IP UPDATE
Exploring the Latest in Intellectual Property Law
IP UPDATE
Exploring the Latest in Intellectual Property Law
Federal Circuit
Subscribe to Federal Circuit's Posts

TTAB Judicial Appointments are Determined Constitutionally Sound

by | Sep 16, 2021 |

Addressing for the first time whether the Supreme Court of the United States’ recent decision in United States v. Arthrex, Inc. also applied to the Trademark Trial and Appeal Board (TTAB), the US Court of Appeals for the Federal Circuit held that it did not, upholding the constitutionality of TTAB judicial appointments and affirming the TTAB’s cancellation of the SCHIEDMAYER trademark. Piano Factory Group, Inc. v Schiedmayer Celesta GMBH, Case No. 20-1196 (Fed. Cir. Sept. 1, 2021) (Bryson, J.)

Schiedmayer Celesta is the remaining corporate entity from a centuries-old line of German keyboard instrument manufacturers that uses the SCHIEDMAYER trademark in connection with the sale of its products. Sweet 16 Musical Properties and Piano Factory Group (collectively, Piano Factory) operated Hollywood Piano retail outlets where it sold “no-name” pianos purchased from China that were affixed with “Schiedmayer” labels. The owner of Piano Factory, believing the SCHIEDMAYER mark had been abandoned, applied to register the SCHIEDMAYER mark, and the registration issued in 2007.

In 2015, Schiedmayer filed a petition to cancel Piano Factory’s registration, alleging that it falsely suggested a connection with Schiedmayer and, thus, violated Section 2(a) of the Lanham Act. After the TTAB granted the petition to cancel, Piano Factory appealed.

Between the time that the parties filed their appeal briefs and the Federal Circuit issued its decision, the Supreme Court issued its decision in United States v. Arthrex, holding that the appointment of Patent Trial & Appeal Board (PTAB) administrative judges violated the Appointments Clause of Article II of the Constitution. On appeal, Piano Factory argued that the appointment of TTAB administrative judges (specifically, the administrative judges who issued the decision Piano Factory was appealing) was likewise unconstitutional. However, the Court disagreed, citing language from the Arthrex decision that “effectively confirmed that . . . the statutory scheme governing TTAB decision-making is not subject to the Appointments Clause problem the Court identified with regard to the PTAB.”

Additionally, Piano Factory cited the Trademark Modernization Act of 2020 (TMA)—which explicitly addressed this issue—for support. Piano Factory argued that since the TMA was not enacted until after the TTAB’s decision to cancel the SCHIEDMAYER registration, its enactment indicated that the TTAB was previously flawed. Again, the Federal Circuit disagreed, stating “the 2020 legislation itself makes clear that it merely confirmed, and did not alter” the framework that was in place prior to the TMA.

Piano Factory also challenged the merits of the TTAB’s decision, including its application of the four-factor test for false association, which considers:

  1. Whether the challenged mark is identical or nearly identical to a name previously used by another person;
  2. Whether the mark would be understood as a unique and unmistakable reference to that person;
  3. Whether the person referenced by the challenged mark was connected with the applicant’s activities and
  4. Whether the earlier user’s name has sufficient fame such that a connection with applicant would be presumed when the contested mark was used to identify the applicant’s goods.

Piano Factory disputed the [...]

Continue Reading



read more

Federal Circuit: Contractual Arbitration Agreements Don’t Bind PTAB Institution Decisions

by | Sep 16, 2021 |

The US Court of Appeals for the Federal Circuit issued an order declining to intervene in inter partes review (IPR) institution decisions by the Patent Trial & Appeal Board (PTAB) and further denied a writ of mandamus to stay the PTAB’s IPR institution pending contractually required arbitration of the dispute between MaxPower and ROHM Japan. In re: MAXPOWER SEMICONDUCTOR, INC., Case No. 21-146 (Fed. Cir. Sept. 8, 2021) (Reyna, J.) (O’Malley, J., concurring in part and dissenting in part).

MaxPower owned patents directed to silicon transistor technology and licensed the patents to ROHM Japan. The license agreement contained an arbitration clause that applied to any disputes arising from or related to it—including patent validity. A dispute arose between the parties as to whether the patents covered certain silicon carbide transistor ROHM products. After MaxPower notified ROHM that it was initiating arbitration under the terms of their license agreement, ROHM challenged the validity of four MaxPower patents at the PTAB, which granted ROHM’s petitions to institute IPRs for the four challenged patents.

MaxPower appealed the PTAB’s institution decision to the Federal Circuit and sought a writ of mandamus to stay or terminate the IPR proceedings without prejudice to later institution if an arbitrator decided that IPR proceedings were appropriate.

The Federal Circuit held that the PTAB’s decision to institute IPR is non-appealable under 35 U.S.C. §314(d), which plainly “confirms the unavailability of jurisdiction” for the Court to hear direct appeals. The Court also found that MaxPower failed to meet the criteria necessary to invoke the collateral order doctrine, which allows appeals from interlocutory rulings if they decide an issue “separate from the merits of the case” that would not be reviewable after final judgment. The Court noted that MaxPower could still raise its arbitration-related challenges after the PTAB issued its final written decisions in these cases.

The Federal Circuit also rejected arguments that the appeals were authorized under 9 U.S.C. § 16(a)(1) and that MaxPower failed to show that its mandamus petition was not “merely a ‘means of avoiding the statutory prohibition on appellate review of agency institution decisions,’” citing the Court’s 2018 decision in In re Power Integrations.

Since the PTAB is not bound by private contracts enforcing arbitration agreements between parties, the Federal Circuit ruled that MaxPower had failed to show that the PTAB’s institution decisions in this case “clearly and indisputably exceeded its authority,” also stating that 35 U.S.C. § 294 does not authorize the PTAB to enforce private arbitration agreements.

In a partial dissent, Judge Kathleen O’Malley argued that the majority decision casts “a shadow over all agreements to arbitrate patent validity” and goes against strong federal policy in favor of enforcing arbitration agreements. While concurring with the majority that the PTAB’s IPR institution decisions are not appealable, Judge O’Malley stated that the case “provides exactly the sort of extraordinary circumstances under which mandamus review is appropriate” in what she called an important issue of first impression. The Supreme Court of the United States has held that [...]

Continue Reading



read more

Notice Under § 287 Means Knowledge of Infringement, Not Knowledge of Patent

by | Sep 16, 2021 |

The US Court of Appeals for the Federal Circuit reversed a district court’s finding of liability for infringement that occurred prior to the filing of the action, explaining that notwithstanding the defendant’ admission that it was aware of the asserted patent, the actual notice requirement of § 287(a) is only satisfied when the recipient is informed of the identity of the patent and the activity that is believed to be an infringement. Lubby Holdings LLC v. Chung, Case No. 19-2286 (Fed. Cir. Sept. 1, 2021) (Dyk, J.) (Newman, J., dissenting in part).

Lubby Holdings sued Henry Chung for infringement of its patent relating to leak-resistant vaping products. Lubby sought damages for alleged pre-filing sales based on alleged compliance with the marking requirement of § 287. Chung raised the issue of whether Lubby’s products were properly marked as required by § 287(a), pointing to one of Lubby’s products as an example. At trial, Chung moved for judgment as a matter of law (JMOL) under Fed. R. Civ. Pro. 50(a), arguing that Lubby did not meet its burden to show that it complied with the § 287 marking requirement. The jury ultimately found Chung liable for direct infringement and awarded Lubby almost $900,000. Chung renewed his motion for JMOL under Rule 50(b) and moved for a new trial under Rule 59(a). After both motions were denied, Chung appealed.

Chung argued that there was no evidence that Lubby complied with the marking or notice requirements of § 287. Lubby argued that Chung did not meet his initial burden to point to products that were sold unmarked.

The Federal Circuit explained that under § 287(a), a patentee must properly mark its articles that practice its own invention, or the patentee is not entitled to damages for patent infringement that occurred before “actual notice” was given to an alleged infringer. The Court noted that once Chung met the “low bar” burden bar under Artic Cat to “articulate the products he believed were unmarked patented articles, the burden of proving compliance with the marking requirement is on the patentee.” The Court explained that Chung met this burden by specifically pointing to Lubby’s J-Pen Starter Kit. The Court continued that the burden shifted to Lubby, and Lubby failed to present any evidence that its products were properly marked or that its products did not practice its invention. As a result, Lubby could only recover damages for the period after Chung was provided with “actual notice.”

The Federal Circuit explained that actual notice under § 287(a) requires that the recipient be informed “of the identity of the patent and the activity that is believe to be an infringement, accompanied by a proposal to abate the infringement.” The Court further explained that it is irrelevant whether the defendant knew of the patent or knew of its own infringement. As applied to this case, the Court found that it was not relevant that Lubby told Chung that he could not use the patented technology, or that Chung [...]

Continue Reading



read more

Material Information Submitted to FDA but Withheld from PTO Gives Rise to Inequitable Conduct

by | Sep 16, 2021 |

The US Court of Appeals for the Federal Circuit found prior art submitted to the US Food and Drug Administration (FDA), yet withheld from the US Patent & Trademark Office (PTO) during prosecution of an asserted patent, sufficient evidence for a finding of inequitable conduct. Belcher Pharmaceuticals, LLC v. Hospira, Inc., Case No. 20-1799 (Fed. Cir. Sept. 1, 2021) (Reyna, J.)

The patent in issue relates to injectable formulations of l-epinephrine. Epinephrine is a hormone that has been on the market since approximately 1938 and is used for a variety of medical purposes. It is also known that l-epinephrine degrades into a more potent isomer known as d-epinephrine. L-epinephrine also degrades into an impurity known as adrenalone through a process called oxidation.

In 2012, Belcher first submitted a New Drug Application (NDA) for a 1 mg/mL injectable l-epinephrine formulation. The NDA was literature-based, meaning that Belcher did not perform any clinical or non-clinical studies on its epinephrine formulation to support its application. Among the materials submitted to the FDA was an article by Stepensky et al to support its statement that “racemization of the enantiomerically pure L-Epinephrine isomer in injectable formulations of epinephrine is a well-known process.” It also submitted data from Swiss pharmaceutical company Sintetica SA’s formulation that had a pH range of 3.1 – 3.3 and undetectable levels of adrenalone. Ultimately, Belcher pursued a formulation with a similar pH range of 2.8 – 3.3.

In 2014, Belcher filed a patent application that was ultimately issued as the asserted patent. The patent taught that increasing the in-process pH to 2.8 – 3.3 unexpectedly reduced the racemization of l-epinephrine to d-epinephrine at release by approximately two thirds. The asserted claims covered pharmaceutical epinephrine formulations having a pH between 2.8 – 3.3 and certain concentrations of l-epinephrine, d-epinephrine and adrenalone at the time of release and 12 months later.

The prosecution of the application involved a single office action in which the pending claims were rejected in view of Helenek. The examiner explained that Helenek taught 1 mg/ml of epinephrine injection that, among other things, had a pH range of 2.2 – 5.0. Belcher overcame this rejection by arguing that Helenek did not render obvious the claimed range of 2.8 – 3.3 because the claimed range was unexpectedly found to be critical to reduce racemization of l-epinephrine.

Hospiria also submitted an NDA seeking approval of an injectable l-epinephrine formulation, which included a certification under 21 U.S.C. § 355(b)(2)(A)(iv)(Paragraph IV) that the asserted patent’s claims were invalid, unenforceable and/or not infringed by Hospira’s NDA product. Belcher subsequently sued Hospira for patent infringement.

During trial, Darren Rubin, Belcher’s Chief Science Officer, testified that in his role at Belcher, he was involved in the drafting and development of the NDA and in the prosecution of the asserted patent—including drafting the claims and specification and responding to the examiner’s office action. Darren admitted he knew of Stepensky before the application was filed and that he possessed a label for a 1 mg/mL epinephrine product marked [...]

Continue Reading



read more

Bascom Cannot Save Your Claims if Your Own Patent Says You Used Known Technology

by | Sep 9, 2021 |

The US Court of Appeals for the Federal Circuit affirmed a district court determination that claims of several patents were patent ineligible under 35 U.S.C. § 101 because they did not recite an innovation with sufficient specificity to constitute an improvement to computer functionality. Universal Secure Registry LLC v. Apple Inc., Case No. 20-2044 (Fed. Cir. Aug. 26, 2021) (Stoll, J.)

Universal Secure Registry (USR) sued Apple, Visa and Visa U.S.A. (collectively, Apple), asserting four patents directed to securing electronic payment transactions, which USR alleged allowed for making credit card transactions “without a magnetic-stripe reader and with a high degree of security” (e.g., allegedly Apple Pay or Visa Checkout). Apple moved to dismiss the complaint under Fed. R. Civ. Pro. 12(b)(6), arguing that the asserted patents claimed patent-ineligible subject matter under 35 U.S.C. § 101. The Delaware magistrate judge, quoting Visual Memory v. NVIDIA (Fed. Cir. 2017), determined that all the representative claims were directed to a non-abstract idea because “the plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.”

The district court judge disagreed, concluding that the representative claims failed at both Alice steps, and granted Apple’s motion to dismiss. The district court found that the claimed invention was directed to the abstract idea of “the secure verification of a person’s identity,” and that the patents did not disclose an inventive concept—including an improvement in computer functionality—that transformed the abstract idea into a patent-eligible application. USR appealed.

In assessing the claims under the Alice two-part test, the Federal Circuit noted that in cases involving authentication technology, patent eligibility often turns on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself. For example, in its 2017 decision in Secured Mail Solutions v. Universal Wilde, the Court (at Alice step one), held that claims directed to using a conventional marking barcode on the outside of a mail object to communicate authentication information were abstract because they were not directed to specific details of the barcode, how it was processed or generated or how it was different from long-standing identification practices. Similarly, in its 2020 decision in Prism Technologies v. T-Mobile, where the claims broadly recited “receiving” identity data of a client computer, “authenticating” the identity of the data, “authorizing” the client computer and “permitting access” to the client computer, the Court held at Alice step one that the claims were directed to the abstract idea of “providing restricted access to resources,” not to a “concrete, specific solution.” At step two, the Court determined that the asserted claims recited conventional generic computer components employed in a customary manner such that they were insufficient to transform the abstract idea into a patent-eligible invention.

The claims in issue fared similarly. The district court held that the representative claim was not materially different from the Prism claims, and the Federal Circuit agreed. Although the [...]

Continue Reading



read more

Damage Expert Testimony Excluded for Failure to Disclose Evidence and to Apportion

by | Sep 9, 2021 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision to preclude a damage expert from characterizing license agreements and opining on a reasonable royalty rate where the sponsoring party failed to produce key documents and to apportion for non-patented features. MLC Intellectual Property, LLC v. Micron Technology, Inc., Case No. 20-1413 (Fed. Cir. Aug. 26, 2021) (Stoll, J.)

MLC sued Micron for infringing claims of a patent relating to programing multi-level memory cells. In his expert report, MLC’s damage expert, Michael Milani, attempted to reconstruct the hypothetical negotiation. Milani opined on two separate approaches to determining the royalty base: A comparable license and the smallest saleable patent practicing unit.

Milani considered each of the Georgia-Pacific factors to determine a reasonable royalty rate. He determined that a Hynix Semiconductor license agreement was relevant, notwithstanding that it required a lump sum payment for a non-exclusive license to a patent portfolio containing the asserted patent rather than a royalty rate. Milani relied on a most favored customer provision that contemplated Hynix paying less for the patents if the licensor granted a license at a royalty rate of less than 0.25% to any new licensee to arrive at his royalty rate. Milani applied this rate to another lump sum agreement MLC had with Toshiba Corporation. To support his opinion, Milani relied on extrinsic evidence, including summaries of negotiations involving the asserted patent and another alleged infringer and letters and memorandums with other licensees—all contemplating a 0.25% royalty rate. Micron moved to exclude Milani’s testimony.

Micron filed a motion in limine to preclude Milani from mischaracterizing the license agreements as reflecting a 0.25% royalty rate. Micron moved to strike portions of Milani’s expert report under Fed. R. Civ. Pro. 37 as based on facts, evidence and theories that MLC disclosed for the first time in its damage expert report. Micron further filed a Daubert motion, seeking to exclude Milani’s reasonable royalty opinion for failure to apportion out the value of non-patented features. The district court granted all three motions.

The district court rejected Milani’s reliance on the most favored customer provision in the Hynix agreement for the 0.25% royalty rate, finding that the provision did not apply the rate to the lump sum nor did it provide any insight into how the lump sum was calculated. The district court also determined that Milani did not base his testimony on sufficient facts or data, and his opinion was not the product of reliable principles and methods. Finally, the district court found that MLC did not disclose the extrinsic evidence relied on by Milani to reflect the 0.25% rate, and therefore MLC could not rely on that evidence. Lastly, the district court determined that there was no evidence supporting Milani’s opinion that the 0.25% rate apportioned non-patented features of the accused products. MLC filed an interlocutory appeal.

The Federal Circuit found that Milani’s testimony relating to the 0.25% royalty rate rested on an inference from the most favored customer clause that went [...]

Continue Reading



read more

Another Genus Claim Bites the Dust for Lack of Written Description

by | Sep 9, 2021 |

Addressing the issue of written description in the context of antibody-related genus claims, the US Court of Appeals for the Federal Circuit reversed a $1.2 billion jury verdict and found genus claims using functional language invalid for lack of written description. Juno Therapeutics, Inc. v. Kite Pharma, Inc., Case No. 20-1758 (Fed. Cir. Aug. 26, 2021) (Moore, J.)

Kite’s YESCARTA® is a therapy in which a patient’s T cells are engineered to express a chimeric antigen receptor (CAR) to target the antigen CD19. Juno sued Kite, alleging infringement of a patent relating to a nucleic acid polymer encoding a three-part CAR for a T cell. The three-part CAR comprises:

  1. An intracellular domain of the CD3 ζ (zeta) chain, a signaling domain that is activated to create an initial immune response
  2. A costimulatory region comprising of a specific amino acid sequence (here, a specific CD28 sequence) that, when activated, directs the T cells to multiply
  3. A binding element that determines what target molecule or antigen the CAR can bind to, such as a single-chain antibody variable fragment (scFV).

Juno’s patent disclosed two scFVs (one that binds CD19 and another that binds PSMA) but did not disclose the amino acid sequence of either scFV.

After a two-week trial, the jury reached a verdict in Juno’s favor, finding in relevant part that Kite failed to prove that any of the asserted claims were invalid for lack of written description or enablement. The jury awarded damages amounting to a $585 million upfront payment and an almost 28% running royalty. The district court denied Kite’s motions for judgment as a matter of law and enhanced the total award to approximately $1.2 billion in addition to the 28% running royalty. Kite appealed.

The Federal Circuit reversed, concluding that no reasonable jury could find adequate written description because the patent disclosed neither representative species nor common structural features of the claimed scFV genus to identify which of the millions of billions of scFVs would function as claimed. Turning first to lack of representative species, the Court explained that the broadest asserted claims cover any scFV that binds to any target of clinical interest but fails to provide a representative sample of species within, or defining characteristics for, that expansive genus. The Court also disagreed that the two working embodiments in the patent were representative of the entire genus of vast number of possible scFVs that bind to an undetermined number of targets without more in the disclosure (such as the characteristics of the exemplary scFVs that allow them to bind to particular targets or nucleotide sequences). The Court stated that even if such scFVs were known as Juno argued, the specification provided no means of distinguishing which scFVs would bind to which targets.

Turning next to lack of structural features common to the claimed genus, the Federal Circuit held that general assertions that scFVs generally have a common structure in the context of the technology in this case were insufficient because an scFV with the [...]

Continue Reading



read more

3D Chess at the Federal Circuit: Can’t Walk Back Arguments in Prior Appeal or Prosecution History

by | Sep 9, 2021 |

In the second appeal to the US Court of Appeals for the Federal Circuit, the preamble term “three-dimensional spreadsheet” was found to be a limitation in the context of claims directed to organizing and presenting information in electronic spreadsheets based on prosecution disclaimer and arguments made in the first appeal. Data Engine Techs, LLC v. Google LLC, (DET II), Case No. 21-1050 (Fed. Cir. Aug. 26, 2021) (Stoll, J.)

In the first appeal (DET I), the Federal Circuit found that DET’s representative claim was “directed to more than a generic or abstract idea as it claims a particular manner of navigating three-dimensional spreadsheets,” improving on electronic spreadsheet functionality and, therefore, directed to patent-eligible subject matter. The Court reversed and remanded. On remand, Google requested that the district court reopen claim construction and construe the preamble term “three-dimensional spreadsheet” in the representative claim.

The district court found the preamble to be limiting and construed “three-dimensional spreadsheet” to mean a “spreadsheet that defines a mathematical relation among cells on different spreadsheet pages, such that cells are arranged in a 3-D grid.” The district court went on to grant Google’s motion for summary judgment of noninfringement as there was no dispute that the accused product (Google Sheets) did not meet the “three-dimensional spreadsheet” limitation under the court’s construction. DET appealed.

Applying de novo review to the claim construction issue presented, the Federal Circuit noted that in DET I, its conclusion that the asserted claims were directed to improvements in three-dimensional spreadsheets ascribed patentable weight to the preamble term “three-dimensional spreadsheet.” The dispute related to whether the claim requires “a mathematical relation among cells on different spreadsheet pages,” as required by the district court’s construction.

The Federal Circuit found that neither the claims themselves nor the specification provided guidance in construing “three-dimensional spreadsheet.” Turning to the prosecution history, the Court noted that during prosecution, the applicants provided an explicit definition of a “true” three-dimensional spreadsheet and distinguished prior art under this definition. Indeed, as the Court noted, its ruling in DET I expressly relied on that definition from the prosecution history in determining that the claims required a three-dimensional spreadsheet that “defines a “three-dimensional spreadsheet” in support of patent eligibility. Thus, the Court concluded that the preamble term was limiting.

In the present appeal, DET contended that the prosecution history passage defining a three-dimensional spreadsheet did not rise to the level of “clear and unmistakable” disclaimer when read in context of the spreadsheet (Lotus 1-2-3) it was distinguishing. The Federal Circuit rejected the argument noting, “DET cannot escape the import of its statements to the Patent Office by suggesting they were not needed to overcome the Examiner’s rejection. Consistent with the public notice function of the prosecution history, the public is entitled to rely on these statements as defining the scope of the claims.” In rejecting DET’s arguments, the Court again cited to the imagery of twisting claims, “like ‘a nose of wax,’ ‘one way to avoid [invalidity] and another to [...]

Continue Reading



read more

Footnote Doesn’t Preserve Claim Construction Argument, but Patent Owner Must Observe “Nose of Wax” Principle

by | Sep 2, 2021 |

The US Court of Appeals for the Federal Circuit rejected an insufficiently developed claim construction challenge and found noninfringement where the patentee argued that a key feature shared by the accused device and the prior art distinguished the prior art from the claimed invention. CommScope Technologies LLC v. Dali Wireless Inc., Case Nos. 20-1817; -1818 (Fed. Cir. Aug. 24, 2021) (Stoll, J.)

CommScope Technologies and Dali Wireless are both in the wireless telecommunications industry. After CommScope sued Dali for infringement of five of its patents, Dali counterclaimed for infringement of two of its own patents. One of Dali’s patents relates to a method of predistorting a signal to account for distortion that occurs when the signal is amplified. The patent describes a training mode in which a feedback loop operates to update lookup tables and an operating mode in which a certain controller is turned off and the lookup table is no longer updated. In particular, the claim recites “switching a controller off to disconnect signal representative of the output of the power amplifier,” which the district court construed to mean “switching a controller to a nonoperating state to disconnect signal representative of the output of the power amplifier.” The accused product has two power amplifiers, and the controller switch continuously chooses between feedback signals for calculating predistortion values. Similarly, one asserted prior art reference discloses a system including multiple power amplifiers and a switch that continuously selects one of the feedback signals. At trial, the jury found the patent both valid and infringed, and the district court denied judgment as a matter of law (JMOL) of invalidity and no infringement.

On appeal, Dali included a footnote challenging the district court’s claim construction. The Federal Circuit held this challenge ineffective for three reasons, writing:

First, an argument that is only made in a footnote of an appellant’s brief is forfeited. Second, even if the argument were in the body of the brief, it is insufficiently developed. Finally, and most importantly, it is irreconcilable with Dali’s statements in other portions of its brief: (1) asserting that the district court’s construction is “unchallenged” and (2) applying the construction in the context of invalidity.

The Federal Circuit also criticized Dali for taking inconsistent positions with respect to application of its claims to the accused product and the prior art “given [the accused device] has a switch that operates identically [to the prior art.” “[t]his case falls squarely within the principle that a ‘patent may not, like a nose of wax, be twisted one way to avoid anticipation and another to find infringement.’” The Court held that no substantial evidence supported the infringement verdict because there was no evidence that the controller in the accused product put itself in the claimed “nonoperating state.” Accordingly, it reversed the denial of JMOL of noninfringement (while affirming the balance of the judgment below).



read more

Absent Explicit Statutory Language? The American Rule Still Applies

by | Sep 2, 2021 |

The US Court of Appeals for the Federal Circuit vacated a district court’s award of attorney’s fees under the prevailing party rule but affirmed the district court’s denial of the US Patent & Trademark Office’s (PTO) request for expert witness fees under 35 U.S.C. § 145. Hyatt v. Hirshfeld, Case Nos. 20-2321;–2325 (Fed. Cir. Aug. 18, 2021) (Hughes, J.). The case involved prolific inventor Gilbert Hyatt and the latest chapter in his battles with the PTO.

Mr. Hyatt is known for his prolific patent and litigation filings (including hundreds of extraordinarily lengthy and complex patent applications in 1995 alone) and for often “’adopt[ing] an approach to prosecution that all but guaranteed indefinite prosecution delay’ in an effort to submarine his patent applications and receive lengthy patent terms.” After the PTO denied some of his patent applications, Mr. Hyatt elected to pursue a district court appeal under 35 U.S.C. § 145 to challenge the PTO’s decisions. The district court ordered the PTO to issue some of the patents and awarded Mr. Hyatt attorney’s fees as the prevailing party. The PTO spent millions of dollars examining Mr. Hyatt’s applications and sought, under §145, reimbursement of its expert witness fees from the case. The district court denied the PTO’s request for expert witness fees, holding that its shifting of “[a]ll the expenses of the proceedings” to the applicant does not overcome the American Rule presumption against shifting expert fees. The PTO appealed.

The PTO challenged both the award of attorney’s fees and the denial of expert fees. In an earlier appeal by the PTO, the Federal Circuit held that the PTO correctly asserted prosecution laches as a defense against Mr. Hyatt, which “render[s] a patent unenforceable when it has issued only after an unreasonable and unexplained delay in prosecution that constitutes an egregious misuse of the statutory patent system under a totality of the circumstances.” Accordingly, the Court vacated the district court’s decision ordering the issuance of patents, and in this appeal, the Court vacated the district court’s holding that Mr. Hyatt is entitled to attorney’s fees—since he is no longer the prevailing party—and remanded for further proceedings.

According to the statute, in an action under § 145, “[a]ll the expenses of the proceedings shall be paid by the applicant.” However, the Federal Circuit agreed with the district court that the statutory language was not sufficiently explicit to overcome the presumption against fee-shifting under the American Rule and that litigants pay their own fees “unless a statute or contract provides otherwise.” In doing so, the Court looked at statutory phrasing, dictionary definitions (e.g., Black’s and Webster’s), legislative history, relevant case law and similarly phrased statutes to confirm whether expert fees were specifically and explicitly contemplated as being included by US Congress in the statute. The Supreme Court of the United States’ 2019 NantKwest decision (that “expenses” under §145 does not invoke attorney’s fees with enough clarity to overcome the American Rule) guided the Court’s analysis as did [...]

Continue Reading



read more

BLOG EDITORS

Paul Devinsky

Amol Parikh

STAY CONNECTED

Subscribe

TOPICS

ARCHIVES