Supreme Court Refuses to Wade in to Federal Circuit Claim Construction Precedent

By on April 7, 2021
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Author: Sean Flaherty

On Monday February 22, 2021, the Supreme Court denied certiorari to Akeva, L.L.C. in its dispute with Nike and Adidas regarding Akeva’s contention that the Federal Circuit applies separate and contradictory lines of authority to claim construction disputes. See No. 20-863, 2021 WL 666458 (U.S. Feb. 22, 2021)

In Akeva L.L.C. v. Nike, Inc., 817 F. App’x 1005, 1006 (Fed. Cir. 2020) a Federal Circuit panel of Justices Newman, O’Malley, and Chen ruled in a non-precedential opinion that the lower court “correctly construed ‘rear sole secured’ to exclude conventional fixed rear soles,” and thus affirmed the summary judgment decision of non-infringement issued by the District Court for the Middle District of North Carolina.

Pat No. 5,560,126 to Akeva, LLC provides that it “relates generally to an improved rear sole for footwear and, more particularly, to a rear sole for an athletic shoe with an extended and more versatile life…” Col. 1:9-12. Claim 25 reflected the exemplary dispute, which provided:

  1. A shoe comprising:
    an upper having a heel region;
    a rear sole secured below the heel region of the upper; and
    a flexible plate having upper and lower surfaces and supported between at least a portion of the rear sole and at least a portion of the heel region of the upper, peripheral edges of the plate being restrained from movement relative to an interior portion of the plate in a direction substantially perpendicular to a major axis of the shoe so that the interior portion of the plate is deflectable relative to the peripheral edges in a direction substantially perpendicular to the major axis of the shoe.

Akeva argued that the ’126 patent covered shoes having either (i) a flexible plate with a conventional / non-removeable rear sole, or (ii) shoes having a removeable or rotatable [ie non-fixed] rear sole.

The District Court disagreed and found that the term “rear sole secured” was construed to mean “’rear sole selectively or permanently fastened, but not permanently fixed into position,’ which would not include conventional rear soles that do not either detach or rotate.”

There was no dispute that the accused shoes had fixed rear soles, so summary judgment was awarded to Nike and Adidas.

On appeal, Akeva reasserted that the ‘126 Patent includes shoes having both conventional and non-fixed rear soles. Akeva argued for example that Figure 28 of the ‘126 patent disclosed only the flexible midsole plate and not a removeable / rotatable rear sole:

Akeva also argued that the specification’s statement ““[t]he graphite insert also need not be used only in conjunction with a detachable rear sole, but can be used with permanently attached rear soles as well” demonstrated that the patent included shoes with conventional rear soles.

The Federal Circuit disagreed, finding instead that the ‘126 specification “clearly disclaims shoes with conventional fixed rear soles.” Akeva L.L.C. v. Nike, Inc., 817 F. App’x 1005, 1012 (Fed. Cir. 2020). It reasoned that “the invention is ‘[a] shoe [that] includes a heel support for receiving a rotatable and replaceable rear sole to provide longer wear.” To Akeva’s argument about Fig. 28, the Federal Circuit concluded that the specification indicated merely that “the shoe may also include a graphite insert.” It was held that the specification’s statement about use of the graphite insert with “permanently attached rear soles” was limited to those “permanently attached” rear soles that were nonetheless rotatable. The Federal Circuit further observed that the “’purpose of the invention’ is to overcome rear sole wear with a shoe having a detachable or rotatable rear sole that may additionally include a graphite insert.”

In its petition for certiorari, Akeva argued that the Supreme Court should decide whether the Federal Circuit’s line of cases finding a “heavy presumption” in favor of the plain meaning of claim terms, or else, the Federal Circuit’s line of cases taking a “holistic” approach toward claim terms, should govern claim construction.

Akeva argued that the “heavy presumption” line of cases permit divergence from a claim term’s plain and ordinary meaning “only” if it meets an “exacting” standard and demonstrates (i) a “clear” disclaimer of claim scope, or (ii) “clear” lexicography. Akeva argued in contrast that the Federal Circuit’s “holistic” approach permits courts to depart from the plain and ordinary meaning of the patent claims even if there is not “exacting “disclaimer, for example when the specification describes “the present invention,” “disparages” prior art, describes certain embodiments “repeatedly” and “consistently,” or provides an “implied” definition.

Akeva argued that the Federal Circuit failed to mention or address the plain meaning of “rear sole secured,” let alone the “heavy presumption” line of precedent. Akeva claimed that the plain meaning of “rear sole secured” denoted having a rear sole “fixed” to the shoe regardless of duration, and therefore encompassed Adidas and Nike’s accused athletic shoes.

Akeva cited Hill-Rom Servs., Inc. v. Stryker Corp., 755 F.3d 1367 (Fed. Cir. 2014); Continental Circuits LLC v. Intel Corp., 915 F.3d 788 (Fed. Cir. 2019); and Absolute Software, Inc. v. Stealth Signal, Inc., 659 F.3d 1121, 1136-37 (Fed. Cir. 2011) in favor of the “heavy presumption” approach. For example, these authorities support contentions that a specification’s description of embodiments, use of the phrase “the present invention,” and disparagement of the prior art does not limit claim scope.

Akeva also recognized cases like Nystrom v. TREX Co., 424 F.3d 1136 (Fed. Cir. 2005), AquaTex Indus., Inc. v. Techniche Solutions, 419 F.3d 1374 (Fed. Cir. 2005), and Abbott Labs v. Sandoz, Inc., 566 F.3d 1282 (Fed. Cir. 2009) in applying the holistic approach. Akeva argued that “holistic cases are themselves often unpredictable as to what aspects of the specification or analysis thereof they might newly rely on to affect the scope of the claims-at-issue.”

According to Akeva, scholarly debate exists regarding the Federal Circuit’s “feuding” lines of authority on claim construction, citing Professors Bessen and Meurer in “Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk.”

Ultimately, the Supreme Court’s denial of certiorari means that there will continue to be substantial dispute over claim construction with each side likely to cite valid yet seemingly incongruous law at one another. District Courts will cite that body of law which is more supportive of its decision, and even though appellate review of claim construction decisions is usually de novo, Federal Circuit panels will find latitude to affirm District Court decisions governing construction, regardless of the methodology applied.

About the author: Sean Flaherty is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on litigation matters involving copyright, trademarks, trade secrets, and patents, as well as transactional matters related to intellectual property licensing. Mr. Flaherty is a registered patent attorney with a degree in Civil Engineering. Mr. Flaherty’s biography can be found here.

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Supreme Court to Review Assignor Estoppel Doctrine

By on February 16, 2021
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Author: Lara Garner

Assignor estoppel bars the seller of a patent from later attacking the patent’s validity in patent infringement litigation. The doctrine seems commonsensical. One shouldn’t be able to sell a patent and then later turn around and claim that that patent is worthless. It would seem reasonable, then, that the assignor should also be barred from challenging the validity of the assigned patent at the USPTO in an inter partes review. Not so according to the Federal Circuit.

Last April, the Federal Circuit “grapple[d] with the doctrine of assignor estoppel” in Hologic, Inc. v. Minerva Surgical, Inc. and affirmed, seemingly reluctantly, the decision of U.S. District Court for the District of Delaware. The district court had held that the assignor of a patent was not barred by assignor estoppel from relying on a Patent Trial and Appeal Board (PTAB) decision, affirmed by the Federal Circuit, invalidating patent claims in a inter partes review. Also affirmed was the district court’s holding regarding a second patent that the assignor was barred from asserting invalidity of that patent’s claims in the district court.

The Patents and the Parties

Hologic sued Minerva for infringement of certain claims of its U.S. Patent Nos. 6,872,183 and 9,095,348. Hologic had acquired the patents indirectly from the founder of Minerva.

In the late 1990s, Csaba Truckai, a founder of the company NovaCept, with his design team at developed a medical device called the NovaSure system and patented the technology. Both the ’183 and ’348 patents list Mr. Truckai as an inventor and Mr. Truckai assigned his interest in the patents to NovaCept.

In 2004, Cytyc Corporation acquired NovaCept for $325 million and in 2007 Hologic acquired Cytyc. Mr. Truckai left NovaCept and, in 2008, founded a competing company, the accused infringer, Minerva.

In the District Court and the Patent Office

Hologic brought its infringement suit against Minerva in 2015. Minerva asserted invalidity defenses in district court and also filed petitions for IPR in the Patent Office challenging the validity of both patents. Review of the ’348 patent was denied but the Board instituted review of the ’183 patent and eventually held the ’183 patent claims unpatentable as obvious. Hologic appealed.

The district court denied Minerva’s request to dismiss Hologic’s claim for infringement of the ’183 patent as the Board’s finding was “on appeal and does not have preclusive effect as to this action unless and until the appeal is resolved.” But Hologic’s motion for summary judgment was granted, for both patents, that the doctrine of assignor estoppel barred Minerva from challenging their validity in district court. The case then proceeded to trial and the jury found for Hologic.

Subsequent to trial, the Federal Circuit affirmed the Board’s decision that the ’183 patent claims are invalid as obvious. In the interim, the ’3348 patent expired.

In deciding post-trial motions, the district court determined that the Federal Circuit’s decision did not affect the jury verdict because invalidity of the ’183 patent did not affect the finding of infringement as to the ’348 patent, and the jury’s damages determination was adequately supported by the finding of infringement of the ’348 patent. The district court further held that invalidation of the ’183 patent did not affect its findings of assignor estoppel on the ’348 patent.” But the court denied Hologic’s request for supplemental and enhanced damages, and ongoing royalties for infringement of the asserted ’183 patent claims as moot.

At the Federal Circuit

On Appeal Hologic argued that assignor estoppel precluded Minerva from relying on the Federal Circuit’s Hologic decision to escape liability for infringement. It contended that “the final outcome of the IPR is irrelevant to the district court proceeding” and that “[t]o hold otherwise would be to hold that the America Invents Act (‘AIA’) abrogated the assignor estoppel doctrine in a district court infringement action.”

The Federal Circuit examined its precedent and disagreed.

The Federal Circuit had first examined and affirmed the vitality of the doctrine of assignor estoppel in 1988, defining it as “an equitable doctrine that prevents one who has assigned the rights to a patent…from later contending that what was assigned is a nullity.” Diamond Scientific Co. v. Ambico, Inc., 848 F.2d 1220, 1224 (Fed. Cir. 1988). The Federal Circuit noted that, while early Supreme Court cases had carved out exceptions to the general assignor estoppel doctrine, the Court did not abolish the doctrine. And, while some courts had questioned the vitality of the doctrine following a Supreme Court’s decision abolishing licensee estoppel, the Federal Court noted an important distinction between assignors and licensees: Whereas a licensee might be forced to continue to pay for a potentially invalid patent, the assignor has already been fully paid for the patent rights.

Assignor estoppel, serves important purposes including: “(1) to prevent unfairness and injustice; (2) to prevent one [from] benefiting from his own wrong; (3) by analogy to estoppel by deed in real estate; and (4) by analogy to a landlord-tenant relationship.”

The doctrine has since continued to be applied in various circumstance, often with the primary stated purpose of the prevention of unfairness and injustice. That said, the Hologic court reasoned that there are limits to the doctrine, including that it does not preclude an estopped party from arguing that the patentee is itself collaterally estopped from asserting a patent found invalid in a prior proceeding.

Based on those limitations, and expressly notwithstanding the seeming unfairness, the Federal Circuit concluded that assignor estoppel did not preclude Minerva from relying on the IPR affirmance to argue that the ’183 patent claims are void ab initio.

But it wasn’t all good news for Minerva. The Federal Circuit rejected its assertion that its invalidity challenge should not have been precluded in the district court, including declining Minerva’s invitation to abandon the doctrine of assignor estoppel entirely.

The incongruity of the result was not lost on the Court. Judge Scholl, who authored the opinion, wrote separately in the decision to highlight this “odd situation where an assignor can circumvent the doctrine of assignor estoppel by attacking the validity of a patent claim in the Patent Office, but cannot do the same in district court.” Judge Scholl concluded:

I suggest that it is time for this court to consider en banc the doctrine of assignor estoppel as it applies both in district court and in the Patent Office. We should seek to clarify this odd and seemingly illogical regime in which an assignor cannot present any invalidity defenses in district court but can present a limited set of invalidity grounds in an IPR proceeding.

Notwithstanding her suggestion, the Court denied en banc rehearing, the parties petitioned the Supreme Court, and last month the Supreme Court granted Minerva’s petition for certiorari on the question of: “Whether a defendant in a patent infringement action who assigned the patent, or is in privity with an assignor of the patent, may have a defense of invalidity heard on the merits.”

About the author: Lara Garner is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Her practice focuses on Intellectual Property litigation and counseling for patents, copyrights, trademarks, and trade secrets, and in a broad range of matters, including contract, technology, and privacy issues. Ms. Garner’s biography can be found here.

Filed under Estoppel Doctrine, Patent, Patent Infringement, USPTO

Today’s No Patent Challenge Provisions in License Agreements

By on December 15, 2020
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Author: John Vassiliades

In the years and days leading up to the seminal U.S. Supreme Court decision in MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118 (2007), it was common for licensors of patents to include a “no patent challenge” clause in the license that prohibited the licensee from challenging the validity of the patents that were the subject of the license. The U.S. Supreme Court put an end to that practice by holding in MedImmune that licensees have the legal right to challenge the validity and enforceability of the patents that are being licensed without first having to breach or otherwise terminate their license agreement. Under this ground-breaking decision, a licensee can successfully challenge the validity of the licensed patents after receiving immunity from infringement by the licensor. The decision seemed to encourage infringing parties to enter into license agreements in order to obtain immunity from infringement, then challenge the validity of the licensed patents without fear of being sued for infringement.

Prior to the MedImmune decision, licensors held the upper hand over licensees because the law permitted licensors the right to require that a licensee contractually waive its right to legally challenge the licensed patents, thereby locking in a licensee to pay royalties for the full term of the agreement which often amounted to the end of the last to expired licensed patent. This prior practice essentially forced a licensee to make the difficult choice between paying royalties for the term of the license or risk termination of the license and the filing of an infringement lawsuit if it did anything that sought to challenge the patents of the licensor.

In the years following MedImmune, sophisticated licensors have pivoted around the decision and have since deployed licensing strategies that place the licensor back in the driver’s seat. Savvy licensors are no longer requiring that their licensee contractually waive their patent challenge rights since to do so is illegal. Instead, they simply require that if you want to be a licensee, you must agree to a contract provision that says that if you or anyone on your behalf seeks to challenge the licensed patents, your license immediately terminates thereby making the licensee a target for an infringement claim by its former licensor. This strategy provides enough of an obstacle to the licensee to not want to challenge the validity of the licensed patents for fear of being sued for infringement by its former licensor once the license is terminated.

Interestingly enough, this licensing strategy has yet to be legally challenged by a licensee in court and while some commentators believe this contract strategy still violates the spirit behind MedImmune because it essentially discourages licensees from asserting their patent challenge rights, other commentators believe that the strategy is an enforceable effective tool for upholding the validity of patents during a time when the legal standards of what is patentable have become less certain, making it generally easier for infringers to challenge the validity of patents. These commentators instead say that this licensing strategy should be legal because unlike the old no challenge clauses (which are now illegal), a simple termination of license clause does not prevent the licensee from being able to challenge the validity or enforceability of a licensed patent if it ever wanted to. That is, under this licensing strategy, the licensee has to be willing to give up its infringement immunity by terminating the license before it seeks to challenge the validity of the licensed patents, something that the Court in MedImmune did not expressly say was illegal.

In any event, licensors of patents are well advised to include such a termination of license provision in their license agreements whether the license is a freedom to operate license, a technology transfer license, or a patent license negotiated in connection with a patent infringement litigation. That said, this basic licensing strategy has taken on many new forms and variations. For example, in some instances, the clause might be drafted in a way that triggers termination of the license if the licensee does anything to oppose the licensed patent even if the action in question is uttering an opposing or threatening statement that does not amount to the filing of a legal proceeding. In addition, the provision may state that a “challenge” includes more than a challenge to the validity or enforceability of the licensed patents but also to any claim that what the licensee may be doing no longer infringes a claim of the licensed patents. Still other variations include a requirement that the licensee give advance notice of any intent to challenge the licensed patents, an automatic increase in royalty rates, or other compensation, which may be in lieu of a termination or in addition to a termination should the licensee wish to resume its license after an unsuccessful challenge. Moreover, it is common for a challenge termination provision to state that termination is triggered not only if the licensee challenges, but also if anyone on behalf of the licensee, such as a sublicensee, a successor of the licensee (in connection with a merger or acquisition transaction involving the licensee), or even a third party working on behalf of the licensee, seeks to challenge.

All of these variations, whether used singly or in tandem, can offer an effective licensing strategy that mitigates the risk of potential future patent challenges by licensees. Since none of these strategies have been challenged in court, licensors are strongly recommended to implement them for all of their patent licensing deals.

About the author: John Vassiliades is registered patent attorney and partner in the firm’s Intellectual Property Practice Group, specializing in high-technology business transactions for the development and monetization of intellectual property rights. He regularly advises clients on patent, trademark, copyright, and trade secret licensing, and R&D, M&A, IT, software, and E-Commerce transactions in a variety of industries. He holds a master’s degree in Biotechnology from Johns Hopkins University.

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A Generic.com Term is Not Per Se Generic

By on July 15, 2020
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Author: Julia Whitelock

A generic term combined with a non-source-identifying term is just a generic term, right?  In United States Patent and Trademark Office v. Booking.com B.V., Case No. 19-46, 2020 U.S. LEXIS 3517, 591 U.S. ___ (June 30, 2020), the U.S. Supreme Court rejected a sweeping rule that the combination of a generic word with “.com” is automatically generic and, therefore, unregistrable per se.

Procedural History

Booking.com, a digital travel company that provides travel-related services under the brand “Booking.com,” filed applications to register the mark “Booking.com.”  A USPTO examining attorney and the Trademark Trial and Appeal Board (“TTAB”) concluded that the term “Booking.com” was generic for the services offered and denied registration.  According to the Trademark Manual of Examining Procedure (“TMEP”) (Oct. 2018), “[portions of the uniform resource locator (‘URL’), including the beginning, (‘http://www.’) and the top-level Internet domain name (“TLD”) (e.g., “.com,” “.org,” “.edu,”) indicate an address on the World Wide Web, and therefore generally serve no source-indicating function.”  TMEP § 1209.03(m).  Because “.com” “generally indicate[s] the type of entity using a given domain name, and therefore serves no source-indicating function, their addition to an otherwise unregistrable mark typically cannot render it registrable.”  Id.  TTAB found that “booking” was a generic term for “making travel reservations” and “.com” only served to identify a commercial website.  It therefore concluded that “Booking.com” is unregistrable because it is generic or, in the alternative, descriptive and lacking secondary meaning.

The U.S. District Court for the Eastern District of Virginia and the U.S. Court of Appeals for the Fourth Circuit disagreed with the PTO.  Generic terms are the “common name of a product or service itself.”  Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 464 (4th Cir. 1996).  The District Court, relying on Booking.com’s new evidence of consumer perception, concluded that the compound term “Booking.com,” as opposed to “Booking,” is not generic.  Instead, consumer perception evidence indicated that “Booking.com” is descriptive and had acquired secondary meaning as to hotel-reservation services.  The USPTO appealed only the District Court’s ruling on genericness.  The Fourth Circuit affirmed the District Court’s determination that “Booking.com” is not generic, finding no error in its assessment of consumer perception and rejecting the USPTO’s contention that combining a generic term with “.com” is “necessarily generic.”  The Fourth Circuit applied the three-step test for genericness: “(1) identify the class of product or service to which use of the mark is relevant; (2) identify the relevant consuming public; and (3) determine whether the primary significance of the mark to the relevant public is as an indication of the nature of the class of the product or services to which the mark relates, which suggests that it is generic, or an indication of the source or brand, which suggests that it is not generic.”  Booking.com B.V. v. United States Patent and Trademark Office, 915 F.3d 171, 180 (4th Cir. 2019) (citing Glover v. Ampak, Inc., 74 F.3d 57, 59 (4th Cir. 1996)).

The Supreme Court’s Ruling Reaffirms the Primary Significance Test for Analyzing Genericness

The Supreme Court affirmed the Fourth Circuit, concluding that “Booking.com” is not generic.  The Court held, “[w]hether any given ‘generic.com’ term is generic…depends on whether consumers in fact perceive that term as the name of a class or, instead, as a term capable of distinguishing among members of the class.”  2020 U.S. LEXIS 3517, *16.  The Supreme Court’s ruling rejected the USPTO’s assertion of a blanket rule that deemed all “generic.com” terms as generic.

The Booking.com Court’s holding does not materially change the test for genericness as announced in Kellogg Co. v. Nat’l Biscuit Co., 305 U.S. 111, 118, 83 L. Ed. 73, 59 S. Ct. 109 (1938).  In Kellogg, the Supreme Court stated that the owner of the mark “must show that the primary significance of the term in the minds of the consuming public is not the product but the producer.”  Id.  In Booking.com, the Supreme Court held that the owner of the mark must show that “consumers in fact perceive that term…as a term capable of distinguishing among members of the class.”  Accordingly, the Booking.com opinion reinforces the primary significance test in determining whether a mark is generic or descriptive in the context of a generic.com term.  To do so, the Court necessarily had to reject the USPTO’s position that a generic term combined with a generic corporate designation (in this case “.com”) is basically per se an unregistrable generic term.    

In Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., the Court held that “Goodyear Rubber Company” was not “capable of exclusive appropriation.”  128 U.S. 598, 602, 32 L. Ed. 535, 9 S. Ct. 166 (1889).  “Goodyear Rubber” was a class of goods and the combination of a generic term with “Company” “only indicates that parties have formed an association or partnership to deal in such goods.”  Id.  In Booking.com, however, unlike a generic term combined with “company,” a generic term combined with “.com” refers to a specific entity due to the exclusivity of domain name ownership.  2020 U.S. LEXIS 3517, *14.  Therefore, “consumers could understand a given ‘generic.com’ term to describe the corresponding website or to identify the website’s proprietor.”  Id. *15.  The Booking.com Court clarified Goodyear’s principles, in conjunction with the subsequent enactment of the Lanham Act, as “A compound of generic elements is generic if the combination yields no additional meaning to consumers capable of distinguishing the goods or services.”  Id. *15-16.  However, “[a] ‘generic.com’ term might also convey to consumers a source-identifying characteristic: an association with a particular website.”  Booking.com, 2020 U.S. LEXIS 3517, *14.  The point is that a court must look at consumer perception to determine whether the combined “generic.com” term identifies a class of goods or a particular producer. 

Impact

The decision may increase the cost of trademark prosecution.  The ruling seemingly opens the gates for an onslaught of generic.com applications.  However, applicants will need to show consumer perception that the generic.com term identifies a brand, not a class of goods.  The Booking.com Court provided a non-exhaustive list of support for consumer perception of a term’s meaning, to include: “consumer surveys, but also dictionaries, usage by consumers and competitors, and any other source of evidence bearing on how consumers perceive a term’s meaning.”  2020 U.S. LEXIS 3517, *16 n.6.  Compiling such evidence may be costly to trademark applicants seeking to register facially generic terms.

The decision may create a path for federal registration for other combination generic terms and non-source-identifying terms.  The Booking.com Court’s holding specifically identifies the factual circumstances for which to apply its rule – when analyzing whether a “generic.com” term is generic.  However, the analysis could likely be extended to other generic terms that lack a source-identifying term (such as other TLDs like “.org” or “.net”, or # or HASHTAG).

While a generic.com mark may be registrable (assuming proof of the mark’s primary significance as source to consumers), Booking.com does not alter the tenets of trademark law – likelihood of confusion and fair use.  “[E]ven where some consumer confusion exists, the doctrine known as classic fair use, [4 McCarthy] § 11:45, protects from liability anyone who uses a descriptive term, ‘fairly and in good faith’ and ‘otherwise than as a mark,’ merely to describe her own goods.”  2020 U.S. LEXIS 3517, *18 (citing 15 U.S.C. §1115(b)(4); KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 122-23, 125 S. Ct. 542, 160 L. Ed. 2d 440 (2004)).   

However, the decision may ultimately increase the instance of trademark bullying.  Even though a generic.com mark is registrable, as the Court explains and Booking.com concedes, the mark is a weak descriptive mark with a more difficult path to showing likelihood of confusion.  First, Booking.com concedes that “Booking.com” is a weak mark and as a descriptive mark, it is “harder…to show a likelihood of confusion.”  2020 U.S. LEXIS 3517, *18 (quoting Tr. of Oral Arg. 42-43, 66).  Second, Booking.com accepts that close variations of “Booking.com” are unlikely to infringe.  Id.  And finally, the federal trademark registration of “Booking.com” “would not prevent competitors from using the word ‘booking’ to describe their own services.”  Id.  However, it is conceivable that a generic.com trademark owner could and would use its federal registration to scare users of the generic term into ceasing use for fear of a costly, protracted legal battle.

About the author: Julia Whitelock is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property and Commercial Litigation Practice Groups.  Her practice focuses on litigating matters involving trademarks, copyrights, trade secrets, commercial disputes, and consumer claims, and advertising & e-commerce law.

Filed under Patent, Patent Trial and Appeals Board, Trademark, Trademark Trial and Appeal Board, Uncategorized

Design Patents on Truck Parts Are Valid

By on July 31, 2019
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Author: Susan Meyer

In a recent decision, the Federal Circuit Court of Appeals ruled that design patents on Ford truck hoods and headlights are not invalid as functional articles, holding “the aesthetic appeal of a design to consumers is inadequate to render that design functional.” Automotive Body Parts Association v. Ford Global Technologies, LLC, No. 2018-1613 (Fed. Cir., July 23, 2019).

According to a patent attorney, design patents protect a “new, original and ornamental design for an article of manufacture.” 35 U.S.C. § 171(a). Established law prohibits design patents on primarily functional designs due to their lack of ornamentality. Utility patents, on the other hand, must be functional to be patentable. Valid design patents may contain some functional elements but may not claim a “primarily functional” design. “If a particular design is essential to the use of the article, it cannot be the subject of a design patent.” L.A. Gear, Inc. v. Thom McAn Shoe Co., 988 F.2d 1117, 1123 (Fed. Cir. 1993).

This case was brought by the Automotive Body Parts Association (ABPA), who asked the court to hold that the aesthetic appeal, and not the mechanical or utilitarian aspect, of a patent design may render it functional. The court declined to adopt the ABPA’s unique argument.

The designs at issue are below.

Ford testified that a design team, and not engineers, designed the ornamental features for the hood and headlights, and although engineers reviewed the final designs, there were no changes to the aesthetic designs based on engineering or functional requirements. The court stressed the importance of prior tests that looked at the presence or absence of alternative designs. Of course, there are a variety of hood and headlight designs available.

Overall, the court found the ABPA’s arguments that designs that derive commercial value from their aesthetic appeal are functional, would gut the principles of design patents: “The very thing . . . for which [the] patent is given is that which gives a peculiar and distinctive appearance, its aesthetic.” The commercial edge the design may give a patent owner is “exactly the type of market advantage manifestly contemplated by Congress in the laws authorizing design patents.”

This recent ruling from the Federal Circuit clarifies that design patent defendants should not focus on whether a design’s aesthetic appeal is functional, but rather focus on the functionality of the article of manufacture itself. Patent owners will do well to develop evidence early of invention by designers and not engineers, and of a variety of design options in the field to show the lack of functional necessity for the particular patented design.

About the author: Susan B. Meyer is a partner and co-chair of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. She is a registered patent attorney whose practice focuses on intellectual property litigation, prosecution, and counseling for clients in a wide variety of industries and technologies. Ms. Meyer’s biography can be found here.

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Amazon’s Patent Infringement Evaluation Program

By on June 19, 2019

Author: David Heckadon

Amazon has been quietly testing a program called “Utility Patent Neutral Evaluation” that allows patent owners who sell their products on Amazon’s website to challenge potential infringers who also sell products on Amazon’s website. At present, the program is by invitation only. The overall objective of the program is to reach decisions very quickly and relatively affordably. Since almost half of American retail ecommerce sales already passes through Amazon’s website (projected to reach 50% by 20211), the ability to have a patent infringer’s product quickly and fairly cheaply removed from the website is a very powerful tool for patent owners. Patent owners who simply don’t have the money to spend on a traditional patent lawsuit can now go after their infringers efficiently on Amazon.

The system itself is simple, and the full decision process takes no more than 4 months. First, the patent owner approaches Amazon and identifies the potential infringer (or infringers), selects 1 claim of a US utility patent that it believes is infringed, and requests an evaluation. The patent owner must also identify the purported infringing product by its Amazon Standard Identification Number or “ASIN.”

The patent owner pays Amazon $4,000. Amazon then notifies the potential infringer(s) and the infringer(s) must also pay $4,000 to Amazon.

The patent claims are then evaluated by an attorney selected by Amazon, and this attorney must return a decision in a matter of weeks. If the patent claim is found to cover the accused product, then Amazon will remove the product from its website within 10 days of the decision. The accused product will also be removed from the website if its seller does not agree to participate in the program.

The program is very streamlined. There are no depositions, no discovery, no document requests, no hearings, no trial, and no experts. There is also no appeal process. The whole process done in writing.

First, the patent owner contacts Amazon to start the process. After Amazon agrees to start the process, the patent owner has only 21 days to submit its arguments (limited to discussing 1 claim from 1 US utility patent). These written arguments are limited to 20 pages (not including claim charts or exhibits). The patent owner must pay the $4,000 to Amazon within 2 weeks of the start of the program.

Next, the seller must also pay $4,000 and is given 14 days to respond. The seller’s response is limited to 15 pages (not including claim charts or exhibits). The possible arguments the seller can made are actually quite limited. The seller can argue only: (a) non-infringement; or (b) invalidity based on sales of the patented product more than 1 year before the patent’s earliest effective filing date; or (c) that the patent has already been invalidated by a court or the Patent Office. Moreover, should the seller argue that the patented product has been on sale for more than a year before the patent’s earliest effective filing date, the evidence presented must be independently verifiable (i.e., affidavits and declarations are not permitted evidence). Should the seller decide not to participate in the program, or fail to pay their $4,000, the seller’s goods are automatically removed from Amazon’s website.

Finally, the patent owner is given 7 days to submit an optional reply to the seller’s response. No modifications to the above 21-day, 14-day, and 7-day schedule are permitted. Once the clock starts ticking, it cannot be turned off.

The attorney evaluator selected by Amazon is given only 14 days to make their decision. To further speed up the process, the attorney evaluator only has to provide the basis for their findings if they find in in favor of the seller. The evaluator uses a “likely or not likely” standard to determine infringement.

Any product determined to be infringing will be removed from Amazon’s website within 10 days of the evaluator’s final decision. Neither the patent owner nor the seller can contact the attorney evaluator regarding their final decision. The entire process is bound by confidentiality agreements and all parties agree not to seek discovery from the other participants, from Amazon, or from the attorney evaluator after the process has concluded.

After the evaluator makes their final decision, the winner then gets its money back, and the loser’s $4,000 is used to pay the attorney. Amazon states that it does not keep any of the money.

Of course, Amazon cannot run its own court system, and it cannot limit the rights of plaintiffs and defendants in court or at the Patent Office. As such, the patent owner can still go to court and sue for infringement (and damages). Conversely, the accused infringer can still go to court and file a Declaratory Judgement action or go to PTAB for a review of the patent in question. Amazon can’t limit these rights, and Amazon confirms it will respect all judgments and arbitrations concerning the patent in question. Amazon also states that it will comply with the evaluator’s decision pending any litigation or settlement. However, Amazon’s huge market power as the world’s largest retailer makes this new system a very fast, cost-efficient, and effective tool to shut infringing products out of the market.

In addition to pleasing patent owners, this new program can also be good news for defendant sellers. Specifically, prior to this program, sellers’ products were simply removed from Amazon’s website after a charge of patent infringement. As such, these sellers had no recourse other than obtaining a declaration of non-infringement from a federal court.

One important limitation of this program is that it can only be used to challenge products that are sold by third-party sellers on Amazon’s website. As such, it cannot be used against products that are sold by Amazon itself. Currently, about 50% of the sales made through Amazon’s website are made by Amazon itself. 2 3 What this means is that only about half of the goods sold on Amazon’s website can be challenged under this new program (however, that percentage is expected to continually increase as Amazon continues to diversify to more sellers).

The program also has provisions to deal with multiple sellers of the accused infringing products. Specifically, each accused seller has to put up $4,000 to participate in the program. If none of the accused sellers remits its $4,000, then the accused goods are automatically removed from Amazon’s website. If multiple sellers lose, the $4,000 cost is divided evenly among them. Interestingly, however, if more than $4,000 has been paid by multiple sellers, the surplus funds received (i.e.: above the $4,000 paid to the attorney evaluator) are to be given to a charity selected by Amazon.

Other interesting provisions include instances where if the patent owner lists multiple products and only some of them are found to infringe the patent, then the patent owner pays $2,000, and the infringing sellers pay $2,000 (in even shares). Also, if the patent owner and the seller settle prior to the evaluation decision, the evaluator gets $1,000 (or $2,000 if settlement occurs after the patent owner’s reply has been filed).

Lastly, as can be seen, this new program is fundamentally different from traditional “early neutral evaluation” since it is not trying to get the parties to an agreement, or provide a non-binding evaluation of the merits of the case. It is also different from traditional mediation since the program is not intended to get the parties to settle. Amazon’s objective is speed and containment of cost in reaching a decision, not on trying to avoid costly litigation.

Amazon may now be the first private business entity to run its own patent infringement dispute resolution system. It will prove interesting to see what happens next as this system expands and is used more and more. It will also prove very interesting to see whether other retailers will try to develop similar programs or work together to build a system that they could all collaborate on.

About the author: David Heckadon is a registered patent attorney and a member of Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. Mr. Heckadon has a degree in mechanical engineering, and his practice focuses on patent prosecution, with particular emphasis on software technologies. Mr. Heckadon’s biography can be found here.
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1 fortune.com/2017/04/10/amazon-retail/
2 https://www.geekwire.com/2019/first-time-amazons-online-sales-make-less-half-entire-business/
3 https://www.statista.com/statistics/259782/third-party-seller-share-of-amazon-platform/

Filed under Patent, Patent Infringement

SCOTUS: AIA Does Not Limit Long-Standing “On Sale” Bar Precedent

By on February 6, 2019
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Author: Patrick Mulkern

Summary

In a recent unanimous decision, the United States Supreme Court rejected a patentee’s argument that the America Invents Act (“AIA”) narrowed or otherwise affected the “on sale” bar rule governing secret sales, invalidating a patent because the subject matter had been subject to a confidential license agreement years prior to the precipitating application.1

Factual Background

Petitioner Helsinn Healthcare S.A. (“Helsinn”) is a Swiss pharmaceutical company that makes a drug for chemotherapy-induced nausea.2 In September 2000, Helsinn partnered with MGI Pharma, Inc. (“MGI”) to market and distribute the drug in the United States. Their license agreements included specific dosage information and required MGI to keep all Helsinn’s proprietary information confidential, but the fact of the license itself was announced in a joint press release.

In 2003, Helsinn filed a provisional application covering specific doses of its nausea drug.3 In May 2013, Helsinn filed the fourth of four applications that claimed priority to that 2003 date, ultimately issuing as U.S. Patent No. 8,598,219 (“the ‘219 Patent”).

Respondents Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc. (“Teva”) are generic drug manufacturers which sought FDA approval to market a generic version of Helsinn’s drug with the same dosage as that claimed in Helsinn’s ‘219 Patent. Helsinn sued Teva for infringement, but Teva claimedthe ‘219 Patent was invalid because the claimed dosage was “on sale” more than one year before the 2003 provisional application to which the ‘219 patent claimed priority.

The district court determined the “on sale” bar did not apply because, under its interpretation of the AIA, an invention is not “on sale” unless the challenged sale made the invention available to the public.4 The district court reasoned that, because the substance of the Helsinn-MGI license agreement had not disclosed the specific dosage, the sale did not make the invention public.

The Federal Circuit reversed, however, because “the details of the invention need not be publicly disclosed” for a sale to fall within the AIA’s “on sale” bar.5 Instead, it only mattered whether “the existence of the sale is public[.]”  According to the appellate court, here, the fact of the Helsinn-MGI agreement had been publicly announced in a joint press release.

Legal Background

The phrase “on sale bar” refers to the patent statute’s language, which prevents a person from receiving a patent if “the invention was . . . on sale” in the United States “more than one year prior to the date of the [patent] application[.]”6 Similar language has been a part of every patent statute since 1836—including the statute in force immediately before the AIA took effect. Then, in 2012, the AIA merely added the phrase “or otherwise available to the public.” Ultimately, the relevant AIA section read: “A person shall be entitled to a patent unless . . . claimed invention was . . . in public use, on sale, or otherwise available to the public[.]”7

The pre-AIA on sale bar had been held to apply when the product was “the subject of a commercial offer for sale” and was “ready for patenting.”8 The Supreme Court’s precedent had made clear (under the pre-AIA language) that the sale, or offer of sale, need not make the invention itself available to the public. Instead, for example, the Court in Pfaff held the inventor lost his rights without any regard to whether the offer of sale disclosed the details of the invention. Other cases have similarly focused only whether the invention was sold, not whether the details of the invention had been publicly disclosed.9 The Federal Circuit has agreed with these cases, consistently holding that even “secret sales” can invalidate a patent.10

This Decision

The Supreme Court began its analysis with a foundational canon of legislative analysis, presuming that “when Congress reenacted the same [on sale bar] language in the AIA, it adopted the earlier judicial construction of that phrase.”11 Justice Thomas noted how, in arguing as amici, the United States acknowledged that “adding the phrase ‘otherwise available to the public’ . . . would be a fairly oblique way of attempting to overturn that settled body of law.”12 Instead, the Supreme Court held, “[t]he addition of ‘or otherwise available to the public’ is simply not enough of a change for us to conclude that Congress intended to alter the meaning of the reenacted term ‘on sale.’”13 Thus, an inventor’s sale of an invention to a third party—even one who is obligated to keep the invention confidential—can qualify as prior art under § 102(a) of the AIA.14

Impact

While the new language of the AIA may have instilled some uncertainty about the new scope of the on sale bar, this decision answers those questions by clarifying that the on sale bar applies even to sales of an invention to a third party regardless of whether the sale results in the patented information being publicly known. Small companies who may look to license their inventions for testing or (like Helsinn) financial reasons during the development stages are on notice that they must be vigilant in filing their patent applications early. Specifically, in-house counsel should be constantly interfacing between the product development team and product commercialization team to understand the development timeline and what actions are being taken with respect to that product vis à vis any related patent applications.

Although the PTO and AIA’s own sponsor, Rep. Lamar Smith (R-TX), came out in favor of Helsinn’s position—and against the Federal Circuit’s decision as “indefensible”—it is clear that Congress will need to be more explicit if it desires to overturn case law interpreting the on sale bar. Even though the PTO had taken the position that the AIA “does not cover secret sales or offers for sale,” this decision may likely cause an update to the Manual of Patent Examining Procedure.15

About the author: Patrick J. Mulkern is an associate in Gordon Rees Scully Mansukhani’s Intellectual Property Practice Group. His practice focuses on intellectual property litigation and transactional matters, with a particular emphasis on patent, trademark, and trade secret litigation. Mr. Mulkern is a registered patent attorney and his biography can be found here.

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1 See Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., Case No. 17-1229, 586 U.S. ___ (Jan. 22, 2019).
2 Id., Slip Op. at 2.
3 Id., Slip Op. at 3.
4 Id., Slip Op. at 4 (citing Helsinn Healthcare S.A. v. Dr. Reddy’s Labs. Ltd., 2016 WL 832089, at *45, *51 (D.N.J. Mar. 3, 2016)).
5 Id. (citing Helsinn Healthcare S.A. v. Teva Pharms. USA, Inc., 855 F.3d 1356, 1360 (Fed. Cir. 2017)).
6 Id., Slip Op. at 5-6 (quoting 35 U.S.C. § 102(b) (2006 ed.)).
7 Id., Slip Op. at 6 (quoting 35 U.S.C. § 102(a)(1) (2012 ed.)).
8 See Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 67 (1998).
9 See, e.g., Elizabeth v. Pavement Co., 97 U.S. 126, 136 (1878) (“It is not a public knowledge of his invention that precludes the inventor from obtaining a patent for it, but a public use or sale of it.”).
10 See, e.g., Special Devices, Inc. v. OEA, Inc., 270 F.3d 1353, 1357 (Fed. Cir. 2001).
11 Helsinn, 586 U.S. at ___, Slip. Op. at 7.
12 Id., Slip Op. at 7-8 (quotations and citations omitted).
13 Id., Slip Op. at 8 (emphasis added).
14 Id., Slip Op. at 9.
15 See Manual of Patent Examining Procedure, § 2152.02(d) (9th Ed., 2018).

Filed under Patent Tagged with , ,

USPTO Practice Change Increases Fees for Multiple Reissue Patents and Allows for Refund of Surcharge Fees

By on June 6, 2018
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Author: Kimberley Chen Nobles

Managing a patent portfolio often includes payment of maintenance fees to keep patent rights in force. While patent owners are accustomed to the fee based system, the new practice can result in a significant increase in fees to maintain multiple reissue patents. In addition, patent owners may have an opportunity to recoup fees paid to the US Patent and Trademark Office (USPTO). Recognizing certain fees can assist with planning and portfolio management.

The USPTO recently issued a new practice and guidance for maintenance fees with respect to multiple reissue patents.1 2 Maintenance fees are costs associated with maintaining a patent after the patent is granted and are due for the 3rd, 7th, and 11th anniversaries of the patent grant. Failure to pay the requisite maintenance fee can lead to loss of patent rights. Managing the timing of maintenance fee payments can avoid surcharges associated with the maintenance fees.

The following is an outline of how to identify which matters the new practice applies to, how to comply with the new practice, and an exemplary scenario.

USPTO Practice for Maintenance Fee Payments (and Possible Refund!)

Effective January 16, 2018, each utility reissued patent requires its own maintenance fees. This new practice replaces the former practice of only requiring payment of one maintenance fee in the latest reissue patent. Patent owners may have to budget additional funds for maintaining any multiple reissue patents.

What is a multiple-reissue patent?

A reissue patent is a patent grant that is issued to correct an error in an earlier patent grant. In some cases, multiple reissue patents are granted. Prior to the new practice, patent owners were only required to pay maintenance fees in the latest reissue patent for a multiple reissue patent family. The USPTO may reissue a single original patent as multiple reissued patents (35 USC 251(b), 37 CFR 1.77).

Example: Original patent is issued → Patent Owner initiates a Reissue proceeding to correct a defect in the patent → Multiple reissue patents issued (e.g., Reissue Pat 1 and Reissue Pat 2)

When are the fees due?

Maintenance fees are paid in windows, either 6 months before a due date, or six months following the due date. Payments in the 6-month window following a dude date require payment of a surcharge. The due dates for each window are three years and six months (3 ½ years), seven years and six months (7 ½ years), and eleven years and six months (11 ½ years), with the due dates calculated from the original patent date.

In the current fee schedule, the 3rd, 7th, and 11th anniversary fees are $1,600, $3,600 and $7,400, respectively.

 

Maintenance Fee Guidance

  • Identify Multiple Reissue Patents, Pending Reissue Applications, and Original Patents
  • Identify Maintenance Fee Payment Dates/Payments
  • Flag/Set fee payments for Multiple Reissue Patents
  • Determine if fee payments are due/have been paid within the period of January 16, 2018 to July 16, 2018
  • Determine if refunds should be requested for surcharge payments

What about payments made prior to January 16, 2018?

The new practice applies to payments made for maintenance fees on or after January 16, 2018 even if prepaid. For reissue matters that may have already been paid, check payments made from July 17, 2017 to January 15, 2018 (for multiple reissue matters). If a payment has been made, a separate maintenance fee may be required in any earlier reissued patent(s) and original patent if there is a pending reissue application.

Payments Made in Original Patent?

The new practice changes the procedure for original patents that are the basis for reissue patents and the basis for reissued applications. Maintenance fees remain due in the original patent whenever an application for reissue of the original patent is pending on the maintenance fee due date.

Payments Made for Reissue Application about to Issue?

Maintenance fee must be paid for the original patent to maintain the last reissued patent even when the reissue patent is expected to issue within the grace period.

Example Scenario – Pending Reissue Patent

For a 7 ½ year maintenance fee due date is Feb. 27, 2018, the new practice applies. In the scenario below, two reissue patents and one pending reissue application exist due to a previous reissue application. As a result, Maintenance fees for the 7 ½ year payment (e.g., $3,600 per reissue/pending reissue) must be made in both reissue patents and the original patent.

 

Requesting Surcharge Refund

While the surcharge fee of $160 based on the current fee scale is a fraction of some of the maintenance fees, Patent owners can request a refund of the surcharge under 37 CFR 1.20(h) for payments made from January 17, 2018 to July 16, 2018. As mentioned above, the surcharge cannot be waived at the time of payment. Refund requests must be made by January 16, 2019.

1 Link to Official Notice: https://www.uspto.gov/sites/default/files/documents/reissue-mf-pay.pdf?utm_campaign=subscriptioncenter&utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term

2 Link to FAQs: https://www.uspto.gov/sites/default/files/documents/faqs-reissue-mf-pay.pdf?utm_campaign=subscriptioncenter&utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term

About the author: Kimberley Chen Nobles is a partner in Gordon Rees Scully Mansukhani’s Intellectual Property practice group. She focuses her practice on representation of technology companies worldwide in transactional and litigation matters involving patents, trademarks, copyrights, and trade secrets.  Ms. Nobles’ biography can be found here.

Filed under Patent, USPTO

The State of Design Patent Infringement Damages Calculations Following the Battle Between Apple and Samsung

By on November 30, 2017
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Author: Mike Khoury

Many people have heard of the patent dispute between Apple and Samsung dating back to a 2011 Northern District of California lawsuit. In a legal battle that has lasted over 6 years, gone through two jury trials, and endured appeals to the Federal Circuit and U.S. Supreme Court, one issue remains uncertain: the measure by which to calculate damages in a design patent infringement case.

In 2011, Apple sued Samsung for infringing upon iPhone design patents. The following year, a jury awarded Apple $399 million in design patent infringement damages—Samsung’s entire profit from sales of the infringing phones. Samsung appealed, arguing that the jury’s damage award should have been limited to only part of the profit (as only part of the phone’s design was copied from Apple). After the Federal Circuit affirmed the jury’s award, Apple Inc. v. Samsung Electronics Co., 786 F.3d 983 (Fed. Cir. 2015), the Supreme Court granted certiorari and reversed. Samsung Elecs. Co. v. Apple, Inc., 137 S. Ct. 429, 434 (2016).

At the center of the Supreme Court’s decision is the damages provision specific to design patents under 35 U.S.C. § 289. In relevant part, section 289 reads: “Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit[.]” (emphasis added).

In interpreting section 289 for the first time, the Supreme Court explained that “[a]rriving at a damages award under § 289 . . . involves two steps. First, identify the ‘article of manufacture’ to which the infringed design has been applied. Second, calculate the infringer’s total profit made on that article of manufacture.” Samsung Electronics, 137 S. Ct. at 434. As used in section 289, the term “article of manufacture,” the Supreme Court continued, “encompasses both a product sold to a consumer and a component of that product.” Id. In other words, “reading ‘article of manufacture’ in § 289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.” Id. at 436 (emphasis added). However, not surprisingly, the Supreme Court stopped short of establishing a test for identifying the article of manufacture under section 289 and remanded to the Federal Circuit for reassessing damages. The Federal Circuit, in turn, remanded the case to the district court for further proceedings. Apple Inc. v. Samsung Elecs. Co., 678 Fed. Appx. 1012 (Fed. Cir. Feb. 7, 2017).

The case is now back before Judge Lucy Koh of the Northern District of California. On October 22, 2017, after Apple and Samsung briefed the issue, Judge Koh ordered a new trial. In her order, Judge Koh adopted a test proposed by the Department of Justice (“DOJ”) in an amicus brief filed in the Supreme Court appeal in this case. “The test for determining the article of manufacture for the purpose of § 289 shall be the following four factors: [1] The scope of the design claimed in the plaintiff’s patent, including the drawing and written description; [2] The relative prominence of the design within the product as a whole; [3] Whether the design is conceptually distinct from the product as a whole; and [4] The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.” Apple Inc. v. Samsung Elecs. Co., No. 11-CV-01846-LHK, 2017 U.S. Dist. LEXIS 177199, at *111 (N.D. Cal. Oct. 22, 2017)

This test is short of a victory for either side. As Judge Koh notes, and as expected, the plaintiff bears the burden of persuasion on identifying both the relevant article of manufacture as well as the amount of total profit on the sale of that article. Id. If plaintiff succeeds in meeting both, only then does the burden shift to defendant to present evidence of an alternative article of manufacture and any deductible expenses. Id. at *111-12.

To date, it remains unclear whether this test will withstand scrutiny. That said, given that both Apple and Samsung suggested in their briefs at least some level of acceptance of the test, it is unlikely either party will challenge it. It is likely, however, that Apple and Samsung will settle their dispute short of another trial. A settlement means that, at least for now, the test will not be challenged. Since Judge Koh’s order is not binding on any court, it will be interesting to see whether other courts in the Northern District and within the Ninth Circuit will adopt the same test. But even then, short of an appeal to the Federal Circuit, the issue remains unresolved. For now, though, Judge Koh’s order provides some much-needed guidance.

A more promising appeal, however, comes from Columbia Sportswear North America, Inc. v. Seirus Innovative Accessories, Inc., Case No. 3:17-cv-1781-HZ (S.D. Cal. 2017), a Southern District of California design patent infringement case and the first case involving a jury verdict awarding damages after the Supreme Court’s Samsung decision. Like Judge Koh, Judge Marco Hernandez in Columbia Sportswear also adopted the DOJ’s test, and on September 29, 2017, the jury awarded Columbia $3 million in damages.

Judgement in Columbia Sportswear was entered on November 22, 2017. The parties have 30 days to appeal.

Stay tuned.

Filed under Patent, Patent Infringement

Further Venue Guidance for Patent Infringement Suits

By on October 6, 2017
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Author: Conor McElroy

As anticipated, the Supreme Court’s May 22, 2017 TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ____ (2017) ruling, which recognized 28 U.S.C. §1400(b) as the exclusive statute governing venue in patent infringement actions, has presented district and circuit courts with the opportunity to provide further guidance on §1400(b). Section 1400(b) states, “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Before TC Heartland, the vast majority of cases only addressed the first prong (“where the defendant resides”) due to the fact that the first prong’s standard was relatively easy to meet. Essentially, venue was proper anywhere a defendant was subject to personal jurisdiction. TC Heartland changed the analysis by determining that “resides” for purposes of §1400(b) only includes the state of incorporation. As a result, more litigants increasingly rely on the second prong (“where the defendant has committed acts of infringement and has a regular and established place of business”), which is therefore, being addressed and analyzed more by the courts.

On September 11, 2017, the U.S. District Court for the District of Delaware issued two decisions regarding venue challenges in patent cases. In Boston Sci. Corp. v. Cook Grp., Inc., No. 15-980-LPS-CJB, 2017 U.S. Dist. LEXIS 146126 (D. Del. Sept. 11, 2017) and Bristol-Myers Squibb Co. v. Mylan Pharms., Inc., No. 17-379-LPS, 2017 U.S. Dist. LEXIS 146372 (D. Del. Sept. 11, 2017), the District Court gave instructions on various aspects of post-TC Heartland §1400(b), including the burden of proof for a venue challenge, and whether TC Heartland effected an intervening change of law for waiver purposes. As for its analysis of the second prong of §1400(b), the court looked to the words of the statute, as well as some of the few decisions that applied the second prong, and determined that a permanent and continuous physical presence is required. In further elaborating, the Court noted circumstances that did not amount to a permanent and continuous presence. Specifically, simply doing business in a district or being registered to do business in a district, merely demonstrating that a business entity has sufficient “minimum contacts” with a district for purposes of personal jurisdiction, maintaining a website that allows consumers to purchase a defendant’s goods within the district, and simply shipping goods into a district are all insufficient to demonstrate that a defendant has a regular and established place of business in the district. In Boston Scientific, the court granted the defendants’ motion to transfer the case because there was not a regular and established place of business in Delaware, while in Bristol-Myers Squibb, the court ordered further discovery into how the defendant operated its business.

On September 21, 2017, the Federal Circuit also issued post-TC Heartland guidance. In In re Cray Inc., No. 2017-129, 2017 U.S. App. LEXIS 18398 (Fed. Cir. Sept. 21, 2017), the court reversed the District Court for the Eastern District of Texas’s denial of motion to transfer. In doing so, the court identified three general requirements relevant to the §1400(b) “regular and established place of business” venue inquiry. First, there must be a physical place in the district. This “place” need not be a formal office or store, but there must still be a physical, geographical location in the district from which the business of the defendant is carried out.” Therefore, mere virtual spaces or electronic communications do not meet the definition of “place.”

Second, the place must be a regular and established place of business. “Regular” means the business operates in a “steady, uniform, orderly, and methodical manner,” while “established” requires that the place in question must be “settled certainly, or fixed permanently.” Finally, the business must be “the place of the defendant.” In other words, “the defendant must establish or ratify the place of business.” Relevant considerations for this factor include whether the defendant owns or leases the place and whether the defendant conditioned employment on the employee’s continued residence in the place of business. In applying these venue requirements to the specifics of the case, the Federal Circuit found that the facts involving an employee’s home being located in the Eastern District of Texas “do not show that [the defendant] maintains a regular and established place of business in the Eastern District of Texas; they merely show that there exists within the district a physical location where an employee of the defendant carries on certain work for his employer.” Thus, the court ruled that case should have been transferred.

While the foregoing cases help to clarify how venue challenges in patent infringement cases may be evaluated, the question of proper venue is often a fact-specific inquiry. Nevertheless, as case law after TC Heartland grows, and as more and more §1400(b) challenges are litigated, the contours and confines of what the “regular and established place of business” prong requires will be clarified. But for now, TC Heartland and cases following it continue to adopt a more restrictive view on venue and the requirements for proper venue.

Filed under Patent, Patent Infringement

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