Patent Docs

Webinar on § 101 Rejections in Computer and Electronics Patents

Strafford will be offering a webinar entitled "Overcoming § 101 Rejections for Computer and Electronics Related Patents -- Leveraging USPTO Guidance and Recent Decisions to Meet 101 Patent Eligibility Requirements" on April 19, 2018 from 1:00 to 2:30 pm EDT.  Charles Bieneman of Bejin Bieneman and Michael P. Shepherd of Fish & Richardson will guide patent counsel for overcoming § 101 rejections for computer and electronics related patents, and review recent case law and USPTO guidance on § 101 patent eligibility and offer strategies to address § 101 rejections.  The webinar will review the following issues:

• What are the significant recent § 101 decisions at the Federal Circuit, the district courts and PTAB?
• How can specifications and claims be drafted to guard against § 101 rejections?
• What strategies and arguments can be used in patent prosecution to overcome § 101 rejections?

The registration fee for the webcast is $297.  Those interested in registering for the webinar, can do so here.

ACI Paragraph IV Disputes Conference

American Conference Institute (ACI) will be holding its 12th Annual Paragraph IV Disputes conference on April 23-24, 2018 in New York, NY.  ACI faculty will provide insights into:

• Understanding the correlation between Paragraph IV filings and the speed of ANDA approvals
• Reviewing recent Federal Circuit rulings and District Court interpretations of TC Heartland, and their impact on venue
• Exploring Oil States vs. Greene's Energy Group and the constitutionality of IPR proceedings
• Examining the impact of the Sovereign immunity defense and the status of a Congressional response
• The interplay between the new FDA leadership and Hatch-Waxman litigation
• Recent PTAB decisions and appeals in the pharmaceutical practice group
• Deciphering recent Federal Circuit opinions addressing obviousness in the ANDA setting
• Reviewing the state of the law on induced infringement for Hatch-Waxman cases
• Evaluating typical ethical predicaments that may arise in Paragraph IV litigation

The conference will offer presentations on the following topics:

• Paragraph IV Litigation Year in Review: Present Developments and Future Forecasts
• The Evolving Principles of Venue and Jurisdiction in the Aftermath of TC Heartland
• IPR Update: Oil States, SAS and the Future of IPRs: An Assessment of Challenges to Inter Partes Review Presently before the Supreme Court
• IPR Update: The Question of Sovereign Immunity: A Legitimate Means of Pharmaceutical Patent Protection?
• The Distinctive Roles of The Magistrate Judge and Local Counsel in Paragraph IV Proceedings
• View From the Bench: The Federal Judges Speak on Paragraph IV Litigation
• The Impact of New FDA Leadership on Hatch-Waxman Practice
• PTAB Update: Wins, Losses and Appeals
• Fireside Chat with the PTAB: Thoughts on Practice, Procedure, IPRs and Other Meanderings in the World of Pharmaceutical Patent Validity Challenges
• Obviousness Update for PIV Litigation: Matters of Inherency, Anticipation and Secondary Considerations
• FTC Keynote: Antitrust Developments Concerning Brands & Generics
• The Devil in the Label Details: A New Test for Induced Infringement
• Ethics: Case Studies in Ethical Developments Influencing Paragraph IV Practice

In addition, two post-conference workshops will be offered on April 25, 2018.  The first, entitled "Jurisdiction and Venue Selection Master Class" will be offered from 8:30 am to 12:00 pm, and the second, entitled "Biosimilar Litigation Boot Camp for the Hatch-Waxman Litigator" will be offered from 1:00 to 4:30 pm.

The agenda for the Paragraph IV Disputes conference can be found here.  More information regarding the workshops can be found here and here.  A complete brochure for this conference, including an agenda, detailed descriptions of conference sessions, list of speakers, and registration form can be obtained here.

The registration fee for the conference alone is $2,395 (or a special $1,795 in-house rate for pharmaceutical & biotech organizations), or $3,495 for the conference and both workshops.  Patent Docs readers are entitled to a 10% discount off of registration using discount code P10-999-PTD18.  Those interested in registering for the conference can do so here, by e-mailing [email protected], or by calling 1-888-224-2480.

Patent Docs is a media partner of ACI's 12th Annual Paragraph IV Disputes Conference.

Putting on Your Best Face: Expanded PTAB Panels in IPRs and Other PTO Proceedings

By Kevin E. Noonan --

There has been a great deal of angst generated by the practice before the U.S. Patent and Trademark Office's Patent Trial and Appeal Board (PTAB) of expanding panels from the customary three Administrative Patent Judges to include additional APJ's, including the Chief Judge and his deputies.  This practice was identified, seemingly by accident, during oral argument in Yissum Research Development Co. v. Sony Corp.; there, it became evident that the USPTO administration can and had intervened to alter or expand panels.  This practice has raised concerns regarding whether the PTAB is observing the procedural niceties that ensure due process will be satisfied.  This happened most recently in Ericsson v. Regents of the University of Minnesota and LSI Logic v. Regents of the University of Minnesota, which some commentators have noted are strikingly similar, and the practice has raised judicial eyebrows at the Supreme Court as well as the Federal Circuit.  The most recent donnybrook has involved production of redacted e-mails and other documents requested by counsel and obtained under a Freedom of Information Act request relating to the St. Regis Mohawk Tribe's assertion (unsuccessful, so far) tribal sovereign immunity to avoid Final Written Decision in a series of inter partes review proceedings initiated prior to transfer of patent rights from drugmaker Allergan to the tribe.

In an effort to improve the optics of the situation, a March 13, 2018 "Chat with the Chief (Judge)" program, featuring David P. Ruschke, Chief Patent Judge, joined by Michelle N. Ankenbrand, Lead Administrative Patent Judge, addressed the issue by discussing a study of the use of expanded panels in IPR and other proceedings before the PTAB.  The program started with the assertion that the Chief Judge has the authority (albeit not citing the statutory basis therefor), to expand panels but moderated that statement by emphasizing that expanded panels are "rare" and "ordinarily not used."  Expanded panels, when they are used are used for two purposes.  According to these officials.  First, the panels are used when the Board is considering "issues of exceptional importance," which the Judge's PowerPoint slide characterized as "guidance."  Second (and perhaps more controversially), expanded panels are used to maintain uniformity (termed "consistency") in PTAB (USPTO, actually) policy decisions.  The Chief Judge explained that an expanded panel requires a written request to the Commissioner of Patents or his delegate (who?); the request can come from an APJ, a merits or interlocutory panel, a patent owner or applicant in ex parte matters, or the parties in inter partes reexamination, interference, or "AIA trial."  The request must also contain reasons for expanded panel consideration; this can, again with some controversy, relate to an issue of first impression or "governed by a prior Board decision where Commissioner has determined it would not be in the public interest to follow the prior Board decision" (emphasis added).  Acceptable justifications or rationales include:

• Predictable and uniform application of agency policy
• Similarly situated parties, under the same facts, are treated the same
• Notice to the public

In practice, when expanded panels are employed, it is preferred that the panel include the Chief and a Deputy; include in the decision an explanation of the reason for expanding the panel; and preferably the expanded panel does not change the result arrived at by the original panel.  In view of these rationales, decisions from expanded panels are expected to be designated either as informative or precedential.

The study described by the Chief Judge involved four questions:  1) how frequent were expanded panels convened? 2) under what circumstances? 3) what was the reasoning behind expanding the panel? and 4) what was the result?  The study considered 7,390 petitions filed before December 31, 2017, involving 6,033 institution decisions, 1,912 Final Written Decisions (FWDs), and "thousands" of interlocutory orders.  Expanded panel decisions were assessed "manually" and excluded families where expanded panels were used to conserve resources (multiple consolidated cases).

Regarding the first question, the statistics showed 23 expanded panels of 6,033 institution decisions; 31 expanded panels of thousands of interlocutory orders; no expanded panels in 1,912 FWDs; and 5 expanded panels involving decisions in multiple consolidated IPRs.

Expanded panels when they arose were empaneled to make a decision on the merits 80% of the time and on request for rehearing in the other 20%.

Data on the rationales for expanded panels were explicated in more detail.

There were 21 instances where the panel was expanded at institution to consider questions of statutory interpretation.

These included:

• § 314(a) Multiple Petitions:  General Plastic v. Canon, Case IPR2016-01357, -01358, -01359, -01360, -01361 (PTAB Sept. 6, 2017) (Paper 19) (precedential) (vote from 3-0 to 7-0 with expansion on rehearing)
    – Emphasizes the factors that the Board considers in deciding whether to exercise its discretion to deny a follow-on Petition in an AIA proceeding under 35 U.S.C. § 314(a).

• § 325(d) Similar Art/Arguments:  Neil Ziegmann v. Carlis G. Stephens, Case IPR2015-01860 (PTAB Sept. 6, 2017) (Paper 13) (vote from 3-0 to 5-0 with expansion on rehearing)
    – Emphasizes that prior art or arguments may be considered "substantially the same" under 35 U.S.C. § 325(d) if they are "cumulative to or substantially overlap  with issues previously considered by the Office with respect to the patent."

• CBM Pre-Institution Disclaimer:  Facebook v. Skky, Case CBM2016-00091 (PTAB Sept. 28, 2017) (Paper 12) (precedential) (vote from 3-0 to 5-0 with expansion on rehearing)
    – Emphasizes that CBM patent review eligibility is determined based on the claims of the challenged patent as they exist at the time of the decision to institute, and that statutorily disclaimed claims must be treated as if they never existed for the purpose of institution.

Five instances arose at institution decision for questions of petition requirements.

Four occurred on motion procedure.

Twelve involved decisions to impose sanctions.

Seven involved questions of sovereign immunity; and ten were at the request of the PTAB panel.  In these ten cases, HTC America v. Virginia Innovation Sciences, Case IPR2017-00870, -00871, -00872, -00873, -00874, -00875, -00876, -00877, -00878, -00879 (PTAB Sept. 13, 2017), the original panel suggested expansion to maintain uniformity due to substantial difference of opinion among the judges on a group of 10 related cases regarding an issue arising under 35 U.S.C. § 112(f).

With regard to the fourth question, the Chief Judge contended that the expanded panel came to the same conclusion as the original panel, with the exception of Target Corp. v. Destination Maternity Corp. (IPR2014-00508), and Nidec Motor Co. v. Zhongshan Broad Ocean Motor Co., No. 2016-2321, slip op. (Fed. Cir. Aug. 22, 2017).

The Chief provided these conclusions:

• Expanded panels are very rare
• Most expanded panel decisions issued as original decisions, not decisions on rehearing
• Panels were expanded for guidance and consistency:
    • to provide forward-looking guidance on reoccurring issues; and/or
    • to treat similarly situated parties the same
• Underlying result remained the same after panel expansion on rehearing, except for Target and Nidec, both of which address same-party joinder

Article I courts, and the PTAB in particular, have a legitimate goal:  providing consistent application of the law to applicants and, in the case of implementing the adversarial avenues the AIA created, developing a consistent body of procedural and substantive law.  To this end, for example, the PTAB has designated some (albeit few) cases precedential, thus providing notice to the public regarding how the Office can be expected to conduct the "trials" mandated by the statute.  But the manner in which the Board has attempted to provide this consistency, in particular with regard to expanded panels in post-grant review proceedings, has provoked sufficient controversy that Chief Judge Ruschke felt it necessary (or at least politically expedient) to requisition a study and include the results in his "chat."  The kerfuffle that has arisen over expanded PTAB panels is the direct result of the chimerical nature of the proceedings engendered by the Leahy-Smith America Invents Act.  Characterized as "trials" in the rhetoric used to obtain passage of the Act, the various post-grant review instruments are more in the nature of "a specialized agency proceeding" as the Supreme Court noted in Cuozzo Speed Technologies v. Lee.  Seen in this light the practice of expanding panels to ensure consistency of agency action would appear to have some merit.  Seen as a trial, however, the overriding consideration is due process, wherein a patentee cannot be deprived of her property except in an adjudicatory proceeding where she has a fair opportunity to be heard without the deck stacked against her.  The Office has been zealous in putting patents of purportedly dubious validity through the gauntlet of post-grant review.  To many, the Board needs to be just as zealous in ensuring that patentees be deprived of their patent properties only if due process is followed as rigorously in the Office as it is in district court.  It may be impossible to reconcile these two diverse mistresses intertwined in post-grant review, but if the Office does not, cannot, or will not, eventually the Supreme Court will.

Federal Circuit Issues Stay in St. Regis Mohawk Tribe Sovereign Immunity Appeal

By Kevin E. Noonan --

The Federal Circuit has granted the St. Regis Mohawk Tribe's motion for stay in inter partes review proceedings before the Patent Trial and Appeal Board, in St. Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc.  In the Order, the Court notes that the PTAB had scheduled final hearing in the IPR for April 3, 2018, and that the Court had sua sponte ordered expedited briefing in the Tribe's appeal in advance of a June 2018 date for oral argument.

The Order also contained this passage, indicating a certain degree of impatience with how the PTAB has observed the jurisdictional niceties:

At this juncture, it appears that the appeals divested the Board of jurisdiction over the aspects of the case on appeal, see Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982); Princz v. Fed. Republic of Ger., 998 F.2d 1 (D.C. Cir. 1993) (appeal from denial of motion to dismiss on grounds of sovereign immunity divests district court of jurisdiction over entire case); Apostol v. Gallion, 870 F.2d 1335 (7th Cir. 1989); accord In re Graves, 69 F.3d 1147, 1149 (Fed. Cir. 1995), and that exclusive jurisdiction to resolve the threshold issue of whether these proceedings must be terminated vests in this court, and that the Board may not proceed until granted leave by this court.  The stay shall remain in effect until the day after oral argument in the appeals in June 2018.  The court will address whether the stay shall remain in effect or whether it will be lifted at that time based on further consideration of the merits of the appeals.

The Tribe’s opening brief is due no later than April 18, 2018, and Mylan and the other Petitioners' brief are due no later than May 11, 2018, with the Tribe's Reply brief and the joint appendix due no later than May 18, 2018.  While not specifically mentioned, amicus briefing falls under Federal Circuit Rule 29, wherein briefs will be due one week after the Tribe's brief for amici supporting their position and amici supporting neither party, and one week after Petitioner's brief for its amicus supporters.  Amici must obtain permission of all parties or leave of the court.

Electronic Scripting Products, Inc. v. HTC America, Inc. (N.D. Cal. 2018)

 Virtual Reality Patents Survive Patent-Eligibility Challenge

By James Korenchan --

Last week, Judge Seeborg of the U.S. District Court for the Northern District of California ruled that claims related to virtual reality applications are patent eligible under 35 U.S.C. § 101.  Plaintiff Electronic Scripting Products, Inc. (ESPI) accused HTC American, Inc. (HTC) of direct and induced infringement through HTC's VIVE virtual reality headsets.  Defendant HTC then brought the § 101 challenge against ESPI in a motion to dismiss.  While this challenge failed, HTC was still successful in having ESPI's complaint thrown out for failure to state a claim, and the Court granted ESPI leave to amend.

The patents at issue in this case, U.S. Patent No. 8,553,935 (the '935 patent) and U.S. Patent No. 9,235,934 (the '934 patent), are in the same family and are directed to measuring pose (i.e., a three-dimensional (3D) position) and orientation of objects in real 3D environments using on-board photodetectors and stationary light sources.  The claimed methods and apparatuses have both virtual reality and augmented reality applications.  Both patents state a need in the art for improved motion tracking of all six degrees of freedom inherent in 3D space, which can be achieved with more robust and rapid pose determination of objects, such as remotes, wands, pointers, and gaming controllers.  The tracked pose and motion of such objects can be digitized with respect to a reference location in real space, which makes one-to-one motion mapping between real space and cyberspace possible.  Ideally, such improvements can reduce or eliminate frequency-encountered problems with a user's quality of experience, such as information loss, position aliasing, gradual drift, and position error.

Representative claims of each patent are as follows:

U.S. Patent No. 8,553,935:

12.  A system comprising a manipulated object, said system comprising:
    a) a first plurality of predetermined light sources disposed at known positions in world coordinates;
    b) a photodetector mounted on-board said manipulated object for generating light data indicative of light detected from said first plurality of light sources;
    c) a relative motion sensor mounted on-board said manipulated object for generating relative motion data indicative of a change in an orientation of said manipulated object; and
    d) a processor for determining the pose of said manipulated object based on said light data and said relative motion data, wherein said pose is determined with respect to said world coordinates.

U.S. Patent No. 9,235,934:

1.  A wearable article cooperating with a first plurality of predetermined light sources disposed in a known pattern, said wearable article comprising:
    a) a photodetector configured to detect said first plurality of predetermined light sources and generate photodetector data representative of the positions of said first plurality of predetermined light sources; and
    b) a controller configured to identify a derivative pattern of said first plurality of predetermined light sources from said photodetector data, wherein said derivative pattern is indicative of the position of said photodetector.

In hopes of dismissing these claims on Alice grounds, HTC asserted that the claims are directed to patent-ineligible abstract concepts of observing visible points in space and determining the position (e.g., the pose and orientation) of an object relative to the viewer.  HTC went as far as characterizing the claims as an attempt to patent an abstract process of using objects to determine one's position, "as sailors have done by looking at the stars for centuries."  Further, HTC cited to 2016's In re TLI Communications LLC Patent Litigation, in which the Federal Circuit found the recited tangible components of a telephone unit and a scanner to amount to no more than conduits for an abstract idea of "classifying an image and then storing the image based on its classification."  HTC argued that the tangible components here -- namely, the recited photodetector and the motion sensor -- are likewise such conduits.

In response, ESPI relied almost entirely on the Federal Circuit decision in Thales Visionix Inc. v. U.S., in which the Federal Circuit found patent-eligible claims that were "not merely directed to the abstract idea of using mathematical equations for determining the relative position of a moving object to a moving reference frame," but rather "directed to systems and methods that use inertial sensors in a non-conventional manner to reduce errors in measuring the relative position and orientation of a moving object on a moving reference frame."  Further, ESPI noted various manners in which the asserted patents provide novel advantages over conventional systems, such as by increasing the speed and accuracy of 3D pose recovery, reducing noise, and reducing system complexity, and cost.

HTC attempted to distinguish ESPI's claims from those in Thales, arguing that, while the eligible claims in Thales provided an improvement over the prior art by having a specific configuration of elements and a particular arrangement of sensors, ESPI's claims do not require any specific configuration of either the recited photodetectors or light sources, and also do not provide an improvement over the prior art.

However, the Court agreed that the claims were similar enough to those in Thales to survive under Alice (albeit saying it was a "close call"), saying that HTC's attempts to distinguish this case from Thales mischaracterize what ESPI's patents state.  Addressing step one of the Alice framework, the Court highlighted differences between the patents and conventional methods.  While conventional methods use photodetectors positioned in and around the environment in order to determine a manipulated object's pose, ESPI's patents specify that a remote control or the manipulated object itself is equipped with motion sensors and the photodetector.  The Court then went on to further emphasize the improvements and non-conventionality of the claimed invention, noting that ESPI recognized a need for improved motion tracking in virtual reality applications "and accomplished this by reversing the usual placement of markers and sensors and using only light sources," thus providing a novel arrangement "eliminat[ing] the need for multiple synchronized imaging cameras located in the environment and also minimiz[ing] the bandwidth and processing needs of the system."

Concluding its short step one analysis, the Court echoed ESPI's arguments with respect to Thales, and distinguished the claims from those in TLI Communications, stating that the recited sensors "are not mere conduits for abstract principles, but instead their placement is integral to the improved functioning of the system."

Rather than stop its analysis there, the Court quickly addressed step two, stating that the claims would have survived regardless of the outcome of step one.  Briefly, citing BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC for support ("[A]n inventive concept can be found in the non-conventional and nongeneric arrangement of known, conventional pieces."), the Court yet again emphasized the claimed invention's simpler, less expensive, versatile, and non-conventional approach, calling it "sufficiently inventive."

This Order is a positive one for patent owners in the virtual and augmented reality fields.  The Court focused quite heavily here on the improvements and advantages of the claimed invention over more conventional approaches.  If patent owners in these fields can invite and rely on the same focus, it would be a useful tool in withstanding Alice scrutiny.

Order Granting Motion to Dismiss by District Judge Seeborg

What You Can Do to Prevent Multiple Petitions (or How You Can Successfully File One) -- Part I: The PTAB's "Multiple Petition Study"

By George "Trey" Lyons, III --

As an endcap to a recent webinar Andrew Williams and I did on the most important PTAB stories from the past year, I addressed the effects that multiple, often serial, petitions can have on patent owners and their patents, and what can be done to alleviate some of the associated stresses -- or increase them if you're the petitioner.  See Top Stories at the PTAB: What You Need to Know (Mar. 13, 2018), available here.  As final topics often go, however, my coverage was constrainedly brief.  So, here I will unpack the analysis patent owners and petitioners, alike, should keep top-of-mind when moving through this strategy.

To frame this issue, for PTAB petitioners who pay no attention to sunk-cost fallacies, the idea of throwing good money after a bad petition (e.g., those filed by another petitioner, based on different art and/or arguments) may always seem like the most aggressive and effective option at your disposal.  From the point of view of the patent owner, the anxiety of finding yourself as the recipient of a multiple petition barrage crying for the revocation of your hard-earned patent rights is often real, and may even seem fundamentally unfair.

Understanding this concern, late last year the PTAB undertook a comprehensive study to look at just how many patents have actually faced multiple petitions, who filed them, when they were filed, and how effective they were, both in terms of institution rate and the number of challenged patents that were ultimately lost (in whole or part).  See Multiple Petitions Study (Oct. 24, 2017), available here.  Because both the ultimate message (i.e., "Fear not, multiple petitions are really not that big of a threat") and the delivery (e.g., fairly confusing metrics, etc.) felt a little unsettling, a few key aspects of the study are likely worth further explication.

In the study, the PTAB reviewed 7,168 petitions addressing 4,376 patents.  From this, taking a "just the facts" approach where we can, some of the more important statistics presented in the study were as follows:

Who's Filing:  84.8% of patents were challenged by a single petitioner, and 94.5% faced two or fewer.

What's Being Filed:  67% of patents are challenged by one petition, 20.2% of patents are challenged by two petitions, and the numbers fall off quickly from there.

When Are They Filed:  Next, in slightly different approach, the PTAB examined when all of these petitions were actually filed.  The presentation, however, may have been a little misleading considering the topic at hand -- the impact of multiple petitions on post-grant proceedings.  The PTAB's graph below indicates that 79% of petitions are filed before the patent owner preliminary response or institution decision, 95% of petitions are filed in a given petitioner's first round (before any institution decision), and only 5% of petitions are filed after a patent owner preliminary response, but before institution decision.

The slightly confusing part of this graph, however, is that some might interpret it on first impression as applying only to multiple petitions.  Not so.  Instead, the 41% (seen here in purple) included in the PTAB-touted "79% of Petitions" being filed without the benefit of seeing a patent owner preliminary response or institution decision are actually instances in which only one petition was ever filed.  But, if you are more interested in the more pressing question seemingly at the center of the study -- when multiple petitions were filed -- the percentage of "wait-and-see" petitioners are actually much more substantial.  Specifically, normalizing these percentages over the number multiple petitions filed, the impact looks more like this:  64.4% of multiple petitions were filed on or near the same day, 8.4% were filed after the patent owner preliminary response, and 27.19% were filed after the decision institution.  Thus, if you're going to be filing (or facing) multiple petitions, the "wait-and-see" strategy seems to be alive and well.

Finally, perhaps not surprisingly at this point, the Board also found that instances of any further, subsequent rounds of petitions past a second round were statistically insignificant (less than 0.1%, and where a "round" is all petitions filed before receiving a decision institution on one of those petitions).  Considering the typical timeline from filing to institution decision in light of the statutory time bar for filing, the PTAB really only confirmed that there are, statistically, very few instances in which multiple full rounds of petitions were filed.

Based on these figures, it would seem that some of the biggest challenges for patent owners who consider these petitions (and PTAB proceedings generally) as "death marches" for their hard-earned property rights (e.g., facing more than one petitioner, facing more than two petitions) are not, statistically, as relevant as some may have thought; but facing the ever-dreaded (and often effective) "wait-and-see" petitioners may well be.

The impact articulated by the PTAB that these petitions actually have on the challenged patent was also very surprising -- although a little difficult to appreciate in the graphs presented below.

Multiple Petition Effect on Institution Decision:

First, the PTAB noted that although institution rates have decreased, the effect that multiple petitions have on those ultimate institution rates is marginal (70% versus 64% in 2017), but has increased slightly (4% in 2013 to 7% in 2016).  To help cut through these figures, the blue line below indicates a measure of the institution rate by patent, which is agnostic of how many petitions were actually filed against the patent (e.g., two petitions filed against a patent, one gets instituted, one does not = 100% institution rate).  The green line, on the other hand, indicates a measure of the institution rate by petition, which is an outcome averaged by how many petitions were actually filed against the patent (e.g., two petitions filed against a patent, one gets instituted, one does not = 50% institution rate).

Thus, as you can see, although the overall institution rate in post-grant proceedings has decreased over the past four years, the impact of filing multiple petitions has increased slightly (note, the figures for 2017 only include analysis for the first half of the year).  Even so, the PTAB's answer to biggest question left on everyone's lips -- "What will this process ultimately mean for my patent (or the one I'm challenging)?" -- was perhaps the most surprising of all.

Multiple Petition Effect on Ultimate Outcome of the Challenged Patent:

Turning to this answer, it is clear that the real effect of multiple petitions is most naturally viewed by considering how these same variables affect the ultimate outcome of the trial[s] and how the patent itself actually changed by going through it [them].  In the graph below, once again the blue and green coloration reflects the scenarios above, which indicate that 69% of all petitions result in a patent being unchanged and 58% of patents are completely unchanged at the end of one or more AIA proceedings.  Furthermore, the PTAB's figures also indicate that multiple petitions are slightly more beneficial for challenging some claims as unpatentable, as opposed to all claims as unpatentable.  Regardless, from the PTAB's view, the impact of multiple petitions in post-grant proceedings on the number of challenged patents that were ultimately lost (in whole or part) does not seem as great as some people feared.

Takeaways:

Bringing all of this back home, although somewhat hard to believe the results of the PTAB's "Multiple Petition Study" seem to indicate that the threats posed to patent owners by petitioners "abusing the system" and filing multiple petitions is not as rampant or pressing as many believed -- at least based on the PTAB's metrics.  The effect that these statistics really have on strategies for navigating post-grant proceedings moving forward, however, really seems to be threefold, all depending on the chair you're sitting in.

First, if you're in the petitioner's chair, and you want to make multiple attempts at invalidating a patent using these proceedings (e.g., correct deficiencies of your own petition, divide and conquer claims, or show another petitioner what they should have argued), you're going to be inclined to throw good money after what you've perceived to be bad (or, more fairly, incomplete) results.  Second, if you're in the patent owner's chair, you don't really care what this study says or what happened to anybody else, because you just got a second (or potentially third, etc.) petition dropped in your lap and you want to know the best path forward.  And third, if you're in the PTAB's chair, based on this study, you probably don't even think there's a problem, and even if there is, you'll deal with it in the "broad discretion" you've been granted by 35 U.S.C. §§ 314(a) and 325(d).

But all said, because this strategy is likely not going away in the foreseeable future, we will turn to the factors and strategies at play when navigating multiple petition proceedings in light of this study and subsequent case law in the next installment. 

Conference & CLE Calendar

March 28, 2018 - "Patent Infringement: Structuring Opinions of Counsel -- Leveraging Opinion Letters to Reduce the Risks of Liability and Enhanced Damages" (Strafford) - 1:00 to 2:30 pm (EDT)

March 29, 2018 - "The Evolving Scope of IPR Estoppel" (Federal Circuit Bar Association) - 1:00 pm to 2:00 pm (EST), Washington, DC

March 29, 2018 - "Patent Prosecution Estoppel from PTAB Proceedings" (Intellectual Property Owners Association) - 2:00 to 3:00 pm (ET)

March 29, 2018 - "Achieve the 'QUALITY' in Patents and Avoid Common Mistakes" (CPA Global) - 11:00 am (CT)

April 5, 2018 - "Paragraph IV Litigation and IPRs -- Interplay Between Paragraph IV Litigation and IPRs, Multiple Generic Challengers, Key Issues in IPRs" (Strafford) - 1:00 to 2:30 pm (EDT)

April 6, 2018 - "Are Patents Under Attack?" (Federal Circuit Bar Association and Center for Innovation Policy at Duke Law) - 8:00 am to 4:45 pm (ET), Duke University School of Law, Durham, NC

April 7, 2018 - "Court of Appeals for the Federal Circuit Practice & Procedure" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) - 9:00 am to 4:30 pm (CT), John Marshall Law School, Chicago, IL

April 9, 2018 - "The Patent System: Transformative Times" (Federal Circuit Bar Association and Boston Patent Law Association) - 2:30 pm to 5:30 pm (ET), Northeastern University, Boston, MA

April 10, 2018 - "Federal Circuit Practice & Insights: A Townhall with Federal Circuit Judge Kara Stoll" (Federal Circuit Bar Association and Michigan IP Inn of Court) - 4:30 pm to 6:30 pm (ET), University of Detroit Mercy School of Law, Detroit, MI

April 12, 2018 - "Protecting Software as a Medical Device With Patents, Design Patents and Trade Secrets" (Strafford) - 1:00 to 2:30 pm (EDT)

April 14, 2018 - "Court of Appeals for the Federal Circuit Practice & Procedure" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) - 9:00 am to 4:30 pm (CT), John Marshall Law School, Chicago, IL

Webinar on Patent Quality

CPA Global will hosting a webinar entitled "Achieve the 'QUALITY' in Patents and Avoid Common Mistakes" on March 29, 2018 beginning at 11:00 am (CT).  Larry M. Goldstein will discuss:

• The patent value hierarchy
• Definitions of "good" and "valuable"
• Quality in provisional applications and non-provisional applications

Those interested in registering for the webinar can do so here.

Intellectual Ventures I LLC v. Symantec Corp. (Fed. Cir. 2018)

By Michael Borella --

Intellectual Ventures (IV) sued Symantec in the District of Delaware, alleging infringement of U.S. Patent No. 5,537,533.  The District Court invalidated the '533 patent on a summary judgment motion as being directed to patent-ineligible subject matter.  IV appealed.

Claim 25 of the '533 patent recites:

25.  A method for remote mirroring of digital data, said method comprising the steps of:
    copying the data from a primary network server to a nonvolatile data buffer in a data transfer unit which is digitally connected to the primary network server, the primary network server including an operating system which is capable of accessing a nonvolatile server store, the data copied to the data transfer unit being a substantially concurrent copy of data which is being stored by the operating system in the nonvolatile server store of the primary network server;
    copying the data from the data transfer unit to an input end of a communication link which has an output end physically separated from its input end;
    generating and sending a spoof packet to the operating system of the primary network server; and
    copying the data from the output end of the communication link to a nonvolatile server store on a remote network server.

Essentially, the claimed invention is a fairly straightforward backup process with the possible exception of the spoof packet, which is used to speed up the transaction.

The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a test to determine whether claims are directed to patent-eligible subject matter under 35 U.S.C. § 101.  One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to "significantly more" than the judicial exclusion.  But generic computer implementation of an otherwise abstract process does not qualify as significantly more.  On the other hand, a claimed improvement to a computer or technological process is typically patent-eligible.

Here, the Federal Circuit rapidly disposed of the matter:

[W]e conclude the district court did not err in finding claims 25 and 33 of the '533 patent ineligible under 35 U.S.C. § 101.  The district court correctly found that the claims were directed to the abstract idea of backing up data, and that the claim limitations lacked an inventive concept as they invoke conventional computer components that do not function in combination in an inventive manner.

Once again, we have a § 101 case in which a broad, vague claim that likely would not be novel or non-obvious is disposed of under § 101 instead of § 102 or § 103.  The District Court even performed a de facto prior art analysis, stating that "[i]t is undisputed that institutions have long backed up data in general, and the specification even describes long-practiced methods of backing up digital data."  Nonetheless, despite IV's contention that the specification of the '533 patent described an improvement over the prior art, the District Court observed that "[t]he claims do not provide any concrete details that limit the claimed invention to a specific solution to the problem of remote back-up of digital data."  In other words, if there is a disclosed improvement, it is not in the claims.  Regarding sending the spoof packet, Symantec offered evidence that such an activity was conventional, and IV did not make a rebuttal.

Recently, the Federal Circuit's Berkheimer v. HP Inc. case held that when there is a material issue of fact over whether claims provide such an improvement, summary judgment is improper.  But here, the Court did not find such an issue:

Our recent decision in Berkheimer v. HP Inc. does not compel a different conclusion.  IV filed a notice of supplemental authority arguing that Berkheimer compels reversal and remand of the district court's judgment because "there is a genuine issue of material fact as to whether the '533 claims improve remote data mirroring in 'an inventive manner' or perform 'well-understood, routine, and conventional activities to a skilled artisan.'"  But, as the district court explained in detail, "the claims invoke conventional computer components that do not supply an inventive concept," and "[t]he specification confirms that the individual components . . . are conventional, generic, and operate as expected."  Moreover, the district court found that IV failed to offer evidence to show that the order of the steps was unconventional.  IV also acknowledged at oral argument that it did not offer expert testimony to show the lack of conventionality of its components.

As such, the Federal Circuit concluded that the District Court did not err in finding the '533 patent invalid under § 101.  And as an aside, anyone who thinks that backing up their data is an abstract concept should keep that in mind when their primary computer is lost, stolen, or crashes.

Intellectual Ventures I LLC v. Symantec Corp. (Fed. Cir. 2018)
Nonprecedential disposition
Panel: Circuit Judges O'Malley, Schall, and Wallach
Opinion by Circuit Judge O'Malley

Drug Costs Continue to Rise

By Kevin E. Noonan --

Increased drug costs have been a political and economic target for more than the past generation, being one of the motivations for the Hatch-Waxman Act in 1984.  Drug costs were a big part of Ross Perot's campaign in 1992, Hillary Clinton's ill-fated healthcare plans when she was First Lady, and President George W. Bush's changes to Medicare/Medicaid during his second term.  Negotiating drug prices was also a lynchpin of President Obama's Affordable Care Act, and the high cost of biologic drugs created the political climate for the Biologic Price Competition and Innovation Act in 2011.

The continuing relevance of high drug costs to most Americans is illustrated by the resonance the issue had for Senator Sanders in 2016 and is likely to have for a variety of politicians of all stripes in 2020.  And this concern is well founded as shown by increase in drug prices for the top 15 drugs by revenue as reported recently in Genetic Engineering and Biotechnology News ("The Top 15 Best-Selling Drugs of 2017: Amid Talk of Curbing Prices, Most Treatments Show Sales Gains," by Alex Phillipidis).  As quoted in the article, drug spending is projected to reach almost $600 billion by 2020, which is almost double drug spending costs in 2015 ($337 billion), according to America's Health Insurance Programs (AHIP).  Of the top fifteen drugs for 2017, two-thirds (9/15) of these drugs are biologic drugs, and nine drugs showed sales gains greater than 50%, with five of these nine showing double-digit growth.  And the drugs ranked #16-#20 (Victoza^®/liralutide (Novo Nordisk); Stelara^®/ustekinamab (J&J); Tecfidera^®/dimethyl fumarate (Biogen); Advair^®/fluticasone and Seretide^®/ salmeterol (GSK); and Harvoni^®/ ledipasvir + sofosbuvir (Gilead)) each had sales of between $3.9 billion and $4.4 billion in 2017.  Those drugs showing sales declines were most likely due to generic competition and/or insurer discounts, according to GEN.  Treatment targets for these drugs include diseases of aging such as cancer (6 drugs), arthritis (4), and diabetes (1), and chronic illnesses like Crohn's disease (2).

Perhaps as a counterweight this trend, UnitedHealthcare announced on March 6th that it would expand discounts to more than seven million individuals enrolled in commercial group health insurance plans.

The data reported in the article is tabulated below (click on table to expand).

Whether Facts Matter in the Patent Eligibility Analysis: HP Files Petition for En Banc Rehearing

By Michael Borella --

In Franz Kafka's novel The Trial, a man is accused of a non-specified crime by a shadowy governmental agency.  The man repeatedly attempts to understand the nature of his alleged wrongdoing and his accusers.  Ultimately, he is executed without these questions being answered.

Under current Supreme Court and Federal Circuit rulings (Alice Corp. v. CLS Bank Int'l and its progeny), a patent can be invalidated or an application can be rejected simply by (i) making a high-level analogy between the claimed invention and one that has been previously found to be directed to a patent-ineligible law of nature, natural phenomena, or abstract idea, and (ii) stating in a purely conclusory fashion that the additional elements of the claim are well-understood, conventional, and routine.  Kafka might crack a sardonic smile at this situation.

One might presume that to establish that claim elements are well-understood, conventional, and routine, a challenger must undertake a factual inquiry.  But this is not the case.  Instead, a form of judicial notice is used to declare claims invalid based on mere contention -- because patent eligibility has been treated as if it is purely a matter of law.  While in some cases, those who employ this short cut are undoubtedly correct (e.g., a general purpose processor certainly is a conventional component of a computer), it has also been used extensively in a questionable manner.

As an example, a challenger (a USPTO patent examiner, for instance) states:  "The claim elements are well-understood, conventional, and routine -- no patent for you!"  In response, the applicant rebuts the examiner both procedurally and substantively:  "Examiner, your conclusory statements do nothing to establish that the claim elements are well-understood, conventional, and routine, and here is some evidence that they are not."  The examiner replies:  "I don't care, eligibility is a matter of law and I am not required to provide factual evidence to support my reasoning, nor do I have to consider any factual evidence that might suggest that I am wrong."  And MPEP § 2106 supports the examiner's position.  Thus, the Kafkaesque irony of patent-eligibility in 2018.

But the times may be a-changing.  Last month, in Berkheimer vs. HP Inc., the Federal Circuit stated:

The question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact.  Any fact . . . that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence.  Like indefiniteness, enablement, or obviousness, whether a claim recites patent eligible subject matter is a question of law which may contain underlying facts [emphasis added].

The Court noted that some § 101 disputes may be resolved as a matter of law when there is no material issue of fact regarding whether one or more claim elements, or combination thereof, are well-understood, routine, or conventional to a person of ordinary skill in the art.  Based on this reasoning, HP's summary judgment motion for ineligibility was reversed and remanded to the District Court for further proceedings.  The Court reiterated this position a few days later in Aatrix Software Inc. v. Green Shades Software, Inc. and three times since then in nonprecedential decisions.

This line of cases, all but one involving Judge Moore in the majority opinion, has sent patentees, practitioners, and commentators into a minor tizzy.  And certainly it has opened the door for a number of interesting questions:  What does it take for a patentee to establish that there is a material issue of fact?  Will § 101 disputes become a battle of experts?  Will § 101 issues now need to be explained to a jury?  How "understood" does a claim element need to be in order to qualify as "well understood?"

In a move that surprised absolutely nobody, HP filed for en banc rehearing of the appeal.  HP starts off its argument with a strong statement:

Under the panel decision in this case, the crucial, threshold determination of patent eligibility under Section 101 is predominantly a question of fact.  That result is inconsistent with the Supreme Court's decisions in Bilski, Mayo, and Alice, with this Court's own precedent, and with the need to resolve issues of patent eligibility as a question of law early in the litigation process to avoid unnecessary, costly, and protracted litigation.

The problem with this proclamation is that HP stretches the truth in at least three ways.  First, the panel did not state nor did it imply that the § 101 inquiry is "predominantly a question of fact" -- if anything, the panel merely held that in some cases, it will involve questions of fact.  Second, this result is quite consistent with Mayo, where Justice Breyer wrote that the § 101 inquiry may overlap with fact-sensitive inquiries such as novelty under § 102.  Third, while incorporating a factual analysis into § 101 disputes could increase the cost and length of litigation, it is far from unnecessary.

To that latter point, the Alice decision has been post-hoc justified due to its ability to rapidly dispose of so-called "bad" patents.  Nobody will argue that "bad" patents don't exist, though a better term for them might be "patents that the USPTO should not have granted."  In practice, however, Alice allows the USPTO and courts to throw the proverbial baby out with the bathwater.  Given its broad scope and sweeping application, § 101 has been used in a questionable fashion to invalidate patents that could have easily been viewed as technical inventions that offer advances over the status quo (see Recognicorp, LLC v. Nintendo Co., Ltd., Smart Systems Innovations, LLC v. Chicago Transit Authority, Two-Way Media Ltd. v. Comcast Cable Communications, LLC, and Move, Inc. v. Real Estate Alliance Ltd. as recent examples).  Many times, claims shot down under Alice are not "good" but their not-goodness would have been properly addressed under §§ 102, 103, and/or 112.

HP goes on to note correctly that many, if not all, previous § 101 appeals were decided as a matter of law, and that the Berkheimer panel deviated from this trend.  Nonetheless, neither the Supreme Court nor the Federal Circuit ever mandated that all § 101 analyses must ignore facts -- only that eligibility decisions could be ripe for judgment on the pleadings or summary judgment when facts are not in dispute.  HP attempts to make hay of the extent that the courts (and the USPTO) may have carried out the analysis otherwise.

HP also states that asking "whether the invention describes well-understood, routine, and conventional activities" is the wrong question.  HP does have a point that "[a] claim that merely applies a new abstract idea . . . might not describe well-understood, routine, and conventional activities."  (For instance, a newly-discovered equation is abstract, but by definition not conventional).

Nonetheless, HP is misconstruing the Alice test.  In the words of the Supreme Court, Alice requires that one first consider the claim to determine whether it is directed to an abstract idea (or other judicial exception).  If this is the case, then one must "consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application."  Well-understood, routine, and conventional elements do not (unless the combination thereof is innovative).  Thus, the well-understood, routine, and conventional question is appropriate once an abstract idea is identified in a claim that has additional elements.  HP's hypothetical does not provide any additional elements.

HP further raises an alarm over a patent owner being able to use "an expert to testify to some 'inventive concept' captured by a patent or to testify that the claim limitations, although known and disclosed in the prior art, were not 'routine and conventional.'"  Rather than addressing the substantive issue -- that in fact, there is a difference between a claim limitation that is disclosed and one that is conventional and routine -- HP merely points out that rapid litigation victories will be harder for defendants.  This will be the effect of the Berkheimer panel decision, of course, when such easy wins are not actually justified.

HP's next issue in the parade of horribles is that:

Under the panel's analysis, a fact issue will arise in any case where the specification recites that the claims do not describe "well-understood, routine, and conventional activities."  That means a fact issue will arise in virtually every case, because for a patent to issue in the first place, every claim should at least allegedly recite something new.

HP points out that this could have resulted in the Alice and Mayo claims surviving summary judgment.  Perhaps.  According to Rule 56, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."  Is HP attempting to shift this burden to the patentee?  Furthermore, if the claims do recite something new, then why should this be ignored when the goal of the statute is to define the scope of patentable innovation?

HP's final point is that if the panel decision holds, litigation will be "more complex, expensive, and lengthy," in comparison to the common practice of applying § 101 early in a case to dispose of a patent.  HP points out that at least one Federal Circuit judge (Judge Mayer for those of you keeping track) has lauded this early dismissal practice because "[p]atent eligibility issues can often be resolved without lengthy claim construction."  But the notion of invalidating a patent without determining the meaning of the claims seems antithetical to the constitutional mandate of promoting "the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

While HP is not wrong to state that litigation will be more complex when issues of fact are part of the eligibility inquiry, its justification for supporting the pre-Berkheimer status quo is shaky, and there is nothing in any of the recent cases that suggest one cannot still obtain an early dismissal under § 101.  In fact, that is exactly what happened in Automated Tracking Solutions, LLC v. Coca-Cola Co. and the recent Intellectual Ventures I v. Symantec Corp.

If anything, HP lost an opportunity to invoke fear, uncertainty, and doubt by asking the unanswered questions that the panel did not address:  What is required for the patentee to establish that there is a material issue of fact?  How does one explain § 101 issues to a jury?  How "understood" does a claim element need to be in order to qualify as "well understood?"  The Federal Circuit needs to flesh out these issues in order to fully develop the factual inquiry.

If the Court does grant en banc review, we will find out how much of this recent jurisprudence is a Judge Moore thing.  Judge Moore wrote the majority opinions of the Berkheimer panel decision, as well as those of Aatrix and Exergen Corp. v. Kaz USA, Inc.  All three decisions applied a factual analysis to a § 101 dispute.  Joining her across these opinions were Judges Taranto, Stoll, and Bryson.  Dissenting from this view was Judge Reyna.  Judge Hughes' dissent in Exergen was directed to the majority's outcome rather than the process they employed to arrive at it.

Applying some educated guesswork based on past § 101 opinions, Judge Newman is likely to side with Judge Moore, while Judge Lourie is likely to go the other way.  The positions of Judges Prost, Linn, Dyk, O'Malley, Wallach, and Chen are unknown.  Thus, the probable Federal Circuit math puts 5 judges in favor of the factual inquiry, 2 against, and 7 (including Judge Hughes) up in the air.

Eyetalk365, LLC v. Zmodo Technology Corp. (D. Nev. 2018)

Video Doorbell Patent Found to Be Patent Eligible

By Joseph Herndon --

Plaintiff Eyetalk365, LLC sued Defendant Zmodo Technology Corp. for infringement of U.S. Patent No. 9,432,638, entitled "Communication and Monitoring System," which issued on August 30, 2016.  Zmodo moved to dismiss for failure to state a claim under 35 U.S.C. § 101.

The patent is directed to an audio-video doorbell system.  The patent describes that the invention enables secure and effective monitoring and interacting with a visitor at a residence or business, including, detection of the presence of a visitor at the exterior of the home or office via a proximity sensor, the interactive communication with the visitor, whether an occupant is present or absent from the home or office, the enablement of automated entry into the home or office by the visitor, and personalization of the process of receiving a visitor.  Such actions are permitted through use of a cell phone app that receives information from the doorbell system, and enables the user to communicate with a person at their home even when absent from their home.

A transceiver, shown in Figure 2 of the patent reproduced below, may be mounted at the front door of a home and used to provide these features.
Claims 1 and 6 of the patent are asserted, of which claim 1 is representative and reproduced below.

1.  A method for receiving a person at an entrance, comprising the steps of:
    (a) detecting the presence of a person at the entrance;
    (b) transmitting, to a computerized controller running a software application, video of the person at the entrance recorded using a camera located proximate the entrance; and
    (c) providing, with the software application running at the computerized controller, a graphical user interface to a remote peripheral device by which a user of the remote peripheral device, which comprises a cell phone, may view the video of the person at the entrance;
    wherein said detecting of step (a) comprises using a wireless video camera comprising a microphone, a speaker, an RF receiver, an RF transmitter, a proximity sensor and uses a keypad comprising one or more buttons to determine that the person is present at the entrance wherein said transmitting of step (b) comprises transmitting digital streaming video wirelessly using the video camera;
    (d) sending an alert to the cell phone that the person is present at the entrance after the keypad is pressed by the person at the entrance;
    (e) speaking with the person at the entrance through the graphical user interface on the cell phone after the keypad is pressed by the person at the entrance; and
    (f) listening to the person at the entrance via the cell phone through use of the graphical user interface after the keypad is pressed by the person at the entrance.

Patentability under 35 U.S.C. § 101

The Court was quick to note that there is a lack of clarity in the test for abstractness challenges under § 101.  Applying the two-step test under Alice Corp., the Court noted that the best test for abstractness under the first Alice Corp. step is whether the invention can be practiced entirely in the mind of a sufficiently intelligent person.

Namely, citing CyberSource, the Court noted that such a method that can be performed by human thought alone is merely an abstract idea and is not patent-eligible under § 101.  Methods which can be performed entirely in the human mind are unpatentable not because there is anything wrong with claiming mental method steps as part of a process containing non-mental steps, but rather because computational methods which can be performed entirely in the human mind are the types of methods that embody the "basic tools of scientific and technological work" that are free to all men and reserved exclusively to none.

Zmodo argued that claim 1 is directed to an abstract idea under the first Alice Corp. step, but the Court disagreed.  Detecting the presence of a person at a door, sending a video of the person to be viewed, and speaking with the person at the door are all concrete steps requiring more than the abstract thinking capabilities of a person or a computer.

Zmodo further argued that claim 1 did not recite anything new or useful, and attempted to prove that elements of claim 1 were all directed to old technology.  However, the Court noted that regardless of anticipation or nonobviousness under §§ 102 and 103 -- neither of which is at issue in the present motion or for consideration under § 101 -- the Court found claim 1 to be patent-eligible under § 101.

The Court clearly set out that the "novelty" of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the § 101 categories of possibly patentable subject matter.

A contrary approach would judicially rewrite the statutory framework for patent validity established by Congress by invalidating a patent not under §§ 101 or 102 but rather under a hybrid of §§ 101 and 102 that Congress has never adopted.  The Supreme Court has declined to do so and has made clear that patent claims must be tested against the statutory requirements for validity as a whole.  That is because it is patent claims, i.e., inventions, to which a patentee is granted exclusive rights, not the elements of a claim.

Thus, the Court denied the motion to dismiss.

This is a short Order, but positive from a patent owner's viewpoint in that not all Courts use § 101 erroneously to invalidate claims.  It would seem that clearly steps of "transmitting, to a computerized controller running a software application, video . . .", and "detecting . . . using a wireless video camera comprising a microphone, a speaker, an RF receiver, an RF transmitter, a proximity sensor and uses a keypad comprising one or more buttons to determine that the person is present at the entrance . . ." include features that qualify as patentable subject matter.

Other features in claim 1 of "(e) speaking with the person . . ." and "(f) listening to the person . . ." would be examples, however, of features covering patent ineligible subject matter since these actions are capable of being performed by a human alone.  This was the distinction that the Court relied upon in its decision.

Order by District Judge Robert C. Jones

Bosch Automotive Service Solutions, LLC v. Matal -- Follow-up on Who Has Burden After Aqua Products?

By Andrew Williams --

We recently noted that the U.S. Patent and Trademark Office appears to have taken the position that neither party has the burden of persuasion with regard to Motions to Amend after the Aqua Products v. Matal decision.  Certainly, the Patent Owner no longer has the burden, as that is one of the only conclusions that can be ascertained from that en banc decision.  However, in no circumstance has the Board expressed the opposite conclusion that the burden falls on the petitioner.  Instead, everything that has come from the Chief Judge or the Board suggests that the Patent Office has taken a third approach -- that neither party currently has the burden.  As a case in point, the Patent Office filed its Intervenor's Petition for Panel Rehearing last month in Bosch Automotive Service Solutions, LLC v. Matal.  As we noted at the time, the Office was not asking the Federal Circuit to alter its judgment in that case.  Rather, it believed that the panel decision incorrectly stated the holding of Aqua Products.  The Federal Circuit last week granted the petition for the limited purpose of amending the earlier opinion.  However, the new opinion still might not be completely to the Patent Office's liking.

Before granting the petition for this limited purpose, the Federal Circuit had requested a response from Bosch Automotive, to which Bosch asserted that the petition should be denied.  In so doing, it said that "[t]o the extent some of the judges [in Aqua Products] found 35 U.S.C. Section 316(e) ambiguous, the panel opinion in this matter resolved the ambiguity."  The Federal Circuit took this as evidence that the original "opinion could be improperly misread."  Therefore, it amended the sentence:

Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable "by a preponderance of the evidence."  35 U.S.C. § 316(e).

to read instead:

Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable "by a preponderance of the evidence."

Obviously, this still is a pronouncement from the Federal Circuit that the petitioner now bears the burden in Motions to Amend, and any suggestion from the Office to the contrary will need to be revised.  However, it does remove the citation to the statute.  As such, it removes any suggestion that the Court believes that the statute is unambiguous.  Correspondingly, should the Office choose to promulgate rules to shift the burden back to the Patent Owner (as Aqua Products suggests it can), then it could be entitled to Chevron deference (which wouldn't be the case if the statute were unambiguous).

As a result, we are still left guessing whether the Patent Office intends to promulgate such a rule, but the pathway forward appears clearer than it did (if the Office show chooses).  Perhaps newly confirmed Director Iancu will provide some insight during his "Fireside Chat" at the 2018 PTAB Bar Association Conference in Washington D.C. on March 22, 2018.  According to the PTAB Bar, this will be the first time since he was named as Director that he addresses a formal gathering of lawyers who appear before the PTAB.  This author will be in attendance at the Conference, and looks forward to any clue that the new Director might suggest.  We will, of course, continue to monitor developments and report any updates in this space as warranted.

Immersion Corp. v. Fitbit, Inc. (N.D. Cal. 2018)

District Court Throws Out Haptic Feedback Claims on Grounds of Patent Ineligible Subject Matter

By James Korenchan --

Last week, Judge Koh of the U.S. District Court for the Northern District of California deemed claims relating to transmission of haptic messages to be directed to an abstract idea and therefore invalid under 35 U.S.C. § 101.

The Plaintiff, Immersion Corp., alleged that Fitbit's wearable health and fitness devices infringe three of Immersion's patents, each of which involve "haptic" feedback technology -- namely, technology that provides forces, vibrations, or other motion feedback that recreates a sense of touch for a user.  Fitbit filed a motion to dismiss contending that the asserted claims of each patent are patent ineligible under § 101.  The District Court denied Fitbit's motion on two of the three patents, but granted the motion with respect to U.S. Patent No. 8,638,301 (the '301 patent).

The two patents at issue that survived the motion, U.S. Patent No. 8,059,105 (the '105 patent) and U.S. Patent No. 8,351,299 (the '299 patent), are directed to having touchscreens and touchpads provide haptic feedback in response to user input received via such touchscreens and touchpads, and having a toothbrush or other device provide haptic feedback in response to a mechanism sensing a condition (e.g., a threshold number of brush strokes being met, or a time period expiring), respectively.  Claims that Immersion asserted as representative of the eligibility of each of these two patents are produced below:

U.S. Patent No. 8,059,105:

19.  A haptic feedback device, comprising:
    one or more processors configured to receive an input signal and generate a force signal based on the input signal, wherein the input signal is associated with a user-independent event, the user-independent event comprising one or more of a reminder event, an initiation of a task, a processing of the task, a conclusion of the task, a receipt of an email, or an event occurring in a game; and
    one or more actuators configured to receive the force signal and impart a haptic effect based on the force signal.

U.S. Patent No. 8,351,299:

20.  An apparatus comprising:
    a housing;
    a sensor coupled to the housing that senses motion of the housing and provides a sensor output based on if the sensed motion exceeds a predetermined threshold;
    a timer coupled to the housing that measures at least one time period and provides a timer output on expiration of the at least one time period; and
    a vibrotactile device that provides a haptic output based on the sensor output if the vibrotactile device receives the sensor output before the timer output and provides the haptic output based on the timer output if the vibrotactile device receives the timer output before the sensor output.

In contending the validity of the '105 patent, Fitbit argued that "[t]here is no purpose for the haptic effect beyond simply communicating to the user" (i.e., providing a notification to the user) that the claimed "user-independent" event occurred.  Fitbit also argued that Immersion attempted to frame an abstract idea as a device claim, citing Alice in that "the mere presence of physical components in the claims is insufficient to confer patent eligibility."

But the District Court did not ignore the physical components of the claims, and in applying step one of the Alice framework, found the U.S. Supreme Court's Diehr decision and the Federal Circuit's Thales Visionix decision to be instructive.  In particular, the District Court stated that characterizing claim 19 as being directed to the abstract idea of providing a notification (e.g., a haptic notification) "strays too far from the weight of the claim," and went on to give reasons why containing such an abstract idea was not enough to elevate the claim to a level of ineligibility:

The weight of the claim clearly focuses on a tangible, non-abstract device as the invention which, through the allegedly unconventional combination of components, contains the new and useful feature of notifying the device's user of independent events through vibration.  See Thales Visionix, 850 F.3d at 1348-49; '105 patent at col. 1:64-col. 2:3 (noting that touchpads of the prior art lack haptic feedback); '105 patent at col. 12:61-67 (discussing scenario in which a user is notified of an event by vibration after having looked away from the screen).  Indeed, a significant majority of the specification details various physical features of the claimed inventions, including different types of actuators and how an actuator can be coupled to the housing of the device.  See '105 patent at col. 5:5-col. 12:49, col. 15:1-col. 16:17.  The fact that part of the claim contains an abstract idea does not make the claim patent-ineligible under § 101.  See Alice, 134 S. Ct. at 2354 ("[A]n invention is not rendered ineligible for patent simply because it involves an abstract concept.").

Further, the District Court found that "Immersion's invention of a touchpad or other similar device that provides haptic feedback is a new arrangement of known components that solves the problem of how to provide non-audio, non-visual notification to a user," and is thus patent-eligible.  Finding step one of the Alice framework to be met, the District Court did not proceed to step two.

Next, the District Court addressed the '299 patent and again stopped their analysis after step one.  Fitbit's arguments here were similar to the notification and physical component arguments noted above with respect to the '105 patent, but Fitbit also argued that providing a notification when a threshold has been reached is a well-known, fundamental practice.  The District Court found these arguments to be unpersuasive for nearly the same reasons as the '105 patent, and analogized to Core Wireless in support of its conclusion:

Namely, characterizing claims 14 and 20 as directed to the abstract idea of [haptic] notification based on motion or a timer ignores the fact that the claimed invention is a tangible device comprising a new and useful arrangement of components that solves the problem of how to notify a user that a predetermined number of motions have occurred in an environment where audio or visual alerts would not be effective.  See Thales Visionix, 850 F.3d at 1348-49.  . . .  Thus, because claim 14 and claim 20 disclose improvements in motion tracking devices, they are not directed to an abstract idea at step one, and the Court need not reach Alice step two.  See Core Wireless, 880 F.3d at 1363; Thales Visionix, 850 F.3d at 1348-49.

The District Court then addressed the patent ineligibility of the '301 patent, whose claimed invention involves a mobile device transmitting a "haptic message" to another mobile device.  The patent describes haptic messages as a useful form of non-linguistic communication that tie physical effects to a message, contrasting with more conventional messaging systems that may provide less or no contextual information associated with received and sent messages.  For example, the patent describes a scenario in which one user appends a haptic signal simulating a heartbeat to a message, sends the message to the other user along with the haptic signal, which causes the other user's phone to vibrate in a manner that simulates the heartbeat pattern.

As a representative example of the asserted claims of the '301 patent, claim 27 is produced below:

27.  A system comprising:
    a processor configured to:
        receive a first sensor signal from a first sensor, the first sensor configured to detect a movement of a first mobile device;
        receive a second sensor signal from a second sensor, the second sensor configured to detect an interaction with the first mobile device;
        receive a first data signal from a network interface, the network interface configured to receive signals transmitted by a second mobile device;
        determine a change in a display signal based at least in part on the first data signal and the second sensor signal;
        determine a haptic effect based at least in part on the first data signal; and
        outputting the haptic effect.

Immersion asserted claim 27 as representative of the eligibility of this patent, but the District Court did not agree, finding the asserted claims of the patent invalid after addressing both steps of the Alice framework.

In addressing step one, the District Court concluded that claim 27 is directed to "receiving sensor and data signals, analyzing those signals, and outputting other signals in response," and therefore falls well within the Federal Circuit's abstract idea category of gathering and processing information.  The District Court walked through the steps of the claim and cited primarily to the decisions in both Electric Power Group and West View Research, in each of which the Federal Circuit found claims to be directed to some form of receiving data, analyzing data, and generating a visual or audio response to the data.  Ultimately, the District Court's decision on step one appeared to rest on how claim 27 did not recite more details regarding how to receive the signals, determine a change in display, and determine the haptic effect, and also did not recite more-detailed physical components involved in carrying out the recited acts.

The District Court's step one conclusion here is an interesting point of both contrast and comparison with the step one conclusions reached for the other two patents.  All three patents more or less involve a haptic effect, though in contrast to claim 27, the eligible claims of the other two patents recited not only specific physical components (e.g., an actuator) included in the system, but also more detail as to how that system and its specific components processed the data and performed other acts that lead to deliverance of the haptic effect.  Despite acknowledging that the act of the processor "outputting the haptic effect" likely involves transmitting a signal to an actuator to cause the actuator to output the haptic effect, the District Court still found claim 27 to be directed to the abstract idea noted above:

Transmitting a signal to an actuator does not make the focus of the claim any less abstract because outputting a signal is no more than the transmission of data.  Similarly, the Federal Circuit has held that displaying the results of collecting and analyzing information, without more, "is abstract as an ancillary part of such collection and analysis." [citations omitted]

With respect to step two, Immersion contended that the claim's inventive aspects include generating graphical and haptic feedback in response to exchanged messages was inventive, but the District Court disagreed, emphasizing again the lack of inventive detail in the claims:

The mobile devices, network interface, processor, and haptic feedback system are, in broad terms, generic, conventional components.  The specification confirms that these are generic components.  . . .  Nothing about the claim or specification suggests that the way these steps are accomplished are anything but generic -- as explained above, the claims recite these steps only functionally and require no inventive algorithm or data structure for performing them.

Finally, the District Court distinguished claim 27 from the claim the Federal Circuit addressed in BASCOM, and instead analogized to the Federal Circuit decisions in both Electric Power Group and TDE Petroleum in finding that the ordered combination of elements did not bring the claim out of the realm of data collection/analysis and was recited no differently than the "ordinary order" in which data collection/analysis elements would appear.

Given the state of the asserted claims -- especially that of claim 27, compared with the other two patents -- the District Court's finding here is relatively unsurprising.  Again, it appears as though the lack of detailed physical components and detailed algorithms is what doomed the '301 patent.