There have been some interesting recent developments, both at the Federal Circuit and the USPTO, regarding subject matter eligibility for patenting as it relates to computer-implemented inventions, software, and other technologies that have been heavily impacted over the past two years by the U.S. Supreme Court’s decision in Alice v. CLS Bank.

For our client alert on May 2016 guidance, please click here.

For our May 17 blog post on the latest post-Alice guidance from the Federal Circuit, please click here.

“You sued them.  They stay, period.” This is the conclusion a Texas trial court came to when asked to exclude the designated representative of a party from a hearing where an employee of the other party, a direct competitor, would disclose his employer’s trade secrets. In a case involving misappropriation of trade secrets between direct competitors M-I Swaco (“M-I”), a subsidiary of Schlumberger, and National Oilwell Varco (“NOV”), the trial court held that to exclude NOV’s designated representative from hearing a disclosure of M-I’s trade secrets would be a “total violation of due process.” On May 20, 2016, the Texas Supreme Court disagreed. See In re M-I L.L.C., No. 14-1045, 2016 Tex. LEXIS 389 (May 20, 2016).

M-I and NOV complete in the business of providing mesh screen filters that filter out solid matter in drilling fluid used in oil drilling, a business area known as solid-control. The dispute at issue originated when Jeff Russo, M-I’s former business development manager, accepted a new position with NOV. M-I alleges that Mr. Russo had in-depth knowledge of M-I’s solid-control business, bidding strategies, pricing information, customer preferences, solid-control systems, and deployment strategies. M-I sought injunctive relief, and during an August 28, 2014 hearing on an application for a temporary injunction, it requested to exclude everyone from the courtroom except the parties’ respective counsels, experts, and testifying witness. NOV’s designated representative, Federico Mezzatesta, would be included in the group to be excluded. The trial court denied the request, and M-I petitioned the court of appeals for a writ of mandamus, which was denied. M-I then petitioned the Texas Supreme Court for mandamus relief challenging the trial court’s refusal to exclude Mr. Mezzatesta from the temporary injunction hearing.

Continue Reading Competitors in the Courtroom: When to Exclude a Party’s Designated Representative from Hearing a Competitor’s Trade Secrets

On Thursday, May 12, 2016, the Federal Circuit reversed a lower court’s finding of invalidity under 35 U.S.C. § 101, as an unpatentable abstract idea, of a software patent concerning a “self-referential” database in Enfish v. Microsoft. In so doing, the Federal Circuit provided some helpful guidance on avoiding Alice rejections for software patents.  This is only the second §101 decision from the Federal Circuit in a high tech case since the Supreme Court’s Alice v. CLS Bank decision in June, 2014 that has upheld the validity of a patent.

Importantly, in Enfish the Federal Circuit gave teeth to the first step of the test developed by the Supreme Court in Mayo v. Prometheus, which was adopted in Alice as the standard for analysis of subject matter eligibility.  In the nearly two years since the Supreme Court’s Alice decision many district courts, Patent Trial and Appeal Board (PTAB) panels, and Patent Examiners have generally considered the inquiry required by this first step – whether the challenged claims cover an abstract idea (and are therefore directed to ineligible subject matter absent the presence of “significantly more” in the claim) – to be met in software cases.

Continue Reading Latest Post-Alice Guidance from the Federal Circuit

On May 11, 2016, President Obama signed the Defend Trade Secrets Act (DTSA) into law. This important new legislation creates a federal private civil cause of action for trade secret misappropriation in which “[a]n owner of a trade secret that is misappropriated may bring a civil action . . . if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” Defend Trade Secrets Act of 2016, S. 1890, Sec. 2. The statute does not preempt existing state trade secret law regimes, but will exist in parallel, adding an enhanced toolbox of options for American companies’ enforcement of their intellectual property rights.

One provision of the new DTSA that has generated much commentary in the run up to its enactment is the new civil seizure mechanism established by the statute. This mechanism allows a court to “issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” The civil seizure process will allow American companies who are aware of a potential misappropriation of their trade secrets to quickly prevent further exposure of proprietary information during the pendency of a formal DTSA case.

Continue Reading Protections of the Newly Enacted Defend Trade Secrets Act

The Defend Trade Secrets Act (DTSA) is now one signature away from becoming law. On April 4, 2016, the Senate unanimously passed the DTSA and, last week, on April 27, the House of Representatives followed suit, passing the DTSA by a vote of 410-2. The DTSA thus has wide bipartisan support and President Obama, who expressed his own strong support for the bill, is expected to sign the bill into law in the near future.

Once enacted, the DTSA will create a federal private civil cause of action for trade secret misappropriation. Under the DTSA, “[a]n owner of a trade secret that is misappropriated may bring a civil action . . . if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.” Defend Trade Secrets Act of 2016, S. 1890, Sec. 2. Civil remedies for trade secret misappropriation have previously been a matter of state law, but, with the passage of the DTSA, an additional avenue of redress will be made available for a party seeking to remedy improper acquisition of its trade secrets. The DTSA gives United States district courts original jurisdiction over actions under the statute. The statute will not preempt existing state trade secret laws, but will exist in parallel, adding an enhanced toolbox of options for American companies’ enforcement of their intellectual property rights.

Below is an explanation of some of the salient provisions of the DTSA that American companies should be aware of as the DTSA moves onto the President’s desk. We will be monitoring DTSA jurisprudence following its enactment and will provide continuing commentary on the new law – check back for regular updates.

Continue Reading Explaining the Provisions of the Defend Trade Secrets Act

Summary: Appellant appealed to the Patent Trial and Appeal Board (“Board”) an obviousness rejection to claims directed to a user interface that displays currency trading information.  Appellant argued in the appeal that the references cited by the Examiner to form the obviousness rejection failed to teach all of the features recited in the claims, whether taken alone or in combination.  The Board overturned the rejection earlier this year in Ex parte Breitenbach, concluding that the combining of the references cited by the Examiner was improper.  No argument was presented by the Appellant to the Board relating to the improperness in combining the references.  This case provides a reminder that such arguments are not futile on appeal.

A closer look at this case follows.

The independent claim on appeal recites (with emphasis added):

  1.  A system comprising at least one computing device coupled to a plurality of other computing devices, the at least one computing device operable at least to:

retrieve market data for a plurality of risk reversals for a currency pair at a first time, at least one of the risk reversals having a first maturity and at least a second risk reversal having a second maturity different than the first;

determine a currency in which to quote skew for each of the risk reversals;

communicate to and therewith causing an interface screen to be displayed at least one of the other computing devices a listing comprising the first and second risk reversals, the market data, and an indication of the determined skew for each of the risk reversals;

retrieve market data for at least one of the first and second risk reversals at a later time;

determine that there has been a change in skew, based on the later retrieved market data, of the at least one of the first and second risk reversals; and

communicate to and therewith refresh the interface screen displayed at the at least one other computing device the later retrieved market data and an indication of the change in skew of the at least one of the first and second risk reversals.

Continue Reading Not Obvious to Combine for a Person of Ordinary Skill in the Art (POSITA)

shutterstock_197051783On Tuesday, April 26, 2016, the Federal Circuit issued an order denying a petition filed by Merck & Cie for rehearing en banc of an Inter Partes Review (“IPR”) final written decision by the Patent Trial and Appeal Board holding several Merck patents invalid as obvious.  Merck & Cie v. Gnosis S.P.A. et al., Case No. 2014-1779 (Fed. Cir., Apr. 26, 2016).  While sympathetic to the challenge that a patentee faces in defending patent validity on appeal under the lower “substantial evidence” standard, the Court affirmed its December 2015 ruling in Merck & CIE v. Gnosis S.P.A. et al., Case No. 2014-1779 (Fed. Cir., Dec. 17, 2015) that the “substantial evidence” review standard applies to post-grant review decisions by the Board.

In reaching its decision, the Court found itself bound by its In re Gartside precedent requiring that agency factual findings are to be reviewed for “substantial evidence.”  Writing for the Court majority, Judge O’Malley explained that applying the “substantial evidence” standard to Board decisions is dictated by 5 U.S.C. § 706 of the Administrative Procedure Act and the U.S. Supreme Court’s ruling in Dickinson v. Zurko, 527 U.S. 150 (1999) that a more searching review for “clear error” applies only to “court/court” review and not “court/agency” review.  Under the “substantial evidence” standard, the Court only inquires whether the agency could have reasonably made its decision as opposed to correctly made the decision given relevant evidence.

Continue Reading Between a Rock and a Hard Place: Federal Circuit Says Its Required to Accord the PTAB Deference Until Instructed Otherwise by SCOTUS or Congress

shutterstock_287304806On March 23, 2016, the Federal Circuit in MAG Aerospace Indus., Inc. v. B/E Aerospace, Inc., Nos. 2015-1370, -1426, upheld a decision concerning U.S. patents directed to vacuum toilets found on commercial aircraft. In its opinion, the Federal Circuit provided guidance on when assignor estoppel may prevent an accused infringer from challenging a patent’s validity and enforceability.

MAG Aerospace Industries, LLC (“MAG”) had sued B/E Aerospace (“B/E”) alleging infringement of patents for “technology that facilitates maintenance and service of vacuum toilets and minimizes vehicles downtime through the use of toilet components that are ‘line replaceable units.’” The inventor of the patents at issue, who currently works for B/E, had assigned the patents-in-suit to his previous employer, who had in turn assigned them to MAG. Based on these facts, the United States District Court for the Central District of California granted summary judgment that the inventor was in privity with B/E and that assignor estoppel thus barred B/E from attacking the validity of the patents. The district court also granted B/E’s motion for summary judgment of non-infringement on all patents.

MAG appealed the summary judgment finding, and B/E appealed the finding of assignor estoppel. After addressing (and affirming) the district court’s non-infringement judgment, the Federal Circuit provided a helpful summary and analysis of the doctrine of “assignor estoppel,” ultimately upholding the district court’s application of assignor estoppel to B/E’s invalidity defenses.

Continue Reading Federal Circuit Flushes Appeal Relating to Infringement of Airline Toilet Patents; Waives-Off Challenge to Finding of Assignor Estoppel

Business_CheckList2On April 22, 2016, a three judge panel of the United States Court of Appeals for the Federal Circuit, consisting of Judges Prost, Dyk and O’Malley, affirmed a district court’s decision to dismiss as moot a patent case involving only cancelled claims.

In Target Training Int’l, Ltd. v. Extended DISC North America, Inc., Case Nos. 2015-1873,  2015-1908, Plaintiff Target Training International, Ltd. (“TTI”) accused Extended DISC North America, Inc. (“EDNA”) of infringing U.S. Patent No. 7,249,372 (the “’372 Patent”) directed to  processing and distributing reports over a network in response to receiving input from a user.

After the lawsuit commenced, EDNA’s franchisor, Extended DISC International Oy Ltd (“EDI”) requested ex parte reexamination of all the claims (1-11) of the ’372 Patent.  The U.S. Patent and Trademark Office (“USPTO”) granted the request and the litigation was ultimately stayed pending the resolution of the reexamination.  Before the stay was entered, however, TTI had served its preliminary infringement contentions asserting claims 1, 2 and 5-11 of the ’372 Patent against EDNA.

Continue Reading Failure to Update Infringement Contentions with New Reexamination Claims Fatal for Patentee

In almost every U.S. patent suit, the patentee’s counsel considers how the case could have been facilitated had the patent at issue been drafted and prosecuted differently.  These considerations demonstrate that patents should be drafted and prosecuted with an eye toward the possibility of litigation.  There have been several landmark decisions in patent cases that directly impact patent prosecution.  This article analyzes some of those decisions in chronological order to provide suggestions for a patent prosecutor in drafting or prosecuting a patent application.

  • The term “invention” should be cautiously used in the description section of the specification and during prosecution.

The implementation protected by a patent is set forth in the claims.  Prosecutors have traditionally used the term “invention” in the specification and during prosecution to highlight aspects of the claimed implementation.  In 2007, the Federal Circuit, however, noted in Verizon v. Vonage that “[w]hen a patent … describes the features of the present invention as a whole, this description limits the scope of the invention.”

As the scope of the patent is well understood to be defined by the claims, this Federal Circuit ruling indicates that the use of the term “invention,” even when used in the specification or during prosecution, can narrow the scope of the claims.  To avoid the issue of whether each disclosed “invention” limits the claims during a possible infringement suit, prosecutors should typically avoid use of the tem “invention” throughout drafting and prosecution.

Continue Reading Key Lessons from Patent Litigation for Drafting and Prosecuting Utility Patent Applications