On November 24, 2021, the Court of Appeals of the Federal Circuit (“CAFC”) affirmed a Patent Trial and Appeal Board (“PTAB”) decision invalidating most of the claims of a patent on opioid addiction treatment because the amounts of compounds described in the patent and ranges listed in the claims were not disclosed in a parent application that pre-dated the alleged prior art. Judge Richard Linn dissented, highlighting a lack of consensus at the CAFC on what satisfies the written description requirement.
Indivior’s Patent Application 9,687,454 (“’454 patent”), which describes orally dissolvable films containing therapeutic agents, claimed priority to the 2009 filing date of a parent application, U.S. Patent Application 12/537,571 (“’571 application”). Claims 1, 7, 8, and 12 of the ’454 patent included language such as “about 40 wt % to about 60 wt %”, “about 48.2 wt % to about 58.6 wt %”, and “about 48.2 wt %.” The ’571 application, on the other hand, included Tables 1 and 5 which disclosed formulations with 48.2 wt % and 58.6 wt % polymer and disclosed that “the film composition contains a film forming polymer in an amount of at least 25% by weight of the composition” or, as an alternative, “at least 50%.”
Dr. Reddy’s Laboratories, Inc. (“DRL”) petitioned for inter partes review of the ’454 patent, alleging that the ’454 patent was not entitled to the 2009 priority date because the polymer weight percentage limitations of the ’454 patent did not have written description support in the ’571 application. Indivior argued that the percentage limitations were disclosed in the ’571 application because the combination of the disclosures in the ’571 application encompassed the claimed ranges in the ’454 patent. The PTAB found that all of the challenged claims except claim 8 of the ’454 patent were not entitled to the 2009 priority date because the subject matter of the claims was not disclosed in the ‘571 application because it did not “discuss or refer to bounded or closed ranges of polymer weight percentages.”
On appeal, the CAFC upheld the PTAB’s ruling and affirmed its finding that the polymer range limitations were not supported in the ’571 application. The CAFC found that the ranges of about 40% to 60% or about 48.2% to 58.6% claimed in the ’454 patent were not found in the ’571 application, which instead used phrases like “at least 25%” and “at least 50%” and used descriptions of various formulations that include specific examples, not ranges. The CAFC stated that “[f]or written description support of a claimed range, more clarity is required.” Judge Linn dissented, reasoning that the ranges were actually present in the ’571 application and this written description for ranges was an “overly demanding standard.” He argued that the ranges the majority said were not found in the ’571 application were actually present and that at least 25% or 50% meant “25%-100%” or “50%-100%” which fell within the ranges.
This split decision underscores a tension within the CAFC regarding what satisfies the written description requirement and how specific a specification should be. This disagreement appeared again less than a week later in Biogen Int’l GMBH v. Mylan Pharma Inc., Case No. 20-1933 (Fed. Cir. Nov. 30, 2021), which featured a split court in which the majority found a patent invalid based on an insufficient written description. In light of this lack of agreement on what constitutes a sufficient written description, an applicant should err on the side of filing applications for specific ranges or amounts as soon as possible.
Recently, the Court of Appeals for the Federal Circuit (“CAFC”) took the rare opportunity to describe the pleading requirement as it relates to direct patent infringement. Plaintiff Bot M8 LLC (“Bot M8”) sued Sony Corp. of America (“Sony”) alleging that Sony’s products, including its Playstation 4 videogame console (the “PS4”), infringed six of its patents directed towards technology for authentication and copyright protection. The district court granted Sony’s motion to dismiss for four of the asserted patents, U.S. Patent Nos. 8,078,540 (“the ’540 patent”), 8,095,990 (“the ’990 patent”), 7,664,988 (“the ’988 patent”), and 8,112,670 (“the ’670 patent”) for failing to adequately plead infringement. This dismissal was challenged on appeal.
The CAFC first stated “a plaintiff cannot assert a plausible claim for infringement under the Iqbal/Twombly standard by reciting the claim elements and merely concluding that the accused product has those elements.”[1] The ‘540 patent required that game and authentication programs be stored on the same board, separate from the motherboard. Bot M8 argued that the PS4’s hard drive stored both programs separate from the motherboard. Sony pointed to statements in the complaint that the authentication program was loaded and stored onto the PS4’s motherboard for execution. Bot M8 countered that this was an “overview statement” and that the limitation was still met if the authentication program was stored on the hard drive with the game program and simultaneously loaded onto the motherboard during execution. But the CAFC found that BotM8 had “essentially pleaded itself out of court” since it was impossible for the authentication program to be separate from the motherboard as plead. The ‘990 patent required storing game information together with a mutual authentication program on a removable storage medium. The CAFC noted that “while Bot M8 points to different storage components in the allegedly infringing devices, it never says which one or ones satisfy mutual authentication limitation.” The CAFC therefore found these allegations to be “conclusory and merely track the claim language” and that “merely possible” infringement allegations are not sufficiently plausible for pleading.
The ‘988 and ‘670 patents required executing a “fault inspection program” before a game is started. The CAFC rejected Sony’s argument that these contentions also just tracked the claim language. The CAFC felt that Bot M8’s allegations that the PS4 generated error messages upon booting up supported a reasonable inference that the PS4 infringed this limitation. To hold otherwise, the CAFC held, would be “demanding too much at this phase” as a plaintiff “need not ‘prove its case at the pleading stage.’”[2]
This case emphasizes that the Iqbal/Twombly standard applies to direct infringement allegations. Patent owners must allege facts from which it is plausible to conclude that the accused device meets the claimed limitations and not merely provide a list of allegedly infringed limitations accompanied by the conclusion that the accused device or one of its components satisfies it.
[1] See, Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
[2] Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1350 (Fed. Cir. 2018)
In a 363-page final initial determination of a Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. § 1337), action, publicly released on October 13, 2021, Administrative Law Judge (“ALJ”) David P. Shaw addressed a number of arguments with respect to several patents owned by Overhead Door Corporation and GMI Holdings Inc. Significant among them was the decision on patentability under 35 U.S.C. § 101. ALJ Shaw found that the relevant patents were not invalid under Section 101 because they used unconventional arrangements of components to solve technological problems.
In Alice, the Supreme Court reaffirmed a two-step inquiry to determine whether claims “are directed to a patent-ineligible concept” under Section 101. Step one “determine[s] if the claim’s character as a whole is directed to excluded subject matter.”[1] Claims that are “directed to a specific improvement in the capabilities of computing devices” are not abstract.[2] Even if the claims are abstract, they are patent eligible at step two if they add an “inventive concept,” which “can be found in the non-conventional and non-generic arrangement of known, conventional pieces.”[3]
Here, the relevant patents, U.S. Patent Nos. 8,970,345 and 9,483,935, involved barrier operator systems, such as garage door openers, that improved the use of RF signaling by modifying the message transmission in two notable steps. First, claims 1 and 16 of both patents recited channel switching to transmit multiple copies of a message. The use of channel-switching allowed the patented system to broaden the range of useful frequencies, thereby solving certain challenges with interference. Second, the receiver scanned multiple channels at a different rate than the transmitter’s switching, so that the RF receiver would detect data packets on the first pass of that RF channel, which allowed the patented system to solve the problem of missing packets that may result from channel-switching.
ALJ Shaw found that the claims recited patent-eligible advances because they recited a specific implementation of channel switching to solve the interference issues created by conventional systems utilizing a single, fixed RF frequency. ALJ Shaw also found that, even if the claims were directed to an abstract idea, they were patent eligible under Alice step two because they recited a non-conventional arrangement and configuration of the wireless communication system. Specifically, the industry utilized single, fixed RF frequency for garage operators. It was unconventional for a remote RF transmitter to transmit multiple copies of a message on multiple RF channels because it was considered unwise and a waste of valuable battery power. Finally, it was unconventional for multi-channel systems to have a receiver that switched frequencies at a different rate than the transmitter’s switching.
[1] Koninklijke KPN N.V. v. Gemalto M2M GmbH, 942 F.3d 1143, 1149 (Fed. Cir. 2019).
[2] Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc., 880 F.3d 1356, 1360 (Fed. Cir. 2018).
[3] BASCOM Global Internet Servs. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016).
The Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank International continues to trip up patentees, as the Federal Circuit, (“CAFC”), and the District of Arizona invalidated two separate patents for claiming unpatentable subject matter last week.
Cardionet involved U.S. Patent No. 7,099,715 (“the ’715 patent”), which was generally “directed to an improved heart monitoring device.” The district court entered summary judgment that defendant did not infringe the claims of the ‘715 patent but denied judgment on the pleadings that the ‘715 patent was invalid under §101 finding an inventive concept under step two of Alice. The parties filed cross appeals, and the CAFC reversed on both grounds. Regarding Alice Step Two, the CAFC analyzed the district court’s determination that the ‘715 patent recited an inventive concept because it satisfied the machine-or-transformation test, but, citing to past decisions, the CAFC determined that “[s]atisfying the machine-or-transformation test, by itself, is not sufficient to render a claim patent-ineligible” because not all “transformations or machine implementations infuse an otherwise ineligible claim with an ‘inventive concept.’” Because the ‘715 patent, though tied to a machine, focuses on “preprocessing a cardiac signal” using a “T wave filter,” the CAFC found that “[a]t bottom, filtering the data requires only basic mathematical calculations . . . calculations, even if ‘groundbreaking,’ are still directed to an abstract idea.”
DataWidget invalidated U.S. Patent No. 10,102,557 (“the ’557 patent”), which is directed to a software plugin, and claims a “system for searching and purchasing data subsets from a data seller” and comprises three main components: “(1) an ecommerce vendor, (2) a data seller, and (3) a data extraction widget.” The district court invalidated the patent under §101 stating “[t]he Court detects no inventive concept in Defendants’ claims” where “[t]he Patent essentially computerizes a longstanding economic practice.” In contrast to the CAFC, the district court focused its analysis on novelty and the ‘557 patent’s lack thereof. The court found that the patents claimed “conventional protocols,” that are “well-known in the art” and perform “generic functions” which are “not new . . . [because a]s far back as the pre-Civil War era, humans have acquired geographic and demographic data and used a printing service to reach a targeted audience.”
Patentees continue to urge the courts and Congress to stop the carnage flowing from Alice. While the Supreme Court has denied certiorari in several high-profile eligibility cases since its Alice decision, as recently as November 1, 2021 (see e.g. ENCO Systems v. DaVincia, No. 2021-456 (Fed. Cir. 2021) (see cert denied here)), patentees remain hopeful that the Supreme Court will take cert in Am. Axle & Mfg. v. Neapco Holdings, 2018-1763 (Fed. Cir. Oct. 3, 2019) where the CAFC was evenly divided on whether to grant rehearing en banc and the six dissenting judges stated that “[t]he court’s rulings on patent eligibility have become so diverse and unpredictable as to have a serious effect on the innovation incentive in all fields of technology.” Id. And, Representative Massey just introduced a bill (Restoring America’s Leadership in Innovation Act of 2021) that, among other things, would abolish Alice and the abstract idea exclusion for patent eligibility. We shall see if these efforts to stem the Alice decision flow.
We’re extremely excited to announce that Irwin IP has again been named as a “Law Firm of the Year” in Intellectual Property Litigation and Patent Law by US News and World Report and Best Lawyer for the second year in a row! Firms included in the 2021 “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Irwin IP is recognized as having a unique combination of quality law practice and breadth of legal expertise.
Earlier this year, US News and World Report again recognized Barry Irwin as Best Lawyer for the fourth year in a row. In addition to the Best Lawyer designation, Barry was also named a Super lawyer and Leading Lawyer this year, making it nearly twenty straight years of achieving those designations. We are very honored to see Barry recognized once again for his outstanding work.
Irwin IP thanks all of those who were involved in the submission, evaluation, and review process!
The Federal Circuit (“CAFC”) affirmed an award of exceptional case attorneys’ fees under 35 U.S.C. § 285 (“§ 285”) over Appellant Heat On-The-Fly (“HOTF”)’s arguments that the district court erred in failing to consider certain factual findings, and that it mis-weighed the strength of HOTF’s litigation positions and a purported lack of litigation misconduct in assessing exceptionality. This case is important both for its clarification of how inequitable conduct factors into the “exceptional case” determination, and its illustration of the hazards of pursuing shaky claims with high-pressure litigation tactics.
Plaintiff-appellee Energy Heating (“Energy”) filed suit for a declaratory judgment that HOTF’s patent for on-demand water heaters used in hydraulic fracturing (“fracking”) were invalid as obvious, unenforceable due to HOTF’s inequitable conduct, and not infringed. HOTF counterclaimed for infringement and brought a third-party claim for induced infringement against one of Energy’s clients, Marathon. The district court found HOTF’s patent obvious as well as unenforceable for inequitable conduct for failure to disclose 61 commercial uses prior to the critical date. Energy and Marathon moved under § 285 for over $5MM in attorneys’ fees, but the court denied it for lack of litigation misconduct by HOTF, aggressive litigation tactics from all parties, and a determination that HOTF’s arguments against inequitable conduct were “meritorious” (despite finding inequitable conduct by clear and convincing evidence). The CAFC then vacated the order denying fees, avoiding the factual determinations to instead indicate that the CAFC could not discern what standard the lower court had applied. Notably, the CAFC pointed out that if a court finding inequitable conduct declines to find the case exceptional under § 285, it should explain why. On remand, the district court awarded § 285 fees. The present appeal ensued.
Most notably, the CAFC rejected HOTF’s argument that the district court failed to give due consideration to the absence of a finding that HOTF engaged in litigation misconduct. The CAFC noted the lower court’s determination that “HOTF litigated the case in an unreasonable manner by persisting in its positions,” and saw “no abuse of discretion in the district court’s apparent refusal to credit HOTF for not further engaging in litigation misconduct.” It also rejected HOTF’s suggestion that the district court had per se found exceptionality from inequitable conduct, finding instead that it had correctly applied the law regardless of its note that courts appeared to universally find exceptionality following inequitable conduct.
This case reinforces the importance not only for district courts to seriously consider exceptionality whenever inequitable conduct is found (especially given Therasense’s high standard of proof), but for litigants to compare their litigation tactics against the strength of their positions. The CAFC has again[1] committed in appellate ink a district court’s sketch of the bounds of reasonable litigation conduct, this time after having erased that court’s prior, more lenient take on the bounds of zealous representation.
[1] See, e.g., Blackbird Tech. LLC v. Health in Motion LLC, No. 2018-2393 (Fed. Cir. Dec. 16, 2019) (summarized here).
On October 13, 2021, the Federal Circuit (“CAFC”) held that any financial interest administrative patent judges (“APJs”) have in instituting AIA proceedings did not violate a patentee’s due process rights. Mobility Workx (“Mobility”) brought an infringement suit against T-Mobile and Verizon Wireless, shortly afterwards Unified Patents LLC (“Unified”) filed an inter partes review (“IPR”) against the asserted patent. The Patent Trial and Appeal Board (“PTAB”) found several claims obvious and others not unpatentable. Mobility appealed and, among other arguments, challenged the constitutionality of the PTAB structure.
First, Mobility argued that executive APJs have an interest in instituting AIA proceedings to generate fees to fund the agency and ensure future job stability. Mobility contended that “24%” of PTAB’s collections come from institutions and that the executive APJs were “impermissibly mixing” their judicial and executive roles by managing the PTAB’s finances and also deciding AIA petitions on their merits. Mobility pointed out that a few executive APJs served on their panel. The CAFC noted that executive APJs are not responsible for the agency’s finances; they merely assist the Director with the budget. The CAFC stated it is Congress who controls the PTO’s budget and that the APJs’ role in the budget is too remote for a due process violation.
Second, Mobility argued that that individual APJs have a personal financial interest in instituting AIA proceedings in order to earn better performance reviews and bonuses. To earn a performance bonus and salary increases, APJs “must generally earn at least 84 decisional units per year.” The CAFC responded by noting that APJs have a fixed salary and undergo an annual performance review. The CAFC found the number of decisional units earned is based on the number of decisions authored, not on the outcomes. While APJs earn decisional units for a follow-on decision if the APJ institutes, Mobility did not make a showing that APJs institute to earn decisional units to qualify for a bonus as APJs can earn decisional units through non-AIA proceedings, such as ex parte appeals. Therefore, the CAFC found any incentive to institute is too remote for a due process violation.
The CAFC rejected Mobility’s other arguments such as their claims of due process violations for having the same panel of APJs for institution and for the final merits of the case and that AIA proceedings are an unlawful taking of property in light of previous cases. The CAFC remanded in light of the Supreme Court’s decision in Arthrex to allow Mobility to request Director review of the final written decision.
Judge Newman dissented. While Newman agreed with the remand, Newman points out several flaws with the PTAB. First, Newman stated it was Congress’s intent for the Director to decide institutions and for the PTAB to adjudicate the final merits, and that it is consistent with the Supreme Court’s decision in Arthrex to require the Director to have the opportunity to review PTAB decisions. The current regulations, however, impermissibly eliminate this opportunity. Next, Newman expressed concern over how the same panel of APJs who decide institution also decide the merits of the case because that has the appearance of bias. Newman noted how Congress, under the APA and the AIA, intended for the PTO to separate investigative and adjudicative functions. Newman said this problem could be fixed by reinstating the Director’s control over institution decisions. Newman also sympathized with Mobility’s charge of bias based on fees and compensation as Newman believed the majority did not consider the weight of Mobility’s charges and did not provide a feeling of “justice.”
While this case is another defeat for parties seeking to challenge the constitutionality of IPRs, Newman’s dissent might provide a roadmap on how to raise this issue again with the Supreme Court.