On Tuesday, the U.S. Supreme Court issued two important patent law opinions that relate to the inter partes review procedure introduced by the America Invents Act: Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, which upholds the constitutionality of inter partes review, and SAS Institute, Inc. v. Iancu, which requires the Patent Trial and Appeal Board to adjudicate the validity all patent claims challenged in a petition for inter partes review if the Board decides to adjudicate the validity of any claim challenged in that petition. Yesterday, the PTO issued a memo describing how pending trials will be conducted and how new petitions will be addressed in light of SAS Institute, but important questions remain.
In an application of 2017 U.S. Supreme Court precedent in Impressions Products, Inc. v. Lexmark Intern., Inc., the Northern District California in International Fruit Genetics LLC v. Orcharddepot.com, No. 4:17-cv-02905-JSW, recently denied a motion to dismiss a claim of patent infringement by holding that the patent exhaustion doctrine did not apply to a sale of a patented product that was outside the scope of the license granted by the patent owner. This decision helps inform how licenses may be interpreted post-Impression Products.
On Monday, November 27, 2017, the Supreme Court heard oral arguments in SAS Institute v. Matal.
Whether 35 U.S.C. § 318(a) requires that the Patent Trial and Appeal Board (PTAB or Board) issue a final written decision as to every claim challenged by a petitioner, or does it allow the Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner.
On September 14, 2012, ComplementSoft sued SAS in the Northern District of Illinois for infringement of U.S. Patent No. 7,110,936. On March 29, 2013, SAS filed a petition with the PTAB for inter partes review (IPR) of the ‘936 Patent, challenging patentability of all 16 claims of that patent. The PTAB instituted IPR as to 9 claims (1 and 3-10) of the ‘936 patent and on August 6, 2014 issued a final written decision under 35 U.S.C. § 318(a), holding that claim 4 was not invalid over prior art, whereas claims 1-3 and 5-10 were unpatentable. SAS’ request for rehearing before the Board was denied. On June 10, 2016, the 2-1 divided Panel of the Federal Circuit Rejected SAS’s argument that the Board must address all claims challenged in an IPR petition in its final written decision, and affirmed the PTAB’s decision, except vacated with respect to claim 4. The Panel consisted of Judges Stoll, Chen, and Newman, with Judge Newman dissenting in part. As Judge Stoll stated, there is “no statutory requirement that the Board’s final decision address every claim raised in a petition for inter partes review. Section 318(a) only requires the Board to address claims as to which review was granted.” The Federal Circuit reasoned that 35 U.S.C. § 314 and 35 U.S.C. § 318(a) are different and that § 318(a) “does not foreclose the claim-by-claim approach the Board adopted [in Synopsys] and in this case.” In a dissenting opinion, Judge Newman stated that 35 U.S.C. § 314(a) required USPTO either refuse to institute IPR entirely, or to review all challenged claims when “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”
We first covered the Supreme Court’s grant of certiorari in Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 137 S. Ct. 2239 (2017), a case with the potential to substantially alter the patent litigation landscape, back in June. On Monday, November 27, 2017 the Court heard oral arguments on whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) since September 16, 2012 to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum and without a jury.
Advocates and commentators on both sides of the argument weighed in extensively prior to Monday’s argument, culminating in almost 60 amicus curiae briefs, the most of any case this term. Parties urging the Court to reject Oil States’ argument included, for example, the Alliance of Automobile Manufacturers, GE, Apple, the Internet Association (which represents Amazon, Facebook and Google), and the current Solicitor General of the United States, Noel Francisco. On the other side, inventors, venture capitalists, law professors, the Pharmaceutical Research and Manufacturers of America, and the Biotechnology Innovation Organization, amongst others, urged the Justices to abolish inter partes review. Protesters, including some organized by websites such as www.usinventor.org, gathered outside the Court on Monday to support Oil States armed with signs stating “PTAB Kills American Dreams” and “Innovation: Don’t Kill it!”
In an interesting development in the post-TC Heartland world, it appears that the Federal Circuit will soon answer the question whether the Supreme Court’s venue decision was a change in the law, or merely a course-correction to honor preexisting law. Here, in a case arising out of the Eastern District of New York, the Federal Circuit ordered AlmondNet, Inc., Datonics, LLC, and Intent IQ, LLC to respond to a petition for a writ of mandamus submitted by Yahoo Holdings, Inc. In its petition, Yahoo argued that the District Court erred in denying its motion to transfer, and specifically that it waived the right to challenge venue on the basis that TC Heartland did not change the law of venue.
Following a lengthy and extensive litigation that began in 2011 that culminated in a U.S. Supreme Court decision in December of 2016, smartphone industry titans Apple and Samsung will again find themselves in Federal District Court Judge Lucy Koh’s courtroom on remand to determine appropriate damages for Samsung’s infringement of Apple’s design patents.
US Design Pat. No. 593,087
US Design Pat. No. 604,305
US Design Pat. No. 618,677
As we have written before, Apple originally filed this patent infringement action in the U.S. District Court for the Northern District of California in 2011, alleging that, in relevant part, Samsung’s smartphones infringed three of Apple’s design patents. Judge Koh presided over the dispute. The jury found infringement of all three design patents, and the district court entered final judgment awarding $399 million attributable to Samsung’s infringement of the design patents. The Federal Circuit upheld the lower court’s judgment on the amount of damages for infringement of the design patents, and Samsung filed a petition for certiorari to the Supreme Court seeking reversal.
The United States Supreme Court decided earlier this year that a 1957 opinion is still valid and still limits venue choices for patent infringement actions under 28 U.S.C. § 1400. See TC Heartland LLC v. Kraft Foods Group Brands LLC, 581 U.S. ___ (2017) (citing Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 226 (1957)). In its extensively-covered TC Heartland decision issued in May, the Court held that “[a]s applied to domestic corporations, ‘reside[nce]’ in § 1400(b) refers only to the State of incorporation,” where the accused infringer has a “regular and established place of business” in the venue. While framed as merely confirmation of precedent from the 1950s, many practitioners and commentators viewed this decision as a dramatic change in the patent litigation landscape.
Since TC Heartland came down, lower courts have applied the new paradigm in differing ways. As trends have developed in recent months, we thought it useful to provide a sampling of the various approaches to venue issues post-TC Heartland. These issues include, for example, whether defendants who did not contest venue prior to the TC Heartland decision waived the defense of improper venue because the case was—or was not—an “intervening change” in the law, and how to assess whether a defendant has regular and established place of business in a particular venue.
On August 25, 2017, the Patent Trial and Appeal Board issued a precedential opinion in Ex Parte McAward, reaffirming the Patent Office’s use of a lower pre-issuance threshold for indefiniteness distinct from the Supreme Court’s Nautilus standard.
A Tale of Two Standards
Under 35 U.S.C. § 112(b), the specification must conclude with “one or more claims particularly pointing out and distinctly claiming the subject matter” regarded as the invention. This definiteness requirement “secure[s] to the patentee all to which he is entitled” and “apprise[s] the public of what is still open to them.” Markman v. Westview Instruments, Inc., 517 U.S. 370, 373 (1996).
During examination, the Patent Office applies the broadest reasonable interpretation of a claim and thereafter determines indefiniteness using the In re Packard standard, in which a claim is indefinite when it contains words or phrases whose meaning is unclear. See In re Packard, 751 F.3d 1307, 1310 (Fed. Cir. 2014)(per curium).
After an eight-year battle through the Federal Courts, the fight over attorneys’ fees in Octane Fitness v. ICON Health & Fitness has likely reached its end with the Federal Circuit upholding the hotly disputed $1.6 million award to Defendant Octane Fitness. This case previously made it up to the Supreme Court, which overturned the Federal Circuit’s prior standard for determining exceptional cases under 35 U.S.C. § 285. Following a remand to the District Court applying the new totality-of-the-circumstances test established by the Supreme Court, the parties again appealed to the Federal Circuit.
The Supreme Court’s decision five months ago in TC Heartland v. Kraft Food Group Brands was a sea change in the way courts interpret venue for patent infringement cases. Since the Federal Circuit’s decision in VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990), venue in patent infringement cases has been determined using 28 U.S.C. § 1391(c), which equates a corporate defendant’s residence with personal jurisdiction. In TC Heartland, the Supreme Court effectively abrogated VE Holding by finding that a corporate defendant “resides” only in its State of incorporation for venue purposes.