MVS Filewrapper® Blog: Critical Versus Optional, but Desireable Claim Elements

On August 6, 2014, the Federal Circuit Court of Appeals issued its opinion in ScriptPro, LLC v. Innovation Associates, Inc. In 2006, the Petitioner ScriptPro, LLC sued Innovation Associates, Inc. for infringement of claims 1, 2, 4, and 8 of U.S. Patent No. 6,910,601 ("the '601 patent").  The '601 patent describes a "collating unit" that uses sensors to automatically dispense and organize prescriptions according to individual patients.  Shortly after the lawsuit was filed, Innovation Associates filed an Inter Partes Reexamination with the USPTO, and the district court stayed the proceedings pending the result of the re-exam.  In January of 2011, the USPTO concluded its reexamination of the claims of the '601 patent, confirming claims 1, 2, 4, and 8. 

 

The district court resumed proceedings and Innovation Associates moved for summary judgment, arguing that the claims were invalid under section 112 on the grounds that the patent's specification did not describe the subject matter of the asserted claims.  The claims at issue did not require the use of sensors.  However, the district court agreed with Innovation Associates that the specification of the '601 patent implied that the use of "sensors" is critical to the functionality of the machine. Specifically, the court held, "no reasonable jury could find that the inventors were in possession of a collating unit that operated without sensors." Accordingly, the district court granted Innovation Associate's motion for summary judgment of invalidity for failure to satisfy the written description requirements of § 112. 

 

On appeal, the Federal Circuit reviewed de novo the language of the specification and—after pointing to several places in the specification suggesting the sensor may or may not be used—found that the wording of the specifications made the sensors an "optional, though desirable," feature of the invention.  The Court also pointed to the original claims as filed and noted "[w]hen a specification is ambiguous about which of several features are stand-alone inventions, the original claims can help resolve the ambiguity, though even original claims may be insufficient as descriptions or be insufficiently supported by the rest of the specification."  The Federal Circuit reversed the grant of summary judgment holding that, ScriptPro could establish that a person of skill in the art would be able to tell from description of the specification that "the inventor[s] actually invented the invention claimed."  The Court concluded that, although the machine would be more efficient with the sensors, it could be fully functional without them and, therefore, the written description was sufficient.

MVS Filewrapper® Blog: Federal Circuit Invalidates Patent Claims As Non-Patentable Subject Matter

The U.S. Court of Appeals for the Federal Circuit's recent decision in Digitech Image Technologies v. Electronics for Imaging, Inc., upheld a decision that patent claims directed to a collection of numerical data that lacks a physical component or manifestation as well as an abstract idea of organizing data through mathematical correlations are invalid.

 The plaintiff, Digitech Image Technologies, filed infringement suits against 32 defendants in the U.S. District Court for the Central District of California, asserting claims of U.S. Patent No. 6,128,415 ("the '415 patent"). The '415 patent disclosed an "improved device profile" that describes spatial and color properties of a device within a digital image processing system and "includes both chromatic characteristic information and spatial characteristic information." The district court concluded that the "device profile" claims were directed to a collection of numerical data that lacks a physical component or physical manifestation and that a "device profile" is nothing more than information, thus not falling into one of the categories of eligible subject matter under 35 U.S.C § 101. Furthermore, the district court concluded that the asserted method claims for generating a device profile encompass the abstract idea of organizing data through mathematical correlations were also ineligible under § 101.

On appeal, Digitech asserted that the district court erred in its findings that both the "device profile" and method claims were invalid. With regard to the "device profile" claims, the Court of Appeals stated that for under § 101, for all categories except process claims, the eligible subject matter must exist in some physical or tangible form. Here the "device profile" is comprised of two sets of data that describe a device dependent transformation—one set of data for color information and the other set of data for spatial information. Though Digitech argued that the "device profile" is hardware or software within a digital image processing system, the Court of Appeals concluded that the claims' only description of the device profile relates to the two sets of data and that data in its non-physical form simply does not fall under § 101.

Additionally, the Federal Circuit concluded that the '415 patent's method claims were drawn to an abstract idea because it describes a process of organizing information through mathematical correlations and is not tied to a specific structure or machine. The Court reasoned that without additional limitations, the employment of a mathematical algorithm to manipulate existing information in order to generate additional information is not eligible for patent protection.  Specifically, the claim stated a process of combining two data sets into the "device profile" and was "so abstract and sweeping" as to cover any and all uses of a "device profile."

 The full opinion is available here: http://www.cafc.uscourts.gov/images/stories/opinions-orders/13-1600.Opinion.7-9-2014.1.PDF

MVS Filewrapper® Blog: Court of Federal Claims Confirms Payment of Maintenance Fees Still Required

A recent decision by the U.S. Court of Federal Claims ("CFC") has upheld the statutorily-mandated maintenance fees required by the USPTO in order to keep issued patents in force.   The owner of an issued patent must pay maintenance fees to the USPTO three times during the lives of their issued patents to keep them in force: at three years and 6 months after grant, at seven years and 6 months after grant, and at eleven years and 6 months after grant.  If a patent holder fails to pay maintenance fees within six months of the statutory deadlines, their pertinent patent expires.

 

The plaintiff, Teresa Lucree, failed to pay the third and final maintenance fee due on U.S. Patent No. 5,781,732.  As a result, the patent expired after only 12 years—8 years before the anticipated expiration date.  After the patent had expired due to non-payment, Lucree filed suit challenging the constitutionality of maintenance fees and Congress's ability to attach conditions to patents that have been issued, asserting that such conditions violate the property interests of patent holders in their patents by enabling the government to take their patents before their expiration date and place them in the public domain.  Lucree sought relief for the early expiration of her patent under the Fifth Amendment’s takings clause, which prohibits “private property [from] be[ing] taken for public use, without just compensation.”  The government in turn sought dismissal of the suit, arguing that post-issuance conditions, such as maintenance fees, are a constitutional exercise of Congress’s well-settled authority to legislate patent fee requirements.

 

In granting the motion to dismiss, the CFC noted the broad terms of Article 1, Section 8, Clause 8 of the U.S. Constitution (the "Intellectual Property Clause") granting Congress the authority to pass laws related to the promotion of progress in "science and the useful arts."  The CFC concluded that requiring the payment of maintenance fees is at least rationally related to the directives of the Intellectual Property Clause, and therefore constitutional. 

 

The CFC also concluded that the expiration of a patent for failure to pay maintenance fees does not constitute a taking under the Fifth Amendment.  The property interest in a patent is subject to the terms and conditions as set by Congress, and early expiration for failing to pay maintenance fees is merely a consequence of failure to meet those conditions. 

 

The full opinion is available here.  

MVS Filewrapper® Blog: USPTO Patent Invalidation Precludes Judicial Equitable Remedies and Sanctions

The U.S. Court of Appeals for the Federal Circuit has issued a decision in ePlus, Inc. v. Lawson.  ePlus sued Lawson asserting infringement of two patents—U.S. Patent Nos. 6,023,683 ("the '683 patent") and 6,505,172 ("the '172 patent").  At trial, the district court held two of ePlus's asserted system claims and three of ePlus's asserted method claims not invalid, and the jury found those same claims infringed by Lawson. 

 

The district court entered an injunction against Lawson, precluding Lawson from "directly or indirectly making, using, offering to sell, or selling within the United States or importing into the United States any of the [adjudged infringing] product configurations and/or installation, implementation, design, configuration, consulting, upgrade, maintenance and support and training and other related and associated services and any colorable variations thereof (the “Infringing Products and Services”)." Lawson appealed, and the Federal Circuit reversed in part, holding the system claims invalid and two of three method claims not infringed.  The Federal Circuit remanded the case to district court to modify the injunction accordingly.

 

On remand the district court modified the injunction so that it only applied to infringement of claim 26 of the '683 patent—the sole remaining method claim.  Further, the district court found Lawson in civil contempt for violating the injunction.  Lawson appealed both the injunction and the contempt order.  While the appeal was pended, the United States Patent and Trademark Office ("USPTO") completed a reexamination of the '683 patent and determined that the sole remaining claim from the litigation—method claim 26—was invalid and cancelled.  In a separate appeal, the Federal Circuit affirmed the USPTO's invalidity determination.  Thus, the present appeal presented two questions:  (1) whether the district court’s modified injunction against Lawson should be set aside in light of the PTO's cancellation of the patent claim on which it was based; and (2) whether the civil contempt sanctions should be set aside. 

 

The Federal Circuit held there was no sufficient legal basis to maintain the injunction and that it must be set aside.  In support of this holding, the Federal Circuit noted, "It is well established that an injunction must be set aside when the legal basis for it has ceased to exist. . . .  Our court has applied these principles to an injunction barring infringement of patents later found to be invalid."  Because the sole remaining claim upon which the injunction was based had been invalidated—by the PTO; affirmed by the Federal Circuit—there was no legal basis for maintaining the injunction.

 

The Federal Circuit also held that the civil contempt sanctions should be set aside.  This was, in part, due to the fact that the injunction was not final and because it was a civil contempt order that was meant to compensate the ePlus for injury suffered as a result of the Lawson's infringing activity.  However, as the only remaining claim upon which the injunction was based was found invalid, the Federal Circuit concluded that "the compensatory award for the violation of the injunction must be set aside in light of the cancellation of claim 26."

 

The full opinion is available here.  

MVS Filewrapper® Blog: USPTO Issues Preliminary Guidance on Patentability Based on Alice Corp.

On June 25, 2014 the USPTO Deputy Commissioner for Patent Examination Policy released a Memorandum to the Patent Examining Corps that provides examiners with preliminary instructions related to subject matter eligibility of claims involving abstract ideas under 35 U.S.C. § 101 in view of the Supreme Court Decision in Alice Corporation Pty. Ltd. v. CLS Bank International.  The memo provides the following guidance with respect to the application of the Mayo framework to the examination of claims involving abstract ideas in light of the Alice decision:

 

(1)  Alice Corp. establishes that the same analysis should be used for all types of judicial exceptions, whereas prior USPTO guidance applied a different analysis to claims with abstract ideas (Bilski guidance in MPEP 2106(II)(B)) than to claims with laws of nature (Mayo guidance in MPEP 2106.01).

 

(2)  Alice Corp. also establishes that the same analysis should be used for all categories of claims (e.g., product and process claims), whereas prior guidance applied a different analysis to product claims involving abstract ideas (relying on tangibility in MPEP 2106(II)(A)) than to process claims (Bilski guidance).

 

The memo then explains that, despite these changes, the basic inquiries and examination procedures as to subject matter eligibility remain the same after the Alice decision. 

 

The instructions also set out a "Two-Part Analysis for Abstract Ideas."  First, the examiner is to determine whether the claim is directed to an abstract idea such as "fundamental economic practices," "certain methods of organizing human activities," "an idea of itself," or "mathematical relationships/formulas."   If the examiner concludes that the claim is directed to an abstract idea, the examiner must then determine "whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself."  The instructions provide examples of what would qualify and what would not qualify as "significantly more" as referenced in the Alice decision: 

 

Would qualify: Improvement to technology or technical field, improvements to functioning of computer itself, and "meaningful limitations."

 

Would not qualify:  Adding the words "apply it," and requiring no more than a generic computer to perform generic computer functions.

 

The instructions direct examiners to reject claims under 35 U.S.C. § 101 as being directed to non-statutory subject matter if they do not amount to "significantly more" than the abstract idea. 

 

These examination instructions are only initial guidelines, and will be updated and modified as needed after additional consideration of the decision and public feedback.  Accordingly, the USPTO has issued a Request for Comments and Extension of Comment Period on Examination Instruction and Guidance Pertaining to Patent-Eligible Subject Matter that is open through July 31, 2014. 

MVS Filewrapper® Blog: Federal Circuit Weighs in on Stays for Post-Grant Review

The Federal Circuit has issued an opinion in VirtualAgility Inc. v. Salesforce.com, Inc., providing clarification regarding how court should properly determine whether to stay litigation during later-requested post-grant PTO proceedings.  Under the America Invents Act, a district court is permitted, but not required, to grant such a stay.  The statute also provides a list of four factors that the district court is to consider when deciding whether to grant a stay of litigation:

 

(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;

(B) whether discovery is complete and whether a trial date has been set;

(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and

(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

 

In January 2013 VirtualAgility Inc. ("VA") sued Salesforce.com, Inc. and a group of other businesses for infringement of U.S. Patent No. 8,095,413.  Salesforce then filed a petition with the Patent Trial and Appeal Board (PTAB) for a post-grant review of the patent under the Transitional Program for Covered Business Method Patents (CBM Program), asserting that all of the claims were patent-ineligible.

 

In May of 2013, Salesforce and the other defendants filed a motion to stay district court proceedings in accordance with AIA Section 18(b)(1).  In denying the motion, the District Court took into account the four factors provided by statute.  The District Court conducted its own
review of the file history, and determined that the PTAB would not likely cancel some or all of the claims, despite the he PTAB’s determination that the claims of the ’413 patent are more likely than not invalid.  The district court therefore determined that the first factor, simplification of the issues, was either neutral or slightly against a stay.  The district court also determined that the fourth factor, burden of litigation, had substantial overlap with the first and would only slightly favor a stay.  The court decided the second factor favored a stay because it was early on in the litigation, and the third factor weighed against a stay because VirtualAgility would suffer from lost market share and consumer goodwill, in addition to the fact that "VA would be unduly prejudiced 'because certain witnesses are of an advanced age.'"

 

The Defendants appealed the denial of the motion to stay to the Federal Circuit, which reversed the district court and concluded that the balance of the factors favored a stay pending the outcome of the CBM review.  The court held that the district court's review the PTAB's determination that the claims of the ’413 patent are more likely than not invalid was an error as a matter of law because under the statutory scheme district courts have no role in reviewing the PTAB’s determinations regarding the patentability of claims that are subject to CBM proceedings.  

 

The Federal Circuit agreed with the district court's determination that the second factor weighed in favor of a stay, but disagreed with the district court's determination that the third factor weighed heavily against a stay.  In concluding that the undue prejudice factor weighed only slightly against a stay, the Federal Circuit held that the district court erred in failing to take into account the fact that VA did not move for a preliminary injunction, and that if VA needed injunctive relief as soon as possible it would have pursued a preliminary injunction, or filed suit earlier. 

 

Ultimately, with three factors heavily favoring a stay and one slightly against a stay, the Federal Circuit Court of Appeals reversed district court and remanded the case with instructions to grant the motion to stay the litigation pending CBM review at the PTO.

 

The full opinion is available here.

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