Patent Docs

IPLAC Offers § 101 Revision That Attempts to Harmonize IPO and AIPLA Proposals

 By Donald Zuhn --

In a letter sent to U.S. Patent and Trademark Office Director Andrei Iancu earlier this month, the Intellectual Property Law Association of Chicago (IPLAC) presented its proposal for a revised version of 35 U.S.C. § 101.  IPLAC described its proposal as a harmonized version of revisions to § 101 proposed by the Intellectual Property Owners Association (IPO) and American Intellectual Property Law Association (AIPLA), which IPLAC indicated "represent the most straightforward and comprehensive revisions to Section 101."  In crafting a harmonized version of § 101, IPLAC sought "to combine the recommendations from IPO and AIPLA into a single proposal furthers the current dialog regarding possible Section 101 revisions that can address the ambiguity and uncertainty recent Supreme Court precedent has created."

The IPLAC proposal reads as follows:

101(a) Eligible Subject Matter: Whoever invents or discovers, and claims as an invention, any useful process, machine, manufacture, composition of matter, or any useful improvement thereto, shall be entitled to a patent for a claimed invention thereof, subject only to the exceptions, conditions, and requirements set forth in this Title.

101(b) Sole Exceptions to Subject Matter Eligibility: A claimed invention is ineligible under subsection (a) if and only if the claimed invention as a whole exists in nature independently of and prior to any human activity, or exists solely in the human mind. In determining eligibility, each claimed invention shall be considered as a whole.

101(c) Sole Eligibility Standard: The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard to (i) the requirements or conditions of sections 102, 103, and 112 of this Title, (ii) the manner in which the claimed invention was made or discovered, or (iii) the claimed invention’s inventive concept.

In its letter to Director Iancu, IPLAC declared that "[o]ver the last few years, the Supreme Court has been injecting ambiguity into the Section 101 subject-matter eligibility requirement, moving farther away from the language of the statute itself," adding that "[t]he recent patent eligibility case law is confusing and creates uncertainty as to both the availability of future patents and the validity of existing patents."  Expressing the belief that "judicial interpretation is unlikely to correct existing ambiguity and uncertainty," and arguing that subject matter eligibility should not "be subject to changing definitions developed and adjusted by courts over time," the association seeks Congressional intervention to "clarify[] and re-establish[] the distinct role of section 101 in limiting patent eligibility to practical uses of processes, machines, manufactures, and compositions of matter as recited in the statute."

IPLAC also provided a section-by-section comparison of its proposal with the current statutory text of § 101 as well as the IPO and AIPLA proposals, along with comments regarding the language that IPLAC used in its own proposal.  For example, with respect to IPLAC's decision to replace the phrase "subject to the conditions and requirements of this title" in the current text of § 101 with the phrase "subject only to the exceptions, conditions, and requirements set forth in this Title" (emphasis in IPLAC's comments), the association noted that the revised language "makes clear that the conditions and requirements of patentability are set forth in the patent statute, and the conditions and requirements set forth in the statute are the only conditions and requirements of patentability," adding that "[t]his means that Congress has not granted the USPTO nor the courts the ability to create its own conditions and requirements of patentability that are not expressly set forth in the patent statute."  In addition, IPLAC explains that § 101(c) of its proposal "addresses the increasing problem with the USPTO and courts confusing patent eligibility with other standards under the Patent Act," and "expressly prohibits the USPTO and courts from determining patent eligibility by considering whether the claimed invention, in whole or in part, include an 'inventive concept'" (emphasis in IPLAC's comments).

For additional information regarding this and other related topics, please see:

• "AIPLA Proposes Legislative Changes to 35 U.S.C. § 101," May 16, 2017
• "ABA IP Law Section Sends Section 101 Revision Proposal to USPTO Director Lee," March 29, 2017
• "What to Do about Section 101? IPO Provides Its Answer," February 9, 2017

U.S. Trade Representative Releases 2018 Special 301 Report

By Kevin E. Noonan --

On April 28th, Ambassador Robert Lighthizer, U.S. Trade Representative (USTR), issued the 2018 Special 301 Report.  According to the USTR website, "[t]he ideas and creativity of American entrepreneurs fuel economic growth and employ millions of hardworking Americans" and "[t]his report sends a clear signal to our trading partners that the protection of Americans' intellectual property rights is a top priority of the Trump Administration," language reiterating last year's Report and consistent with much of the trade-related rhetoric emanating from the White House this year.  The press release accompanying the report again recites statistics as the basis for these views, citing government estimates that 45.5 million American jobs that depend (directly or indirectly) on IP-intensive industries, representing 30% of all employment.  The Report "calls on U.S. trading partners to address IP-related challenges" and "draws attention to IP-related trade barriers and the steps foreign countries can take to open their markets to IP-intensive goods—steps that help to protect U.S. jobs, create opportunities for job growth, and promote free and fair trade that benefits all Americans."

As it has done for the past several years over very different administrations, the Report highlights China as a country in which both "[l]ongstanding and new IP concerns merit attention," including with respect to "coercive technology transfer requirements, range of impediments to effective IP enforcement, and widespread infringing activity" (enumerated as "trade secret theft, rampant online piracy and counterfeit manufacturing").  It is the 14th consecutive year that China has been placed on the Priority Watch List, which as it sounds reflects greater concern and greater scrutiny.

The USTR also cites India for what he calls "longstanding challenges in its IP framework and lack of sufficient measurable improvements, particularly with respect to patents, copyrights, trade secrets, and enforcement, as well as for new issues that have negatively affected U.S. right holders over the past year."

Canada once again is singled out, being "downgrade[d]" from the Watch List to the Priority Watch List, for "for failing to make progress on overcoming important IP enforcement challenges."  These include "key concerns" related to "poor border enforcement generally and, in particular, lack of customs authority to inspect or detain suspected counterfeit or pirated goods shipped through Canada, concerns about IP protections and procedures related to pharmaceuticals, deficient copyright protection, and inadequate transparency and due process regarding the protection of geographical indications."

The Report also announces that the USTR has closed "Out-of-Cycle" reviews of Kuwait albeit "without a change in status", because, inter alia, the country "has not yet brought its copyright regime in line with its international commitments and still needs to make necessary improvements to the regulations implementing its 2016 Copyright and Related Rights Law."  Closure of OCR of Tajikistan resulted in that country being downgraded to the Priority Watch List, for "fail[ing] to address unlicensed software use by government agencies during the OCR."  The USTR also announced that he will begin an OCR Colombia, Kuwait, and Malaysia.

The Report is promulgated pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994).  The Trade Representative is required under the Act to "identify those countries that deny adequate and effective protection for IPR or deny fair and equitable market access for persons that rely on intellectual property protection."  The Trade Representative has implemented these provisions by creating a "Priority Watch List" and "Watch List."  Placing a country on the Priority Watch List or Watch List is used to indicate that the country exhibits "particular problems . . . with respect to IPR protection, enforcement, or market access for persons relying on intellectual property."  These watch lists are reserved for countries having "the most onerous or egregious acts, policies, or practices and whose acts, policies, or practices have the greatest adverse impact (actual or potential) on the relevant U.S. products."

The USTR reviewed  "more than 100" of this country's trading partners and identified twelve countries on a "Priority Watch List" (increased by one from last year) and another 24 countries on the "Watch List" (also increasing by one from last year), all relating to deficiencies in intellectual property protection in these countries.  The Priority Watch List in the 2018 Report adds Canada to those countries cited in the 2017 Report (Algeria, Argentina, Chile, China, India, Indonesia, Kuwait, Russia, Thailand, Ukraine, and Venezuela).  Countries on this list "present the most significant concerns this year regarding insufficient IP protection or enforcement or actions that otherwise limited market access for persons relying on intellectual property protection."  On the Watch List this year are Barbados, Bolivia, Brazil, Costa Rica, Dominican Republic, Ecuador, Egypt, Greece, Guatemala, Jamaica, Lebanon, Mexico, Pakistan, Peru, Romania, Switzerland, Turkey, Turkmenistan, Uzbekistan, and Vietnam.  Saudi Arabia, Tajikstan, Thailand, and the United Arab Emirates were added, Bulgaria was removed, and Canada and Columbia moved to the Priority Watch List this year.

The Report also notes the USTR's continued efforts to enhance public engagement.  In addition to written comments (from 62 interested parties, including 23 trading partner governments), there was a public hearing on March 8, 2018 that heard testimony from "representatives of foreign governments, industry, and non-governmental organizations" (where the comments and a transcript of the hearing are available on the USTR website).

The Report identifies "foreign trading partners where IP protection and enforcement has deteriorated or remained at unacceptable levels and where U.S. persons who rely on IP protection have difficulty with fair and equitable market access."  The Executive Summary captures this Administration's combative tone:

The Report reflects the resolve of this Administration to call out foreign countries and expose the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers.  The identification of the countries and IP-related market access barriers in this Report and of steps necessary to address those barriers are a critical component of the Administration's aggressive efforts to defend Americans from harmful IP-related trade barriers.

The Report notes that "[i]n virtually all countries mentioned in the Report, IP enforcement is lacking," based on (a) "[in]adequate or [in]effective border enforcement against counterfeit and pirated goods" (Canada, Egypt, Indonesia, Mexico, Turkey, Turkmenistan, UAE, and Uzbekistan); (b) copyright piracy in China, Mexico, Russia, Ukraine and Vietnam, with particular emphasis on use of unlicensed software by government agencies in Argentina, Greece, Tajikistan, Turkmenistan, Uzbekistan, and Venezuela; (c) online piracy in Canada, China, India, the Netherlands, Romania, Russia, Switzerland, Taiwan, Ukraine, "and elsewhere"; (d) restrictive patentability criteria in Argentina, China, India, Indonesia Saudi Arabia, Thailand, and Russia, including "a lack of adequate and effective protection for regulatory test or other data submitted by pharmaceutical and agricultural chemical producers"; (e) inadequate trade secret protection in China and India, which "U.S. trade secrets at unnecessary risk"; and (f) negative market access effects on regulatory agencies in the European Union."

The Report contains two Sections (on "Developments in Intellectual Property Rights Protection and Enforcement" and "Country Reports") and two Annexes on particular issues (the statutory bases of the Report, and government technical assistance and capacity building efforts).  In Section I, the Report reiterates its raison d'etre, that:

IP infringement undermines U.S. competitive advantages in innovation and creativity, to the detriment of American businesses and workers.  In its most pernicious forms, IP infringement endangers the public, such as through exposure to health and safety risks from counterfeit products like semiconductors, automobile parts, apparel and footwear, toys, and medicines.  In addition, trade in counterfeit and pirated products often fuels cross-border organized criminal networks and hinders sustainable economic development in many countries.  Fostering innovation and creativity is essential to U.S. economic growth, competitiveness, and an estimated 45 million American jobs that directly or indirectly rely on IP-intensive industries.  USTR continues to work to protect American innovation and creativity in foreign markets with all the tools of U.S. trade policy, including through the annual Special 301 Report.

It then reviews "initiatives for strengthen IP protection and enforcement," which includes "examples of initiatives to strengthen IP protection and enforcement; illustrative best practices demonstrated by the United States and our trading partners; [and] U.S.-led initiatives in multilateral organizations; and bilateral and regional developments."  It also highlights areas of continued concern, including "counterfeits, online piracy, forced technology transfer, innovative pharmaceutical products and medical devices, and geographical indications (GIs)."  As in earlier years, it mentions how important IP protection is to innovations in the environmental sector.  Finally, Section I includes a discussion relating to "the importance of full implementation of the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and developments on the U.S. use of WTO dispute settlement procedures to resolve IP concerns."

In a section entitled "IP Protection and Enforcement and Related Market Access Challenges," the Report discusses innovation in the pharmaceutical industry, medical devices and market access concerns.  In this regard the Report states that "USTR has been engaging with trading partners to ensure that U.S. owners of IP have a full and fair opportunity to use and profit from their IP, including by promoting transparent and fair pricing and reimbursement systems."  These efforts have included "ensur[ing] robust IP systems; reduc[ing] market access barriers to pharmaceutical products and medical devices, including measures that discriminate against U.S. companies, are not adequately transparent, or do not offer sufficient opportunity for meaningful stakeholder engagement; and has pressed trading partners to appropriately recognize the value of innovative medicines and medical devices so that trading partners contribute their fair share to research and development of new treatments and cures" (echoing the "fair share" mantra recited by the President in stump speeches and tweets).  The Report calls out in this regard the following efforts in particular countries:

• Canada and Mexico: in the context of renegotiating the North American Free Trade Agreement (NAFTA), seeking strong IP provisions, and provisions to "ensure that national-level government processes for the listing and reimbursement of pharmaceutical products and medical devices are transparent, provide procedural fairness, are nondiscriminatory, and provide full market access for U.S. products";

• Korea: as part of renegotiating the U.S.-Korea Free Trade Agreement (KORUS FTA), obtain a commitment to reform "a[n unnamed] key measure" to "provide fair and non-discriminatory treatment of pharmaceutical products, including imported products, under certain medical pricing and reimbursement programs";

• Japan: as part of "the U.S.-Japan Economic Dialogue," seeking "to ensure transparency and fairness and address other concerns with respect to pharmaceutical and medical devices pricing and reimbursement policies";

• China: here, there are "a range of issues affecting the pharmaceutical sector, negotiate to provid[e] for effective protection against unfair commercial use, as well as unauthorized disclosure, of test or other data generated to obtain marketing approval for pharmaceutical products, as well as expediting its implementation of an effective mechanism for the early resolution of potential patent disputes";

• India: obtain "meaningful IP reforms on longstanding issues," which include patentability and compulsory licensing criteria, protection against unfair commercial use and unauthorized disclosure of test or other data generated to obtain marketing approval for pharmaceutical products;

• Indonesia: address issues of Indonesian patent law, including patentability, compulsory licensing, and requirements for local manufacturing and use;

• Argentina: (somewhat ironically) discussing patentable subject matter as well as unfair commercial use and, like in many emerging countries, unauthorized disclosure of "undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products, among other issues";

• Saudi Arabia: patent enforcement and protections against commercial use, and also unauthorized disclosure of "undisclosed test or other data generated to obtain marketing approval for pharmaceutical products, among other issues"; and

• United Arab Emirates (UAE): seeking reassurance that UAE will provide protection for pharmaceuticals through, inter alia, the Gulf Cooperation Council (GCC) patent system.

Compulsory licensing poses particular concerns with regard to pharmaceuticals and medical devices, according to the Report, because "[s]uch actions can undermine a patent holder's IP, reduce incentives to invest in research and development for new treatments and cures, unfairly shift the burden for funding such research and development to American patients and those in other markets that properly respect IP, and discourage the introduction of important new medicines into affected markets."  Even when compulsory licenses are justified they should be used in only "limited circumstances" and only after attempting to negotiate with the rights holder; the Report cited these concerns particularly with Chile, Colombia, El Salvador, India, and Malaysia.  More generally, the Report points to "non-transparent" and discriminatory practices and "unreasonable regulatory delay" as being of concern to the USTR and administration.  In contrast, national systems that accelerate approval based on regulatory in other countries is praised in the Report.  The Report notes that stakeholders have identified industries have expressed concerns regarding the policies of several trading partners, including Algeria, Australia, Canada, China, Colombia, Ecuador, Japan, Korea, New Zealand, and Turkey with regard to these issues, citing specific examples falling within these general categories for each country.

The Report next turns to technology transfer issues, including innovation by indigenous peoples and "localization."  In this portion of the Report, compulsory technology transfer is emphasized as causing difficulties for American innovators, particularly in China.  The Report identifies the anti-innovation cycle of imposing such measures to incentivize local innovation, which leads to create market entry barriers and thus discourages foreign (i.e., U.S.) investment, which not only hurts domestic industry in those countries but also can produce "non-market distortions" which in turn can lead to "suboptimal outcomes."  The Report sets forth a litany of these practices, including requirements for technology transfer as the price for regulatory or other governmental approval; permitting state-owned enterprises to seek "non-commercial terms" for IP licensing or otherwise; providing unfair competitive advantage to local industry (if only passively by permitting U.S. IP-rights infringement); permitting cyber-intrusions; giving preference to local products and services dependent on indigenous IP; "[m]anipulating" processes of standards to prefer local concerns; and conditioning regulatory approval or other governmental approvals on disclosure of confidential business information and then "failing to protect such information appropriately."  China, Indonesia, Nigeria, and Turkey are particularly cited for these concerns.

Trade secret protection, or lack of it, is also a concern discussed in the Report.  It cites "growing need for trading partners to provide effective protection and enforcement of trade secrets" in "a wide variety of industry sectors, including information and communications technologies, services, pharmaceuticals and medical devices, environmental technologies, and other manufacturing" areas.  The Report cites "various sources, including the U.S. Office of the National Counterintelligence Executive (ON- CIX)" for reporting these concerns, which are discussed in the Report with specificity regarding Brazil, China, India, Indonesia, and Nigeria for a wide variety of trade secret related breaches, including permitting (or not stopping) departing employees from taking with them trade secret information-containing electronic storage devices, cyber intrusion and computer hacking, misuse of trade secrets disclosed to government agencies, for example, as part of a regulatory approval process, and others.  The Report on a positive note cites efforts by China, the European Union, and Taiwan to address these issues (albeit noting that China's efforts have come up short), and supports he Organization for Economic Co-operation and Development (OECD)'s work on trade secret protection.

The Report next addresses geographical indications (GIs) issues (which is ironic, in view of the Administrations withdrawal from the Trans-Pacific Partnership treaty, which addressed this issue in a U.S-friendly fashion).  The Report cites U.S. efforts "through bilateral and multilateral channels" to improve U.S. access to a variety of goods having geographic specificity, as the Report states the issue where the goods identifier includes "place names (or words associated with a place) and identify products as having a particular quality, reputation, or other characteristic essentially attributable to the geographic origin of the product."  This is a particular problem with the EU where it poses a significant barrier to entry (for example, for U.S.-sourced parmesan or feta cheeses), and the bases for the issue (including impairment of trademark and trade dress rights and interference with international standards) are discussed in depth.  Part of the reason for U.S. concern is frankly admitted to be that "[t]he United States runs a significant deficit in food and agricultural trade with the EU" and "[t]he EU's GI system contributes to this asymmetry in U.S.-EU trade in agricultural products for products subject to the EU's GI regime."  The Report also notes that this issue is being addressed in bilateral or multilateral agreement with other nations, including Argentina, Brazil, Canada, Chile, China, Colombia, Costa Rica, Ecuador, Indonesia, Japan, Malaysia, Mexico, Morocco, Paraguay, the Philippines, South Africa, Tunisia, Uruguay, and Vietnam.

The Report next addresses border control and criminal enforcement against counterfeiting; insofar as placement of the issues discussed in the Report indicates the importance the Trump administration places on them this is a change from the prior administration.  Counterfeit goods (including "semiconductors and other electronics, chemicals, automotive and aircraft parts, medicines, food and beverages, household consumer products, personal care products, apparel and footwear, toys, and sporting goods") "make their way from China" and other countries, particularly those having an "ineffective or inadequate IP enforcement system."  The Report states that such counterfeit goods harm "consumers, legitimate producers, and governments," particularly with regard to medicines, automotive and airplane parts, and food and beverages" because the counterfeit products do not meet the "rigorous good manufacturing practices used for legitimate products."  The Report enunciates particular concern for such activities in China, Hong Kong, India, Indonesia, Singapore, Thailand, Turkey, and the United Arab Emirates, and alleges that 90% of all counterfeit drugs entering the U.S. come from China, the Dominican Republic, Hong Kong, and India, with China and India being particularly singled out as a source of counterfeit drugs.  The USTR notes the efforts of ICANN to withdraw the Registrar Accreditation Agreement for Nanjing Imperiosus Technology a known Internet-based source of counterfeit medicines.  Accordingly, the Report "urges" U.S. trading partners to "undertake more effective criminal and border enforcement against the manufacture, import, export, transit, and distribution of counterfeit goods" and states that the Office engages trading partners bilaterally, through trade agreement and international organizations on this issue.

The Report next turns to online and broadcast piracy of copyrighted works (again, seemingly of less important to this administration than the prior one), citing the "increased availability of broadband Internet connections around the world" as being a "boon" to the U.S economy and foreign trade.  But while advances in technology have enabled U.S. creative producers to better distribute copyrighted materials it has also made the Internet "an extremely efficient vehicle for disseminating infringing content, thus competing unfairly with legitimate e-commerce and distribution services that copyright holders and online platforms use to deliver licensed content."  A variety of forms of this issue are discussed in the Report, which names China, India, Mexico, Peru, and Vietnam for optical piracy; Canada, China, Cyprus, India, the Netherlands, Russia, Switzerland, and Ukraine for "commercial-scale online piracy; Canada, Mexico, the Netherlands, Saudi Arabia, Sweden, and Switzerland for "stream-ripping" (which is "the unauthorized converting of a file from a licensed streaming site into an unauthorized copy" and is now a "dominant" method for music piracy); and Argentina, Brazil, Chile, China, Hong Kong, Indonesia, Mexico, Peru, Singapore, Taiwan, and Vietnam for the use of illicit streaming devices.  Illicit camcording continues to be a particular concern in the Report, with Brazil, Canada, China, Ecuador, India, Japan, Mexico, Peru, the Philippines, Russia, and Taiwan being cited in this regard.  Other aspects of copyright enforcement contained in the Report are royalty payment and administration regimes including collective management organizations (CMO), which the Report states are "flawed or non-operational" in many countries (Argentina, India, Korea, the UAE, and Ukraine, specifically).

Trademarks and impediments to obtaining and enforcing them in some countries make up the next topic in the Report, with Brazil, China, India, Malaysia, and the Philippines, having "slow" opposition proceedings and Russia and Panama having no administrative opposition proceedings.  Even registering (i.e., making a record of) trademarks is problematic in some countries, with "unnecessary administrative and financial burdens" imposed on owners and there being unnecessary difficulties in maintaining and enforcing trademarks (albeit without naming any countries where these and other difficulties contained in the Report have arisen).  There are also issues with cybersquatting and particularly with country code top-level domain names (ccTLDs) for U.S. rights holders.  The governments of Argentina, Chile, China, Costa Rica, Greece, Kazakhstan, Korea, Tajikistan, Thailand, Turkey, Turkmenistan, Ukraine, and Vietnam are named for unlicensed use of software, and the Report cites a commercial value for such illicit use of software at $52 billion worldwide.

The Report sets forth efforts related to initiatives to strengthen IP protection and enforcement in foreign markets, either supported or assisted by the U.S. (in Bosnia and Herzegovina, Bulgaria, China, Greece, India, Jordan, Kuwait, Pakistan, Taiwan, Thailand, and the United Arab Emirates) and sets forth "illustrative best IP practices" in detail for Brazil, India, Jamaica, Malaysia, Spain, and Thailand.  The Report also discussed bilaterial, regional, and international agreements.

Section I of the Report ends by mentioning the role of intellectual property and the environment and intellectual property and health as areas of concern raised by stakeholders in their comments.  In India, for example, compulsory licensing of "green" technology "will discourage, rather than promote, investment in and dissemination of green technology innovation, including those technologies that contribute to climate change adaptation and mitigation."  The Report contains an affirmation of the provisions regarding IP and public health set forth in the Doha Declaration and states that it "recognizes the role of IP protection in the development of new medicines, while being mindful of the effect of IP protection on price" (a change from the pledge not to interfere with Doha provisions permitting compulsory licensing under certain specified conditions contained in earlier Section 301 Reports).  And the final portion of the Report discusses efforts at dispute resolution of IP matters under the GATT/TRIPS provisions as they are implemented by the WTO.

Finally, the last portion of Section I of the Report relates to dispute settlement and enforcement.  It states that while the U.S. believes that "[t]he most efficient and preferred manner of resolving concerns is through bilateral dialogue," when that doesn't work "the United States will use enforcement tools including those provided under U.S. law, the WTO and other dispute settlement procedures, as appropriate."  Specifically cited is the August 14, 2017 Presidential Memorandum regarding an investigation by the USTR of "laws, policies, practices, or actions of the government of China that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development" (82 FR 39007) and its subsequent institution on August 18, 2017.  The Report notes that the investigation reported, in March 22, 2018 that "the investigation supports findings that acts, policies, and practices of the China related to technology transfer, intellectual property, and innovation covered in the investigation are unreasonable or discriminatory and burden or restrict U.S. commerce" and the subsequent actions of the Administration to impose tariffs on Chinese goods.  Other enforcement actions, mostly of historical significance, are also discussed.

Section II of the Report is a detailed, country-by-country discussion for each country on the Priority Watch List and the Watch List, relating to the activities (or lack thereof) of each country that results in placement of that country on these lists.

As it has for the past several years (and across otherwise very different Administrations), the U.S. Trade Representative Special 301 Report provides insights into both the concerns of U.S. IP rights holders and the Administration's intentions to work with, cajole, coerce, or threaten other countries to increase protection for IP rights of U.S. IP rights holders.  The substance of the Report is decidedly more aggressive than Reports issued during the Obama Administration, and while the 2017 Report (the Trump administration's first) was less pugnacious than might have been expected, the tone of this Report is much more consistent with its stated policy positions.  As with last year's Report, the tone and tenor of this Report is robustly assertive regarding IP rights and America's intention to negotiate international agreements and confront its trading partners in ways that protect American innovation and commercial interests first and foremost regardless of consequences.

For additional information regarding this and other related topics, please see:

• "U.S. Trade Representative Issues 2017 Special 301 Report," May 4, 2017
• "U.S. Trade Representative Issues 2016 Special 301 Report," May 19, 2016
• "U.S. Trade Representative Issues 2015 Special 301 Report," April 30, 2015
• "U.S. Trade Representative Issues 2014 Special 301 Report," May 19, 2014
• "U.S. Trade Representative Issues 2013 Special 301 Report," May 30, 2013
• "U.S. Trade Representative Issues 2012 Special 301 Report," May 1, 2012
• "U.S. Trade Representative Releases Special 301 Report on Global IPR," May 4, 2011
• "U.S. Trade Representative Releases Special 301 Report on Global IPR," May 19, 2010
• "New Administration, Same Result: U.S. Trade Representative's Section 301 Report," May 6, 2009
• "Congressmen Criticize U.S. Trade Representative over Special 301 Report," July 1, 2008
• "U.S. Continues Efforts to Protect Patent Rights Abroad," April 29, 2008

Conference & CLE Calendar

May 1, 2018 - "Patent Inventorship: Best Practices for Determination and Correction -- Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" (Strafford) - 1:00 to 2:30 pm (EDT)

May 2, 2018 - "Recent Developments in Double Patenting: ODP Challenges and Considerations" (The Knowledge Group) - 12:00 to 1:30 pm (ET)

May 2, 2018 - "The Supreme Court Decided Oil States & SAS Institute: Now What?" (Federal Circuit Bar Association) - 3:00 pm to 4:00 pm (EST)

May 3, 2018 - "Patent Ownership Rights: Structuring Assignment and Employment Contracts -- Key Provisions, Implications for Litigation, Recent Court Treatment" (Strafford) - 1:00 to 2:30 pm (EDT)

May 3, 2017 - "The Very Essence of Romance is Uncertainty" (Intellectual Property Owners Association European Practice Committee) - Amsterdam, Netherlands

May 3, 2018 - "The Evolving State of Sovereign Immunity Before the Patent Trial and Appeal Board" (Technology Transfer Tactics) - 1:00 to 2:00 pm (ET)

May 8, 2018 - Symposium on Intellectual Property (George Washington University Law School, Pillsbury, NERA Economic Consulting, and Mayer Brown) - Washington, DC

May 8, 2018 - "Intellectual Property Valuation and Damages: Nuts and Bolts in 2018" (The Knowledge Group) - 12:00 to 1:30 pm (ET)

May 9, 2018 - "Supplemental Examination Requests: Benefits and Limitations, Strategic Use -- Assessing Enforceability of Patent Portfolios, Evaluating the High Burden" (Strafford) - 1:00 to 2:30 pm (EDT)

May 8-10, 2018 - Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) - Chicago, IL

May 10, 2018 - "Will the Supreme Court Step in Again in Helsinn v. Teva? Does a Sale of Confidential Materials Trigger the On-Sale Bar?" (Federal Circuit Bar Association) - 3:00 pm to 4:00 pm (EST)

May 10, 2018 - European Patent Strategies (Intellectual Property Law Association of Chicago Corporate Committee and Weickmann & Weickmann) - 5:00 pm to 6:05 pm (CT), Chicago, IL

June 13-15, 2018 - Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) - New York, NY

June 25-27, 2018 - Summit on Biosimilars (American Conference Institute) - New York, NY

July 18-20, 2018 - Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) - San Francisco, CA

FCBA Webast on Oil States & SAS Institute

The Federal Circuit Bar Association (FCBA) will be offering a webcast entitled "The Supreme Court Decided Oil States & SAS Institute: Now What?" on May 2, 2018 from 3:00 pm to 4:00 pm (EST).  Emily Johnson of Amgen, Inc. will moderate a panel consisting of Allyson Ho of Morgan Lewis & Bockius LLP, Christopher Suarez of Williams & Connolly LLP, Gregory Castanias of Jones Day, and Russell Cass of Clark Hill PLC.  The panel will discuss the Supreme Court's decisions in Oil States and SAS Institute, including their holdings and the issues left for another day, potential implications for patent owners and petitioners involved in IPR proceedings, anticipated changes to PTAB adjudication of IPR challenges, likely impact on district court litigations and appeals to the Federal Circuit, the next expected constitutional challenges to IPR proceedings, and potential consequences of labeling patent grants as "public rights" and "public franchises."

The webinar is complimentary for FCBA members and $50 (government/academic/retired) or $125 (private practitioner) for non-members.  Those interested in registering for the webcast, can do so here.

FCBA Webast on Helsinn v. Teva

The Federal Circuit Bar Association (FCBA) will be offering a webcast entitled "Will the Supreme Court Step in Again in Helsinn v. Teva? Does a Sale of Confidential Materials Trigger the On-Sale Bar?" on May 10, 2018 from 3:00 pm to 4:00 pm (EST).  Mark Freeman, Appellate Staff, Civil Division, U.S. Department of Justice will moderate a panel consisting of Joe Matal of the U.S. Patent & Trademark Office, Amy Saharia of Williams & Connolly LLP, and Dmitry Karshtedt of the George Washington University School of Law.  The panel will discuss the prospects for Supreme Court review in Helsinn v. Teva, in which the Federal Circuit construed the amended on-sale bar of the Leahy-Smith America Invents Act, determining that Congress did not alter the scope of the bar, and the ramifications of each possible outcome for future users of the first-to-file patent system.

The webinar is complimentary for FCBA members and $50 (government/academic/retired) or $125 (private practitioner) for non-members.  Those interested in registering for the webcast, can do so here.

Presentation on European Patent Strategies

The Intellectual Property Law Association of Chicago (IPLAC) Corporate Committee and Weickmann & Weickmann will be offering a panel discussion on European Patent Strategies by Alfred Keyack, EPO Attaché to the United States, and Dr. Frank Feller, European Patent Attorney on May 10, 2018 from 5:00 pm to 6:05 pm (CT) at SRAM, LLC in Chicago, IL.  George Jonas, Downstream Managing Counsel, Global Patents and Technology, BP America, Inc. will moderate the discussion.

There is no registration fee for event, but attendees must register in advance.  Those interested in registering for event can do so here.

USPTO Issues Guidance on Supreme Court Ruling in SAS v. Iancu

By Kevin E. Noonan --

Well, that didn't take long.  The U.S. Patent and Trademark Office issued Guidance today, just two days after the Supreme Court decision in SAS Institute Inc. v. Iancu came down, regarding how the Patent Trial and Appeal Board (PTAB) will apply the Court's mandate in that inter partes review (IPR) decisions are all or nothing with respect to challenged claims ("Guidance on the Impact of SAS on AIA Trial Proceedings").

The Guidance is simple:  going forward (i.e., for all pending and future-filed petitions), the Board will institute on all challenged claims so long as the petitioner has shown a reasonable likelihood of invalidating at least one of the claims.  For cases where the Board has engaged the parties in partial institution proceedings, the Board "may" issue an order "supplementing the institution decision to institute on all challenges raised in the petition."  In such cases the Board also has discretion to take action "permitting additional time, briefing, discovery, and/or oral argument."  Examples included in the Guidance include granting additional time for the Patent Owner Response or, if the statutory twelve-month time is close to expiry, taking advantage of the additional six months provided by the statute for extraordinary cases.  The Guidance stresses however that such decisions will be made on a case-by-case basis.

The Petitioner and Patent Owner responses to such a supplementation order are specified to include a "meet-and-confer" discussion between the parties on whether additional briefing, time, etc. is needed; the Guidance notes that while the Board may (i.e., has the discretion to) act sua sponte, there may be no accommodation of the parties unless they request it.  And of course the parties can affirmatively waive any changes to the briefing schedule or timing, the Guidance suggests.  The result of such a meet-and-confer will be a conference with the Board, which will resolve any failure to agree between the parties.  The Final Written Decision arising from such cases will contain a decision on all challenged claims, both as originally instituted and added through amendment of the institution decision.

The Guidance directs parties to contact the panel (only for case-specific questions) or to submit written questions to the [email protected] mailbox.

The Guidance closes by reminding the public that the Office fortuitously scheduled a "Chat with the Chief" webinar on Monday, April 30 at noon EDT, where Chief Patent Judge David Ruschke will discuss the Guidance.

Genome Structure of the American Cockroach

By Kevin E. Noonan --

Perhaps somewhat ironically, a group of Chinese researchers* recently published a report on the genome of the American cockroach (Periplaneta americana), entitled "The genomic and functional landscapes of developmental plasticity in the American cockroach" in Nature Communications.  These researchers,** applying a variety of modern genomic analysis techniques, elucidated aspects of the animal's genomic DNA having implications for its range, behavior, and ecology.

The report details genetic assessment of the P. americana genome, comprising 3.38Gb; this is the second largest genome to locusts (Locusta migratoria) among insect species.  P. americana was introduced into Americas from Africa in 16th century and is related to other cockroach species as well as two termite species.  Using a consensus gene set, the researcher found expansion of genes associated with environmental adaptation, including chemoreception and detoxification.  "Multiple pathways" that regulate metamorphic development well-conserved, and 20-hydroxyecdysone, juvenile hormone, insulin, and decapentaplegic signals are involved in regulating developmental and behavioral plasticity.

The report details the results produced from more than 1 terrabasepairs from 3 individuals, assembled de novo to 295-fold coverage; for comparison, samples from the Australian cockroach (P. australasiae) and the smoky brown cockroach (P. fuliginosa) were sequenced to forty-fold coverage.  About 60% of genomic sequences comprise repetitive elements, but otherwise the genomic DNA composition found for this species is typical for species in Order Blattodea (which comprises more than 4,000 species of cockroaches and more than 3,000 species of termites).  The American cockroach genome comprises 21,336 protein-coding genes, 95% of which were detected to be expressed; 90% of these genes are inherited in common with other species in this Order, with 84% found in related cockroach species and 82% in the dampwood termite.  13,555 of these are genes are termed "multicopy universal" genes.  Median intron length (3 kp) found in the cockroach genes is half the average size in locust genes but larger than in other insect species.  A total of 17.5 Gb transcriptome sequencing data were generated from three independent libraries, with inserts of 1–2 Kb, 2–3 Kb, and 3–6 Kb, for the messenger RNA pool of all stages of cockroach development.

Using this data the researchers compared 12 insect species for "gene repertories" and found 479 orthologs specific for species in Order Blattodea in ~1,000 cockroach genes; the American and German cockroaches (B. germanica) encode largest gene sets, but showed fewer species-specific genes than other insect species.  In more detail analyses, 2,000 single copy universal genes were identified, 538 chosen to establish phylogenetic relationships between the 12 insect species.  Comparisons with other cockroach species showed that P. americana, P. fuliginosa and P. australasiae, shared about 88% amino acid identity between orthologous proteins.  P. americana shares only 75% sequence identity with B. germanica, which was a lesser degree of relatedness than was found between P. americana and two termite species:  Z. nevadensis (which shares 79% sequence identity) and M. natalensis (which shares 80% sequence).  Among 7,640 common orthologs between these species, approximately two-thirds of the American cockroach genes are more closely related to the termite genes in sequence identity, while only one-third being more closely related to the German cockroach.

The genes shared between the American cockroach and termite species were "significantly over-represented in 29 pathways, including a number of classic functional components in insects, such as development, nutrition, and immunity."  In contrast, genes shared between the American cockroach and the German cockroach were "significantly enriched" in only 6 such pathways, two of which are related to signal transduction.

With regard to the genes analyzed to identify those genes important to evolution of the cockroach, the researchers started from the presumption that "[a]daptation to host and environment is mainly mediated by chemical communication and subsequent abilities to tolerate chemical and biological factors, such as toxins or pathogens."  These were genes from families involved in chemoreception, detoxification, and immunity.  For chemoreception genes, a total of 154 olfactory receptor genes (ORs) were found in the P. americana genome, while other Blattodean species were found with only half as many ORs.  The P. Americana genome comprises 522 gustatory receptor genes (GRs), which represents the greatest expansion of GRs in the insect species reported to date.  Interestingly, 329 of these GRs formed a specific clade in the phylogeny and were annotated as potential bitter receptors.  The ionotropic glutamate receptor (IR) gene family also has experienced a substantial expansion in the P. americana genome, in which were found a total of 640 candidate IRs (Fig. 2c), much more than that in the termite genome (148 in Z. nevadensis; Fig. 2a) (see Figure 2).

Other genes arising from this analysis include odorant binding protein (OBP) genes, the number of OBPs in Blattodean species (with the most in P. americana) being dramatically reduced compared to Drosophila and other insects (Fig. 2a), suggesting to these researchers that the transport of odorant molecules may be functionally conserved in cockroaches.

With regard to genes involved with detoxification, 178 cytochrome P450s, 90 carboxyl/choline esterases, 39 glutathione transferases, and 115 ATP-binding cassette transporters were detect in the P. Americana genome.  The P450 genes showed the greatest expansion in the American cockroach, compared with other Blattodean species.  Phylogenetic analysis of P450s across Blattodean species could be collected into four major clans, the CYP2, the CYP3, the CYP4, and the mitochondrial clade (Fig. 2d).  Most P450 genes in P. americana clustered with CYP3 (79/178 genes) and CYP4 (62/178 genes) lineages (Fig. 2d).  The researchers speculated that specific expansion of these P450 genes improved insecticide resistance in the American cockroach, which clearly has implications for improved survival.

Genes involved in immunity comprise "innate" immunity genes in the Imd, Toll, and Janus kinase-signal transducer and activator of transcription (JAK-STAT) gene pathways.  Compared with other insects, many of these genes, particularly in the Toll pathway, were found to have been extensively expanded.  In addition, Gram-negative binding proteins (GNBPs), pattern recognition proteins responsible for the detection of pathogens and activation of the Toll pathway, were found to be expanded, there being 12 GNBP1-like and 2 GNBP3-like genes in the American cockroach genome, which is more than in any of those insect species examined (for example, there are a maximum of 6 GNBPs in Z. nevadensis).  Similarly, Toll protein genes were expanded in American cockroach DNA (14 Toll protein genes) compared, for example, with the Drosophila genome (which encodes 9 Toll protein genes).  Eleven antimicrobial protein (AMP) genes were detected in the P. americana genome, including defensins, termicins, attacin, drosomycin, Pro-rich peptide (Paprp-1), and anti-fungus peptide (AFP).  In functional testing, these researchers found strong antimicrobial activity after injection with Escherichia coli (Gram-negative bacterium), moderate antimicrobial activity with Staphylococcus aureus (Gram-positive bacterium), and weak antimicrobial activity with Candida albicans (fungi), consistent with the cockroach habitat including decaying animal matter and other offal.

What the researchers termed "crucial biosynthesis and signaling pathways for regulating insect development" were "substantially expanded" in the American cockroach genome, including insulin-like peptide and genes involved in juvenile hormone biosynthesis and metabolism, and the cuticle protein family also appeared to be one of the most expanded gene families in P. americana.  These results are consistent with the increased size of the American cockroach, which has the largest size (up to 53 mm in body length, the frequency of molting (6-14 times), and the longest life cycle (700 days).  The researchers also report that signaling pathways thought to be involved in wound healing and tissue repair in insects (Drosophila) and vertebrates, were expanded in certain pathways (including the Grainy head (GRH), Wingless (Wg), and Notch pathways), which may also contribute to the hardiness of these insects.

In addition to the intrinsic interest of these results for understanding insect relatedness, ecology, and behavior, the results reported in this paper elucidate for the first time specific genetic correlates to traits that have permitted the American cockroach to thrive in disadvantageous environments.  To the extent that the common perception of this insect, that it can (and will) outlive the human species and even a nuclear holocaust, has any validity, this capacity relies at least in part on the genetic characteristics set forth in this paper.  There is something to be learned, about evolution, survival, and life on this planet, from these beasts.

*Sheng Li, Shiming Zhu, Qiangqiang Jia, Dongwei Yuan, Chonghua Ren, Kang Li, Suning Liu, Yingying Cui, Haigang Zhao, Yanghui Cao, Gangqi Fang, Daqi Li, Xiaoming Zhao, Jianzhen Zhang, Qiaoyun Yue, Yongliang Fan, Xiaoqiang Yu, Qili Feng & Shuai Zhan

**From Guangzhou Key Laboratory of Insect Development Regulation and Application Research, Institute of Insect Science and Technology & School of Life Sciences, South China Normal University, Guangzhou; CAS Key Laboratory of Insect Developmental and Evolutionary Biology, CAS Center for Excellence in Molecular Plant Sciences, Institute of Plant Physiology and Ecology, Chinese Academy of Sciences, Shanghai; the University of Chinese Academy of Sciences, Beijing; the Research Institute of Applied Biology, Shanxi University, Taiyuan; Zhongshan Entry-Exit Inspection and Quarantine Bureau Technology Center, Zhongshan; and State Key Laboratory of Crop Stress Biology for Arid Areas and Key Laboratory of Integrated Pest Management on the Loess Plateau of Ministry of Agriculture, Northwest A&F University, Yangling

Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018)

By Andrew Williams --

Earlier today, the Supreme Court held in Oil States Energy Services, LLC v. Greene's Energy Group, LLC that inter partes review proceedings do not violate Article III or the Seventh Amendment of the Constitution.  Justice Thomas, writing for the 7-2 majority, explained that a grant of a patent is a matter involving a public right.  Moreover, because IPR proceedings involve the same basic matter as the grant of a patent, they also fall within the public rights doctrine.  As a result, the Constitution does not prohibit the Patent Office from resolving issues of validity post issuance outside of an Article III Court.  Important to the analysis was the lack of distinction between IPR proceedings and the initial grant of the patent because "[p]atent claims are granted subject to the qualifications that the PTO has 'the authority to reexamine – and perhaps cancel – a patent claim' in an inter partes review."  Justice Breyer wrote a concurrence that was joined by Justices Ginsberg and Sotomayor.  Even though he joined the Court's opinion in full, he wanted to stress that the decision should not be read as stating that matters involving private rights could never be adjudicated outside of Article III courts.  Justice Gorsuch dissented, and was joined by the Chief Justice.  In his dissent, Justice Gorsuch explained that the history of the patent system and the prior case law required the finding that patents are private rights, and therefore must be adjudicated in Article III courts.

We have previously explained the background of the Oil States case.  Interestingly, this case was appealed from a Federal Circuit Rule 36 affirmance.  Nevertheless, the Federal Circuit had previously considered the issue of the constitutionality of IPRs in MCM Portfolio LLC v. Hewlett-Packard Co.  In that case, a three-judge panel concluded that because patents are public rights and "the grant of a patent is primarily a public concern," Congress was able to create administrative procedures for assessing their validity.  This case was consistent with the Federal Circuit's decision in Patlex Corp. v. Mossinghoff, in which the Court had determined that ex parte reexaminations did not violate Article III of the constitution.  Nevertheless, not all Federal Circuit judges appeared to agree with this conclusion.  In a dissent to the denial of a petition for en banc hearing in Cascades Projection LLC v. Epson America, Inc., Judge Reyna explained that Supreme Court precedent was clear that only Article III courts had the authority to set aside or annul a patent right.

One of the cases that Judge Reyna cited, McCormick Harvesting Machine v. Aultman, was discussed at length in today's Supreme Court decision by both the majority and the dissent.  And as we predicted, both sides pointed to McCormick Harvesting as either supporting their opinion (or at least not being in conflict with it).  Justice Gorsuch pointed to the broad sweeping language from that case that stated "[t]he only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent."  However, the majority correctly pointed out that this is "best read as a description of the statutory scheme that existed at that time," and did not address whether Congress had authority to establish an entirely different scheme.  In fact, before the 1870 change to the patent statute discussed in that case, Congress did provide examiners with absolute discretion to cancel any reintroduced original claim in a reissue proceeding.  It was the fact that Congress withdrew this grant of authority before McCormick Harvesting that made the Patent Office's cancellation of original claims in reissue proceedings a violation of due process and an invasion on the then-exclusive jurisdiction of the judicial branch by the executive.

The Court did stress, however, that its holding was limited to the question of the constitutionality of IPRs only.  For example, the Court pointed out that "Oil States [did] not challenge the retroactive application of inter partes review, even though that procedure was not in place when its patent issued."  This will almost certainly lead to continued constitutional challenges for patents that issued prior to the enactment of the AIA.  In addition, the Court noted that it was not determining whether IPR proceedings raise due process concerns, which is interesting in view of the questioning about expanded panels during oral argument.  Finally, the Court stressed that the holding should not be misconstrued to suggest that other constitutional challenges could not be made, for example challenges related to the Due Process Clause or the Takings Clause.  These limitations to the holding virtually ensure that there will be continued challenges to particular IPR practices adopted by the PTAB.

A potential silver lining for Patent Owners is that the patent system appears to have a new friend in Justice Gorsuch.  His dissent did an admirable job in pointing out the policy reasons that supported his conclusion.  He stressed the time and cost of not only inventing something truly novel, but the additional resources necessary to apply for and obtain a patent.  And this fails to capture any investment made to commercialize the patent in reliance of the patent rights.  But as Justice Gorsuch put it, "what happens if someone later emerges from the woodwork, arguing that it was all a mistake and your patent should be canceled?"  Of course, if true, the patent holder would not have been deserving of the patent in the first place.  However, should "a political appointee and his administrative agents, instead of an independent judge, resolve the dispute?"  This was the crux of his problem with the Court's decision.  As Justice Gorsuch pointed out, the Director of the Patent Office serves at the pleasure of the President, and he supervises and pays the Board.  The Director can select the APJs that will hear a case, determine how many will be on a particular panel, and even add more members to the panel if the decision is not to his liking.  This problem can be solved by allowing Article III courts to be the only venue to resolve validity disputes of issued patents.  As Justice Gorsuch put it, "when an independent Judiciary gives ground to bureaucrats in the adjudication of cases, the losers will often prove the unpopular and vulnerable."  Instead of the judicial independence, we are at the risk of "armies of lobbyists and lawyers [that will] influence (and even capture) politically accountable bureaucracies."  We can only hope that this doomsday scenario does not come to pass (and hope that the Federal Circuit will be a reliable backstop for any true abuse of power).  But it will be interesting to see if Justice Gorsuch will continue to champion the patent system in future case (or whether it was just his distrust of the administrative state that brought him to the defense of patents in this case).

Oil States Energy Services, LLC. v. Greene's Energy Group, LLC (2018)
Opinion of the Court by Justice Thomas, joined by Justices Kennedy, Ginsburg, Breyer, Alito, Sotomayor, and Kagan; concurring opinion by Justice Breyer, joined by Justices Ginsburg and Sotomayor; dissenting opinion by Justice Gorsuch, joined by Chief Justice Roberts

SAS Institute Inc. v. Iancu (2018)

By Kevin E. Noonan --

The Supreme Court reversed the judgment of the Federal Circuit today in SAS Institute Inc. v. Iancu.  In a rare close decision in patent cases, Justice Gorsuch (joined by the Chief Justice and Justices Kennedy, Thomas, and Alito) provided a textual explication of the inter partes review (IPR) statute in deciding that the U.S. Patent and Trademark Office was compelled to render a Final Written Decision (FWD) on all claims challenged by a petitioner in its IPR petition.  This decision overruled the Patent Office's practice (by rule; 37 C.F.R. § 41.108(a)) that the Director (through the Patent Trial and Appeal Board) could institute an IPR on less than all challenged claims and then limit the FWD to only the instituted claims.

According to the majority, the decision to institute is binary (either the PTAB decides to institute or not), but once instituted, the Board must render a decision on all challenged claims.  Justice Gorsuch in his opinion set forth the relevant statutory language he believed supported the Court's opinion and the various procedures (one "inquisitorial" in nature, like ex parte reexamination, in contrast to the more adjudicatory IPR procedure).  IPRs "look[] a great deal like civil litigation," in his opinion and are governed by express provisions in the statute regarding the standards for instituting an IPR (§§ 311-314), conducting the IPR proceeding (§ 316), settlement (§ 317) and coming to a final decision on patentability (§ 318).

Justice Gorsuch's explication of the language of the statute is based on earlier instances of statutory interpretation by the Court as well as with reference to dictionaries and legal scholarship.  Important terms in the statute include the use of the word "any" in 35 U.S.C. § 318(a) (that the Office "shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner") to mean "every," stating that "[t]he agency [here, the USPTO] cannot curate the claims at issue but must decide [the validity] of them all."  This interpretation is further supported by the use of the word "shall," which the opinion notes "generally imposes a nondiscretionary duty."  This language provides a "ready answer" to the question presented, the opinion stating that the language of § 318(a) is "both mandatory and comprehensive" with regard to the statutory requirement that the Board render a Final Written Decision on all claims challenged in an IPR petition.

While stating that this analysis "would seem to make this an easy case," the opinion reviews (and rejects) the Director's arguments to the contrary.  The majority finds no basis in the statute for the Director to have discretion regarding "partial institution."  Indeed, the opinion notes that, unlike in ex parte reexamination, the IPR provisions of the statute do not permit the Director to initiate an IPR sua sponte.  "From the outset, we see that Congress chose to structure a process in which it's the petitioner, not the Director, who gets to define the contours of the proceeding," says the majority.

The Court majority also sees interpretive meaning in further distinctions between IPR proceedings and ex parte reexamination.  In the latter proceedings, Congress chose "an inquisitorial approach" (analogous to ex parte examination in the first instance) and thus Congress "knew exactly how to" expressly give the Director the discretion he argues he has under the IPR provisions of the America Invents Act.  "Congress's choice to depart from the model of a closely related statute is a choice neither we nor the agency can disregard," according to the opinion, citing University of Tex. Southwestern Med. Center v. Nassar, 570 U.S. 333, 353 (2013).

Further, the Court's opinion cites the language of § 314, where that language appears to provide either that the IPR proceedings be instituted or that they are not, based on the provision that the Director must decide "whether to institute an inter partes review . . . pursuant to the petition."  Both the terms "whether" and "pursuant to the petition" have meaning to the Court majority.  "Whether" to institute an IPR implies a "yes or no" option, and "pursuant to the petition" supports the earlier-stated view that what is instituted is an IPR on the claims challenged by the petitioner.  As stated in the opinion, "[n]othing suggests the Director enjoys a license to depart from the petition and institute a different inter partes review of his own design" (emphasis in opinion).

The majority also held that this portion of the statute, which the Director relied upon to imply discretion based on the language that the Director should institute if there is a "reasonable likelihood" that "at least 1 of the claimed challenged by the petition" is invalid, implies exactly the opposite.  For the Court majority, "[o]nce that single claim threshold is satisfied, it doesn't matter whether the petitioner is likely to prevail on additional claims"; the Director should institute the IPR on all challenged claims (emphasis in opinion).  The opinion again references the ex parte reexamination statute to show that if Congress had intended to give the Director the discretion he claims there was language available to do so.

The opinion summarily rejects the Director's reliance on his discretion under § 314 to institute an IPR to support his discretion to institute partially, once again characterizing the decision as binary.  This conclusion is supported, according to the opinion, by the language of the other provisions in the statute which reference "the petition" rather than challenged claims, the majority interpreting Congress not to have intended the Director to have discretion other than whether or not to institute an IPR against the claims the petitioner challenged.

With regard to the ambiguity purported to be in the statute due to slight differences in the language of § 314 and § 318 (which forms the basis for the dissent's position), the majority assert that they "just don't see it," characterizing it as a "slight linguistic discrepancy."  Any differences between the claims challenged in the petition and the claims available for Final Written Decision can be explained by the patentee's ability to cancel or amend claims, according to the opinion (terming it a "winnowing mechanism").  The opinion states that "[w]e need not and will not invent an atextual explanation for Congress's drafting choices when the statute's own terms supply an answer," citing U.S. v. Ron Pair Enterprises Inc., 489 U.S. 235, 240-241 (1989).

Neither are the Director's policy arguments persuasive (in contrast to the effects of these arguments on the dissenting Justices).  Even though "[e]ach side offers plausible reasons why its approach might make for the more efficient policy[,] who should win that debate isn't our call to make," because "[p]olicy arguments are properly addressed to Congress, not this Court."  And "[w]hatever its virtues or vices, Congress's prescribed policy here is clear: the petitioner in an inter partes review is entitled to a decision on all the claims it has challenged" says the Court, nicely closing the door on the basis for the dissenting Justices' contrary opinion.

Because the majority saw no ambiguity in the statutory language, deference to the agency's implementation decisions under Chevron v. Natural Resources Defense Council did not apply.  In an interesting side note (with regard to Justice Gorsuch's acknowledged antipathy to Chevron), the majority deigns to leave the continued vitality of the agency deference doctrine "for another day," merely holding that "we owe an agency's interpretation of the law no deference" if there is (as here, for these Justices) no ambiguity in the statute's mandate.

And not surprisingly, the Court rejects the Director's final argument that the question before it is one regarding the institution decision, which Congress under § 314(d) put beyond judicial review, citing Cuozzo Speed Technologies LLC v Lee (2016).  The majority reminds the Director that Cuozzo recognized a "strong presumption" of judicial review of agency decisions, and that judicial review was necessary to preclude agency "shenanigans" that would "exceed its "statutory bounds."

Justice Breyer dissented, joined by Justices Ginsberg, Sotomayor, and Kagan.  These Justices did perceive an ambiguity in the differences in language (albeit slight) between § 314 and § 318 sufficient to support both the Director's application of the statute and entitlement to Chevron deference.  To the dissenters, the statutory language is far from being as clear as the majority believes; to them, the statute is "technical, unclear and constitutes a minor procedural part of a larger administrative scheme."  The dissent expressly relies upon Chevron, characterizing it as "an interpretative technique that judges often use in such cases" where the statute contains an ambiguity (and perhaps setting the terms of a future dispute between the Justices on the question of Chevron deference).  Using this technique, the dissent finds such an ambiguity and further that the Director's interpretation of the ambiguous statutory language is reasonable (and thus the dissenting Justices would affirm).  Helpful in considering the dissenting Justices' thinking in this regard, Justice Breyer sets forth a hypothetical (as is his wont) in which a petitioner challenges sixteen claims and the Board institutes an IPR on one of them, and the uses this hypothetical as a practical guidepost for its explication of the statutory language.

The dissenting opinion performs its own brand of statutory exegesis and, unsurprisingly, finds ambiguity between reference to claims challenged in the petition and claims surviving to Final Written Decision.  These Justices perceive that the majority relies on its own statutory language that actually does not exist in the statute (specifically "'any patent claim challenged by the petitioner' in the petitioner's original petition") and for them, "[w]hich reading we give the statute [theirs or the majority's] makes a difference."  Without expressly making the point, the dissent illustrates that, if these Justices cannot agree on the meaning of the statutory language, such language is prima facie ambiguous and thus Chevron deference should attach to the Director's interpretation.

In addition, these Justices agreed with the Director's argument that interpreting the statute as the majority did would impose tremendous inefficiencies on the PTAB, requiring them to provide a FWD on claims that the petitioner had not shown had a reasonable likelihood of being invalid.  This point was emphasized in a one-paragraph, separate dissent penned by Justice Ginsberg (joined by the other dissenting Justices), who saw "no cause to believe Congress wanted the Board to spend its time so uselessly."

One practical consequence of this decision (that Justice Breyer in his dissent fully appreciates) is that it provides a route for a petitioner, unhappy that the Board refused to institute IPR on any particular claim, to appeal the FWD and thus overcome the prohibition in the statute that the institution decision is at the Director's discretion and not appealable.  This is clearly contrary to the legislative scheme (and Justice Sotomayor, one of the dissenting Justices here, at oral argument quizzed counsel aggressively on whether the entire exercise was a way to get around the Court's Cuozzo decision).  This decision also raises the possibility that the Board, rather than issue an appealable FWD on claims that do not rise to the "reasonable likelihood" standard will instead refuse to institute using language in the decision providing a roadmap for further petitions of more limited scope that it will institute.  No matter how the Board adapts its practices to avoid the outcome mandated by this decision, the majority's clear holding provides the basis for the Office and the public to petition Congress to intercede to change the statutory language to give the Director the discretion the Court majority could not find in the statute Congress enacted.

SAS Institute Inc. v. Iancu (2018)
Opinion of the Court by Justice Gorsuch, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito; dissenting opinion by Justice Ginsburg, joined by Justices Breyer, Sotomayor, and Kagan; dissenting opinion by Justice Breyer, joined by Justices Ginsburg and Sotomayor, and joined except as to Part III-A by Justice Kagan

USPTO Updates Patent Eligibility Guidance in View of Berkheimer

By Michael Borella --

The second part of the patent-eligibility test of Alice Corp. v. CLS Bank Int'l involves an inquiry into whether certain elements of a claim directed to an unpatentable judicial exception are "well-understood, routine, and conventional."  If this is the case, the claim fails to meet the requirements of 35 U.S.C. § 101.  If not, the claim clears the § 101 hurdle.  Since Alice, this determination has been largely treated as a matter of law.

But recently, 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 non-precedential decisions.

On April 19, the U.S. Patent and Trademark Office (USPTO) published a memorandum providing updated § 101 examination guidance that takes the Berkheimer rule into account.  This memo was widely anticipated given that Berkheimer is viewed as one of the more significant § 101 decisions in recent history, and also because at least some Patent Trial and Appeal Board (PTAB) panels have stated that the case's holding does not apply to their review of patent-eligibility rejections from examiners (see, e.g., Decision on Request for Rehearing in Ex parte Daniel R. Swanson Sr.). 

In the memo, the Office begins by reviewing the Berkheimer case and acknowledging its importance.  The Office writes:  "[w]hile the Berkheimer decision does not change the basic subject matter eligibility framework as set forth in MPEP § 2106, it does provide clarification as to the inquiry into whether an additional element (or combination of additional elements) represents well-understood, routine, conventional activity."

The Office goes on to specify how the case impacts examination procedure.  Notably, when applying the second part of the Alice test, an examiner should not find that an additional element is well-understood, routine or conventional unless the examiner can expressly support (in writing) one of the following four rationales.

1. "A citation to an express statement in the specification or to a statement made by an applicant during prosecution that demonstrates the well-understood, routine, conventional nature of the additional element(s)."  But, an element is not well-understood, routine, or conventional if "the specification is silent with respect to describing such element."

2. "A citation to one or more [court decisions] noting the well-understood, routine, conventional nature of the additional element(s)."

3. "A citation to a publication that demonstrates the well-understood, routine, conventional nature of the additional element(s)."  This does not include all publications that could qualify as prior art under § 102, however.  Particularly, "the description of the additional elements in the publication would need to demonstrate that the additional elements are widely prevalent or in common use in the relevant field, comparable to the types of activity or elements that are so well-known that they do not need to be described in detail in a patent application to satisfy 35 U.S.C. § 112(a)."

4. "A statement that the examiner is taking official notice of the well-understood, routine, conventional nature of the additional element(s)."  An examiner should only take this option "when the examiner is certain, based upon his or her personal knowledge, that . . . the additional elements are widely prevalent or in common use in the relevant field, comparable to the types of activity or elements that are so well-known that they do not need to be described in detail in a patent application to satisfy 35 U.S.C. § 112(a)."  Of course, the applicant can challenge the official notice following the procedures of MPEP § 2144.03, which should result in the examiner having to rely on one of the first three rationales.

This guidance certain is welcome.  Conclusory reasoning is not uncommon in § 101 rejections and examiners who follow this guidance will be less likely to rely upon such a technique.  But there are reasons why we might not expect this guidance to result in a substantive change in examination.

The second rationale requires a citation to case law indicating that a claimed element is similar to something found to be well-understood, routine, or conventional by the Supreme Court or Federal Circuit.  There are many such decisions, numerous ones of which involve conclusory reasoning themselves regarding additional elements.  Also, there is little discussion in the memo as to how examiner as supposed to consider whether a combination of additional elements constitutes significantly more.  Thus, use of this rationale might not, in truth, avoid the problem that the USPTO is trying to solve.

Additionally, the USPTO's new emphasis on the second part of Alice may incentivize examiners to lump more elements under the first part, leaving a small number of simple additional elements that can be quickly dismissed as well-understood, routine, or conventional under the second part (i.e., using the second rationale above).  For instance, consider this claim from the USPTO's Example 34:

1.  A content filtering system for filtering content retrieved from an Internet computer network by individual controlled access network accounts, said filtering system comprising:
    a local client computer generating network access requests for said individual controlled access network accounts; at least one filtering scheme;
    a plurality of sets of logical filtering elements; and
    a remote ISP server coupled to said client computer and said Internet computer network, said ISP server associating each said network account to at least one filtering scheme and at least one set of filtering elements, said ISP server further receiving said network access requests from said client computer and executing said associated filtering scheme utilizing said associated set of logical filtering elements.

The USPTO stated that this claim is eligible.  Nonetheless, an examiner may still review the claim elements piecemeal.  For example, the examiner might contend that the claim is directed to the abstract idea of content filtering, and that the additional elements of a local client computer, remote ISP server, and computer network are well-understood, routine, and conventional.  By grouping as many elements as possible under the looser rubric of part one, it is easier to justify, even under the new guidance, that a claim is ineligible.

In short, the memo gives applicants a few more tools for rebutting examiners, but the scourge of § 101 rejections with little or no supportive reasoning is far from over.

News from Abroad: EPO Guidance on the Therapeutic Methods Exclusion

By Antony Craggs* --

The therapeutic methods exclusion is often problematic to navigate.  In T 0699/12, the Technical Board of Appeal (TBA) of the European Patent Office (EPO) has provided some useful guidance on its application.  In an opposition before the Opposition Division, the division held that the patent in suit (which was for a method for performing in vivo dosimetry) was invalid pursuant to Art 53(c) of the European Patent Convention (EPC).

Art. 53(c) of the EPC states:  "European patents shall not be granted in respect of:  . . . methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body . . . ."

On appeal the Technical Board of Appeal, considering the effect of this provision, referred to decision G 01/04 and explained that it ". . . clarified that a method claim falls under the prohibition of patenting methods for treatment by therapy or surgery under Art. 53(c) EPC if it comprises or encompasses at least one feature defining a physical activity of action that constitutes a method step for treatment of a human or animal body by surgery or therapy . . . ."

It concluded that Art 53(c), therefore, did not exclude methods from patent protection that are used during a therapeutic or surgical treatment of a human or animal body, but methods that are therapeutic or surgical treatments of a human or animal body.

Applying this to claim 1 of the patentee's main request, this read as follows:

1. Method for enabling quantification of dose delivery in radiotherapy treatment, characterized in that it comprises the steps of:
    - irradiation of a phantom following a treatment
plan of a patient,
    - measurement of the irradiation in said phantom,
    - collecting information regarding the irradiation by information means arranged between the phantom and the radiation source, wherein said measurements are divided in time-intervals, and
    - analysing the measurements for obtaining information regarding the relationship between the measurements in the phantom and measurements in the information means between the phantom and the treatment source at each time-interval,
    - using said relationship information during verification of the treatment of the patient.

The patent specification further explained that the "invention is thereby a method to calibrate the detectors to be used in vivo (during treatment) in a time-efficient and accurate way to achieve high quality, reliable dose measurements during treatment".

The Technical Board of Appeal concluded that the wording of claim 1 did not include any step that could be considered as being of surgical or therapeutic nature, since no actual irradiating step was claimed.  It reasoned that the "verification" (namely, 'quantification of the dose delivery' of the treatment) had no therapeutic or surgical effects as such.  Rather, it only determined (verified) the radiation dose during a treatment.

Expressed another way, the claimed method only concerned the technical operation of a device (the radiation/ treatment source and the information means/detectors) without any functional link to the effects of the device on the body.

* Mr. Craggs is a patent attorney with D Young & Co

This article was reprinted with permission from D Young & Co.

Conference & CLE Calendar

April 23-24, 2018 - Paragraph IV Disputes conference (American Conference Institute) - New York, NY

April 24, 2018 - "Trade Secrets Update 2018: Year Two of the DTSA" (McDonnell Boehnen Hulbert & Berghoff LLP) - 10:00 am to 11:15 am (CT)

April 26, 2018 - "Patent Eligibility, Duty to Disclose and More: USPTO Manual of Patent Examining Procedure New Guidance" (Strafford) - 1:00 to 2:30 pm (EDT)

April 27, 2018 - Ethics in the Practice of Intellectual Property Law (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) - 12:30 to 5:15 pm, Chicago, IL

May 1, 2018 - "Patent Inventorship: Best Practices for Determination and Correction -- Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" (Strafford) - 1:00 to 2:30 pm (EDT)

May 2, 2018 - "Recent Developments in Double Patenting: ODP Challenges and Considerations" (The Knowledge Group) - 12:00 to 1:30 pm (ET)

May 3, 2018 - "Patent Ownership Rights: Structuring Assignment and Employment Contracts -- Key Provisions, Implications for Litigation, Recent Court Treatment" (Strafford) - 1:00 to 2:30 pm (EDT)

May 3, 2017 - "The Very Essence of Romance is Uncertainty" (Intellectual Property Owners Association European Practice Committee) - Amsterdam, Netherlands

May 3, 2018 - "The Evolving State of Sovereign Immunity Before the Patent Trial and Appeal Board" (Technology Transfer Tactics) - 1:00 to 2:00 pm (ET)

May 8, 2018 - Symposium on Intellectual Property (George Washington University Law School, Pillsbury, NERA Economic Consulting, and Mayer Brown) - Washington, DC

May 8, 2018 - "Intellectual Property Valuation and Damages: Nuts and Bolts in 2018" (The Knowledge Group) - 12:00 to 1:30 pm (ET)

May 9, 2018 - "Supplemental Examination Requests: Benefits and Limitations, Strategic Use -- Assessing Enforceability of Patent Portfolios, Evaluating the High Burden" (Strafford) - 1:00 to 2:30 pm (EDT)

May 8-10, 2018 - Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) - Chicago, IL

June 13-15, 2018 - Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) - New York, NY

June 25-27, 2018 - Summit on Biosimilars (American Conference Institute) - New York, NY

July 18-20, 2018 - Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation (Practising Law Institute) - San Francisco, CA

PLI Patent Fundamentals Bootcamp

Practising Law Institute (PLI) will be holding its Patent Fundamentals Bootcamp 2018: An Introduction to Patent Drafting, Prosecution, and Litigation on May 8-10, 2018 in Chicago, IL, on June 13-15, 2018 in New York, NY, and on July 18-20, 2018 in San Francisco, CA.  The three-day program, which is directed to patent prosecuting and litigating attorneys and patent agents with or without a Patent Office registration number or little patent experience, will focus on teaching the basics of claim drafting, patent application preparation and prosecution, as well as a review of recent developments in the law.  A litigator's perspective is also presented to show how drafting and prosecution can influence the development, and often the outcome, of subsequent patent litigation.  The seminar will feature lectures in the morning followed by small clinic sessions in the afternoon, with day 1 focusing on invention disclosures and patent preparation, day 2 on prosecution and issuance, and day 3 on litigation/claim analysis.  Lectures will explain:

• Learn how to prepare a patent application that satisfies the statutory requirements for patentability and distinctly claims the subject matter which the applicant regards as the invention with an eye towards successful prosecution and enforcement
• Understand how to prosecute an application to obtain allowance of an enforceable patent
• Find out how to interview an Examiner
• Discover effective uses of reissues, reexamination supplemental examinations, inter partes review, post-grant review and other post-issuance proceedings
• Determine best practices to anticipate patent litigation issues during the patent prosecution process
• Get helpful approaches on patent opinion drafting
• Learn how to prepare infringement/invalidity claim charts for litigation

PLI faculty will offer presentations on the following topics:

• Initial Steps of a Patent Invention Disclosure
• An Overview of Claim Drafting and Preparation of a Patent Application
• The Basics of Patent Claim Drafting
• Review of Patent Model Claims
• An Overview of Patent Prosecution
• Conducting the Examiner Interview
• Patent Prosecutor Ethics
• Patent Litigation Issues
• Patent Claim Chart Review

A program schedule and list of speakers for each of the locations can be found here.  Patent Docs authors Kevin Noonan (Chicago co-chair) and Donald Zuhn will be presenting on day 1 at the Chicago seminar.

The registration fee for the conference is $2,195.  Those interested in registering for the conference can do so at the PLI website.