Ip 2014 Year In Review
There have been numerous notable developments in patent situation law in 2014. Key decisions in the Federal Circuit and Top Court tackled a number of key issues, including patent eligibility of software and business methods, standards for caused violation when multiple actors are participating, the responsibility of proof in declaratory judgment cases, the ongoing growth and development of inequitable conduct jurisprudence, the conventional for indefiniteness, the conventional for awarding attorneys’ charges, laches, and guidance for damages, designed for standard essential patents.
Through the finish of 2014, we concluded 2 yrs of operation from the new statutory framework supplied by the America Invents Act (AIA), which introduced new publish-grant procedures for challenging the validity of patents in the U.S. Patent Office. As discussed further below, inter partes review and also the covered business method review have grown to be potent weapons against patent proprietors.
Within the new landscape, one where the eligibility – and therefore validity – of numerous software and business method patents continues to be tossed into question through the Supreme Court’s Alice situation, and something by which challenging the validity of patents underneath the AIA has shown quite effective, patent proprietors would be advised to review their existing portfolios and prosecution strategies and develop ways of address these changes.
Additionally to moving the U . s . States from the first-to-invent to some first-inventor-to-file patent country, the 2012 America Invents Act (AIA) introduced new trial-like procedures that enable organizations to challenge the validity of issued patents within the U.S. Patent Office. The previous inter partes re-examination procedure was substituted with inter partes review (IPR), publish-grant review (PGR), and covered business method review (CBM) procedures prior to the recently created Patent Trial and Appeal Board (PTAB). While patent violation claims continue to be adjudicated within the courts, these new publish-grant proceedings offer an alternative avenue for patent holders and challengers to fight more than a patent’s validity within the Patent Office without making use of traditional litigation within the courts.
Now 2 yrs since their beginning, these publish-grant proceedings are showing to become incredibly well-liked. Initial USPTO projections had forecast about 420 petitions each year trying to initiate these new proceedings. However, about 600 petitions were filed within the newbie as these proceedings grew to become available, and nearly 1,900 petitions were filed within the second. Publish-grant proceedings are particularly famous the electrical/computer arts, with more than 60% of petition filings occurring within this technology area.
For any comprehensive take a look at current and future the process of Publish-Grant Proceedings, please visit our September 2014 articles in IPLAW360, offered at the next links:
- Training From 24 months of AIA Publish-Grant Proceedings
- Trends From 24 months of AIA Publish-Grant Proceedings
Patent-Qualified Subject Material
In Alice Corp. Pty. Limited. v. CLS Bank Int’l, the final Court issued a lengthy-anticipated and unanimous decision on patent qualified subject material, holding that claims forwarded to applying abstract tips on a normal computer, without further limitations, aren’t patent qualified.
By means of background, courts have in the past produced three judicial exceptions as to the otherwise is really a broad statutory meaning of subject material that’s qualified for patent protection (see, 35 U.S.C. §101). The Alice decision sets forth a couple-part test for figuring out if your patent claim is forwarded to qualified subject material. First, it should be determined when the claim is forwarded to one of these simple three judicially produced exceptions (e.g., an abstract idea). Second, when the claim is forwarded to one of these simple three groups, it should be determined when the claim furthermore recites an “inventive concept” that covers some thing specific than the usual law of nature, an all natural phenomenon, or perhaps an abstract idea. Unless of course the claim recites such additional inventive concept, the claim isn’t qualified for patent protection.
The Alice decision has led to drastic changes towards the eligibility of software and business method patents. Publish Alice, the government Circuit and district courts happen to be invalidating many software and business method patents according to their interpretation from the Supreme Court’s Alice decision. For instance, in Ultramercial, Corporation. v. Hulu, LLC, the government Circuit figured that the patent at issue, an application business method patent forwarded to viewing an advert in return for use of copyrighted media, didn’t claim patent-qualified subject material. The claims weren’t patent qualified simply because they simply instructed someone to implement an abstract idea using routine, conventional computer activity.
However, software and business methods can always be patent qualified, if correctly claimed. The Alice Court was careful to indicate that the claim isn’t always ineligible for patent protection due to the fact an abstract idea is involved. Patent claims, including an abstract idea, will skew more towards eligibility when they require specific implementations that don’t prevent others from practicing the actual abstract idea.
For instance, in DDR Holdings, LLC v. Hotels.com, L.P., the government Circuit affirmed the district court’s ruling that the patent claim forwarded to a method for retaining visitors online was patent qualified. The Government Circuit figured that the claimed system constituted patent qualified subject material since it provided a brand new means to fix an issue particularly arising within the arena of computer systems.
Because of its part, the U . s . States Patent and Trademark Office (USPTO) has issued a brand new group of guidelines to assist its Examiners correctly use the Alice test to patent claims, including abstract ideas. The Rules include types of patent qualified and non-qualified claims. There’s apt to be a teething period as Examiners adjust their examination tactic to implement these new guidelines.
As highlighted through the apparently contradictory Federal Circuit decisions above, the road between what’s and isn’t patent qualified subject material remains unclear. It had been clearly and not the Supreme Court’s intent in Alice to get rid of software and business method patents. However, until situation law further clarifies the limitations of the items constitutes patent qualified subject material, patent applicants and patent holders of software and business method patents will face challenges in acquiring and enforcing patent legal rights for their inventions.
To acquire more information around the implications from the Alice decision and a few practice tips, please visit our related article: Patenting Business Methods and Software within the U.S.
While technical standards advantageously result in financial savings for industry and supply for interoperability of numerous products, patented features that are handled by a business standard can offer an unfair competitive benefit to the patent holders by requiring industry people to license individuals patents. Two particular concerns regarding standards-essential patents are royalty stacking (the necessity to license multiple patents to conform having a standard) and patent hold-up (demanding excessive royalties once companies sign up to some certain standard). To level the arena, standards setting organizations typically require their people to license their standards-essential patents on fair, reasonable, and nondiscriminatory (also referred to as “FRAND”) terms.
The issue of methods to correctly calculate damages in violation cases involving patents susceptible to a FRAND obligation is a subject of ongoing debate. This season, the government Circuit’s decision in Ericsson, Corporation. v. D-Link Systems, Corporation. provided significant assistance with this problem. Typically, a court instructs the jury inside a patent violation situation around the “Georgia-Off-shore factors,” some 15 factors which are considered together to reach an acceptable royalty to become compensated through the infringer. The Ericsson decision, however, noted that in the event involving FRAND patents, most of the Georgia-Off-shore factors might not be relevant or might even be resistant to the FRAND obligation. The Government Circuit held that district courts must think about the patent holder’s actual FRAND obligation and should particularly instruct the jury accordingly regarding the factors it ought to consider. The Government Circuit also ruled that awarded damages must only be in line with the useful towards the standard through the patented feature, apportioned to any or all additional features needed through the standard and cannot be premised around the overall worth of following a standard.
For any more in-depth analysis of the situation, and it is implication to damages for violation of standards-essential patents, please watch our December 2014 advisory.
Attorney Charges in Patent Cases
Two significant U.S. Top Court decisions on attorney charges in patent cases were made the decision in 2014. In Octane Fitness, LLC v. ICON Health & Fitness, Corporation., __ U.S.__, 134 S.Ct. 1779 (2014), the final Court decreased the bar for recovering attorney charges in patent cases.
Underneath the patent statutes (35 U.S.C. §285), a court may award reasonable attorney charges towards the prevailing party in “exceptional cases.” The Government Circuit had established an extremely stringent standard requiring the current party to determine the suit was “fairly groundless.” however, in Octane Fitness, the final Court held that the “exceptional situation” is only one that sticks out from others based on the substantive strength of the party’s litigating position, or even the not reasonable way the situation was litigated. The Final Court also held that patent litigants aren’t needed to determine their entitlement to attorney charges by obvious and convincing evidence, but instead with a preponderance from the evidence.
Following this decision, we view attorney fee motions granted in a greater rate, specially when a patentee continues a situation after an unfavorable claim construction decision reasonably precludes violation.
Highmark Corporation. v. Allcare Health Management System, Corporation., __ U.S. __, 134 S.Ct. 1744 (2014), altered the grade of appellate overview of district court decisions involving obtaining attorney charges under 35 U.S.C. §285. The Government Circuit had formerly adopted de novo overview of the “fairly groundless” standard (now overruled by Octane Fitness (see above)). In Highmark, the final Court gave deference to some district court’s determination about this issue by holding that the lower “abuse of discretion” standard should apply when reviewing every aspect of an area court’s §285 determination. The discretion granted to district courts should lead to less reversals about this issue through the Federal Circuit.
Inside a 6-3 decision, the U.S. Top Court in Petrella v. Metro-Goldwyn-Mayer, __U.S. __, 134 S.Ct. 1962 (2014) eliminated the defense of laches in copyright cases. Laches, most emphasized, is really a judicial creation made to reduce not reasonable delays within the filing of lawsuits. However, the Copyright Act itself is aware of such delays by its three-year time limit (17 U.S.C. §507(6)), which allows a copyright violation suit to become introduced only within 3 years from the latest act of violation. Most stressed the doctrine of laches is “basically gap-filling, not legislation- overriding.” if a contributing factor to action includes a statutory limitations period for getting suit, then laches cannot bar an action for violation introduced within the period.
The Final Court particularly pointed out the patent law defense of laches inside a footnote, but didn’t discuss whether laches ought to be eliminated in patent law too. Perhaps, the patent law defense of laches could be distinguished because patent law includes a somewhat various and longer time limit (six years limitation on damages instead of 3 years limitation on getting suit for copyright) and also the term of the patent is a lot shorter compared to copyright term (twenty years from filing instead of existence from the creator plus 70 years). Once we expected, patentees have elevated this problem and also the Federal Circuit has decided to hear en banc if the Supreme Court’s recent Petrella decision eliminating the defense of laches in copyright cases should be relevant to patent violation cases too. SCA Hygiene Prods. AB v. First Quality Baby Prods., LLC, Given. Cir., No. 2013-1564, en banc reh’g granted 12/30/14.
Inside a unanimous decision, the final Court in Limelight Systems, Corporation. v. Akamai Technologies, __ U.S. __, 134 S.Ct. 2111, 189 L.erectile dysfunction.2d 52 (2014), again required are designed for a typical produced by the government Circuit, this time around the correct standard for inducement of violation.
By means of background, the government Circuit had locked in Muniauction that the method claim can’t be directly infringed unless of course all steps are carried out through the same party or by others underneath the direction and charge of that party. Muniauction, Corporation. v. Thomson Corp., 532 F.3d 1318 (Given. Cir. 2008). Despite the fact that inducement needs a direct infringer, in Limelight, the government Circuit had created out the best to that particular rule, finding inducement to infringe once the patentee demonstrated that other independent parties had performed the technique steps not done by the alleged infringer.
The Final Court reversed the government Circuit, reiterating that there might be no inducement to infringe unless of course there’s an action of direct violation. Since a finding of direct violation was precluded through the Federal Circuit’s Muniauction decision, the final Court held that there might be no inducement to infringe. Considerably, the final Court recommended the Federal Circuit may have an chance to revisit its position on direct violation on remand. Thus, the Limelight decision through the Top Court leaves the doorway open for patent proprietors to challenge Muniauction’s direct violation rule that steps of the method should be performed either by one party or by others under that party’s direction or control.
Until you will find further developments in this region of patent law, the final Court’s Limelight decision will continue to present pitfalls for businesses with poorly drafted claims that need steps to be achieved by multiple independent parties, or in which the underlying technology necessitates participation of multiple independent parties.
Burden of Creating Violation in Declaratory Judgment Actions
Underneath the Declaratory Judgment Act, alleged infringers can seek declaratory judgments from the court declaring, for instance, that the patent is invalid or their activities don’t infringe the patent. This season, the final Court addressed the issue which party bears the responsibility of showing violation when an alleged infringer/licensee seeks a declaratory judgment of non-violation.
In Medtronic, Corporation. v. Mirowski Family Ventures, LLC, 571 U.S. __, 134 S.Ct. 843 (2014), a legal court issued a unanimous ruling that even in instances where a licensee seeks a declaratory judgment of non-violation, and also the patent holder is foreclosed from getting an violation counterclaim, the responsibility of persuasion continues to be around the patent holder to demonstrate infringing activity through the licensee.
In 2014, the publish-Therasense landscape ongoing to evolve around the issue of inequitable conduct. 3 years ago, in Therasense v. BectonDickinson 649 F.3d 1276 (Given. Cir. 2011) (en banc), the government Circuit altered the inequitable conduct landscape through the elimination of the sliding proportions of materiality and intent and creating a greater standard for any finding of inequitable conduct. To demonstrate inequitable conduct under Therasense, a celebration must establish that “however forInch an omission or misrepresentation produced by the patent applicant, the claim under consideration will not have been permitted. A celebration asserting an inequitable conduct defense should also individually establish that exact intent to trick the U . s . States Patent and Trademark Office (USPTO) is “the only best inference capable of being attracted in the evidence.”
Within the wake from the increased Therasense standard for showing inequitable conduct, some commentators asked if the doctrine had lost much or all its effectiveness. Two cases made the decision this season show, while Therasense has stopped the concept of inequitable conduct defenses being nearly globally pled in violation cases, the doctrine continues to have teeth underneath the appropriate conditions.
In American Calcar, Corporation. v. American Honda Motor Co, 768 F.3d 1185 (Given. Cir. 2014), the patentee posted info on a previous art navigation system but withheld more in depth technical information in the possession that will have avoided the patent from issuing. The Government Circuit, in affirming the district court, agreed the requisite specific intent to trick was present because among the inventors possessed the fabric, understood of their importance, selectively disclosed just the content that will not bar his patent application, and the testimony lacked credibility.
In Apotex Corporation. v. UCB, Corporation., 763 F.3d 1354 (Given. Cir. 2014), the government Circuit again upheld a finding of inequitable conduct for the reason that the inventor possessed information and, through his attorney, affirmatively misrepresented the variations between your prior art and also the claimed invention towards the USPTO. A legal court discovered that these activities exceeded good belief advocacy and led to a patent which should not have access to issued.
These decisions indicate the inequitable conduct defense continues to be viable under appropriate conditions, notwithstanding the increased needs established by Therasense.
In Nautilus, Corporation. v. Biosig Instruments, Corporation., __ U.S. ___, 134 S.Ct. 2120 (2014), the final Court held the Federal Circuit’s standard for locating a patent claim indefinite under 35 u.s.c. §112 was too restrictive. In pertinent part, 35 U.S.C. §112 mandates that “the specs shall conclude with a number of claims particularly mentioning and clearly claiming the topic that the inventor or perhaps a joint inventor regards because the invention.” if the statute isn’t complied with, then your claim is invalid.
Before Nautilus, the government Circuit had judged a patent claim that they can meet this definiteness requirement if it wasn’t “insolubly ambiguous” and it was “amenable to construction.” basically, a patent claim was considered definite or no sense whatsoever might be made from the claim considering the specs.
In Nautilus, the final Court articulated a less stringent test for creating indefiniteness, namely that the patent claim is indefinite if, when viewed considering the specs and prosecution history, the claim cannot inform individuals skilled within the art concerning the scope from the invention “with reasonable certainty.”
The brand new “with reasonable certainty” standard needs a more critical look at the clearness from the claim language. Patent holders can anticipate more effective patent invalidity challenges according to indefiniteness within the years ahead and patent applicants should review their pending claims for potential issues in meeting the brand new standard for definiteness.
Searching ahead to 2015, more changes are coming lower the pike. Around the legislative front, the brand new Republican-controlled Congress is revisiting the patent reform efforts that stalled in 2014. Passage of legislation is extremely likely.
Within the courts, a slew of cases promise further refinements and potential changes towards the patent laws and regulations. A few of the issues which may be addressed through the Top Court include whether a defendant’s thought that a patent is invalid is a practicable defense to inducement (the Commil USA v. ‘cisco’ situation) and if the longstanding prohibition on having to pay license charges following a patent’s expiration ought to be overruled (the Kimble v. Marvel situation).
We continuously track many of these issues.