MVS Filewrapper® Blog: Update on "Patent Troll" Legislation in the Wake of the 2014 Elections

Post by Luke Holst

In December of 2013, the U.S. House of Representatives passed H.R. 3309, the "Innovation Act," ostensibly to address the problem of abusive patent litigation, sometimes referred to as patent trolling.  While H.R. 3309 passed with bipartisan support by an overwhelming margin of 325-91 votes, its companion bill failed to clear the Senate.  Failure of the Senate bill is attributable to removal of controversial fee-shifting language from H.R. 3309 by Judiciary Committee Chairman Patrick Leahy, D-Vt. The fee-shifting provisions required losing parties in patent litigation to pay their opponent's legal fees—a situation critics argued would discourage the filing of meritorious patent suits by small businesses.  After votes on the Senate counterpart bill stalled repeatedly, Senator Leahy withdrew the bill from the Senate Judiciary Committee's agenda last May.

 

In the wake of the 2014 midterm elections, Republicans have vowed to take up the legislation again early in 2015.  House Judiciary Committee Chairman Bob Goodlatte, R-Va., recently stated that a new version of the Innovation Act, and two companion bills addressing trade secret protections, should be reintroduced in the U.S. House of Representatives in January and pass with bipartisan majorities.  The trade secrets legislation looks to create private civil trade secret misappropriation lawsuits under the federal Economic Espionage Act, which currently only allows prosecutors to bring criminal cases.  On the Senate side, Senator Charles Grassley, R-Ia., is expected to replace Leahy as Chairman of the Judiciary Committee as the Republicans take over the Senate majority in January.  Senator Grassley has signaled his intention to make patent reform a priority in the new Congress and believes patent reform can be accomplished early next year.  In addition, the White House has signaled its support for legislation curbing abusive patent litigation, signaling that this may be an issue for which meaningful legislative action could be seen during the 2015 term.

 

 

MVS Filewrapper® Blog: USPTO Releases New Guidelines on Patent Subject Matter Eligibility

Post by Dan Lorentzen

The USPTO today released new Guidance on Patent Subject Matter Eligibility.  The new guidance comes nearly 9 months after the first set of "2014 Procedure For Subject Matter Eligibility Analysis Of Claims Reciting Or Involving Laws Of Nature/Natural Principles, Natural Phenomena, And/Or Natural Products"  were released in March 2014.  The March guidelines sought to implement new procedures to address changes in the laws relating to patent subject matter eligibility under 35 U.S.C. § 101 in light of the Supreme Court's decisions in Association for Molecular Pathology v. Myriad Genetics, Inc. and Mayo Collaborative Services v. Prometheus Laboratories, Inc. However, a new set of guidelines have been expected based on the more recent Supreme Court decision in Alice Corporation Pty. Ltd. V. CLS Bank International, and based on numerous comments and criticisms of the original guidelines. 

 

The new guidance presents a number of changes in relation to the March guidelines.

The new guidance also includes a new set of examples for "Nature-Based Products."  These examples replace the set of examples that were included with the March guidelines.  Additional explanatory example sets relating to claims that do and do not amount to significantly more than a judicial exception are apparently being developed to be issued at a future date.

 

A more detailed discussion of the new guidelines is forthcoming.

 

 

 

 

MVS Filewrapper® Blog: Shifting Pre-Trial Strategy in the Wake of Alice and Ultramercial

Post by Paul S. Mazzola

 

Four recent Supreme Court cases involving patentable subject matter under 35 U.S.C. § 101 (Bilski v. Kappos, Mayo Collaborative Services v. Prometheus Laboratories, Inc., Ass'n for Molecular Pathology v. Myriad Genetics, Inc., and Alice Corp. v. CLS Bank International ) have had the practical effect of heightening the standard for patentability.  However, these cases may also be altering the way patent cases are handled in their early stages.

 

The Federal Circuit recently decided the case of Ultramercial, Inc. v. Hulu, LLC for a third time.  The case was originally filed in the Central District of California in 2009. Initially, the district court granted the defendant's pre-answer motion to dismiss under Rule 12(b)(6), finding the patent at issue did not claim patent-eligible subject matter.  In the first appeal, the Federal Circuit reversed the district court, and the Supreme Court vacated the decision of the Federal Circuit for further consideration in light of Mayo. On remand, the Federal Circuit again reversed the district court, finding it was improper to dismiss the suit by granting a Rule 12(b)(6) motion.  To that end, the court made several compelling statements regarding the interplay between such motions and the § 101 analysis.  The court stated, "[I]t will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter."  The court reasoned that issued patents are presumed to be valid, and "the analysis under § 101, while ultimately a legal determination, is rife with underlying factual issues." Adding that claim construction should be required if there are factual disputes, the court succinctly stated, "Rule 12(b)(6) dismissal for lack of eligible subject matter will be the exception, not the rule."

 

After a second petition for certiorari was filed with the Supreme Court, the Court decided Alice.  The holding in Alice—that an abstract idea is not patent eligible subject matter if "merely requires generic computer implementation"—was squarely relevant to the patent at issue in Ultramericial, leading the Supreme Court to again vacate the decision of the Federal Circuit for further consideration in light of Alice.

 

In applying Alice to the patent at issue in Ultramericial, the Federal Circuit held that the claims do not recite patent-eligible subject matter under § 101, but affirmed the motion to dismiss under Rule 12(b)(6).  In doing so, the court deviated sharply from the decisive language from its previous decision, but dedicated no discussion to reconcile why a motion to dismiss is the appropriate mechanism to dispose of a suit involving an issued patent in an infringement suit presumably "rife with underlying factual issues."  However, the concurring opinion of Judge Mayer was almost entirely devoted to this issue.  "First, whether claims meet the demands of 35 U.S.C. § 101 is a threshold question, one that must be addressed at the outset of litigation.  Second, no presumption of eligibility attends to the section 101 inquiry."  Describing section 101 as a "gateway" and a "sentinel" akin to establishing jurisdiction, Judge Mayer forwarded three benefits of resolving any issue of patentable subject matter at the outset of litigation: conserving judicial resources, thwarting vexatious infringement suits, and protecting the public. In addressing the district court opinion, Judge Mayer stated, "No formal claim construction was required because . . . no 'reasonable construction would bring the claims within patentable subject matter.'"  Regarding the presumption of validity for issued patents requiring clear and convincing evidence to the contrary, Judge Mayer noted "the PTO has for many years applied an insufficiently rigorous subject matter eligibility standard." Thus, Judge Mayer found, "[T]he district court properly invoked section 101 to dismiss Ultramercial's infringement suit on the pleadings."

 

Given the apparent shift by the Federal Circuit toward resolving issues of patent-eligible subject matter at the pleadings stage, defendants of infringement suits involving uncertain subject matter eligibility are more likely to use a motion to dismiss to try to avoid costly discovery and claim construction.  The opportunity for an alleged infringer to undercut an infringement suit at the pleadings phase may also impact litigation strategy, including whether such a motion should be pursued in conjunction with other mechanisms such as post-grant proceedings before the Patent Trial and Appeal Board.

 

 

 

MVS Filewrapper® Blog: USPTO Publishes its 2014 Patent Public Advisory Committee Annual Report

By Jonathan Kennedy

The Patent Public Advisory Committee (PPAC) for the USPTO published its Annual Report for the 2014 fiscal year.  The annual report is directed to the President of the United States and addresses many issues faced in the previous fiscal year, summaries of goals met, and recommendations for the future. 

The 2014 report expressed concerns over the effect of sequestration and the USPTO's budget.  At the end of the 2014 fiscal year, the USPTO netted $129 million in fees.  The report notes the USPTO's continued concern over high user fees and beginning in the 2015 year is conducting a biennial fee review to assess any chilling effect on innovation and disclosure due to patent office fees.  This will include an assessment of whether the fees are commensurate with the USPTO's projected needs. 

The 2014 report discussed many goals that were achieved during the 2014 fiscal year including a significant reduction in the backlog of Requests for Continued Examination (RCEs).  Between October 2009 and March 2013, the number of RCEs awaiting examination grew from approximately 17,000 to over 110,000.  As of October 2014, this number has been reduced to 46,441.  The PPAC recommends that the Office establish a goal that all RCEs be examined within four months at the latest—four months is currently the average for when an RCE is examined.  This would help to progress the examination of applications.

The 2014 report also highlights the importance of some programs instituted by the USPTO to decrease patent pendency.  During the 2014 fiscal year total patent application pendency was reduced to an average of 27.4 months.  Specifically the report highlights the use of the After Final Consideration Pilot 2.0, Track One Prioritized Examination, Patent Prosecution Highway (see our recent series on ways to accelerate examination, which addresses both the Track One Prioritized Examination and Patent Prosecution Highway and other programs), and the Quick Path Information Disclosure Statement (QPIDS).  The report notes that QPIDS allows applicants to have new prior art considered by the USPTO without the need for an RCE after payment of the issue fee.  In the 2014 fiscal year there were 2,241 QPIDS requests filed and 1,934 continued on to issue with an RCE.  This program appears to be quite effective.

The report also addressed the opening of satellite offices in Denver, Colorado, Silicon Valley, California, and Dallas Texas, in addition to the satellite office already opened in Detroit, Michigan.  The USPTO hired an additional 137 patent examiners and 47 judges.  Further, the report notes an additional 112 examiners are expected to be hired in the 2015 fiscal year.  At the end of the 2014 fiscal year, the Patent Trial and Appeal Board (PTAB) had 214 judges. 

The report notes that the PTAB was kept busy during the 2014 fiscal year with appeals from examination and post-grant proceedings.  The PTAB affirmed or affirmed-in-part  67%, reversed 30%, and remanded or dismissed 3% examiner decisions on appeal.  Since the inception of the America Invents Act, the PTAB has received 2,082 petitions for post-grant proceedings—1,841 inter partes review petitions, 233 covered business method petitions, 2 post-grant review petitions, and 6 derivation proceeding petitions.   The report notes the vast majority of petitions related to the electrical and computer software arts at 71.6% of petitions.

BlogCFC was created by Raymond Camden. This blog is running version 5.8.001.