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IPR Estoppel Applies to Claim Not Addressed During Pre-SAS Proceeding

by | Sep 1, 2022 |

In the companion district court case to the Supreme Court’s 2019 Thryv v. Click-to-Call decision regarding the scope of review for inter partes review (IPR) decisions, the US Court of Appeals for the Federal Circuit addressed what it characterized as “a rather unusual set of circumstances” to find that the accused infringer was estopped from challenging in district court the validity of a claim for which the Patent Trial & Appeal Board (Board) had refused to institute IPR. Click-to-Call Techs. LP v. Ingenio, Inc., Case No. 22-1016 (Fed. Cir. Aug. 17, 2022) (Stoll, Schall, Cunningham, JJ.)

Click-to-Call filed suit against Ingenio alleging patent infringement of 16 claims. Ingenio filed a petition for IPR challenging the 16 claims and one additional dependent claim. The Board only partially instituted the IPR, and in its final written decision addressed and found persuasive un-patentability grounds based on a Dezonno reference but refused to consider grounds based on a Freeman reference (leaving one of the asserted claims unaddressed). Ingenio had successfully requested a stay of the district court suit pending resolution of the IPR. During the appeal of the Board’s decision regarding the IPR, the Supreme Court in SAS Institute, Inc. v. Iancu, overruled the practice of partial institutions. However, Ingenio never sought remand under SAS for the Board to consider its challenge to the unaddressed asserted claim.

After the IPR appeal had run its course, the district court lifted the stay and Ingenio moved for summary judgment of invalidity. Ingenio argued that the unaddressed asserted claim (which was the only asserted claim not found unpatentable in the IPR) was invalid based on the same Dezonno reference that Ingenio had used against the other asserted claims. Click-to-Call argued that 35 U.S.C. § 315(e)(2) estopped Ingenio from raising this invalidity ground. Click-to-Call also moved to amend its selection of asserted claims to add two additional claims that were not at issue in the IPR. The district court found that Dezonno anticipated the unaddressed asserted claim and denied Click-to-Call leave to amend its asserted claims. Click-to-Call appealed.

Click-to-Call argued that Ingenio was estopped from asserting invalidity of the unaddressed asserted claim. The Federal Circuit agreed and found that IPR estoppel applied. Specifically, the Court found that district court erred by only analyzing common law issue preclusion, focusing on whether the argument had been “actually litigated” instead of following the language of IPR estoppel under § 315(e)(2), which estops grounds that “reasonably could have [been] raised.” The Court found that the statutory language precluded Ingenio from arguing that Dezonno anticipated the unaddressed asserted claim. The Court explained that Ingenio’s IPR petition included not only a challenge to the unaddressed asserted claim based upon Freeman, but also unpatentability challenges to other claims based on Dezonno. The Court viewed this as evidence of Ingenio’s awareness of Dezonno as an anticipatory ground that it “reasonably could have raised” in the IPR. The Court was unpersuaded by Ingenio’s arguments that there was no estoppel with regard [...]

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PTO Can and Should Use Alice/Mayo Framework to Assess Eligibility

by | Sep 1, 2022 |

Addressing a challenge of the Alice/Mayo framework in the context of the Administrative Procedure Act (APA) and the Fifth Amendment’s due process clause, the US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision finding that patent claims directed to analyzing social security benefit applications were patent ineligible under 35 U.S.C. § 101. In re Killian, Case No. 21-2113 (Fed. Cir. Aug. 23, 2022) (Taranto, Clevenger, Chen, JJ.)

Jeffrey Killian filed a patent application related to a system and method for determining eligibility for social security disability insurance (SSDI) benefits through a computer network. The examiner rejected the claims under § 101, finding that they were directed to the abstract idea of “determining eligibility for social security disability insurance . . . benefits” and lacked additional elements amounting to significantly more than the abstract idea because the additional elements were simply generic recitations of generic computer functionalities. Killian appealed to the Board, which affirmed the examiner’s rejection. The Board explained that the claims were directed to the patent ineligible abstract idea of “a search algorithm for identifying people who may be eligible for SSDI benefits they are not receiving,” and that the “determining” and “selecting” limitations of the claims could be performed by the human mind and thus were an “abstract mental process.” Killian appealed.

Killian raised several arguments that generally fell into three categories:

  1. The Alice/Mayo standard is indefinite under the APA.
  2. The § 101 analysis for software violated Killian’s Fifth Amendment due process rights.
  3. Step 2 of the Alice/Mayo analysis has no basis in patent law.

Addressing the first argument, the Federal Circuit noted that the APA cannot apply to the decisions of courts because courts are not agencies. Next, the Court dismissed Killian’s argument that all § 101 decisions are void because the Alice/Mayo standard is indefinite. The Court explained that it has routinely found that mental processes are abstract ideas, including claims that were directed to data gathering, analysis and notification on generic computers. The Court found that nothing in Killian’s claims provided an inventive manner to accomplish the claimed method, and thus the § 101 rejection was entirely proper. As a final point, the Court stated that it was bound to Supreme Court precedent and only new overruling precedent would change the analysis it applied.

The Federal Circuit also rejected Killian’s due process argument. Killian argued that his due process rights were violated because he did not have an opportunity to appear in the other cases regarding patent eligibility. As an initial matter, the Court noted that no “void-for-vagueness” doctrine argument was put forward, and the doctrine requires a case-by-case analysis. The Court found that this was not a close case, as data gathering and analysis methods run afoul of established § 101 precedent. Next, the Court addressed the common law approach of not requiring “a single governing definitional context” and a comparison to previously decided cases finding it appropriate. Killian’s due process rights were found to [...]

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File Like an Eagle: ANDA pH Specification Rules Infringement Inquiry

by | Sep 1, 2022 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s finding of noninfringement in a Hatch-Waxman case under 35 U.S.C. § 271(e)(2) and § 271(a)-(b). The Court found that the alleged infringer’s abbreviated new drug application (ANDA) specification controlled the § 271(e)(2) infringement inquiry, and that there were no clear errors by the district court that would warrant reconsideration of the § 271(a)-(b) ruling. Par Pharmaceutical, Inc. et al. v. Eagle Pharmaceuticals, Inc., Case No. 21-2342 (Fed. Cir. Aug. 18, 2022) (Moore, Prost, Hughes, JJ.)

Par is the maker of Vasostrict®, a vasopressin injection product used to treat patients with critically low blood pressure. Par sued Eagle, an ANDA filer seeking to market a generic version of Vasostrict®, asserting infringement of two Orange Book-listed patents. The claims of both asserted patents required a vasopressin composition with a rounded pH between 3.7 and 3.9 (i.e., a pH between 3.65 and 3.94 before rounding). Par argued that Eagle infringed because Eagle’s ANDA sought approval for a product with a pH of 3.64, just 0.01 beneath the claimed range, and because “real-world” evidence purportedly showed that the pH of Eagle’s product drifts up over time. Accordingly, Par asserted infringement under § 271(e)(2), based on the filing of Eagle’s ANDA, and also sought a declaratory judgment that Eagle’s planned generic product would infringe under § 271(a)-(b). The district court disagreed. Par appealed.

Turning first to the issue of infringement under § 271(e)(2), the Federal Circuit explained that because drug manufacturers are bound by strict statutory provisions to sell only those products that comport with their ANDAs, if an ANDA defines a proposed generic drug in a manner that directly addresses the issue of infringement, the ANDA controls the infringement inquiry. The Court stated, however, that if an ANDA specification does not speak clearly and directly to the question of infringement, courts may look to other relevant evidence, such as data or samples the ANDA filer has submitted to the US Food & Drug Administration (FDA), to assess whether a proposed product will infringe.

The Federal Circuit found that in Eagle’s case, “the inquiry begins and ends with Eagle’s ANDA specification.” Eagle’s ANDA contained both a release specification, requiring the generic product to have a pH range of 3.4–3.6 (i.e., up to 3.64 before rounding) at the time of distribution, and a stability specification, requiring that same pH range throughout the entirety of the product’s shelf life. Par argued that the stability specification was irrelevant to the infringement inquiry because the FDA cannot ensure that every product Eagle sells complies with the stability specification. The Court disagreed, finding that the district court did not clearly err in ruling that Eagle’s ANDA defined a product outside the scope of Par’s claims.

As to Par’s declaratory judgment claim under § 271(a)-(b), the Federal Circuit found that the district court did not commit clear error in its consideration of Par’s infringement arguments. The district court considered but did not find compelling Par’s evidence of an upward pH drift in Eagle’s post-release pH data [...]

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Fifth Circuit Affirms Dismissal of Walker Process Claim, Disagrees with Federal Circuit Transfer of Action

by | Aug 25, 2022 | ,

The US Court of Appeals for the Fifth Circuit affirmed a summary judgment order dismissing a Walker Process monopolization action brought by Ronald Chandler and his oilfield service company Chandler Manufacturing (collectively, Chandler). The Fifth Circuit affirmed the lower court’s tossing of the action, holding that the alleged claims lacked a nexus to antitrust injury and were time barred under the four-year statute of limitations. Ronald Chandler et al. v. Phoenix Services, LLC, Case No. 21-10626 (5th Cir. Aug. 15, 2022) (Wiener, Graves, Duncan, JJ.)

A Walker Process monopolization action involves antitrust claims regarding fraudulently obtained patents. Chandler alleged that even though Phoenix Services’ patent for fracking technology was declared unenforceable in separate federal litigation in 2018, Phoenix Services continued to enforce the patent to exclude competitors from the market (for example, by sending cease-and-desist letters to Chandler’s clients that attempted to utilize the technology). A Walker Process claim requires a showing of the following:

  • The defendant obtained its patent by “knowing and willful fraud on the patent office and maintained and enforced the patent with knowledge of the fraudulent procurement.”
  • The plaintiff can satisfy all other elements of a Sherman Act monopolization claim.

In the district court, a Texas federal judge granted summary judgment to Phoenix Services, finding that Chandler filed the lawsuit too late and that the defendants involved ultimately could not be held liable. Chandler appealed.

The Fifth Circuit first addressed its appellate jurisdiction. The Court made it clear that it did not agree with the Federal Circuit’s transfer of this Walker Process case (on the basis that it did “not present a substantial issue of patent law” since the underlying patent had already been declared unenforceable in earlier litigation), but that under the Supreme Court’s 1988 decision in Christianson v. Colt Indus. Operating Corp. it did not find the transfer “implausible.” It therefore accepted jurisdiction but noted that its acceptance did not mean that it found the Federal Circuit’s decision correct.

The Fifth Circuit acknowledged that unlike the situation in Xitronix v. KLA-Tencor, where it and the Federal Circuit debated the appellate jurisdiction issue of Walker Process claims, the patent involved here had already been declared unenforceable. However, the Fifth Circuit pointedly noted its position that Walker Process claims should fall under the appellate purview of the Federal Circuit.

On the merits, the Fifth Circuit agreed with the Texas district court that Chandler did not sufficiently demonstrate that its alleged lost profits were caused by Phoenix Services’ alleged antitrust behavior. The Court found that Chandler failed to present substantial evidence that the cease-and-desist letters materially harmed Chandler’s business.

Antitrust plaintiffs must show the following:

  • Injury-in-fact, e., an injury to the plaintiff proximately caused by the defendants’ conduct
  • Antitrust injury
  • Proper plaintiff status, which ensures that other parties are not better situated to bring suit.

Only injury-in-fact was analyzed in the appeal. Chandler argued that the cease-and-desist letter sent to its clients eventually drove the client out of business. However, the Fifth Circuit [...]

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Claim Cancelation Limits but Doesn’t Prohibit Assignor Estoppel Defense

by | Aug 25, 2022 |

On remand from the Supreme Court, the US Court of Appeals for the Federal Circuit reconsidered the boundaries of the doctrine of assignor estoppel. The Federal Circuit found that the patent assignor was estopped from challenging the validity of an asserted patent because the asserted claim was not materially broader than the specific claims assigned to the patent owner. Hologic, Inc. v. Minerva Surgical, Inc., Case Nos. 2019-2054; -2081 (Fed. Cir. Aug. 11, 2022) (Stoll, Clevenger, Wallach, JJ.)

Csaba Truckai filed a patent application for a device that was designed with a moisture-permeable head to treat abnormal uterine bleeding while avoiding unintended burning or ablation. Truckai assigned the pending patent application to his company, Novacept, which was later acquired by Hologic. Truckai then founded a new company, Minerva Surgical, and developed a new device that used moisture impermeability to avoid the unwanted ablation. Hologic subsequently filed a continuation application to expand the scope of its claims to encompass applicator heads in general, regardless of moisture permeability. The US Patent & Trademark Office issued a patent on the expanded claims in 2015, and Hologic subsequently sued Minerva for patent infringement.

Hologic argued that doctrine of assignor estoppel barred Minerva from challenging the validity of the patent claims. The district court agreed and granted summary judgment of infringement. On appeal, the Federal Circuit affirmed the summary judgment of no invalidity. The Supreme Court granted certiorari and declined Minerva’s request to discard the doctrine of assignor estoppel but clarified that it comes with limits, holding that “assignor estoppel applies only when an inventor says one thing (explicitly or implicitly) in assigning a patent and the opposite in litigation against the patent’s owner.” The Supreme Court remanded to the Federal Circuit to address whether Hologic’s claim was materially broader than the one Truckai assigned. The Supreme Court explained that if the asserted claim was materially broader than the assigned claim, “then Truckai could not have warranted its validity in making the assignment and without such a prior inconsistent representation, there is no basis for estoppel.”

On remand, the Federal Circuit considered whether Truckai warranted the assigned claim’s validity at the time of assignment and whether the assigned claim was materially broader than the asserted claim.

The Federal Circuit concluded that Truckai had represented that the assigned claim was valid. The Court explained that the assigned claim was initially rejected as being anticipated, but Truckai successfully argued for its allowance. The claim was then canceled in response to a restriction requirement, but such cancellation did not speak to the claim’s patentability because an assignee would understand that it could later prosecute the claim’s subject matter under standard patent practice. Therefore, cancelation did not nullify the claim, and it “remained viable for further prosecution.” Additionally, the assignment was not just to the rights to the application, but to the rights to any continuation, continuation-in-part or divisional patent applications not yet filed. When presenting the application, Truckai signed [...]

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Not “Use It or Lose It”: Even if Unexercised, Director’s Authority over Institution Decisions Remains

by | Aug 25, 2022 |

The US Court of Appeals for the Federal Circuit denied mandamus relief, finding that a party is not entitled to petition the director for review of a Patent Trial & Appeal Board (Board) decision denying institution of an inter partes review (IPR) or post-grant review (PGR) proceeding. This ruling reflects the Court’s ongoing consideration of the Supreme Court’s decision in United States v. Arthrex, Inc., which held that Board judges cannot constitutionally render final decisions in IPRs without US Patent & Trademark Office (PTO) Director oversight. Click here for our discussion of the case on remand, for which the Federal Circuit just denied en banc rehearing. In re Palo Alto Networks, Inc., Case No. 22-145 (Fed. Cir. Aug. 16, 2022) (Dyk, Chen, JJ.) (Reyna, J., concurring).

After being sued by Centripetal Systems for patent infringement, Palo Alto Networks filed petitions for IPR and PGR of some of the asserted patents. The Board denied institution, and Palo Alto Networks filed requests for Director rehearing. Although the PTO acknowledged receipt of the request, it informed Palo Alto Networks that the Director was not considering requests for rehearing of institution decisions “at this time.” Thereafter, Palo Alto Networks sought a writ of mandamus from the Federal Circuit. Between the request for mandamus and the Court’s decision, the PTO issued guidance explaining that although the PTO was not considering requests for rehearing, “the Director has always retained and continues to retain the authority to review such decisions sua sponte after issuance (at the Director’s discretion),” and indeed, exercised its authority to initiate sua sponte review since.

The Federal Circuit rejected Palo Alto Networks’ claim that the Director’s refusal to consider petitions for rehearing of institution decisions amounted to an abdication of authority prohibited by the Appointments Clause. Even assuming that institution decisions were “final decisions on how to exercise executive power” implicating the Appointments Clause, the Court found that the Director maintains statutory and regulatory authority to review institution decisions (unlike in Arthrex), and that the Board renders such decisions only based on the Director’s delegation of authority (also unlike Arthrex). Accordingly, the structural authority maintained by the Director is sufficient, even if such authority goes unexercised, according to the Court.

Writing separately, Judge Reyna agreed that no Appointments Clause violation had occurred but on different grounds. Although Judge Reyna noted that a categorical rejection of requests for rehearing by the Director might raise constitutional concerns, he concluded that mandamus was inappropriate for several reasons. First, the Director’s caveat that she refused to accept requests “at this time” did not constitute a categorical refusal but rather an exercise of discretion. Second, the Director’s invocation of her sua sponte authority to review belied a lack of exercise of discretion. The Director did in fact exercise sua sponte authority to consider Palo Alto Networks’ request, even though briefing in the Federal Circuit was pending, and thus a writ of mandamus was inappropriate.



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Not a Well-Crafted Housing: Product-by-Process Claim Element Isn’t Limiting

by | Aug 25, 2022 |

The US Court of Appeals for the Federal Circuit affirmed a ruling that certain claims reciting a “housing . . . being cast in one piece” should be construed as a product-by-process claim element and affirmed the subsequent finding of invalidity of all challenged claims. Kamstrup A/S v. Axioma Metering UAB, Case No. 21-1923 (Aug. 12, 2022) (Reyna, Mayer, Cunningham, JJ.)

Kamstrup owns a patent directed to an ultrasonic flow meter housing in the form of a monolithic polymer structure that is cast in one piece. The patent specification explains that the invention can be fabricated with fewer steps compared to existing meters, since only a single step is used to form the monolithic polymer structure. Axioma petitioned for inter partes review of all claims of the patent, and the Patent Trial & Appeal Board (Board) found each claim unpatentable as either obvious or anticipated.

The Board construed the claim term “being cast in one piece” to be a product-by-process claim element. Kamstrup did not present any evidence showing that this claim element provided structural or functional differences distinguishing the housing itself from the prior art, and therefore the Board determined that the housing element was not entitled to patentable weight. The Board subsequently invalidated the independent claim and various dependent claims based on a prior art meter having a housing. The Board also found the remaining dependent claims to be invalid based on two additional references, which the Board determined were sufficiently analogous to flow meter technology to merit consideration in its obviousness analysis.

On appeal, Kamstrup challenged the Board’s product-by-process construction. The Federal Circuit explained that product-by-process claiming is designed to enable an applicant to claim an otherwise patentable product that resists definition other than by the process by which it is made. Where a product-by-process claim element is implicated, structural and functional differences distinguishing the claimed product from the prior art must be shown in order for that claim element to be relevant (limiting) to the anticipation or obviousness inquiry. If no structural or functional differences are shown, the element is given no patentable weight. Turning to the claim element at issue, the Court found that the plain meaning of the term “housing . . . being cast in one piece” implicated a product-by-process interpretation since it described the structure “being” cast in a particular way. The Court also affirmed the Board’s finding of invalidity because Kamstrup failed to identify any disclosure in the specification, prosecution history or extrinsic evidence of any structural or functional differences between the housing element as claimed and the prior art.

Kamstrup also argued that the two secondary prior art references were not analogous prior art because they fell within the field of “medical devices for thermodilution,” and therefore they should not be included in an obviousness analysis. The Federal Circuit disagreed, finding that the references were directed to “sensing or measuring fluid flow and fluid flow characteristics such as temperature,” which is related to “flow meters that include different types of sensors.”



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Prior Art Citation to Inventors’ Report Not “By Another” for § 102(e)

by | Aug 25, 2022 | ,

The US Court of Appeals for the Federal Circuit found that a prior art patent’s summarization of a report authored by the inventors of a patent challenged under inter partes review (IPR) did not constitute a disclosure “by another” under pre-America Invents Act § 102(e). LSI Corp. v. Regents of Univ. of Minnesota, Case No. 21-2057 (Fed. Cir. Aug. 11, 2022) (Dyk, Reyna, Hughes, JJ.)

The Regents of the University of Minnesota (UMN) sued LSI Corporation and Avago Technologies (collectively, LSI) for infringement of a patent related to methods for reducing errors in binary data sequences. LSI petitioned for IPR, challenging several claims of the asserted patent and arguing that they were anticipated by two prior art references, Okada and Tsang. Tsang made reference to a “Seagate Annual Report” that was published by the inventors of the asserted patent, and which was later embodied in the patent’s application.

The Patent Trial & Appeal Board (Board) found that one of the challenged claims was anticipated by Okada. The Board also found that LSI had not shown that the other challenged claims were rendered unpatentable by either Okada or Tsang and further rejected an invalidity (anticipation) theory first raised by LSI during oral arguments as untimely (while noting that the argument failed even if timely raised). The Board determined that the Tsang reference was not “by another” under § 102(e) because LSI’s petition relied solely on material that was originally disclosed in the inventor’s Seagate Annual Report. LSI appealed the Board’s determinations relating to invalidity based on Okada or Tsang.

The Federal Circuit noted that LSI did not challenge the Board’s untimeliness determination and rejected LSI’s argument that it did not need to because the Board nevertheless reached a merits decision on the argument. The Court cited to its 2016 decision in Intelligent Bio-Systems v. Illumina Cambridge, which held that “the Board’s rejection of arguments on the ground that they were newly raised in a reply brief was not an abuse of discretion even though the Board went on to address the merits.”

Turning to the § 102(e) issue, the Federal Circuit first explained that an invention is anticipated under § 102(e) if the invention is described in a patent application filed “by another,” but a patent owner may overcome such anticipation by establishing that the relevant prior art disclosure describes the owner’s invention. Describing the history of the Tsang reference and the patent under review, the Court explained that the inventors originally submitted a Seagate Annual Report to Seagate, a UMN collaborator. Tsang, a Seagate employee, received the report and quickly filed a patent application for an improvement on the methods described in the report. This application listed only Tsang as inventor and made direct reference to the Seagate Annual Report.

The Federal Circuit then addressed whether LSI’s IPR petition relied on Tsang’s improvement to the inventors’ report or simply on Tsang’s summary of the inventors’ report. The Court explained that while LSI’s petition relied on both Tsang’s summary of the [...]

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Recapture Rule Applies to Subject Matter Surrendered to Overcome § 101 Rejection

by | Aug 18, 2022 |

Affirming a Patent Trial & Appeal Board (Board) decision, the US Court of Appeals for the Federal Circuit held, for the first time, that the rule prohibiting recapture of subject matter surrendered during prosecution applies to subject matter surrendered to overcome a § 101 patent eligibility rejection. In re McDonald, Case No. 21-1697 (Fed. Cir. Aug. 10, 2022) (Newman, Stoll, Cunningham, JJ.)

During prosecution of a parent patent application relating to displaying search results, the inventor, John McDonald, added a “processor” limitation to certain claims to overcome a § 101 rejection. McDonald subsequently filed a continuation application, which was eventually issued. McDonald then filed a reissue application seeking to broaden the claims of the continuation patent by striking all of the originally added “processor” claim language. With the reissue application, he included a declaration that the processor language was unnecessary to the patentability and operability of the relevant claims. The examiner rejected the claims as obvious, and McDonald appealed. On appeal, the Board affirmed the obviousness rejection and also rejected the reissue claims as being based on a defective declaration lacking a correctable error. The Board found that McDonald was impermissibly attempting to recapture surrendered subject matter. McDonald appealed.

Exercising de novo review, the Federal Circuit first recounted more than a century of caselaw relating to patent reissue and recapture. The Court explained that a patent may be reissued if the inventor erroneously claimed less than they had a right to claim in the original patent, but that the recapture rule bars a patentee from regaining that which was surrendered during prosecution. The Court then turned to its three-step recapture analysis in which it considers the following:

  1. Whether, and in what aspect, the reissue claims are broader than the patent claims
  2. If broader, whether those broader aspects of the reissue claim relate to the surrendered subject matter
  3. If they do, whether the surrendered subject matter has crept into the reissue claim.

Applying this test, the Court concluded that McDonald sought to broaden his claims and that the surrendered subject matter crept into those broadened claims. The Court also held that McDonald did not meet the reissue statute’s “error” requirement, finding that his actions were deliberate as opposed to inadvertent or by mistake.

The Federal Circuit then addressed McDonald’s arguments that the recapture rule does not apply to subject matter surrendered to overcome a § 101 rejection. The Court conceded that its previous decisions centered on prior art rejections under § 102 and § 103 but found that the public’s reliance interest on a patent’s public record must also apply to subject matter surrendered under § 101. The Court also reiterated that it “reviews a patent family’s entire prosecution history when applying both the rule against recapture and prosecution history estoppel.” The Court thus affirmed the Board’s decision barring McDonald from reclaiming subject matter previously surrendered during prosecution.



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Rage against the Machine: Inventors Must Be Human

by | Aug 11, 2022 |

The US Court of Appeals for the Federal Circuit found that an artificial intelligence (AI) software system cannot be listed as an inventor on a patent application because the Patent Act requires an “inventor” to be a natural person. Thaler v. Vidal, Case No. 21-2347 (Fed. Cir. Aug. 5, 2022) (Moore, Taranto, Stark, JJ.)

Stephen Thaler develops and runs AI systems that generate patentable inventions, including a system that he calls his “Device for the Autonomous Bootstrapping of Unified Science” (DABUS). In 2019, Thaler sought patent protection for two of DABUS’s putative inventions by filing patent applications with the US Patent & Trademark Office (PTO). Thaler listed DABUS as the sole inventor on both applications. The PTO found that the patent applications lacked valid inventorship and sent a Notice of Missing Parts requesting that Thaler identify a valid inventor. Thaler petitioned the director to vacate the notices. The PTO denied the petitions, explaining that a machine does not qualify as an inventor and that inventors on patent applications must be natural persons. Thaler then pursued judicial review in the district court. The district court agreed with the PTO, concluding that an “inventor” under the Patent Act must be an “individual,” and that the plain meaning of “individual” is a natural person. Thaler appealed.

The sole issue on appeal was whether an AI software system can be an “inventor” under the Patent Act. The Federal Circuit started with the statutory language of the Patent Act, finding that it expressly provides that inventors are “individuals.” The Court noted that while the Patent Act does not define “individual,” the Supreme Court has explained that the term “individual” refers to a human being unless there is some indication that Congress intended a different reading. The Federal Circuit also found that this result was consistent with its own precedent, which found that neither corporations nor sovereigns can be inventors; instead only natural persons can be inventors.

The Federal Circuit rejected Thaler’s policy argument that inventions generated by AI should be patentable to encourage innovation and public disclosure. The Court found that these policy arguments were speculative, lacked any basis in the text of the Patent Act, and were contrary to the unambiguous text of the Patent Act. The Court also rejected Thaler’s reliance on the fact that South Africa has granted a patent with DABUS as an inventor, explaining that the South African Patent Office was not interpreting the US Patent Act. The Court concluded that since Congress has determined that only a natural person can be an inventor, AI cannot be an inventor.

Practice Note: The Federal Circuit’s decision comes on the heels of a decision from the US Copyright Office Review Board finding that a work must be created by a human being to obtain a copyright. The Federal Circuit also noted that it was not confronted with the question of whether inventions made by human beings with the assistance of AI are eligible for patent protection.



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