The U.S. Patent and Trademark Office announced a propose change to the standard for construing both unexpired and amended patent claims in Patent Trial and Appeal Board (PTAB) proceedings under the America Invents Act (“AIA”). The change would replace the current Broadest Reasonable Interpretation (“BRI”) standard with the standard articulated in Phillips v. AWH Corp. 415 F.3d 1303 (Fed. Cir. 2005) (en banc). This change would harmonize the claim construction standard applied in inter partes review, post-grant review, and covered business method patent proceedings before the PTAB with the one used by federal district courts and the International Trade Commission. The proposed amendment would also allow the PTAB to consider any prior claim construction determination concerning a term of the involved claim in a civil action, or an ITC proceeding, that is timely made of record in an AIA proceeding.
Michael Newman is a Member in the firm and is based in our Boston office. His practice is focused on his work with the US International Trade Commission (USITC). His cases in federal courts also include patents, trade secrets, and other intellectual property matters. The areas of technology in which Michael has particular experience include biochemistry, biotechnology, chemistry, computer software, mechanical devices, medical devices, semiconductors, and converged devices. He was named a Massachusetts Super Lawyers Rising Star in Intellectual Property Litigation in 2013, 2014, and 2015.
The Court of Appeals for the Federal Circuit ruled in February that it was wrong for a judge to rule that a patent was ineligible under the Alice standard because there were underlying factual disputes that could not be resolved on summary judgement. The case is Berkheimer v. HP Inc., case number 17-1437, in the U.S. Court of Appeals for the Federal Circuit.
In its first en banc decision of 2018, the Federal Circuit held that “judicial review is available for a patent owner to challenge the U.S. Patent and Trademark Office’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review.” Wi-Fi One v. Broadcom (Fed. Cir. 2018) (en banc). The 9-4 decision overruled a contrary conclusion in Achates Reference Publishing v. Apple.
The United States Court of Appeals for the Federal Circuit’s recent decision in Aqua Products Inc., v. Matal materially changes the burden of proof associated with the patentability of amended claims during an inter partes review (“IPR”), shifting the burden from the Patent Owner seeking the amendment to the IPR Petitioner opposing it.
Prior to the Aqua decision, if a Patent Owner sought to amend claims during an IPR, the Patent Trial and Appeals Board (the “Board”) placed the burden on the Patent Owner to prove that the proposed amended claims were patentable. When Patent Owner Aqua attempted to amend its claims during an IPR challenge to its U.S. Patent No. 8,273,183, the Board found that Aqua had not met its burden and denied Aqua’s motion to amend.
New rules for patent cases in the Northern District of California will significantly affect litigation and settlement of cases in Silicon Valley’s backyard. Lawyers litigating cases in the district after the January 17, 2017 change should be wary of the new requirements that set the Northern District of California apart. These changes fall into three main categories.
The first change affects the initial Case Management Conference under Federal Rules of Civil Procedure 26. In the Case Management Statement, parties now must provide non-binding, good-faith estimates of the damages expected in the case, as well as an explanation for the estimates. Patent L.R. 2-1(b)(5). If a party cannot provide this information they must explain why, state what information they would need to do so, and state when the party believes they would be in a position to provide the estimate and explanation.
Two years after the Central District of California invalidated two 3-D animation patents under Section 101, the Federal Circuit reversed that court’s decision, finding that the lower court oversimplified the claims of a computer-related invention. McRO, Inc. v. Bandai Namco Games Am. Inc., Nos. 2015-1080, et al., 2016 U.S. App. LEXIS 16703 (Fed. Cir. Sep. 13, 2016) (opinion by Judge Reyna, joined by Judges Taranto and Stoll). While this case has stimulated discussion in the legal community, as being a ground-breaker for the patentability of software patents since the Supreme Court’s decision in Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014), the Federal Circuit’s McRO decision conforms with existing principles in post-Alice Section 101 law. While the Federal Circuit disagreed with the lower court in applying these principles to the facts of this case, the McRO decision does not change the core principle that patent claims directed to specific improvements in computer technology are patent-eligible.
The patents at issue in McRo (U.S. Patent Nos. 6,307,576 and 6,611,278) involve 3-D computer animation. Their specifications describe that in the relevant art, applying the appropriate data points for basic sound phonemes, e.g. ‘aah,’ ‘ee,’ or ‘oo,’ was usually done using a “keyframe” approach. McRO, 2016 U.S. App. LEXIS 16703 at *7. In a keyframe approach, an animator sets the morph weights at certain important times, between which a computer program “interpolates” (filling in the data points between those morph weights). Id. at *8. The patents state that this method requires the animator to manually set a tediously high number of keyframes, which is time consuming, and can be inaccurate. Id.
Several months ago, we were struck with the question of whether, as counsel for a patent owner at the ITC, our clients’ case would benefit from a Markman hearing. Claim construction during an ITC investigation was routinely performed as part of the evidentiary hearing in an investigation, rather than as part of earlier Markman proceedings. This has now changed. Recently appointed ALJs at the ITC have been trending towards conducting Markman hearings rather than pushing claim construction to the final hearing. This new trend has resulted in additional litigation strategy considerations at the ITC, regarding whether Markman hearings are beneficial, or detrimental, and what affect the increase in Markman hearings have on investigations.
Claim construction will occur at some point in any patent-based ITC investigation. From a patent owner’s perspective, the question is whether having a Markman hearing at the ITC will be helpful. A negative claim construction order, especially early in the investigation, may imperil the ability to reach the evidentiary hearing as an adverse ruling could result in summary determination. In contrast, a favorable claim construction order could result in added pressure for settlement.
Think you’ve won on validity at the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) and your claims are safe on appeal? “Not so fast,” says the Federal Circuit in Software Rights Archive, LLC v. Facebook Inc., Nos. 2015-1649 through 2015-1563 (Fed. Cir., Sep. 9, 2016) (nonprecedential) (per curiam).
In Software Rights, patentee Software Rights Archive appealed an Inter Partes Review (IPR) decision finding four independent claims across two patents invalid (two claims in each patent). Facebook, LinkedIn, and Twitter cross-appealed, arguing that further claims should not have been held patentable.
The Federal Circuit panel majority, performing its own analysis of the prior art, agreed with Facebook that several additional claims in the patents were anticipated and rendered obvious over the cited prior art.
On December 17, 2015, Judge Rodney Gilstrap of the Eastern District of Texas (EDTX) ruled that, in light of Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014) (“Alice”), a plaintiff’s position on the validity of the patent-in-suit under § 101 was “objectively unreasonable” and that the harm to the defendants was compounded by the plaintiff litigating in “an unreasonable manner[,]” meriting an award of attorneys’ fees under 35 U.S.C. § 285. eDekka LLC v. 3balls.com, Inc.et al., C.A. Nos. 2:15-cv-541 and 2:15-cv-585 (Dec. 17, 2015). Judge Gilstrap, who presides over the busiest patent docket in the country, found “a clear need to advance considerations of deterrence” in light of eDekka’s “unreasonable § 101 positions and vexatious litigation strategy.”
The ruling provides useful guidance on what constitutes an “exceptional case” under § 285, particularly in the wake of Alice and its progeny. Practitioners in EDTX should pay particular attention, given that up until now, judges in EDTX have found a low proportion of software patents invalid under § 101 and have granted few exceptional case motions.
2015 was a busy year for post-grant review appeals at the Federal Circuit and produced notable opinions in the areas of claim construction, IPR procedural issues, and the constitutionality of IPRs in general. In 2015, the Federal Circuit reversed the Board’s claim construction in an IPR for the first time, and found that IPRs do not violate Article III and the Seventh Amendment of the Constitution. Below is a summary of some of the most important Federal Circuit decisions of the year regarding post-grant proceedings.