Kaijet Technology Int’l Ltd, Inc., Case No. 23-1336 (Fed. Cir. July 31, 2024) (Dyk, Clevenger, Stoll, JJ.)

Sanho owns a patent directed to a port extension apparatus designed to enhance connectivity of end-user devices (such as laptops) with other devices (such as printers). Kaijet petitioned for inter partes review (IPR) challenging certain claims of Sanho’s patent, arguing that the claims were obvious based on a prior art reference. The Board found that the patent claims were invalid because of the prior art reference’s earlier effective filing date. Sanho argued that a prior sale of its HyperDrive device by the inventor of the patent should disqualify the reference as prior art. However, the Board determined that Sanho failed to demonstrate a public disclosure of the HyperDrive sale before the prior art reference’s effective filing date. Thus, the patent was invalidated. Sanho appealed.

The Federal Circuit affirmed, explaining that the America Invents Act (AIA) redefined prior art, shifting from a first-to-invent to a first-inventor-to-file system. Under the AIA, prior art includes patents and applications filed before the patent’s effective filing date subject to exceptions for public disclosures by the inventor. Sanho argued that the HyperDrive sale fell into this exception.

The Federal Circuit dismissed Sanho’s argument that the phrase “publicly disclosed” in § 102(b)(2)(B) should encompass all types of disclosures described in § 102(a)(1), including private sales. The crux of the issue was whether placing an invention “on sale” was tantamount to a “public disclosure” under § 102(b)(2)(B). The statute states that a disclosure is not prior art if the subject matter was publicly disclosed by the inventor before the effective filing date of the prior art. Sanho argued that “publicly disclosed” includes any disclosure, even private sales. The Court disagreed, explaining that the statute’s use of “publicly” implies a narrower scope than just “disclosed.” The Court noted that the purpose of this exception is to protect inventors who make their inventions available to the public before another’s patent filing.

The Federal Circuit also relied on legislative history in support of the conclusion that “public disclosure” in § 102(b)(2)(B) means the invention must be made available to the public. Sanho argued that as long as there are no confidentiality requirements, all disclosures, even private sales, should constitute public disclosures. Again, the Court rejected that argument, noting that the statute differentiates between “publicly disclosed” and general “disclosures,” implying different meanings.

The Federal Circuit determined that § 102(b)(2)(B) protects inventors who publicly disclose their inventions from subsequent disclosures by others, ensuring that prior public disclosure by the inventor prevents a third party’s disclosure from becoming prior art. This provision aims to encourage inventors to share their innovations with the public.

Practice Note: For a disclosure to qualify as “public” under the [...]

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PTAB MTA Pilot Program to the Rescue

by | Aug 1, 2024 |

On review of a final written decision from the Patent Trial & Appeal Board in an inter partes review (IPR), the US Court of Appeals for the Federal Circuit found that all challenged claims were obvious but left open the possibility of the patent owner amending the claims under the Motion to Amend (MTA) Pilot Program. ZyXEL Communications Corp. v. UNM Rainforest Innovations, Case Nos. 22-2220; -2250 (Fed. Cir. July 22, 2024) (Dyk, Prost, Stark, JJ.)

ZyXEL Communications petitioned for IPR challenging claims 1 – 4, 6, 7 and 8 of a patent owned by UNM Rainforest Innovation (UNMRI). The patent relates to methods for constructing frame structures in communication systems using orthogonal frequency-division multiple access (OFDMA) technologies. The patent describes a method for constructing a frame structure with two sections, each of which is configured for a different communication system, where the second communication system is used to support high mobility users (i.e., faster moving users).

Before the Board, ZyXEL argued that claims 1 – 4, 6 and 7 were unpatentable in light of two prior art references (Talukdar and Li), and that claim 8 was unpatentable in light of Talukdar and another prior art reference (Nystrom). During the Board proceedings, UNMRI filed a contingent motion to amend if any of the challenged claims were found to be unpatentable. As part of its motion, UNMRI requested preliminary guidance from the Board pursuant to the Board’s MTA Pilot Program. In its opposition to UNMRI’s motion to amend, ZyXEL argued that UNMRI’s amended claims lacked written description support, and in its preliminary guidance, the Board agreed. UNMRI attempted to file a revised motion to amend, but the Board rejected the revised motion and instead permitted UNMRI to file a reply in support of its original motion. It also allowed ZyXEL to file a sur-reply. The Board determined that claims 1 – 4, 6 and 7 were unpatentable, but that claim 8 was not. The Board also granted UNMRI’s motion to amend and determined that the new claims were nonobvious over the prior art of record. Both sides appealed.

With respect to the Board’s decision on the obviousness of claims 1 – 4, 6 and 7, the Federal Circuit found that substantial evidence supported the ruling. UNMRI’s primary argument was that a person of skill in the art (POSA) would not have been motivated to combine Talukdar and Li, but the Court credited the Board’s reliance on ZyXEL’s expert, who demonstrated sufficient motivation to combine the two references.

The Federal Circuit reversed the Board’s finding that claim 8 had not been shown to be obvious, however. The Court noted that while the Nystrom reference may not explicitly state the benefit of the missing limitations, “a prior art reference does not need to explicitly articulate or express why its teachings are beneficial so long as its teachings are beneficial and a POSA would recognize that their application was beneficial.”

Regarding UNMRI’s motion to amend, ZyXEL argued that the Board erred in granting the [...]

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Don’t Mess With Anna: Texas Town Schools Patent Owner on § 101

by | Aug 1, 2024 |

On cross-appeals from a granted Fed. R. of Civ. Pro. 12(c) motion on subject matter eligibility, the US Court of Appeals for the Federal Circuit found that a patent directed to a method for “assist[ing] an investigator in conducting a background investigation” did not claim patent-eligible subject matter, but that the mere assertion of the patent did not render the case “exceptional” for the purposes of attorneys’ fees. Miller Mendel, Inc. v. City of Anna, Texas, Case No. 22-1753 (Fed. Cir. July 18, 2024) (Moore, C.J.; Cunningham, Stoll, JJ.)

Miller Mendel sued the City of Anna, Texas, for infringement of claims directed to software for managing pre-employment background investigations based on the Anna police department’s use of the Guardian Alliance Technologies (GAT) software platform. Miller Mendel’s complaint asserted “at least claims 1, 5, and 15” of the patent, each of which generally recited a “method for a computing device with a processor and a system memory to assist an investigator in conducting a background investigation” comprising the steps of receiving data identifying the applicant, storing the data, transmitting an applicant hyperlink to the applicant’s email address and receiving an applicant’s response.

Anna moved for judgment on the pleadings, alleging that the patent claims were ineligible for patent protection under 35 U.S.C. § 101. After the district court granted the motion, Miller Mendel filed a motion for reconsideration, arguing that the district court lacked jurisdiction to invalidate any unasserted patent claims. The district court denied the reconsideration motion but clarified that its decision was limited to asserted claims 1, 5 and 15. Anna also filed a motion for attorneys’ fees, which the district court denied, finding that the case was not exceptional. Miller Mendel appealed the § 101 issue, and Anna cross-appealed on the unasserted claims and attorneys’ fees issues.

The Federal Circuit first addressed Miller Mendel’s argument that the district court erred in relying on a declaration filed by Anna in ruling on the Rule 12(c) motion. The Court acknowledged that a Rule 12(c) motion must be treated as one for summary judgment if matters outside the pleadings are presented to and not excluded by the court. However, the district court explained that the declaration was not relevant to its decision, and it did not rely on any material outside the pleadings in its § 101 analysis. Thus, the Federal Circuit found that any error in failing to explicitly exclude the declaration was harmless.

Turning next to the patent eligibility analysis, the Federal Circuit agreed with the district court that under Alice step one, the asserted claims were directed to the abstract idea of performing a background check. The claims and specification emphasized that the invention was a system to “help a background investigator more efficiently and effectively conduct a background investigation” by “automating a majority of the tasks of a common pre-employment background investigation so that fewer hardcopy documents are necessary.” In other words, the problem facing the inventor was the abstract idea of performing background checks more efficiently [...]

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Beware Equitable Doctrine of Issue Preclusion in Multiparty, Multivenue Patent Campaigns

by | Aug 1, 2024 |

Addressing for the first time whether an invalidity order merges with a voluntary dismissal for purposes of finality, the US Court of Appeals for the Federal Circuit held that an interlocutory order merges with the final dismissal, rendering the interlocutory order final for purposes of issue preclusion. Koss Corp. v. Bose Corp., Case No. 22-2090 (Fed. Cir. July 19, 2024) (Hughes, Stoll, Cunningham, JJ.). As a consequence, the Federal Circuit found that the patent owner’s appeal from an adverse decision in an inter partes review (IPR) was moot under the doctrine of nonmutual collateral estoppel.

In July 2020, Koss filed a patent infringement lawsuit against Bose in the Western District of Texas, asserting three patents whose common specification discloses a “wireless earphone that communicates with a digital-audio source, such as an iPod, over an ad hoc wireless network like Bluetooth.” The same day, Koss asserted the same patents against Plantronics. Bose filed a motion challenging venue and also petitioned for inter partes review (IPR) of the three patents. Later in 2020, Bose filed a declaratory judgment action seeking a declaration of noninfringement in the District of Massachusetts on the three patents Koss asserted against Bose in the Texas litigation. The Massachusetts litigation was stayed pending the resolution of the venue motions in the Texas case.

In 2021, the Texas court dismissed Koss’s complaint against Bose for improper venue. Koss then asserted a counterclaim of infringement of the same three patents in the Massachusetts litigation. The Massachusetts court again stayed the litigation pending the resolution of the IPRs, which (by that time) the Patent Trial & Appeal Board had instituted. Meanwhile, Koss’s case against Plantronics was transferred to the Northern District of California, and Plantronics moved to dismiss the complaint on the ground that all the asserted claims (which included all the claims asserted against Bose) were invalid under 35 U.S.C. § 101. The California court granted Plantronics’s motion, rendering all the asserted claims invalid. However, that order did not finally dispose of the case.

Koss then moved for leave to amend its complaint, which the California district court granted. In the amended complaint, Koss asserted two additional patents. Plantronics moved to dismiss the asserted claims in those patents as invalid under § 101. The parties fully briefed Plantronics’s motion, but before the district court issued a decision on the merits of that motion, Koss voluntarily stipulated to dismissal with prejudice, disposing of the lawsuit in its entirety. Koss did not ask the district court to vacate its earlier order finding certain claims invalid under § 101. The California district court then issued an order dismissing the case with prejudice. The deadline for Koss to appeal the judgment came and went – Koss did not appeal.

Arguing that the patents had been finally adjudicated invalid in the Plantronics litigation, Bose moved to dismiss Koss’s appeal from the Board in the IPR proceedings as moot. Koss opposed the motion, arguing that its amended complaint rendered the invalidity decision on the prior complaint non-final because the [...]

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