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Revenge of the Grammar Nerds: Grammatical Canons Overturn $8.6 Million Jury Infringement Verdict

by | Jan 14, 2021 |

Addressing whether the phrase “a plurality of” should apply to each element in a series, the US Court of Appeals for the Federal Circuit entered judgment of non-infringement, finding that the district court’s claim construction that did not require a plurality of each recited component was at odds with the claim language based on the application of grammatical rules. SIMO Holdings, Inc. v. Hong Kong uCloudlink Network Technology Limited, Case No. 19-2411 (Fed. Cir. Jan. 5, 2021) (Taranto, J.)

SIMO sued uCloudlink for patent infringement based on sales of certain GlocalMe WiFi hotspot devices and a wireless phone model. Generally, these hotspots and patented technology seek to reduce costs for calls and internet access for people traveling internationally.

The sole patent claim at issue covered an apparatus that performed certain communications protocol data transfer and authentication functions that enabled an international traveler to take advantage of a non-subscribed carrier without incurring roaming charges. At issue was the interpretation of that claim language, specifically whether the preamble, which recited a series of technological components (e.g., memory, processors, programs and, importantly here, “non-local calls database”), was a limiting part of the claim, and, if so, whether the language that recited “a plurality of” these components meant that the claimed invention must have a plurality of each of these components, or just more than one of all of them taken together. This was a determining factor for infringement, as it was essentially undisputed that the uCloudlink devices did not have one (let alone multiple) non-local calls databases. The district court concluded that the preamble language was limiting but, parsing the grammar involved and noting that specification “states that the non-local calls database is optional,” concluded that a non-local calls database was not a necessary component, and that summary judgment of infringement was warranted. UCloudlink appealed.

The Federal Circuit agreed that the preamble was limiting, but disagreed that a structure not having a recited element could infringe. The claim in issue recited “[A] wireless communication client or extension unit comprising . . .” followed by a list of components including the non-local call database. Notwithstanding that the database was found in the preamble, the Court concluded that it was limiting because it followed the term “comprising” and provided the necessary structure for the invention, which otherwise would have had no limiting description of the physical components of the apparatus. Moreover, the Court noted that subsequent claim language, which recited “the wireless communication client” and “the extension unit,” referred to those items identified in the preamble after “comprising.”

The Federal Circuit relied on many grammatical canons, its own precedent, various Scalia & Garner textualist interpretation books and the law-school writing-class favorite, Strunk & White. Applying these sources together, the Court reiterated that nouns in series are generally each treated as modified by a phrase that precedes the series (here, “a plurality of”), and that such a rule is particularly forceful when the series ends in an “and” rather than an “or.” And, with no article [...]

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Patent Owner’s Disavowal of Appeal from District Court’s Noninfringement Judgment Moots IPR Appeal

by | Jan 14, 2021 |

Addressing the standard for mootness in inter partes review (IPR) proceedings following a district court noninfringement judgment, the US Court of Appeals for the Federal Circuit held that a petitioner’s IPR appeal was moot after the patent owner decided not to appeal the final judgment of noninfringement. ABS Global, Inc. v. Cytonome/ST, LLC, Case No. 19-2051 (Fed. Cir., Jan. 6, 2021) (Stoll, J.) (Prost, C.J., dissenting in part).

In June 2017, Cytonome/ST filed a complaint against ABS asserting infringement of six patents, including the patent of interest in this case. ABS filed a petition for IPR of all claims of the patent. In April 2019, the Patent Trial and Appeal Board (PTAB, the Board) issued its final written decision invalidating certain claims of the patent. Two weeks later, the district court granted ABS partial summary judgment, holding that the accused products did not infringe any of the asserted patent’s claims. In June 2019, ABS appealed the PTAB’s final written decision. In a briefing before the Federal Circuit, Cytonome/ST’s counsel filed an affidavit stating that Cytonome/ST “has elected not to pursue an appeal of the district court’s finding of non-infringement as to the patent and hereby disclaims such an appeal.” In June 2020, the district court entered final judgment, including as to non-infringement of the patent.

The Federal Circuit dismissed ABS’ appeal of the PTAB’s final written decision on the ground that the appeal was moot in view of the district court’s non-infringement judgment. The Court characterized the question as one under the voluntary-cessation doctrine. In the context of intellectual property infringement cases, the voluntary-cessation doctrine requires the property owner claiming mootness to prove that the “allegedly wrongful behavior could not reasonably be expected to recur,” i.e., that it will not assert the intellectual property right against the same accused products again. If it does, the burden shifts to the accused infringer to show that it “engages in or has sufficiently concrete plans to engage in activities” that would not be covered by the property owner’s non-assertion decision.

Applying the doctrine, the Federal Circuit concluded that Cytonome/ST could not reasonably be expected to assert infringement of the patent against ABS because ABS had already secured a district court judgment that the accused products do not infringe and Cytonome/ST disclaimed any appeal of the non-infringement judgment. In effect, ABS was insulated from liability for infringement, including for future infringement for products that are “essentially the same” as ABS’ currently accused products pursuant to the Kessler doctrine. Further, the Court found that ABS had not demonstrated it could reasonably expect Cytonome/ST to sue it for infringement of the patent in the future as ABS had not shown it had current or concrete future plans to engage in activities not covered by Cytonome/ST’s disavowal: “Cytonome’s disavowal of its right to appeal the summary judgment of noninfringement ‘estops Cytonome from asserting liability against ABS for infringement of the…patent claims in connection with the accused products, thereby allowing ABS to make, use, and sell those products [...]

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Supreme Court to Consider Doctrine of Assignor Estoppel in Patent Cases

by | Jan 14, 2021 | ,

The Supreme Court of the United States agreed to review assignor estoppel in patent cases. Minerva Surgical, Inc. v. Hologic, Inc., et al., Case No. 20-440 (Supr. Ct. Jan. 8, 2021) (certiorari granted). The question presented is:

Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.

Csaba Truckai is the inventor of two patents relating to endometrial ablation that were ultimately acquired by Hologic. Truckai later founded Minerva and developed a system that competed with Hologic’s system. The district court ruled that Minerva could not challenge the validity of the patents because Truckai was barred by assignor estoppel from attacking his own patents. A jury found that Minerva infringed both patents and awarded Hologic more than $4.7 million. On appeal, the US Court of Appeals for the Federal Circuit affirmed, confirming that assignor estoppel bars an assignor from asserting invalidity of an assigned patent in district court, and “declined Minerva’s invitation to ‘abandon the doctrine’ of assignor estoppel entirely.”



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State University Challenges Board on Sovereign Immunity in Inter Partes Review

by | Jan 14, 2021 |

The US Court of Appeals for the Federal Circuit reiterated that “[s]overeign immunity does not apply to IPR proceedings when the patent owner is a state.” Board of Regents of the University of Texas System v. Baylor College of Medicine, Case No. 20-1469 (Fed. Cir. Dec. 10, 2020) (per curiam).

Baylor College of Medicine petitioned for inter partes review (IPR) of two patents owned by the Board of Regents of the University of Texas System (UT). UT moved to dismiss the petitions on state sovereign immunity grounds. The Patent Trial and Appeal Board denied the motion, citing Regents of the University of Minnesota v. LSI Corp. (IP Update, Vol. 22, No. 7).

UT appealed, arguing that University of Minnesota was wrongly decided, but admitted that the panel was bound by it. Predictably, the panel affirmed the Board.

Practice Note: UT’s strategy implies that it intends to use its case as a vehicle to seek en banc (and possibly Supreme Court) review of the University of Minnesota decision.



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New or Not, Object-Oriented Simulation Patent Ineligible Under § 101

by | Jan 14, 2021 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s pleadings-stage determination that patent claims directed to an object-oriented simulation were subject matter ineligible under 35 USC § 101. Simio, LLC v. FlexSim Software Prod., Inc., Case No. 20-1171 (Fed. Cir. Dec 29, 2020) (Prost, C.J.).

Simio filed suit against FlexSim for infringement of patent claims directed to object-oriented simulations in which one instance of an object may have behaviors assigned to it without changing the generic object’s definition. FlexSim moved to dismiss the complaint under Fed. R. of Civ. P.12(b)(6), arguing that the patent was invalid under 35 USC § 101. The district court granted FlexSim’s motion to dismiss, finding that the asserted claims were directed to the ineligible abstract idea of substituting text-based coding with graphical processing and that FlexSim properly showed there was no inventive concept or alteration sufficient to make the system patent-eligible. Simio appealed.

The Federal Circuit reviewed the dismissal order and its underlying patent eligibility conclusions de novo. Under the two-step Alice/Mayo framework, the Court affirmed. Considering the first step of the Alice/Mayo framework, the Court agreed that the asserted claims were “directed to the abstract idea of using graphics instead of programming to create object-oriented simulations.” The Court rejected Simio’s argument that the “executable process to add a new behavior to an object instance” improved the functionality of the computer on which it ran, concluding that no improvement was made to the computer and that the claim limitation did not change the claim’s “character as a whole.” As to step two of the Alice/Mayo framework, whether the claim limited the abstract idea to an inventive concept, the Federal Circuit concluded that, while the claim may be directed to a new idea, it is still an abstract one lacking any inventive concept or application of the idea. The Court affirmed the district court’s dismissal.

The Federal Circuit next addressed whether the district court erred in denying Simio’s motion for leave to amend its complaint. The Court concluded that, after disregarding conclusory statements, Simio’s amended complaint just repackaged the same assertions of non-abstractness as the original complaint. Citing its holding in ShoppersChoice.com (IP Update, May 2020), the Court also rejected Simio’s argument that the district court should have conducted claim construction before determining eligibility. In ShoppersChoice.com, the Court held that pleadings-stage patent eligibility decisions may be proper when the patentee does not explain how a term’s construction could affect the analysis.

Finally, the Federal Circuit raised its own independent reasoning for denying Simio’s motion for leave to amend, explaining that it “may affirm on any grounds for which there is a record sufficient to permit conclusions of law, even grounds not relied upon by the district court.” The Court found that Simio failed to show good cause for seeking leave to amend after the scheduling order’s deadline. Namely, Simio’s amended complaint contained no facts that could not have been alleged before the deadline. Nor did Simio demonstrate any relevant [...]

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How Not to Build a Case of Trade Secret Misappropriation

by | Jan 14, 2021 | ,

The US Court of Appeals for the Ninth Circuit affirmed a dismissal of trade secret claims, finding that although misappropriation of a trade secret prior to the enactment of the Defend Trade Secrets Act (DTSA) does not preclude a claim arising from post-enactment or continued use of the same trade secret, the publication of a trade secret in a patent application extinguishes trade secret status. Eli Attia; Eli Attia Architect PC v. Google LLC, et al., Case No. 19-15771 (9th Cir. Dec. 16, 2020) (Wallace, J.)

Eli Attia is an architect who developed a system and method for automated design, fabrication and construction, called Engineered Architecture (EA). In 2010, Attia entered into a partnership with Google. Attia disclosed his trade secrets related to the technology to Google so that they could work together to develop a program that would implement EA. Attia executed patent assignments with Google, and a year later Google filed patent applications related to the EA trade secrets. The patents were published in 2012. Google then allegedly excluded Attia from the project and used EA to create Flux, a platform used by architects, engineers and construction workers, focused on making buildings more efficient and using artificial intelligence to streamline the design process.

In 2014, Attia sued Google under state law for trade secret misappropriation and breach of contract. In 2016, Congress enacted the DTSA. Since its inception, DTSA has been an enumerated predicate for the civil Racketeer Influenced and Corrupt Organizations Act (RICO), which means that plaintiffs can bring lawsuits claiming a conspiracy when theft of trade secrets is an underlying claim. Attia amended his complaint to add RICO claims based on Google’s alleged trade secret misappropriation. Google removed the action to federal court and moved to dismiss. Attia filed another amended complaint, this time asserting a new DTSA claim and two RICO claims.

The district court dismissed Attia’s federal claims with prejudice and declined to exercise supplemental jurisdiction over the state law claims. The district court found that the alleged trade secrets were already disclosed in Google’s 2012 published patent applications, and those publications extinguished the relevant trade secrets. The court held that Attia lacked standing to assert DTSA or RICO claims, and neither estoppel nor continued use could convert the 2012 publications into a DTSA violation. Attia appealed.

On appeal, the Ninth Circuit noted that the issue was one of first impression before the Court, and set out to determine whether, as a matter of law, the pre-enactment disclosure of a trade secret forecloses the possibility of a DTSA claim arising from the continued use of the trade secret after enactment. The Uniform Trade Secrets Act (UTSA), the established model statute for trade secret misappropriation that has been adopted by the majority of the states, contains an anti-continued use provision, the Court noted. The UTSA states that “ a continuing misappropriation that began prior to the effective date,”… “does not apply to the continuing misappropriation that occurs after the effective date.” The DTSA does not [...]

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IP Implications of the Consolidated Appropriations Act, 2021

by | Jan 14, 2021 | , ,

On December 27, 2020, Congress signed the Consolidated Appropriations Act, 2021, into law. The omnibus act includes new legislation affecting patent, copyright and trademark law. A brief summary of key provisions is provided below.

Patents – Section 325 Biological Product Patent Transparency

42 USC § 262(k) was amended to require that the US Food and Drug Administration (FDA) provide the public with more information about patented biological products. Within six months, the FDA must make the following information available to the public on its Database of Licensed Biological Products or “Purple Book,” and it must update the list every 30 days:

  • A list of each biological product, by nonproprietary name, for which a biologics license is in effect
  • The license date and application number
  • The license and marketing status (as available)
  • Exclusivity periods

The amendment requires that the holders of a license to market a biologic drug now disclose all patents believed to be covering that drug. The new law is designed to prevent errors that could delay biosimilars from coming to the market.

Copyrights – The CASE Act of 2020

The Consolidated Appropriations Act incorporates the Copyright Alternative in Small-Claims Enforcement (CASE) Act of 2020, as well as legislation designed to increase criminal penalties for the unauthorized digital streaming of copyright-protected content. The CASE Act includes revisions to the Copyright Act, 17 USC §§ 101 et seq., with the goal of creating a new venue for copyright owners to enforce their rights instead of having to file an action in federal court.

The Copyright Claims Board

The CASE Act established the Copyright Claims Board (a small claims court), which is designed to serve as an alternative forum where parties may voluntarily seek to resolve certain copyright claims regarding any category of copyrighted work. A party may opt out upon being served with a claim, choosing instead to resolve the dispute in federal court. A party to a proceeding before the Board may, but is not required to, be represented by a lawyer. A party may also be represented by a law student who is qualified under applicable law, and who provides such representation on a pro bono basis. The Board consists of three copyright claims officers who may conduct individualized proceedings to resolve disputes and must issue written decisions setting forth their factual findings and legal conclusions.

Procedural Matters

The Board must follow the law in the federal jurisdiction in which the action could have been brought if filed in federal court. Because jurisdictional conflicts may arise where a dispute may have been brought in multiple jurisdictions, the CASE Act provides that the Board may apply the law of the jurisdiction that the Board determines has the most significant ties to the parties and the conduct at issue.

Although formal motion practice is not permitted, discovery is allowed on a limited basis, including requests for documents, written interrogatories and written requests for admission. The Board may consider evidence, documentary and (non-expert) testimony, without the application of formal [...]

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Government Contractors May Include Restrictive Markings on ‘Unlimited Rights’ Data

by and | Jan 7, 2021 |

The US Court of Appeals for the Federal Circuit reversed an Armed Services Board of Contract Appeals (ASBCA) denial of summary judgment and held that a federal contractor may include certain restrictive markings on “unlimited rights” data supplied to the US government. The Boeing Company v. Secretary of the Air Force, Case No. 19-2147 (Fed. Cir. Dec. 21, 2020) (Lourie, J.)

Boeing entered into two contracts with the US Air Force that required Boeing to deliver technical data to the Air Force with “unlimited rights” pursuant to Defense Federal Acquisition Regulation Supplement 252.227-7013 (-7013 clause). Boeing marked each technical data deliverable submitted to the Air Force with a legend that described Boeing’s data rights pertaining to third parties. The government rejected Boeing’s technical data deliverables in view of the legend Boeing placed on the data, and Boeing requested a Contracting Officer Final Decision (COFD) regarding the propriety of its marking. The Air Force issued a COFD for each contract, confirming the rejection of technical data marked with Boeing’s legend as a nonconforming marking because it was not in the authorized format pursuant to paragraph (f) of the -7013 clause (Subsection 7013(f)).

Boeing appealed the COFDs to the ASBCA and moved for summary judgment, arguing that Subsection 7013(f) only applies to legends that restrict the government’s rights in technical data and is inapplicable to legends that only restrict third-party rights. The ASBCA denied Boeing’s summary judgment motion because Boeing’s legend was not one of the four specific legends authorized under Subsection 7013(f). The ASBCA entered final judgment, and Boeing appealed.

The Federal Circuit reversed. The Court found that the plain language of Subsection 7013(f) makes clear that the two sentences describe the way in which a contractor “may assert restrictions on the Government’s rights,” and agreed with Boeing that Subsection 7013(f) applies only in situations when a contractor seeks to assert restrictions on the government’s rights. The Federal Circuit explained that under the ASBCA’s reading, the first sentence would be “entirely unnecessary” to the regulation, and the Court “cannot disregard the first sentence.” The Court also explained that its interpretation of Subsection 7013(f) is faithful to the overall purpose of the -7013 clause because the US Department of Defense intended the technical rights regulations to govern allocation of data rights between contractors and the government.

The Federal Circuit remanded the case back to the ASBCA for further proceedings on whether Boeing’s legend did in fact restrict the government’s rights.

Practice Note: This decision strengthens contractors’ ability to ensure that data supplied in a federal procurement remain protected from non-governmental access, particularly in light of evolving standards for the protection of “confidential information” pursuant to the Freedom of Information Act from the Supreme Court holding in Food Marketing Institute v. Argus Leader Media, 139 S. Ct. 2356 (2019).



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PTAB Designates Two Precedential Opinions for Evaluating Impact of District Court Litigations on Discretionary Denial under § 314(a)

by | Jan 7, 2021 |

In the wake of its May 13, 2020, precedential decision in Apple v. Fintiv, Inc., the Patent Trial and Appeal Board designated as precedential two additional decisions that weigh the Fintiv factors. In Fintiv, the Board articulated six factors for consideration when determining to exercise discretion to deny institution of an inter partes review (IPR) petition under § 314(a) in view of a parallel district court proceeding:

  • Existence of a stay pending IPR
  • Proximity of the court’s trial date to the Board’s deadline for issuing a final written decision
  • Expended investment in the parallel proceeding
  • Overlap between issues raised each proceeding
  • Whether the petitioner and the defendant are the same party
  • Other circumstances.

The two new precedential decisions provide further insight as to what circumstances may tip the balance for each factor. In each decision, the Board found that the circumstances of the parallel district court proceeding did not weigh in favor of a discretionary denial of institution.

In Sotera Wireless, Inc. v. Masimo Corp., Case No. IPR2020-01019, Paper 12 (USPTO Dec. 1, 2020 (Chagnon, APJ) (designated precedential as to § II.A on Dec. 17, 2020), the Board weighed the Fintiv factors and declined to deny institution based on the parallel district proceeding. In particular, the PTAB found that the already granted stay weighed strongly against exercising discretion to deny institution under the first factor. The Board rejected speculative arguments that if it declined review, the district court would lift the already granted stay and would set a trial date to pre-date the timeframe for issuing a final written decision in the IPR proceeding. The Board concluded that the second factor also weighed against denial because discovery was not complete and the district court had not issued a claim construction order or any other significant rulings. The Board also found that the fourth factor (issue overlap) weighed against denial because materially different invalidity grounds had been raised in the district court contentions as compared to the grounds at issue in the IPR petition.

In Snap, Inc. v. SRK Technology, LLC, Case No. IPR2020-00820, Paper 15 (USPTO Oct. 21, 2020 (Droesch, APJ) (designated precedential as to § II.A on Dec. 17, 2020), the Board again weighed the Fintiv factors and declined to deny institution based on the parallel district proceeding. Because the district court had not yet ruled on the motion to stay pending the outcome of the IPR, the Board found that the “stay factor” did not weigh for or against denying institution. As for the issue overlap factor, the Board found that a stipulation by the defendant to not pursue in district court any ground raised, or that could have reasonably been raised, in the IPR weighed strongly in favor of not exercising discretion to deny institution.



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Defend Trade Secrets Act Supports Sealing Information on Appeal

by | Jan 7, 2021 | ,

Addressing whether purported trade secret information ought to remain under seal on appeal, the US Court of Appeals for the Sixth Circuit ruled in a one-judge order that the Defend Trade Secrets Act (DTSA) provided a statutory basis that overcame the presumption of public access. Magnesium Machine, LLC v. Terves, LLC, Case No. 20-3779 (6th Cir. Dec. 10, 2020) (McKeague, J.)

This case presented the issue of what part of a record may be sealed on appeal—normally a routine question—in litigation that was anything but routine. According to the verified complaint, Magnesium Machine discovered a particular salt-based treatment for use on oil and gas tools. According to Magnesium, in the course of litigating a patent infringement suit against one of Magnesium’s suppliers, Terves and its counsel, McDonald Hopkins, obtained information reflective of Magnesium’s alleged trade secret from a third party pursuant to subpoena. Specifically, Magnesium claimed that particular language in a settlement agreement disclosed Magnesium’s trade secrets. The settlement agreement had been produced by the third party without any confidentiality designation. The complaint alleged violations of the federal DTSA and Oklahoma and Ohio state trade secrets acts.

Invoking the seizure provisions of the DTSA, Magnesium sought and obtained an ex parte order directing the US Marshals to seize Terves’s electronic equipment, including devices at Terves’ president’s home. That order did not last long. Following an evidentiary hearing (in which Terves participated) the day after the order was issued, the district court vacated the seizure order because Magnesium had not demonstrated misappropriation of a trade secret.

To appeal, Magnesium requested express findings of fact and conclusions of law. The district court explained that Terves and its lawyers subpoenaed materials in good faith, that the settlement agreement was produced without restriction (such as a confidentiality marking), that Terves’s lawyers did not impermissibly share the settlement agreement with Terves employees and that upon objection by Magnesium, Terves deleted its copies of the settlement agreement. Thereafter, on motions to dismiss, the district court concluded that Magnesium failed to allege misappropriation and that the litigation privilege protected Terves’ counsel.

Terves sought and obtained attorneys’ fees against Magnesium and its counsel for proceeding in bad faith. The district court found that Magnesium had every reason to know that its claims were baseless, because it was “well aware at the time the suit was filed that Defendants had received the allegedly secret information through legitimate discovery means and that it was provided to them without description.” Moreover, claiming that a three-word phrase in the settlement agreement purportedly disclosed trade secret information was “an intentional exaggeration/misrepresentation.” Indeed, other public statements had provided far more detail than the purportedly secret phrase, according to the district court.

On appeal, although Terves contended that the purported trade secret did not qualify as a secret, in the exercise of caution and on Magnesium’s request, Terves nonetheless sought to file a brief under seal. Judge David McKeague, acting on behalf of the Sixth Circuit, agreed that it was appropriate to seal the information, [...]

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