Key Takeaways and Outlook for 2022
Tracking with this era’s continuation and uncertainty trends―global supply chain disruption, innovation outpacing legislation, the unstoppable internet of [all the] things (IoT)―2022 is expected to be another busy year in the world of patent litigation.
We fully expect persistence in these spaces:
The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) obviousness decision, finding that the Board did not err in restricting the broadest reasonable interpretation of a claim term based on its use in the specification. Quanergy Systems, Inc. v. Velodyne Lidar USA, Inc., Case Nos. 20-2070; -2072 (Fed. Cir. Feb. 4, 2022) (Newman, Lourie, O’Malley, JJ.)
Velodyne owns a patent directed to a lidar-based 3D point cloud measuring system that can be used in self-driving vehicles to sense their surroundings. Quanergy petitioned for inter partes review of Velodyne’s patent, challenging the claims as obvious over a Japanese patent application (Mizuno). During the proceedings, the Board construed the broadest reasonable interpretation of the term “lidar (light detection and ranging)” to mean “pulsed time-of-flight (ToF) lidar” based on the written description of Velodyne’s patent and found that Mizuno’s system was not a ToF lidar system. The Board also presumed a nexus between the claimed pulsed ToF lidar system and Velodyne’s evidence of commercial success, relying on mapping the features of the claimed ToF lidar system to Velodyne’s commercial products. Based on its obviousness analysis and presumption of nexus, the Board issued final written decisions, finding that Velodyne’s patent was not unpatentable as obvious. Quanergy appealed.
Quanergy raised two arguments on appeal: The Board erred in its construction of the term “lidar,” and the Board erred in its obviousness analysis. Addressing claim construction, Quanergy argued that the Board did not use the broadest reasonable interpretation of “lidar” since “lidar” merely requires the use of laser light for detection and ranging, and thus “lidar” includes not only “pulsed ToF lidar” but also triangulation and other detection techniques described in Mizuno. The Federal Circuit rejected Quanergy’s argument, finding that the Board did not err in construing the term “lidar” according to its broadest reasonable interpretation because the written description focuses exclusively on “pulsed ToF lidar.”
Turning to obviousness, Quanergy argued that the Board erred in concluding that Velodyne’s claims were nonobvious over Mizuno because the expert testimony that the Board relied upon focused only on one particular embodiment of Mizuno’s device, which was not directed to a pulsed ToF lidar system. The Federal Circuit rejected this argument, finding that the Board did not err because Mizuno described “detect[ing] light reflected at an angle using position or image sensors, neither of which are used in pulsed time-of-flight lidar systems.” Based on this description, the Court found that Mizuno’s device was not a ToF lidar system.
Quanergy also argued that the Board failed to consider the issue of unclaimed features before presuming nexus. Quanergy argued that Velodyne’s evidence of commercial success related to those unclaimed features, such as a 360-degree horizontal field of view, a wide vertical field of view, a dense 3D point cloud and software, all of which were critical and materially impacted the functionality of Velodyne’s products. The Federal Circuit rejected this argument, finding that the Board did not err in finding a presumption of nexus [...]
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The US Court of Appeals for the Federal Circuit reversed a district court order enforcing one party’s version of a settlement agreement, finding that version unsupported by the record. The Court found that the other party’s version accurately reflected the parties’ understanding. PlasmaCam, Inc. v. CNCElectronics, LLC, Case No. 21-1689 (Fed. Cir. Feb. 3, 2022) (Dyk, Reyna, JJ.) (Newman, J., dissenting).
PlasmaCam and CNCElectronics (CNC) both operate in the precision cutting industry. PlasmaCam is the exclusive licensee of a patent related to precision cutting equipment, and it sued CNC for allegedly infringing the patent. In December 2019, the parties notified the district court that they had settled the case but disputes arose in the process of drafting a formal agreement, particularly with respect to the scope of “covered products” under the settlement license and the scope of a “mutual release.” Although the parties eventually advised the district court that they had reached a complete agreement, disputes remained as to the scope of covered products. On PlasmaCam’s motion, the district court ordered CNC to execute PlasmaCam’s version of the agreement, execute a promissory note contemplated by the agreement and pay any unpaid settlement funds. CNC appealed.
The Federal Circuit first evaluated whether it had jurisdiction. The Court found that it had jurisdiction because the district court’s order was an injunction (since it ordered CNC to specifically perform an action, i.e., execute an agreement and promissory note, and not merely to pay money) and a final judgment (because it resolved all substantial issues between the parties).
The Federal Circuit next considered the negotiations between the parties with regards to the settlement agreement. As to the scope of covered products, the Court found that the parties had reached agreement regarding a definition of “covered products” in an email, even though the scope of the mutual release was still being negotiated. However, the Court found that the agreed definition of “covered products” was different from the one PlasmaCam provided to the Court and the one which the Court had subsequently ordered CNC to adopt. The Court also recognized the parties’ subsequent agreement regarding the mutual release, which both parties had confirmed to the district court. Because the district court had clearly erred by adopting a definition of “covered products” different from the one that was agreed by the parties, the Court reversed the district court’s order and remanded for further proceedings consistent with the parties’ actual agreement.
Judge Newman dissented. In her view, no agreement had been reached at all, as the parties had apparently continued to disagree as to the scope of key terms.
Practice Note: In this case, the parties’ statements to the district court that they had reached an agreement played a large role in establishing that an agreement had been formed even though there was no single signed document that reflected the agreement and, in some views, there continued to be disputes about important terms. Litigants should be careful not to represent to a court that an agreement has been [...]
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Following public consultation rounds on the regulation of standard-essential patents (SEPs) in the United States and the United Kingdom, the European Union followed suit and published a “Call for Evidence” concerning an impact assessment on the European Union’s new framework for SEPs on 14 February 2022.
The Call for Evidence is part of the European Commission’s proposal for new EU legislation and non-legislative actions, which is expected to be adopted in the fourth quarter of 2022. While the European Union remains open on how exactly a system for licensing SEPs can be made more balanced, fair, transparent, predictable and efficient, there are already signs of a stricter approach in European competition policy towards dominant positions, including SEP holders, in high-tech markets. The European Commission stresses that the expected entry into force of the European unitary patent system requires an initiative at EU level, as initiatives at national level will not apply to unitary patents. Key elements of discussion include:
The European Commission is accepting feedback in all 24 EU languages until 9 May 2022 (midnight Brussels time), and is particularly interested to hear opinions of SEP holders, SEP implementers, patent lawyers, legal practitioners, academics, patent-pool administrators, industry associations, start-ups, small and medium-sized enterprises (SMEs), standard development organizations (SDOs), consultants, policy makers and any other stakeholders that have experience with SEPs. All feedback will be published online.
Practice Note: Stakeholders should consider participating in the consultation, irrespective of whether they are more in the SEP holders’ or implementers’ camp, and even if their EU business may be limited. In times of global licensing campaigns, dialogues between the European Union and the United States on competition policy in the technology sector, and EU courts assuming jurisdiction in global SEP disputes, a future EU SEP policy will have an impact also elsewhere around the globe.
The US Court of Appeals for the Federal Circuit affirmed the grant of a preliminary injunction, finding that the district court did not abuse its discretion, clearly err in its underlying factual findings or abuse its discretion in setting the scope of the preliminary injunction. BlephEx, LLC v. Myco Indus., Inc., Case Nos. 2021-1149; -1365 (Fed. Cir. Feb. 3, 2022) (Moore, Schall, O’Malley, JJ.)
Myco sells AB Max, a mechanical device with an attached swab used for treating an eye condition known as blepharitis. Myco began marketing AB Max at a trade show in February 2019. One month later, BlephEx filed an application that later issued as a patent. The patent is directed toward cleaning debris from an eye during treatment of ocular disorders, including blepharitis. According to the patent, prior art treatment for blepharitis included at-home treatment where the patient would use a cotton swab, fingertip or scrubbing pad to scrub the eyelid margin in order to remove debris. Patients would often fail to adequately cleanse the eyelid margin, however. The patent’s solution is an electromechanical device with an attached swab for use by an eyecare professional to clean the patient’s eyelid margins.
The day the patent issued, BlephEx sued Myco and its chairman, John R. Choate, alleging that Myco’s AB Max infringed BlephEx’s newly issued patent. BlephEx moved the district court for a preliminary injunction prohibiting Myco from selling, distributing or offering the AB Max for sale. Myco opposed, arguing that a prior art reference (Nichamin) raised a substantial question of invalidity. The district court disagreed with Myco and granted the injunction. The district court noted that to anticipate, a prior art reference must disclose all elements of a claim arranged as in the claim, and Nichamin did not disclose combining the electromechanical applicator device depicted in one embodiment with a swab disclosed in another. The district court also rejected Myco’s argument that the patent examiner failed to consider Nichamin because he did not substantively discuss it during prosecution. The district court further rejected Myco’s obviousness argument as unsupported by expert evidence, finding Myco failed to overcome “the safety concerns of attaching a swab that is soaked in an abrasive to the Nichamin hand-held device.”
After the district court granted the preliminary injunction, Myco moved for reconsideration and argued that the preliminary injunction was overbroad because the AB Max had noninfringing uses. The district court rejected Myco’s argument, finding it was untimely and presented hypothetical noninfringing uses that were “outweighed by evidence that the only actual use of the AB Max was to treat anterior blepharitis,” which would likely infringe the asserted patent. Myco appealed.
The Federal Circuit affirmed the preliminary injunction grant. With respect to Myco’s anticipation argument, the Court found “Myco offers nothing other than attorney argument as to what the highly skilled artisan would do,” and this was insufficient to raise a substantial question of validity. The Court also noted that Myco had “put all of its eggs in the anticipation basket” and fatally failed [...]
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Considering numerous claim construction, infringement and damages issues related to patents allegedly covering Apple’s iPhones 5 and 6 series technology, a panel of the US Court of Appeals for the Federal Circuit determined that the district court should have held a third trial on damages because the plaintiff’s expert improperly treated the asserted patents as key during his analysis of purportedly comparable license agreements. Apple Inc. v. Wi-Lan Inc., Case No. 20-2011 (Fed. Cir.) (Moore, C.J.; Bryson, Prost, JJ.)
This appeal is the latest iteration of a patent dispute between Apple and Wi-Lan that has lasted eight years and included two trials. The two patents at issue are directed to bandwidth technology that allows a “subscriber unit” rather than the “base station” to allocate bandwidth. At issue in the appeal were numerous challenges from both Apple and Wi-Lan.
The Federal Circuit rejected Apple’s challenge to the district court’s construction of “subscriber unit,” which Apple claimed was limited to “customer premises equipment [CPE]” (e.g., home routers). Although Apple pointed to parts of the specification that suggested that a CPE was a subscriber unit, the Court found that no language met the heavy burden of a clear and unmistakable redefinition of “subscriber unit.” That the sole disclosed embodiment was a CPE did not move the needle, as nothing indicated that the embodiment was limiting.
Next, the Federal Circuit affirmed the jury verdict on liability, finding that substantial evidence supported the jury’s determination that the accused iPhones contained a subscriber unit. The Court found that a jury could conclude from expert testimony that an iPhone allocates bandwidth between two separate connections—voice-over-LTE and data.
Because of the appeal, Apple may now be on the hook for additional infringement liability. The district court had granted Apple summary judgment of noninfringement based on a license agreement between Intel (the maker of Apple’s processor chips in the accused products) and Wi-Lan. According to Apple, this agreement gave Intel a license through patent expiry rather than for the license term. The Federal Circuit rejected that reading of the license between Intel and Wi-Lan, instead finding that the license extended only to pre-termination sales, not in perpetuity as Apple claimed.
Finally, the Federal Circuit found that the district court correctly ordered a new trial on damages after the first trial in the case but erred by not ordering the new trial on damages based on expert testimony admitted at the second damages trial. Regarding the first damages trial, the Court rejected Wi-Lan’s challenge to the district court’s determination that Wi-Lan’s damages expert did not appropriately tie his damages opinion to the benefits of the patented technology. With respect to the second damages trial, the Court found that Wi-Lan’s damages expert gave improper testimony because, without tying his opinion to the facts of the case, he stated that the asserted patents were the “key” drivers of the royalty rates in other license agreements he relied upon—licenses that were to a much larger patent portfolio. Without a sound basis in evidence, [...]
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The US Patent & Trademark Office (PTO) continues to uphold its promise to combat fraud and “protect the integrity of the U.S. trademark register” with initiatives to investigate and sanction actions before the PTO that appear to violate the Trademark Rules of Practice or the PTO website terms of use. The latest effort comes in the form of a January 25, 2022, sanctions order signed by the commissioner for trademarks against Abtach, 360 Digital Marketing and Retrocube based on evidence that each of the respondents engaged in an “egregious scheme to deceive and defraud both the PTO and individual applicants in more than 5,500 trademark applications, including engaging in the unauthorized practice of law and intentionally providing false, fictitious, or fraudulent information to the PTO in violation of the PTO’s rules of practice in trademark matters.” According to the sanctions order, the respondents were each given an opportunity to respond to a show cause order issued in November 2021, but the PTO received no responses from the noticed parties.
In the sanctions order, the PTO outlined the activities of the three respondents, which appear to operate as separate entities but are ultimately controlled by Abtach, a Pakistan-based company that is also under investigation by Pakistan’s Federal Investigation Agency for criminal fraud. The PTO’s use of the word “egregious” to describe the respondents’ actions might be an understatement. The sanctions order describes how the respondents set up dozens of websites to hold themselves out as providers of logo designs and low-cost trademark application filing services while forging documents that appear to be issued by the PTO, artificially modifying official PTO documents, threatening customers with legal action if they did not file for registration of their logos through the respondents, intentionally filing applications with errors to delay and increase the cost of the prosecution process, submitting invalid verifications and declarations and demanding payments for unnecessary services or fraudulently inflated fees. The respondents took these actions while failing to employ any US-licensed lawyers to do this work before the PTO.
In determining appropriate sanctions, the PTO considers several factors, including whether the conduct was willful or negligent, whether it was part of a pattern of activity or an isolated event, whether it infected the entire record or was limited to a single submission, whether it was intended to injure a party, what effect it has on the PTO and what is needed to deter similar conduct by others. In this case, the PTO found that the respondents had orchestrated a “widespread, intentional and coordinated effort to defraud both applicants and the USPTO.” Finding the respondents’ activities to be both willful and fraudulent, and to have harmed thousands of applicants while also delaying proceedings in the PTO and “eroding trust in the U.S. trademark registration process,” the PTO ordered termination of all trademark applications and proceedings submitted by the respondents. The PTO will also flag any issued registrations as being subject to a sanctions order. To the extent any victims of the respondents have [...]
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In a precedential opinion, the US Court of Appeals for the Federal Circuit reversed a district court’s denial of a plaintiff’s requested injunction seeking to force a patent challenger to abandon its petitions for inter partes review (IPR). Nippon Shinyaku Co. Ltd. v. Sarepta Therapeutics, Inc., Case No. 2021-2369 (Fed. Cir. Feb. 8, 2022) (Newman, Lourie, Stoll, JJ.)
Nippon Shinyaku and Sarepta Therapeutics executed a mutual confidentiality agreement (MCA) to facilitate discussion of “a potential business relationship relating to therapies for the treatment of Duchenne Muscular Dystrophy.” The MCA established a mutual covenant not to sue for “any legal or equitable cause of action, suit or claim or otherwise initiate any litigation or other form of legal or administrative proceeding against the other Party . . . in any jurisdiction in the United States or Japan of or concerning intellectual property in the field of Duchenne Muscular Dystrophy” during a covenant term. The mutual covenant explicitly “include[d], but [wa]s not limited to, patent infringement litigations, declaratory judgment actions, patent validity challenges before the U.S. Patent and Trademark Office or Japanese Patent Office, and reexamination proceedings before the U.S. Patent and Trademark Office” (emphasis added). The MCA also included a forum selection clause to govern post-term intellectual property disputes between the parties, which stipulated:
that all Potential Actions arising under U.S. law relating to patent infringement or invalidity, and filed within two (2) years of the end of the Covenant Term, shall be filed in the United States District Court for the District of Delaware and that neither Party will contest personal jurisdiction or venue in the District of Delaware and that neither Party will seek to transfer the Potential Actions on the ground of forum non conveniens (emphasis added).
“Potential actions” were defined as:
any patent or other intellectual property disputes between [Nippon Shinyaku] and Sarepta, or their Affiliates, other than the EP Oppositions or JP Actions, filed with a court or administrative agency prior to or after the Effective Date in the United States, Europe, Japan or other countries in connection with the Parties’ development and commercialization of therapies for Duchenne Muscular Dystrophy (emphasis added).
The day the covenant term ended, Sarepta filed seven petitions for IPR at the Patent Trial & Appeal Board (Board). Nippon Shinyaku filed suit in the US District Court for the District of Delaware for breach of contract, declaratory judgment of noninfringement and invalidity and patent infringement. Nippon Shinyaku motioned for a preliminary injunction to enjoin Sarepta from proceeding with the IPR petitions and to force Sarepta to withdraw them. The district court denied Nippon Shinyaku under each of the preliminary injunction factors (likelihood of success on the merits, irreparable harm in the absence of extraordinary preliminary relief, balance of harms in its favor and relief being in the public interest).
The district court explained that any irreparable harm arguments fell within Nippon Shinyaku’s contract interpretation arguments, and that Nippon Shinyaku’s balance of hardships and public interest arguments relied on Sarepta’s ability to file [...]
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March 2022 Update: The Federal Circuit has issued an errata to this decision. Read about it here.
Addressing inter partes review (IPR) estoppel after the Supreme Court of the United States’ 2018 decision in SAS Institute, Inc. v. Iancu, the US Court of Appeals for the Federal Circuit overruled its decision in Shaw Industries Group v. Automated Creel Systems, stating that the only plausible reading of 35 U.S.C. § 315(e)(2) estops a party from raising all claims and grounds that reasonably could have been included in the party’s petition for IPR. The Court also rejected the district court’s two-tier damages model as contrary to customary patent damages calculations. California Institute of Technology v. Broadcom Limited, Case Nos. 20-2222; 21-1527 (Fed. Cir. Feb. 4, 2022) (Lourie, Linn, Dyk, JJ.) (Dyk, J., dissenting in part).
Background
California Institute of Technology (Caltech) filed suit against Broadcom and Apple, alleging patent infringement directed to the generation and repetition of information in a wireless data transmission system. Wireless transmission systems generally use data repetition so that the transmitted information may be decoded even when data loss occurs. The patented circuitry discloses a form of irregular data repetition in which portions of the information bits may be repeated a varying number of times.
Apple filed multiple IPR petitions challenging the validity of the claims at issue. The Patent Trial & Appeal Board (Board) concluded in all cases that Apple failed to show that the challenged claims were unpatentable as obvious. At the district court, Apple and Broadcom raised new arguments of obviousness not asserted in the IPR proceedings. The district court granted Caltech’s motion for summary judgment of no invalidity, precluding Apple and Broadcom from raising arguments at trial that they reasonably could have raised in their IPR petitions.
At trial, the district court instructed the jury that “repeat” means “generation of additional bits, where generation can include, for example, duplication or reuse of bits.” Apple and Broadcom argued that the Broadcom chips (which were integrated into Apple devices) did not infringe the asserted claims because they did not repeat information at all. With respect to one of the asserted patents, the district court did not provide a jury instruction relating to its construction that the claim language “information bits appear in a variable number of subsets” requires irregular information bit repetition. The jury found infringement of all asserted claims. Apple and Broadcom filed post-trial motions for judgment as a matter of law (JMOL) and a new trial, both of which the district court denied.
The district court adopted Caltech’s proposed two-tier damages theory, explaining that Broadcom and Apple’s products were different and therefore possessed different values simply because they were “different companies at different levels in the supply chain.” The district court ultimately entered judgment against Broadcom for $288 million and against Apple for $885 million. Broadcom and Apple appealed.
The Appeal
Broadcom and Apple argued that the district court’s construction of “repeat” was inconsistent with the claim language and specification. The Federal Circuit [...]
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Key Takeaways and Outlook for 2022
While Gen Z taught us all on TikTok how not to be “cheugy,” or out of touch with pop culture, similarly, trademark law in 2021 ushered in new and changed regulations, provided further guidance on traditional legal concepts and gave us a peek into how brands may help shape the future in the “metaverse”—and beyond. Trademarks (like Gen Z), keeping us all hip.
After another year of uncertainty marked by an ongoing pandemic, environmental strains, fights for social justice and a growing understanding of what it means to be truly equitable and inclusive, we expect that brands will continue to serve as cultural beacons, consumer protection tools and drivers of change in 2022. Developments to watch include:
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