Judgment Day: Supreme Court Grants Petitions on Constitutionality of Administrative Patent Judges in Arthrex, Inc. v. Smith & Nephew, Inc.

by Matt Digan

On October 13, 2020, the Supreme Court granted three petitions for writs of certiorari related to a Federal Circuit decision in the 2019 case Arthrex, Inc. v. Smith & Nephew, Inc.[1] On the surface, the case involves questions of administrative and constitutional law, but the outcome of the case could have significant impact on the world of patents.

The Supreme Court’s grant was for two specific issues:

(1) whether, for purposes of the Constitution’s appointments clause, administrative patent judges (APJs) of the U.S. Patent and Trademark Office (USPTO) and Patent Trial and Appeal Board (PTAB) are principal officers who must be appointed by the President with the Senate’s advice and consent, or inferior officers whose appointment Congress has permissibly vested in a department head; and

(2) whether, if APJs are principal officers, the court of appeals properly cured any appointments clause defect in the current statutory scheme prospectively by severing the application of 5 U.S.C. § 7513(s) to those judges.[2]

The controversial 2019 decision by the Federal Circuit concluded that APJs are principal officers who must be appointed by the President, with the advice and consent of the Senate, under the Appointments Clause of the Constitution.[3] In analyzing the question of whether APJs were principal or inferior officers, the Federal Circuit ultimately assessed three factors: how the work of APJs was reviewed, how APJs were otherwise supervised, and how APJs could be removed from office.[4] Generally speaking, the more control, review, and direction over the work and role of a given officer that can be demonstrated, the more likely that officer will be found to be an inferior officer. The Federal Circuit determined that the first and third factors weighed in favor of categorizing APJs as principal officers, whereas the second factor pointed towards categorizing them as inferior officers. Thus, on balance, the Federal Circuit concluded APJs were principal officers and that the then-current statutory scheme of the Secretary of Commerce appointing APJs to the PTAB was unconstitutional.[5]

As a remedy for the finding, the Federal Circuit vacated the PTAB’s underlying Arthrex decision, remanded for a new hearing, directed designation of a new panel of APJs to hear the PTAB proceeding, and severed the portion of the Leahy-Smith America Invents Act (AIA) that provided removal protections to APJs.[6] By severing that portion, the Federal Circuit held that APJs were now inferior officers and could continue performing their role without violating the Appointments Clause.[7] In addition to the underlying Arthrex decision, the Federal Circuit vacated more than 100 other PTAB decisions that predated the Arthrex decision and in which the Appointments Clause challenge was properly preserved.[8]

Both parties in Arthrex petitioned for an en banc rehearing by the Federal Circuit, but the petition was denied on March 23, 2020.[9] In response, the chief APJ issued an order on May 1, 2020 holding all impacted cases to be held in administrative abeyance until the Supreme Court either granted or denied certiorari on Arthrex.[10]

The Supreme Court could ultimately decide that the statutory framework for appointing APJs prior to the Federal Circuit’s Arthrex decision was constitutional or that the Federal Circuit’s remedy for an unconstitutional framework is sufficient, either of which would result in a narrow decision. However, the Supreme Court could find that APJs are not constitutionally appointed and that the Federal Circuit’s solution is insufficient to cure the problem(s), resulting in a far wider-reaching decision that could potentially reap chaos on the patent world. Though the full extent of such a possibility is not well defined given the amount of uncertainty that pervades, short of Congressional intervention in that scenario, such a decision could open a “floodgate of challenges” to the constitutionality of any of thedecisions by the PTAB dating back to its creation.[11] A date has not been set for oral arguments before the Court, but this case stands to be an important one to watch for patent owners, patent challengers, and the broader world of patents.

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[1] Amy Howe, Supreme Court will consider constitutional status of administrative patent judges, SCOTUS Blog (Oct. 13, 2020), https://www.scotusblog.com/2020/10/supreme-court-will-consider-constitutional-status-of-administrative-patent-judges/.

[2] Arthrex Inc. v. Smith & Nephew Inc., SCOTUS Blog (last visited Oct. 20, 2020), https://www.scotusblog.com/case-files/cases/arthrex-inc-v-smith-nephew-inc-2/.

[3] Daniel N. Yannuzzi, Supreme Court Deciding Constitutionality of PTAB Judge Appointments, The National Law Review (Oct. 14, 2020), https://www.natlawreview.com/article/supreme-court-deciding-constitutionality-ptab-judge-appointments.

[4] Dion Bregman, Maria Doukas, & Vishal Parikh, Supreme Court Will Review Arthrex Cases Regarding Whether PTAB Judges Are Constitutional, JD Supra (Oct. 19, 2020), https://www.jdsupra.com/legalnews/supreme-court-will-review-arthrex-cases-21001/.

[5] Yannuzzi, Supreme Court Deciding Constitutionality of PTAB Judge Appointments, https://www.natlawreview.com/article/supreme-court-deciding-constitutionality-ptab-judge-appointments.

[6] Id.

[7] Dion Bregman et al., Supreme Court Will Review Arthrex Cases Regarding Whether PTAB Judges Are Constitutional, https://www.jdsupra.com/legalnews/supreme-court-will-review-arthrex-cases-21001/.

[8] Id.

[9] Id.

[10] Id.

[11] Yannuzzi, Supreme Court Deciding Constitutionality of PTAB Judge Appointments, https://www.natlawreview.com/article/supreme-court-deciding-constitutionality-ptab-judge-appointments.

No Basis Left Unexamined: Federal Circuit Ruling Green Lights Expanded PTAB Review of Substituted Claims in IPR Proceedings

by Matt Digan

On July 22, 2020, in the case of Uniloc 2017 LLC v. Hulu, LLC,the Federal Circuit ruled for the first time that the Patent Trial and Appeal Board (PTAB) is not limited to considering § 102 and § 103 issues when evaluating substitute claims in an inter partes review (IPR), but is within its authority to consider §101 patent eligibility issues as well.[1] A petition to institute an IPR must still originate under § 102 or § 103 issues, and thus ruling only concerns the PTAB’s authority when evaluating substitute claims.[2]

Background

When the America Invents Act passed in 2011, it ushered in new procedures for challenging patent validity: including IPRs. Under 35 U.S.C. § 311(b), any person who is not the patent owner may file a petition with the U.S. Patent and Trademark Office (USPTO) seeking the cancellation of one or more claims of the issued patent arising under 35 U.S.C. §§ 102,103 grounds. In light of its intended structure as a less used and narrower supplement to the post-grant review (PGR) procedure, the IPR procedure in practice today is an unrecognizable creature of broad implementation rules that is used far more often than PGR.

During an IPR, the patent owner has a limited right to amend the patent by canceling one or more of the challenged claims and offering substitute claims.[3] The evaluation of the substitute claims by the PTAB lies at the heart of the decision in Uniloc 2017 LLC v. Hulu, LLC. If the IPR is not dismissed or the petitioner and patent owner do not come to an agreement, the PTAB will issue a final written decision regarding the patentability of the challenged claims and any new substitute claims.[4] This final written decision may then be appealed to the Federal Circuit.[5]

The Case

The patent at issue in this case owned by Uniloc is U.S. Patent No. 8,566,960 (the ‘960 patent) and is entitled “System and Method for Adjustable Licensing of Digital Products.”[6] The patent concerns the problem of consumers of software legitimately needing to use digital products on multiple devices.[7] The ‘960 patent teaches a method for adjusting the number of devices allowed to use a digital product (software) under license.[8]

Hulu filed a petition with the PTAB to institute an IPR of claims 1-25 of the ‘960 patent.[9] In response, Uniloc filed a Motion to Amend, seeking the substitution of claims 1, 22, and 25 with three new claims if the PTAB found the former claims unpatentable.[10] Hulu opposed the motion by arguing that the substituted claims were directed to patent-ineligible subject matter under §101.[11] Rather than argue based on the merits of its substituted claims, Uniloc’s response rested on the contention that Hulu was not permitted to raise a §101 argument in opposition to the new claims.[12]

In its written decision, the PTAB—in addition to explaining why the challenged original claims were unpatentable—denied Uniloc’s Motion to Amend on the grounds that Hulu had demonstrated by a preponderance of the evidence that the substituted claims were directed to non-statutory subject matter under § 101.[13] Ineligibility was the sole ground on which the PTAB rejected Uniloc’s Motion to Amend.[14]

On appeal to the Federal Circuit, Uniloc argued that the PTAB erred as a matter of law by grounding its rejection of Uniloc’s Motion to Amend on § 101 because the PTAB is limited in its evaluation of substituted claims to issues of anticipation or obviousness.[15] Uniloc’s appeal also concerned an issue of mootness, as there were parallel proceedings in the Eastern District of Texas while the IPR was proceeding at the USPTO, but that aspect of the case will not be covered in detail here. Suffice it to say that the Federal Circuit found that the case was not moot.[16]

The Federal Circuit rejected Uniloc’s argument and found that the text, structure, and legislative history of the IPR statutes indicate Congress’s unambiguous intent to permit the PTAB to review proposed substitute claims more broadly than those bases provided in § 311(b).[17]

First, the IPR statutes “plainly and repeatedly” require the PTAB to determine the “patentability” of proposed substitute claims.[18] The conditions of patentability are set out in three sections: §§ 101, 102, and 103.[19] Overall patentability concerns all three of those sections. It follows that a plain-language reading of the statute demonstrates Congress’s intention for the PTAB to review proposed substituted claims for overall patentability.[20]

Further, the Federal Circuit found that Uniloc’s contention that § 311(b) constrains the PTAB to review of only §§ 102 and 103 issues on proposed substituted claims is incorrect.[21] § 311(b) is confined to the review of existing claims at the time IPR is instituted, and does not apply to proposed substituted claims—the PTAB cannot “cancel” something that is not “of the patent” and that does not even exist yet.[22]

Second, the Federal Circuit found that the structure and legislative history of the IPR statutes supported its finding. In terms of structure, § 311 is a provision applying to the petition phase of the proceedings and should not then bind a separate adjudicative -stage provision, such as § 316.[23]

The Federal Circuit noted that reexamination proceedings—the predecessors to IPR—were limited to substantial new questions of patentability regarding an issued patent’s original claims on the basis of new information about preexisting technology that “escaped review” at the time of the initial examination.[24] Under an IPR, proposed substitute claims have not undergone a patentability review by the USPTO, and so the substantial new questions of patentability that have not previously been considered by the PTO include all patentability questions, including § 101 patent eligibility.[25]

Quoting the PTO, the Federal Circuit noted that, “if a patent owner seeking amendments in IPR were not bound by § 101 and § 112, then in virtually any case, it could overcome prior art and obtain new claims simply by going outside the boundaries of patent eligibility and the invention described in the specification.”[26]

Finally, the dissenting opinion in the case contended in direct contradiction to the majority that the majority opinion actually does not follow the plain language of the statute.[27] The dissenting opinion claimed that because the patent owner may only propose narrowed claims that address the issues raised in the petition, analysis of patentability under § 101 is not appropriate.[28] The effect of the majority’s ruling is going to be opening up substitute claims to examinations on par with full blown reviews undertaken during patent prosecution, but rather than being conducted by a patent examiner, they will be conducted by Administrative Patent Judges—an unforeseen and highly inefficient shifting of the “mammoth task of examining claims” to the litigation-driven IPR proceeding.[29]

Implications

It remains to be seen just how much of an impact this decision will have on IPR proceedings going forward, but it will be interesting to see how often § 101 is cited as grounds for rejecting substituted claims. At the very least, patent owners will now have to take into account § 101 issues when formulating substitute claims.

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[1] Uniloc 2017 LLC v. Hulu, LLC, 966 F.3d 1295, 1303-1304 (Fed. Cir. 2020).

[2] 35 U.S.C. § 311(b).

[3] 35 U.S.C. § 316(d)(1)(A)-(B).

[4] 35 U.S.C. § 318(a).

[5] 35 U.S.C. § 319.

[6] Uniloc 2017 LLC, 966 F.3d at 1298.

[7] Id. at 1298-1299.

[8] Id.

[9] Id.

[10] Id. at 1300.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id. at 1303-1304.

[16] Id. at 1301.

[17] Id. at 1304.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id. at 1305.

[23] Id.

[24] Id.

[25] Id. at 1305-1306.

[26] Id. at 1306.

[27] Id. at 1311.

[28] Id. at 1314.

[29] Id. at 1316.

Chalk It Up: Federal Circuit Provides Clarity in Assessing Design Patent Infringement

by Matt Digan

On May 14, 2020, the Federal Circuit clarified the proper manner in which the ordinary observer test in design patent infringement cases should be administered in its ruling in Lanard Toys, Ltd. v. Dolgencorp LLC.[1]

The Federal Circuit’s ruling comes from a case originating in the Middle District of Florida, in which Lanard Toys (Lanard) filed suit against JA-RU, Inc. (JA-RU) asserting design patent infringement among other claims. Lanard’s design patent at issue in the case, U.S. Design Patent No. D671,167 (D167 patent), is for a toy chalk holder designed to look like a number two pencil.[2] One year after Lanard began selling its toy chalk holder, JA-RU began selling its own toy chalk holder that was designed using Lanard’s toy as a reference. After both parties filed for summary judgement, the district court granted JA-RU’s motion while finding that JA-RU’s product did not infringe the D167 patent.

Lanard appealed the district court’s ruling on the design patent infringement claim to the Federal Circuit on three grounds. First, Lanard argued that the district court erred in its claim construction by eliminating elements of the design based on functionality and lack of novelty. Second, Lanard argued that the court erred in its infringement analysis by conducting an element-by-element comparison rather than comparing the overall designs. Third, Lanard argued that the court used a defunct “point of novelty” test to evaluate infringement.[3] The Federal Circuit rejected each of Lanard’s arguments.

First, the Federal Circuit disagreed with Lanard that the district court “eliminated” entire elements of the claimed design. On the contrary, the district court acknowledged the ornamental aspects of each functional element, clarifying the scope of the protected subject matter.[4] Far from finding the district court’s decision in error, the Federal Circuit believed the district court followed claim construction directives for design patents “to a tee” in light of precedent.[5] The district court merely construed the claims in line with the statutory protection afforded to an ornamental design.

The Federal Circuit then clarified that while the ordinary observer test involves comparing similarities in overall designs, and not similarities of ornamental features in isolation, the test cannot ignore the reality that designs often have both functional and ornamental aspects. A court must consider how the ornamental differences in each element would impact the ordinary observer’s perception of the overall designs. Here, the district court noted that, “the problem for Lanard, however, is that the design similarities stem from aspects of the design that are either functional or well-established in the prior art.”[6] From this, the district court found that the attention of the ordinary observer would be drawn to those aspects of the claimed design that differ from the prior art, so no ordinary observer would believe the accused design to be the same as the patented design. The Federal Circuit held that the district court struck the correct balance in considering the ornamental aspects of the design while remaining focused on how an ordinary observer would view the overall design.

Finally, the Federal Court rejected Lanard’s contention that the district court’s ruling revived the defunct “point of novelty” test. While the “point of novelty” test went the way of the dodo in the Federal Circuit’s Egyptian Goddess ruling in 2008, the Federal Circuit made clear that it never questioned the importance of considering the patented design and the accused design in the context of the prior art. The Federal Circuit found that the district court unequivocally considered the points of novelty of the patented design over the prior art, but then placed those points of novelty in context by considering that those points of novelty would draw the attention of the ordinary observer.[7]

The ruling should prove to be helpful guidance both to would-be design patent owners and present owners alike. Lanard demonstrates that great care must be taken in constructing design patent claims at the outset. Likewise, current design patent owners should take Lanard into account when weighing the merits of potential enforcement actions and how a court might construe their patent’s claims differently than they envision. In short, Lanard provides greater clarity on how courts are supposed to evaluate the ordinary observer test in design patent infringement cases and how claim construction and the issue of novelty factors into that overall assessment.

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[1] Rob Courtney, Useful Item Itself is Not Copyrightable, Fish & Richardson (May 14, 2020), https://www.fr.com/fcs/lanard-toys-v-dolgencorp/.

[2] Lanard Toys, Ltd. v. Dolgencorp LLC, 958 F.3d 1337, at 1339 (Fed. Cir. 2020).

[3] Id. at 1341.

[4] Id. at 1342.

[5] Id.

[6] Id. at 1343.

[7] Id. at 1344.

USPTO Joins Fight to Combat COVID-19 with Deferred-Fee Provisional Patent Application Pilot Program

by Matt Digan

Announced September 16, 2020, the United States Patent and Trademark Office (USPTO) has created a deferred-fee provisional patent application pilot program to enable applicants and inventors to aid in the ongoing fight against COVID-19 while protecting their patent rights.

The USPTO recognizes its important charge of issuing high-quality patents to inventors and how that goes hand-in-hand with the dissemination of important free-flowing technical information among the world’s brightest minds. To that end, the USPTO’s new program will permit applicants to defer payment of the provisional application filing fee until the filing of a corresponding nonprovisional application.

Beginning September 17, 2020, the USPTO began accepting applications for its new pilot program. Applications are scheduled to be accepted for 12 months. Eligible applications for the program must disclose subject matter concerned with a product or process related to COVID-19. Additionally, any such product or process must require Food and Drug Administration (FDA) approval for use against COVID-19. Said approval does not have to obtained prior to submitting an application to the program; approval can be pending or can be sought at any time prior to marketing the subject matter for use against COVID-19.

For more information on the new program, see the USPTO’s full notice.

Sources:

• USPTO Announces COVID-19 Deferred-Fee Provisional Patent Application Pilot Program, USPTO.gov (Sept. 16, 2020), https://www.uspto.gov/about-us/news-updates/uspto-announces-covid-19-deferred-fee-provisional-patent-application-pilot.
• Department of Commerce; United States Patent and Trademark Office; Deferred-Fee Provisional Patent Application Pilot Program and Collaboration Database To Encourage Inventions Related To COVID-19, 85 FR 58038 (Sept. 17, 2020), https://www.federalregister.gov/documents/2020/09/17/2020-20443/deferred-fee-provisional-patent-application-pilot-program-and-collaboration-database-to-encourage.

Developments in Proper Patent Venue

– David Ward

Proper venue for patent cases in the United States has seen a drastic shift in the last several years, beginning with the United States Supreme Court’s TC Heartland LLC v. Kraft Food Grp. Brands, LLC holding in 2017.¹ In TC Heartland, the Court made a landmark distinction between the general venue statute, 28 U.S.C. § 1391(c), and the patent venue statute, § 1400(b).² This distinction unequivocally separated patent venues as only being proper “where the defendant resides, or where the defendant has committed acts of infringement and has regular and established place of business;” the key wording of “resides” now means only where the defendant is incorporated after TC Heartland.³

After TC Heartland: In re Cray

Courts have further narrowed the meaning of § 1400(b) since then. While TC Heartland cleared up the question of “where the defendant resides” in the first prong of the patent venue statute, In Re Cray Inc. defined a “regular and established place of business” as (1) the defendant’s physical place within the judicial district; (2) “regular and established”; and (3) “the place of the defendant.⁴ The physical place must be a building or part of a building set apart for any purpose used for conducting business, and it must be used in a steady, uniform, orderly, and methodical manner.⁵ The determination of a “regular and established place of business” is a highly factual one, considering whether the place is owned or leased, whether defendant conditioned employment on an employee’s continued residence in the district, marketing, and other relevant factors.⁶ “The place of the defendant,” usually (but not always) means a place owned or leased by the defendant, not just where employees work.⁷ Under the patent venue statute, the patent infringement must have also allegedly taken place there as well.⁸

In re Google, LLC

Texas has been one of the most recent battleground for patent infringement venue disputes regarding a “regular place of business.” In 2019, Google was sued for patent infringement in the Eastern District of Texas because the alleged patent infringement took place on “Google Global Cache” servers housed in the District.⁹ The District Court denied a motion to dismiss for lack of venue because the servers were regarded as a “regular and established place of business.”¹⁰

The Federal Circuit disagreed in February of 2020, stating that no Google employee performed installation of, performed maintenance on, or physically accessed the datacenters. ¹¹ While the Federal Circuit rejected an argument that Google had to own or lease the premises (which they did not), the court reasoned that a “place a business” required defendant’s employees or agents to conduct business there.¹² While the parties contracting with Google could be seen as their agents, the court reasoned that the relationship did not rise to that level. The contracting party did not have authority to act on Google’s behalf and was given only specific step-by-step instructions, and therefore did not qualify as an “agent.”¹³ Lastly, purely background maintenance work was not sufficient because that work standing alone was not “conducting [the defendant’s] business” in the meaning of a “regular and established place of business” in the statute.¹⁴

Uniloc 2017 LLC v. Apple Inc.

Despite this even further narrowing of the patent venue statute in the Federal Circuit, the Western District of Texas (WDTX) refused a motion to transfer a case with Apple as a defendant to the Northern District of California (NDCA) in June of 2020.¹⁵ The case was easily distinguishable from recent cases. First, Apple has a significant presence in WDTX with a large campus, manufacturing activities, and numerous stores in the forum.¹⁶ Apple employs over 7,000 employees at its campus in the WDTX.¹⁷ Second, Apple contracts with its manufacturer Flextronics, which manufactures the accused infringing product in the District.¹⁸ And third, Apple receives many of its components from suppliers within the WDTX.¹⁹

Given these facts, Apple’s operations in the WDTX rose to the level of “where the defendant has committed acts of infringement and has regular and established place of business” under both § 1400(b) as well as In re Cray. Apple, however, still argued that it would be more convenient for them as the defendant in NDCA. Judge Albright of the WDTX did not agree with that either, as Apple’s recent growth, significant contacts, and presence within the District showed that it was not “clearly more convenient” for Apple to transfer the case under 5^th Circuit precedent.²⁰

Moving Forward

While the recent Uniloc v. Apple case provided what seems to be a rare defeat for large corporate patent defendants seeking a venue transfer to their home forum, it was a highly factual distinction. Courts have continually narrowed the patent venue statute since TC Heartland in 2017, with both In re Cray and In re Google restricting what constitutes a “regular place of business” of the defendant. However, even though the bar is high, the Uniloc v. Apple case proves that it is indeed possible for patent plaintiffs litigating against large corporate entities to secure a venue other than the defendant’s home venue.

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[1] 137 S. Ct. 1514 (2017)
[2] Id. at 1520.
[3] Id. at 1519; see 28 U.S.C. § 1400(b).
[4] In re Cray Inc., 871 F.3d 1355, 1360-63 (Fed. Cir. 2017)
[5] Id.
[6] Id.
[7] Id.
[8] 28 U.S.C § 1400(b).
[9] Super Interconnect Techs. LLC v. Google LLC, No. 2:18-CV-00462-JRG, 2019 WL 3717683, at *1 (E.D. Tex. Aug. 7, 2019).
[10] Id.
[11] In re Google LLC, 949 F.3d 1338, 1340 (Fed. Cir. 2020).
[12] Id. at 1345.
[13] Id.
[14] Id. at 1346; see 28 U.S.C. § 1400(b).
[15] Uniloc 2017 LLC v. Apple Inc., No. 6-19-CV-00532-ADA, 2020 WL 3415880 (W.D. Tex. June 22, 2020).
[16] Id. at *4.
[17] Id.
[18] Id. at *5.
[19] Id.
[20] Id. at *16; see In re Volkswagen of Am., Inc., 545 F.3d 304, 314 (5th Cir. 2008)

Food Products Containing CBD Cannot Seek Trademark Protection

by Shuyu Wang

Photo: Kimzy Nanney/unsplash.com

The Trademark Trial and Appeal Board (TTAB) recently affirmed a decision by the United States Patent and Trademark Office (USPTO) to refuse the registration of a mark for a hemp oil product containing cannabidiol (CBD).^[1] The refusal was based on the analysis that the applicant’s use of the mark for its goods was unlawful under federal law regulating cannabis products.

Applicant, Stanley Brothers Social Enterprises, LLC (Stanley Brothers), sought registration of the mark CW for “hemp oil extracts sold as an integral component of dietary and nutritional supplements.” Its goods contain cannabidiol (CBD), a substance extracted from the cannabis plant that is regulated under the Food, Drug & Cosmetics Act (FDCA) as a drug.^[2] The examining attorney refused this registration on the ground that Applicant’s goods were illegal under the FDCA and the federal Controlled Substances Act (CSA), and Applicant appealed to the TTAB to contest this decision.^[3]

The core issue at appeal was whether Applicant’s goods were illegal under the FDCA and CSA, which required the TTAB to look at the nature and intended uses of the goods. Applicant developed a strain of cannabis which was high in CBD content but low in tetrahydrocannabinol (THC) content. A high concentration of CBD was proved to be helpful for treating childhood epilepsy seizures, while THC would make a user psychoactive. The low THC content in Applicant’s goods would help control the psychoactive caused by the substance.^[4] However, Applicant did not market its goods as a treatment for childhood epilepsy only, but claimed that its goods could be used “to promote mind and body wellness.”^[5]

The examining attorney found that Applicant’s goods fall within the CSA’s definition of “marijuana,” which is illegal to “manufacture, distribute, or dispense.”^[6] However, Congress created an “industrial hemp” exception from the CSA’s prohibitions in the Agricultural Act of 2014 (the “2014 Farm Bill”), which was subsequently expanded in the Agriculture Improvement Act of 2018 (the “2018 Farm Bill”). The Industrial Hemp Provision allows the growth and cultivation of cannabis products with a THC concentration of more than 0.3 percent.^[7]

Applicant provided evidence showing that its hemp oil products satisfied the conditions under the Industrial Hemp Provision, but the TTAB found its argument of the Industrial Hemp Provision exemption misplaced. The exemption permits the growth or cultivation of industrial hemp, but not the distribution or sale of CBD in food products. Thus, this exemption does not conflict with the FDCA’s prohibition on offering food added a drug, i.e., CBD in this case.^[8]

Moreover, the TTAB found Applicant’s products fall within the FDCA’s definition of “food,” which reinforces the rationale that Applicant’s hemp oil products cannot escape the FDCA’s regulation. “Food” under the FDCA includes “articles used for food or drink for man or other animals. The records show that Applicant’s good is recommended to be used in recipes for beverages and promoted as “dietary supplements,” which is deemed to be a food within the meaning of the FDCA.^[9]

In short, Applicant’s sale and distribution of its hemp oil products as dietary and nutritional supplements violate the FDCA’s prohibition, which forms the ground of rejection of a trademark application for an unlawful good.^[10]

What CBD-Related Products Can Be Trademarked?

In re Stanley Brothers provides only one scenario of trademark refusal based on the violation of the FDCA. It does not suggest that all CBD-related products cannot seek trademark protection. In fact, following the 2018 Farm Bill that excludes “hemp” with a THC concentration less than 0.3 percent from controlled substances under the CSA, the USPTO issued an examination guide in May 2019, clarifying the examining process covering CBD-related products.

The USPTO Examination Guide 1-19 acknowledges that “hemp” is no longer a per se ground for refusal of trademark registration.^[11] Nevertheless, the timing of filing an application for CBD-related products matters. The USPTO clarifies that trademark applications filed before December 20, 2018 for CBD-related products will be refused due to the violation of the CSA, because such applications do not have a valid basis for use in lawful commerce at the time of filing. But in light of the 2018 Farm Bill, the USPTO will provide such applicants the option of amending the filing date to overcome the CSA refusal ground.^[12]

That provided, the USPTO emphasizes that not all “hemp”-derived products are lawful.^[13] For example, the FDCA still prohibits using “hemp” in foods or dietary supplements, and the In re Stanley Brothers decision is in accordance with this Examination Guide. Under the new guidance, several CBD-related products have successfully registered a trademark, including:

• US 6115812––Mark “EVERYDAY. SIMPLE.” for electric vaporizers for the ingestion and inhalation of CBD derived from “hemp”;
• US 6115840––Mark “HEMPLILY” for bath bombs containing CBD derived from “hemp”;
• US 6119610––Mark “JSK NUGGS” for cigar flavorings containing water-based CBD derived from “hemp.”

Patenting CBD-Related Products

We posted an article in April discussing patenting cannabis in the US. Unlike trademark registration, a patent applicant is not required to prove that the CBD-related product is lawfully used in the US.^[14] However, a CBD-related invention still needs to satisfy all registration requirements under the U.S. Patent Law.

For instance, a patent for cannabis extracts can face an eligibility challenge. In United Cannabis Corp. v. Pure Hemp Collective Inc., United Cannabis Corporation (UCANN) sued Pure Hemp for patent infringement, while Pure Hemp challenged UCANN’s patent’s validity.^[15] UCNAA obtained a patent for a cannabis extract comprising of different ingredients, each with a specific concentration, which is claimed to overcome previous limitations on treating pain and various medical condition.^[16] The District Court for the District of Colorado applied the “Alice” Patentability Test, which first requires the court to determine whether the claims are directed to a patent-ineligible concept, including laws of nature, natural phenomena, and abstract ideas.^[17]

Applying the test, the court noted that the claims at issue specified threshold concentrations of cannabis-related chemicals in liquid form. The challenger, Pure Hemp, failed to prove that such precise concentrations of ingredients occur in nature, and the court concluded that UCANN’s liquid formulation by itself is novel. The court found UCANN’s formulation is directed to a “non-naturally occurring delivery method of naturally occurring chemicals in non-naturally occurring proportions and concentrations,” and therefore it is not ineligible under the Alice test.^[18]

The expansion of legal usage of cannabis-related products in the US has made it possible to obtain intellectual property protection for the cannabis industry, but trademark or patent applicants should always keep in mind the nature and uses of their CBD-related products in relation to federal laws. After all, both trademark and patent registrations are fact-oriented processes that require close examination to the fact and evidence in each case.

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[1] In re Stanley Brothers Social Enterprises, LLC, TTAB Serial No. 86568478 (June 16, 2020).
[2] Id. at 1.
[3] Id. at 1-2.
[4] Id. at 2-3.
[5] Id. at 3.
[6] Id. at 4.
[7] Id. at 5-6.
[8] Id. at 12-13.
[9] Id. at 13-14.
[10] Id. at 16.
[11] USPTO Examination Guide 1-19 at 1-2 (May 2, 2019). Contrasting with “hemp,” “marijuana,” i.e., cannabis product with a THC concentration more than 0.3%, violates federal law and is still a per se ground for refusal of trademark registration.
[12] Id. at 2.
[13] Id.
[14] Clinton South & Brian Shortell, Patenting Cannabis: Possibilities and Pitfalls, IPWatchdog (Feb. 7, 2020), https://www.ipwatchdog.com/2020/02/07/patenting-cannabis-possibilities-pitfalls/id=118615/.
[15] United Cannabis Corp. v. Pure Hemp Collective Inc., 2019 U.S. Dist. LEXIS 66092, at *5 (D. Colo. Apr. 17, 2019).
[16] U.S. Patent No. 9,730,911 (filed Oc. 21, 2015).
[17] United Cannabis Corp. v. Pure Hemp Collective Inc. at *5.
[18] Id. at *15-16.

New Chinese Patent Law Draft Amendment

– David Ward

China’s National People’s Congress (NPC) released a new Patent Law Draft for public comment on July 3, 2020.¹ The new draft includes major patent law changes such as pharmaceutical patent term extensions, term compensation, linkage, partial designs, statutory damages, punitive damages, and much more. Below are several highlights of the changes.

Design Patents

Article 2 of the draft adds language that allows partial design protection.² The current version of the patent law usually does not protect portions of designs, unless they are replacement parts that can be used or sold separately.³ However, the new draft would eliminate this limitation, allowing the exclusion of parts of a design with less design value. This could mean that design patent infringement would extend to copying patented parts of a design even when the entire product has an overall different design.⁴ Furthermore, Article 42 extends the design patent term from 10 years to 15 years from filing (as opposed to 15 years from date of grant in the U.S.).⁵

Patent Term Compensation

Article 42 also adds a patent term adjustment due to delay in examination by the China National Intellectual Property Administration (CNIPA).⁶ This means that if an invention patent has been granted more than four years from the filing date and three years from request for examination, the owner may request compensation in patent term from the CNIPA for the unreasonable delay in granting the patent. However, this does not apply to delays caused by the applicant and must also be requested by the applicant.

Pharmaceutical Patents

The new Draft sets up a patent linkage system in Article 75, which allows for a pharmaceutical patent owner to seek a CNIPA judgment within thirty days after publication of an application for a generic drug’s marketing approval.⁷ After the thirty days has passed without the patent holder bringing an action, the party seeking the generic drug marketing approval can bring a claim for declaration of non-infringement.⁸ However, if the patent owner brings action within the thirty day period, a decision will be rendered within nine months.⁹ The lack of a requirement in this drafted provision for generic drug filers or regulators to notify patentees means that patentees of innovative drugs will need to continuously monitor generic drug applications, and be ready to start an infringement action within 30 days.

Article 42 of the draft also allows patentees of innovative drugs to apply for a patent term extension of up to five years.¹⁰ This extension, however, is only available if the effective term of the patent is less than 14 years after obtaining marketing approval.¹¹ There is some confusion about if the extension will be available for the first marketing approval of a product or ingredient, but it will likely dealt with in further legislation or regulations.¹²

Statutory Damages & Burden of Proof

Statutory damages, as defined by current Chinese law, caps damages in a range of RMB 10,000 (USD 1,450) to RMB 1,000,000 (~ USD 145,000).¹³ The first draft of the new patent laws raised this range to RMB 100,000 to RMB 5,000,000, but the second Draft has removed the floor of RMB 100,000.¹⁴ This allows judges to determine any reasonable amount of damages from nominal to RMB 5,000,000.

Another issue the draft seeks to remedy is burden shifting of proof for damages. Since there is no discovery, if the evidence needed to calculate damages is held by the infringer, and the infringer refuses to submit the evidence (or submits fabricated evidence), the court can determine damages based on initial evidence and the patent owner’s calculations.¹⁵ The failure of the infringer to satisfy their burden of supplying contrary evidence can also be included in damages calculations.¹⁶

Open Patent License System

            Articles 50-52 of the draft set up an open patent license system to boost patent utilization.¹⁷ This allows patent holders to register with the Chinese patent office, allowing “open license” grants to any entity that accepts the license under prespecified standard license conditions. The open license would allow any prospective licensee to obtain a license by sending a written notice to the patentee and paying the specified fee. It is worth noting that in the U.S., the United States Patent and Trademark Office has set up a similar “Patents 4 Partnerships Marketplace Platform” that creates a centralized place for patent owners and prospective licensees to connect (without standardized open licensing) in light of the COVID-19 pandemic.¹⁸

Good Faith

            The new draft also requires an explicit duty of good faith for both patent applicants and patentees in enforcing their rights under Article 20.¹⁹ This provision will be useful for when patents that have not been substantially examined are used to extort money from third parties or restrict competition. If patents are used to restrict competition, however, such actions will be dealt with under China’s Anti-Monopoly Law.²⁰

Moving Forward

            If and when the draft is passed, it would be a landmark shift in many facets of China’s patent laws. The public comment period runs through Aug. 16, 2020, allowing stakeholders to suggest revisions or other changes. Some have observed that there are still ambiguities and holes in the proposed draft that will require clarification and further legislation. Ultimately, though, the important conclusion to draw is that China’s intellectual property landscape is on the move.

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[1] Amendments to the Patent Law (Second Deliberation Draft), People’s Republic of China, http://www.npc.gov.cn/flcaw/userIndex.html?lid=ff80808172b5fee8017313b6232c2b55 (last accessed Aug. 6, 2020) (translated by Google); see also He Jing, Anjie Law Firm, Comparison of Patent Law Amendments (1^st Reading and 2^nd Reading), https://chinaipr2.files.wordpress.com/2020/07/translation-of-patent-law-amendment-2nd-reading-june-2020.doc (last accessed Aug. 6, 2020).
[2] Aaron Winniger, China Releases Draft Amended Patent Law for Comment, China IP Law Update (July 5, 2020) https://www.chinaiplawupdate.com/2020/07/china-releases-draft-amended-patent-law-for-comment/.
[3] Paolo Beconcini, The Latest Draft Amendments to the Chinese Patent Law, Lexology (Aug. 3, 2020) https://www.lexology.com/library/detail.aspx?g=864e7173-5f99-4f5f-b23c-3dacfa98b35d.
[4] Julia Peng & Stefaan Meuwissen, China: New Draft Patent Law – What to Expect and What Not to Expect, JDSupra (July 16, 2020) https://www.jdsupra.com/legalnews/china-new-draft-patent-law-what-to-32591/ .
[5] Winniger, supra note 2.
[6] Id.
[7] Peng, supra note 4.
[8] Id.
[9] Translation of Draft Patent Law Available, China IPR (July 4, 2020) https://chinaipr.com/2020/07/04/translation-of-draft-patent-law-available/.
[10] Peng, supra note 4.
[11] Id.
[12] See Philip Katz et al., Proposed Changes to Draft Patent Law Further Strengthen Incentives to Bring New Drugs to China, Hogan Lovells (July 7, 2020) https://www.engage.hoganlovells.com/knowledgeservices/news/proposed-changes-to-draft-patent-law-further-strengthen-incentives-to-bring-new-drugs-to-china; Peng, supra note 4.
[13] Beconcini, supra note 3.
[14] Id.
[15] Peng, supra note 4.
[16] Id.
[17] Id.
[18] Patents 4 Partnerships IP Marketplace, USPTO https://developer.uspto.gov/ipmarketplace/search/platform.
[19] Peng, supra note 4.
[20] Id.

Only Experts Can Testify to Patent Obviousness, but They Can’t Draw the Conclusion

By Shuyu Wang

Photo: Quino Al / unsplash.com

In patent disputes, a patent’s validity is often challenged on the ground of obviousness. But who may opine about this issue? A Federal Circuit decision in HVLPO2, LLC v. Oxygen Frog, LLC, 949 F.3d 685 (Fed. Cir. Feb. 5, 2020) rules out lay witness testimony on patent obviousness, saying that such evidence is inadmissible.

Who is Qualified to Testify to Patent Obviousness?

In this case, HVLPO2 (HVO) sued Oxygen Frog for infringement of U.S. Patent Nos. 8,876,941 and 9,372,488, which share a specification about an oxygen-generating system used to manage airflow for torch glass artists.^[1] The district court granted HVO’s partial summary judgment that led to a jury trial on claims 1 and 7 of both the disputed patents. At trial, Oxygen Frog contended that the claims were obvious. It provided two prior art references including one video by a glass blowing artist, Tyler Piebes.^[2]

Mr. Piebes was not qualified as an expert witness, but he testified before the jury as a fact witness that he thought the patent’s modification of the oxygen-generating system was “obvious.”^[3] The district court gave the jury a limiting instruction that “a witness such as Mr. Piebes certainly can offer his observations and explain to you how a system works and what he thinks would occur to him from his perspective would or would not be obvious.”^[4] After trial, the jury returned a verdict that claims 1 and 7 of the ‘488 and ‘941 patents would have been obvious to a person of ordinary skill in the art.^[5] HVO then moved for a judgment as a matter of law (JMOL), or in the alternative, for a new trial, and the district court denied its motion.

On appeal, the Federal Circuit reviewed whether the district court abused its discretion in denying the motion for a new trial. The core inquiry is whether the district court’s admission of Mr. Piebes’ (Oxygen Frog’s witness) testimony substantially prejudiced HVO. Citing Federal Rules of Evidence 702, the Federal Circuit addressed the qualification issue of an expert witness. Since an obviousness invalidity challenge in a patent trial touches the determination of a fact in issue, a jury needs a qualified expert to assist them to understand the evidence.^[6] Then who is qualified? Such an “expert” should have some scientific, technical, or other specialized knowledge to make a jury understand the pertinent art.^[7] Following this rule, the Federal Circuit concluded that the district court abused its discretion in admitting a lay witness to testify to the underlying technical questions of the disputed patents.

Additionally, a party using any qualified expert witness for trial must take a further step to comply with Federal Rules of Civil Procedure. Such party must disclose its expert to the opposing party at the court orders, along with a written report containing all opinions and reasonings of the expert.^[8] HVO argued that Oxygen Frog’s failure to disclose Mr. Piebes violated this rule. On the other hand, Oxygen Frog said it did not need to follow this rule, because Mr. Piebes was introduced as a lay witness to speak about his perception and experience.^[9] However, the Federal Circuit found that Mr. Piebes’ testimony was directed to the central obviousness issue that was in the purview of experts, and thus ruled Mr. Piebes’ lay testimony inadmissible.^[10]

Oxygen Frog tried to argue that the error to admit Mr. Piebes’ testimony was harmless to the extent such admission was improper, but this argument was rejected by the Federal Court. The court placed great significance on expert testimony on ultimate issues in a patent trial, because it has the potential to substantially impact a jury’s decision. Due to such significance, both parties should be granted an equal chance to adequately prepare their cases where expert testimony is involved. ^[11] However, in this case, HVO lost its chance because of Oxygen Frog’s non-disclosure, and there is no way to know whether the jury was completely or partially influenced by Mr. Piebes’ testimony when it returned a decision. Thus, the Federal Court found HVO significantly prejudiced by the improper admission of Mr. Piebes’ testimony, and accordingly remanded a new trial.^[12]

The HVLPO2 decision helps draw a line for patent litigation: you should properly disclose an expert witness to testify to a fundamental issue of patent validity—obviousness. But having an expert witness does not result in a winning case. There is something else for you to consider.

What Can an Expert Witness Say?

Expert testimony is important and helpful for explaining the underlying technical facts in patent litigation. Unfortunately, expert opinions are not decisive on questions of law.

We should make a distinction between “question of fact” and “question of law” in patent litigation. Federal Rules of Evidence 702 allows experts to opine about a fact at issue within their areas of expertise. In other words, experts can testify to what they saw, what they heard, and what they did, to help answer questions as to the technical matters.^[13] However, this does not permit experts to testify to the ultimate “question of law,” such as interpreting what the law of obviousness is, or concluding whether a patent at issue is obvious or not.

The touchstone of the admissibility of expert testimony is whether it is helpful for the trier of fact, whether it be judge or jury, to reach a legal conclusion.^[14] After all, it is the legal decision-maker who has the monopoly as to the law, and many experts on technical issues of a patent are not legal experts. This is especially important in a jury trial. If an expert were to testify as to questions of law, there would be a risk that the expert would misinterpret the law or interfere with the judge’s jury instruction.^[15] A jury could be unavoidably confused by conflicting interpretations of a law or a legal standard, or improperly swayed, thus returning a verdict that’s prejudicial to the challenged party.

Nevertheless, it is possible that an expert misspeaks while testifying. It sounds quite natural to say “therefore, the subject matter of claim 1 would have been obvious for a person skilled in the pertinent art because of the prior art references x, y, and z.” Yet, such testimony can be objected to and struck as irrelevant in a tribunal.^[16] Thus, a counsel should carefully prepare the expert witness to make sure no such misstatement occurs.

Tips on Offering Expert Testimony

If you have experts to testify for a patent obviousness challenge, good. You probably have a better chance to help the judge or jury to understand the technical matters of your patent. However, before you bring the experts into the court, you should fully disclose them and their opinions to your opposing party under Federal Rules of Civil Procedure. Also, prepare the expert testimony carefully so it speaks to the factual matters, not the legal questions. Otherwise, your expert testimony can be struck, which can negatively impact your case.

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[1] HVLPO2, LLC v. Oxygen Frog, LLC, 949 F.3d 685, 687 (Fed. Cir. Feb. 5, 2020)
[2] Id.
[3] Id. at 687-88.
[4] Id. at 688.
[5] Id.
[6] HVLPO2, LLC v. Oxygen Frog, LLC, 949 F.3d at 688.
[7] See Fed. R. Evid. 702(a).
[8] Fed. R. Civ. P. 26(a)(2).
[9] HVLPO2, LLC v. Oxygen Frog, LLC, 949 F.3d at 689.
[10] Id.
[11] Id. at 690.
[13] Daniel Hanson, Don’t Let Experts Testify as to Obviousness, IPWatchdog (July 24, 2019), https://www.ipwatchdog.com/2019/07/24/dont-let-experts-testify-obviousness/.
[14] Notes of Advisory Committee to Fed. R. Evid. 704.; Hanson, see supra note 12.
[15] Hanson, see supra note 12.
[16] Id.

The Same Art or Arguments: The New Inter Partes Review Discretion Framework

– David Ward

The United States Patent Trial and Appeal Board (PTAB) recently clarified the basis of its discretion to deny an inter partes review (IPR). An IPR, for those unaware, is a petition by a person who is not the owner of a patent seeking to cancel as unpatentable 1 or more claims of another’s patent.¹ Under 35 U.S.C. § 325(d), the Director may take into account whether the same or substantially the same prior art or arguments were previously presented to the Office when evaluating an IPR. While previous precedent had developed factors to determine whether the same or substantially the same prior art or arguments were presented, clarification was needed in applying the factors once they had been determined.² That has changed after Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH was decided on March 24, 2020.³

Becton, Dickson Factors

In 2017, the PTAB determined there were six factors to consider in evaluating whether the same prior arts or arguments were previously presented to the office in an IPR under §325(d). Those six factors are:

1. the similarities and material differences between the asserted art and the prior art involved during examination;
2. the cumulative nature of the asserted art and the prior art evaluated during examination;
3. the extent to which the asserted art was evaluated during examination, including whether the prior art was the basis for rejection;
4. the extent of the overlap between the arguments made during examination and the manner in which Petitioner relies on the prior art or Patent Owner distinguishes the prior art;
5. whether Petitioner has pointed out sufficiently how the Examiner erred in its evaluation of the asserted prior art; and
6. the extent to which additional evidence and facts presented in the Petition warrant reconsideration of the prior art or arguments.⁴

These non-exclusive factors were established to guide decisions of discretion and cut down on duplicate proceedings and consideration. Each of these factors is a highly factual determination, and while helpful, there was no further elaboration in how to apply these factual factors once decided. Enter the recent Advanced Bionics decision to provide further clarification.

Applying the new Advanced Bionics Framework

The recent Advanced Bionics built upon the Beckton, Dickinson framework to clarify how these factors are applied. The resulting two-part framework for their application is as follows:

1. whether the same or substantially the same art previously was presented to the Office or whether the same or substantially the same arguments previously were presented to the Office; and
2. if either condition of first part of the framework is satisfied, whether the petitioner has demonstrated that the Office erred in a manner material to the patentability of challenged claims.⁵

To determine the first prong of the new Advanced Bionics test, the previous Becton Dickinson factors are used; more precisely, factors (a), (b), and (d), are used to determine whether the same or substantially the same art or arguments were previously presented to the office.⁶ The second prong of the test then uses Becton, Dickinson factors (c), (e), and (f) to determine whether a material error has been made by the Office.⁷ If a condition in part one is satisfied, and the petitioner fails to make a showing of material error, the Director will usually not institute an IPR.⁸ The decision also further elaborated that the Becton, Dickson factors are to be read broadly. Specifically, the decision stated that the consideration of previous art or arguments should not necessarily be limited to any particular process or examination, but rather the factors should include any previous proceeding relating to the matter.⁹

Other Decisions and Implications

On the same day that the Advanced Bionics decision was designated as precedential, there were two more PTAB decisions deemed precedential or informative that followed this new Advanced Bionics two prong analysis using Becton, Dickson factors.¹⁰ These decisions further solidify the new framework for instituting or denying an IPR under 35 U.S.C. §325(d).

The Advanced Bionics decision also has several implications in practice. As already discussed, the Becton, Dickinson factors are now to be read more broadly to encompass any previously presented art and argument. But perhaps more significant is the second prong of the Advanced Bionics test. The second prong first asks, “if either condition of first part of the framework is satisfied” (emphasis added). This means if either the same or substantially same art or argument is presented, then the analysis moves to a determination of whether there was a material error.¹¹ The practical implication of this will undoubtedly lead to more debate over what constitutes a “material error.”

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[1] 35 U.S.C. § 311(a)-(b).
[2] See Becton, Dickinson & Co. v. B. Braun Melsungen AG, IPR2017-01586, Paper 8 (Dec. 15, 2017) (precedential as to section III.C.5, first paragraph).
[3] IPR2019-01469, Paper 6 (Feb. 13, 2020) (precedential).
[4] Becton, Dickinson & Co IPR2017-01586, Paper 8 at 17.
[5] Advanced Bionics IPR2019-01469, Paper 6 at 8-9.
[6] Id. at 9.
[7] Id.
[8] Id. at 8-9.
[9] Id. at 9-10.
[10] See PUMA N. Am., Inc. v. NIKE, Inc., IPR2019-01042, Paper 10 (Oct. 31, 2019) (informative); Oticon Medical AB v. Cochlear Ltd., IPR2019-00975, Paper 15 (Oct. 16, 2019) (precedential as to sections II.B and II.C).
[11] Advanced Bionics IPR2019-01469, Paper 6 at 8-9.

U.S. Supreme Court Rules on Inter Partes Review Time-Bar Decisions

– David Ward

The United States Supreme Court has been using its latest term to resolve a couple issues of statutory interpretation related to intellectual property.¹ The latest of these decisions, Thryv, Inc v. Click-To-Call Technologies, LP, sought to determine whether the Patent Trial and Appeals Board’s (PTAB) time-bar determination of inter partes review is judicially reviewable.² The court answered no, that it is not appealable as an agency decision under 35 U.S.C. § 314(d).³

Background

An inter partes review (IPR) is a petition by a person who is not the owner of a patent seeking to cancel as unpatentable one or more claims of another’s patent.⁴ In the case at hand, petitioner Thryv sought an IPR for respondent Click-to-Call’s patent for an anonymous telephone call system. Thryv had previously filed suit in 2001 for patent infringement, which ended in voluntary dismissal without prejudice.⁵ Click-to-Call’s main argument was that 35 U.S.C. § 315(b) does not allow an IPR to be instituted if the petition requesting it is filed more than 1 year after the service of a complaint alleging infringement of the patent.⁶ The PTAB disagreed, concluding that because the 2001 petition was dismissed without prejudice, it did not trigger § 315(b), and invalidated thirteen of the respondent’s patent claims.

Click-to-Call then appealed, challenging the Board’s ruling on § 315(b). Thryv leaned on 35 U.S.C. § 314(d), which states that determinations of whether to institute an IPR under that section are final and non-appealable. The Federal Circuit Court of Appeals dismissed Click-to-Call’s challenge for lack of jurisdiction.⁷ In 2016, the Supreme Court vacated and remanded the Federal Circuit’s decision in light of Cuozzo Speed Technologies, LLC v. Lee, which expanded the Court’s view of § 314(d) to barring IPR appeals on other grounds.⁸ Upon rehearing, the Federal Circuit Court of Appeals vacated the Board’s ruling, citing their new decision in Wi-Fi One, LLC v. Broadcom Corporation that held that time-bar determinations under § 315(b) are appealable.⁹ The case then made its way back to the Supreme Court to resolve the issue of reviewability of time-bar determinations under § 315(b).

Analysis

Justice Ginsburg, writing for the majority, leans heavily on the rule the Supreme Court settled on in Cuozzo: “that § 314(d) bars review at least of matters ‘closely tied to the application and interpretation of statutes related to’ the institution decision.”¹⁰ The Court found that a § 315(b) challenge fell within that scope. In the majority’s opinion, the intent of Congress in passing this legislation was to weed out bad patent claims and that allowing § 315(b) appeals would go directly against that intent.¹¹ While there is usually a presumption favoring judicial review, both this case and Cuozzo overcome that presumption because allowing appeals would go against the statutory purpose of minimizing overlap between IPRs and patent-infringement litigation.¹² Even though the language of § 314(d) bars appeals only “under [that] section,” the Court found that every decision made “under” that section also relies on other provisions, such as § 315(b).¹³ Therefore, allowing judicial review of time-bar determinations under § 315(b) was not the intent of Congress in passing this legislation. The judgment of the Federal Circuit Court of Appeals that reversed the Board’s ruling was then vacated and remanded with instructions to dismiss for lack of appellate jurisdiction.¹⁴

What does this mean?

Thryv is another in a recent list of Supreme Court cases giving more discretion to the executive branch and Patent Office’s administrative process.¹⁵ The Court’s aim to reduce waste of judicial and other government resources in patent appeals is very apparent in this case. If it wasn’t apparent before, this ruling hammers down the adage of “getting it right the first time” for anyone in PTAB proceedings, as the list of appealable rulings is now one shorter.

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[1] See also Romag Fasteners, Inc. v. Fossil, Inc 140 S. Ct. 1492 (2020).
[2] Thryv, Inc v. Click-To-Call Techs., LP, 140 S. Ct. 1367, 1370 (2020).
[3] Id.
[4] 35 U.S.C. § 311(a)-(b).
[5] Thryv, Inc 140 S. Ct. at 1371; See Inforocket.Com, Inc. v. Keen, Inc., No. 1:01–cv–05130 (SDNY).
[6] 35 U.S.C. § 315(b); Thryv, Inc 140 S. Ct. at 1371-72.
[7] Click-to-Call Techs., LP v. Oracle Corp., 622 F. App’x 907 (Fed. Cir. 2015), cert. granted, judgment vacated, 136 S. Ct. 2508 (2016).
[8] Click-To-Call Techs., LP v. Oracle Corp., 136 S. Ct. 2508 (2016); see Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2142 (2016).
[9] Click-To-Call Techs., LP v. Ingenio, Inc., YellowPages.com, LLC, 899 F.3d 1321, 1341 (Fed. Cir. 2018)
[10] Thryv, Inc, 140 S. Ct. at 1373 (citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2141 (2016)).
[11] Id. at 1375.
[12] Id. at 1374-76.
[13] See 35 U.S.C. §§ 314(d), 315(b).
[14] Thryv, Inc 140 S. Ct. at 1377.
[15] See generally Thryv, Inc 140 S. Ct. at 1367; Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365 (2018); Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016)