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Functional claim language has long been a mainstay of U.S. patent law. In the historic case of O’Reilly v. Morse, 56 U.S. 62 (1853), the famous inventor of the single-line telegraph (Morse) claimed patent rights to the use of electro-magnetism for transmitting a signal–without limit to any “specific machinery or parts.” Id. The Supreme Court found the claim “too broad and covers too much ground.” Although Morse’s claim directed to a single functionally described element was deemed improper, patent attorneys quickly learned that a combination of functionally-claimed elements could work. An example of this is famously seen in the Wright Brothers early aircraft patents. See US821393.

The Supreme Court pushed-back again on functional claims–perhaps most notably in Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946).  In Halliburton, the Supreme Court invalidated Walker’s means-plus-function claims as indefinite after holding that it was improper to claim an invention’s “most crucial element … in terms of what it will do rather than in terms of its own physical characteristics or its arrangement in the new combination apparatus.”  Id. Halliburton can be read as distinguishing between, on the one hand, claim elements that were already well known in the art, and on the other hand entirely new elements.  Well-known functionality will be understood by those skilled in the art as translating to particular machinery or processes.  And, the existence of prior art means that the patent doctrines of obviousness and anticipation will limit unduly broad scope.  On the other hand, newly invented functionality has the potential of resulting in quite broad scope if divorced from the underlying mechanisms of operation.  The Halliburton decision was not a surprise given that the Supreme Court had already repeatedly criticized functional claims.  A good example of that criticism is seen in the 1938 General Electric decision where the court complained about the “vice” of functional claim limitations:

But the vice of a functional claim exists not only when a claim is ‘wholly’ functional, if that is ever true, but also when the inventor is painstaking when he recites what has already been seen, and then uses conveniently functional language at the exact point of novelty.

Gen. Electric Co. v. Wabash Appliance Corp., 304 U.S. 364, 371 (1938).

Halliburton did not stand for long. Rather, the Patent Act of 1952 was expressly designed to overrule Halliburton and revive the use of means-plus-function claims.  The new law, now codified in 35 U.S.C. § 112(b) reads as follows:

(f) ELEMENT IN CLAIM FOR A COMBINATION.—An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.

Id.  You’ll note that the statute does not suggest any difference between well-known or novel elements in their use of means-plus-function language.  One key feature of Section 112(f) is its particularly narrow interpretive scope.  Means-plus-function elements are not interpreted as extending to the full scope suggested by their broad claim language.  Rather, as the statute recites, the scope is “construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.” Id.  Thus, a claim directed toward a “fastening means” appears quite broad on its face as covering all conceivable ways of fastening, but the term would likely be quite narrowly interpreted if the patent specification is also narrowly drafted.  If the specification disclosed a “nail” as its only example, the court would likely limit “fastening means” to only include nails and their equivalents.  Id. (“structure … described in the specification and equivalents thereof.”).

Invalid as Indefinite: Section 112(f) does not tell a court what to do in cases where the specification lacks disclosure of any “corresponding structure.”  The Federal Circuit’s approach is to hold those claims invalid as indefinite under 35 U.S.C. § 112(b). In re Donaldson Co., 16 F.3d 1189 (Fed.Cir.1994) (en banc).  Indefiniteness was also the hook used by the Supreme Court in Halliburton, then codified within Rev. Stat. § 4888.  I am fairly confident that the Supreme Court would affirm the Donaldson precedent if it ever heard such a case. But, as discussed below, this interpretation leads to some seemingly unjust results.

Structure Plus Function: Because of the narrow construction and indefiniteness concern, patent drafters today largely shy-away from using means-plus-function claim language. Still, functional limitations offer powerful exclusive rights if given their full scope. In the marketplace, consumers  ordinarily care more about whether a machine serves its appointed function rather than how it particularly works. A common approach for many skilled patent attorneys is to take advantage of functional limitations while still endeavoring to avoid being categorized as Section 112(f) means-plus-function limitations. This approach is often quite natural as the English language regularly identifies machines and parts by their function: a brake, a processor, a seat.  These terms are inherently functional but are also tied to known mechanical structures.  I call this approach “structure plus function” and it requires a threshold amount of structure sufficient to ensure that the limitation is not MPF. Structure-plus-function regularly results in broader claims than MPF and claims that that are less likely to be invalidated as indefinite. Again, this is nothing new, and they exact type of language discussed by the Supreme Court in its 1938 GE decision. Still, in recent cases the Federal Circuit has been more aggressively putting claims in the Section 112(f) MPF box.  The key case on point is Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015) (en banc).

The MPF rules are particularly pernicious in situations where the claim element at issue is already widely available in various forms.  Since it is already widely available, the inventors (and their patent attorneys) typically feel less need to fully describe and specify particular examples of the well-known element.  That inventor “feeling” is generally supported by strong precedent that a thin specification is appropriate for elements of the invention already known to the public. This well-known-element situation is also outside of the point-of-novelty policy concerns raised by Halliburtan.  So, ordinarily, well known elements need only a thin disclosure within the specification.  An off the shelf-component might not receive any structural disclosure at all other than identifying its name and how it connects-in with the rest of the invention.  BUT, that all changes if the claim element is interpreted as MPF.  If its MPF, the claim scope is limited only to what is disclosed (and equivalents), and a specification without structural disclosure will render the MPF claim invalid as indefinite.  Thus, we have two entirely different drafting approaches that will depend greatly on how the claim is interpreted.  And, following Williamson there is no longer a strong MPF interpretive presumption based upon the presence/absence of traditional MPF language such as “means for.”  What that means practically is that the threshold is high-stakes, but unpredictable.

Recently, the Federal Circuit decided two Section 112(f) cases that push back a bit on Williamson:

None of the claim elements at issue in the cases used the word “means” as a signal of intent.  Still, the two district courts interpreted the limitations as written in means-plus-function form. In addition, both district courts concluded that the claims were invalid as indefinite since the specifications lacked disclosure of corresponding structure.

The first step in 112(f) analysis is to determine whether a claim element should be classified as a means-plus-function claim.  The most obvious clue is whether the element is written in traditional means-plus-function style–using the word “means” and also including some functional purpose.  An element that does not use “means” is presumptively not a means-plus-function claim.  However, that presumption is not longer a strong presumption. Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015) (en banc).  And, the presumption can be overcome by a showing that the claim “fails to recite sufficiently definite structure or else recites function without reciting sufficient structure for performing that function.” Id. (internal quotation marks removed).  In addition, “nonce words” are seen as effectively using the word “means.” Id.   Taking all this together, we know that Williamson is a quite important decision. It (1) moved away from a strong presumption against MPF interpretation absent “means” language and (2) established the “nonce word” doctrine. Not surprisingly, the case is the most-cited Federal Circuit decision of 2015.  Still, some members of the court appear to see Williamson as potentially going too far, and that can be seen in the Dyfan and VDPP decisions by Judges Lourie (in both); Dyk, Stoll, Newman, and Taranto.

Claim Construction: The question of whether a claim element is in means-plus-function form is part of claim construction. It is thus the role of the court (rather than a jury) to decide and is ordinarily seen as a question of law with de novo review on appeal.  One exception  to this is comes when a party presents evidence leading to underlying factual  conclusions. Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 574 U.S. 318 (2015). Those factual conclusions are given deference on appeal.  Id. In some cases, the factual conclusions may conceivably so intertwine with the legal conclusions that the ultimate claim construction should also be treated as a mixed-question of law and fact and thus given deference on appeal.  (This last sentence should be seen as my speculation on the correct rule rather than black-letter caselaw.)

In most situations, claim construction is purely a question of law and comes-in most commonly when the parties are endeavoring to show the level of understanding of a person of skill in the art (POSA).  For MPF interpretation, this type of expert factual evidence appears to be more common than ordinary claim construction as the parties endeavor to show that a particular claim element would be understood as connoting “structure.” See Zeroclick, LLC v. Apple Inc., 891 F.3d 1003 (Fed. Cir. 2018).

Dyfan’s patents are directed to location-based triggers in mobile phones. Coincidentally, I used my idea of this technology in my internet law course recently in our discussion of privacy law–imagining Ads pop-ups based upon a user’s particular micro-location. In our example here, imagine that as you walk near the vacuum cleaner aisle of Target, your phone receives a “targeted” vacuum cleaner advert or coupon.

The Dyfan claim is directed to a “system” and requires “code” to cause a mobile device to output “visual information” based upon “location-relevant information.”  The claim’s “wherein” clause requires certain timing of the outputs (automatic output of visual information after receiving a communication receipt but without requiring a separate “first message”).  The wherein clause ties itself to the “system” (“wherein the system is configured…”) and does not state if the action is also done by the code. Thus, the courts identified this clause as the “system” element.

The district court found these two claimed elements to lack “structure” and therefore interpreted them as MPF elements.  At step two, district court examined the disclosure documents found no corresponding structure within the specification.  The result then is that the Code and System elements were un-construable and the entire claim invalid as indefinite.

On appeal, the Federal Circuit reversed and remanded–holding that the district court had improperly shifted the burden to the patentee to prove that the elements were not MPF.  This presumption of no-MPF exists because the claims did not use the term “means.” In its decision, the appellate court began in an odd way by stating that overcoming the presumption requires “a preponderance of the evidence.”  I call this ‘odd’ because preponderance of the evidence is the standard used for questions of fact rather than questions of law. As I mentioned, claim construction has been repeatedly deemed a question of law except for limited circumstances.  Here though, there was expert testimony that those skilled in the art would understand “code” to be a particular term of art that encompasses a computer program, and that “off-the-shelf-software” was available to perform the specific function claimed.  On appeal, the Federal Circuit began with a presumption that the code was not-MPF, and that presumption was further solidified by the unrebutted testimony indicating structure.  As part of this, the appellate panel also rejected the notion that the code limitation was “purely functional.”

The system limitation is a bit more complicated — certainly the “system” has structure.  The claim actually requires that the system include a physical building. But, the claim also requires that the system be “configured such that” messages are sent in a particular order and based upon particular triggers.  “A system comprising . . . wherein the system is configured such that . . . .”  Section 112 speaks in terms of an “element”, and the court was faced with the question of whether (1) the system itself is the element, or instead (2) the element is the sub-part of the system that performs the claimed function.  On appeal, the Federal Circuit did not decide this question, but instead held that the claims provide sufficient structure either way.  The court particularly noted that the aforementioned ‘code’ is part of the system and it it is pretty clear that the code would be doing the work here as well.

Although the wherein clause does not expressly refer to the previously recited “code,” it references specific functions that are defined or introduced in the code limitations and thus demonstrates that it is the code that performs the function recited in the wherein clause.

Slip Op. Since these claim elements included sufficient structure, the appellate panel concluded that they were not written in means-plus-function form. And, as a consequence the indefiniteness ruling

VDPP is non-precedential, but reaches the same results. And, although decided only one-day after Dyfan, it favorably cites that decision and particularly the shifting of burdens and evidentiary requirements.  VDPP’s patents relate to technology for blending 2-D video streams so that they appear 3-D. US9699444B2 claim 1 is directed to “an apparatus” having two elements: (1) a storage and (2) a processor.  The storage is “adapted to store one or more frames.”  The processor has a number of  claimed functions, including obtaining and expanding an image; creating a ‘bridge frame’ that is a “non-solid color”; and blending various frames for display.   The patent has a 2001 priority date, and the claims here have shifted substantially to capture market development.

The C.D.Cal. district court determined that VDPP’s claimed  “processor” and “storage” elements were both subject to § 112(f) since they “do not describe how to carry out the recited functions—only that they do” somehow accomplish those functions.  That statement appears almost lifted from Halliburton’s definition of means-plus-function claiming.  In another pithy restatement of its conclusions, the district court also identified each term as a “black box for performance of a function.” On appeal the Federal Circuit reversed–holding that the “processor” and “storage” elements contained sufficient structure.

In the case, the district court “summarily concluded that the limitations [were] subject to § 112(f).”  On appeal, the Federal Circuit found that erroneous because claims without the “means” term are presumed to not be MPF.  This issue here seems to get to the heart of the nonce-word debate. My understanding of ‘nonce words’ is that they are presumed to be MPF triggers.  Thus, the district court’s opinion appears to be based on its conclusion that the processor and storage are “nothing more than nonce words.”  On appeal, however, the Federal Circuit took a different path. Rather than starting with the nonce work question, the court began with the presumption of no-MPF absent the word “means.”  The court then quoted Dyfan’s statement that overcoming the presumption requires evidence.

Vizio was required to provide at least some evidence that a person of ordinary skill would not have understood the limitations to ‘recite sufficiently definite structure[s].’

Slip Op. (quoting Dyfan).  The district court had avoided this presumption by identifying the terms as nonce words. That approach was apparently wrong: “The court pointed to no such evidence from Vizio, instead summarily concluding that the limitations are subject to § 112(f). . . That is insufficient to overcome the presumption against application of § 112(f).” Perhaps the best way to reconcile the developed doctrine here is that a district court should not identify a word as a ‘nonce’ word based upon reasoning alone. Rather, that determination requires some sort of evidence.  In VDPP, the court again referred back to Dyfan and shows district courts how to cite the case:

Vizio’s arguments are particularly unpersuasive in view of our holding in Dyfan . In Dyfan , the district court determined that the limitations “code” and “application” were subject to 112(f). We reversed the district court’s construction of those terms (among others), explaining that the court did not give effect to the presumption against § 112(f). More specifically, we held that the defendant failed to show “that persons of ordinary skill in the art would not have understood the ‘code’/‘application’ limitations to connote structure in light of the claim as a whole.” That same rationale applies here. As explained above, the court ignored that it was Vizio’s burden to rebut the presumption against § 112(f), and Vizio failed to meet that burden.

Slip Op.  I’ll just note that this type of talk of ‘presumption’ and presumably external ‘evidence’ is radically different from how the court usually discusses claim construction.  Rather, claim construction is a question of law where we are searching for the proper construction.  Typically neither party has a burden of proving a question of law.

In VDPP, the district court also pointed to evidence presented that the storage and processor are known structural forms.  The patentee had fallen into the pernicious trap noted above by explaining in the specification that that “processors” and “storage” are “well-known” in the art.  Here, the court concluded that the specification statement that these are “well known” provides good evidence that the terms were not intended as MPF (without further elaboration or explanation of the reasoning here).

The one problem with the court’s analysis in VDPP is that it implicitly concludes that the “processor” counts as the “element” for MPF analysis.  But, the claim is directed to a particular function, not simply a “processor for processing.” Here, for instance, the claim requires “a processor adapted to: obtain a first image frame from a first video stream; ….” Although a general processor may be well known, a processor “adapted” as claimed was not well known in the art, and the question that the court needs to ask with regard to structure is whether the claim itself provides the structure for performing the recited function.

As you can see, this area is ripe with historical confusion, statutory bright lines, and shifting precedent.  I expect that the court will continue to develop precedent, but I expect that this pair of cases will begin to tone-down the impact of Williamson while also shifting litigation tactics.

I’ve written a number of times about the Supreme Court’s old decision in Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946).  Walker’s patent claimed a “means . . . for tuning” a sound filter to a particular vibration frequency while looking for an oil-well blockage.  The Supreme Court found the claim problematic because it did not claim the physical characteristics of the invention’s point-of-novelty, but instead that tuning element was claimed as a means for accomplishing its function.  The decision noted that some of the patent’s claims did include physical details of the tuning mechanism, but those claims had not been asserted in the case.

The particular holding in Halliburton was that Walker’s patent claim was invalid as indefinite because it used means-plus-function claim language at the point of novelty.  Halliburton was overturned by the Patent Act of 1952 with creation of a statutory right to include means-plus-function elements in combination claims. 35 USC 112(f).  I wonder though whether under the new law, the Supreme Court might have found an alternative mechanism for invalidating the claim, such as full-scope enablement, full-scope written description, or ineligible subject matter.

I draw attention to Halliburton because of its similarity to the patent in American Axle.  The AmAxle patent claims a method of manufacturing a drive-shaft, with the apparent point-of-novelty being “tuning [a] liner to attenuate at least two types of vibration.” US7774911.  Although this claim is perhaps not entirely functional, the Supreme Court has also chastised partially-functional claiming:

But the vice of a functional claim exists not only when a claim is ‘wholly’ functional, if that is ever true, but also when the inventor is painstaking when he recites what has already been seen, and then uses conveniently functional language at the exact point of novelty.

Gen. Electric Co. v. Wabash Appliance Corp., 304 U.S. 364 (1938).

If the court ends up granting certiorari in American Axle, I expect these parallels will see further development.

By the time the Federal Circuit opines about a particular patent, that patent is usually at least 8 years old (median). I was wondering about the shortest time from patent-issuance to Federal Circuit written decision.  The fastest I could find (for the past decade) is M-I LLC v. FPUSA, LLC, 626 F. App’x 995 (Fed. Cir. September 24, 2015) (non-precedential).

M-I’s US9004288 issued Apr. 14, 2015 and directed to a system for recovering drilling fluid by using an improved “shaker.”  A month later, May 15, 2015, M-I sued FPUSA for patent infringement in W.D.Tex and requested a preliminary injunction.  The district court reviewed the equitable factors and granted the preliminary injunction on June 24, 2015. As was its right, FPUSA immediately appealed — filing its notice of appeal five days later along with a motion to expedite.  The Federal Circuit granted that motion.  Appellate was complete on September 8, and the court heard oral arguments on September 16.  Eight days later, the court released Judge Hughes 7-page non-precedential opinion that affirmed-in-part.  In particular, the court agreed that the preliminary injunction was proper, but concluded that the district court should have more carefully prescribed the scope.  “[T]he preliminary injunction is overbroad … As we have previously held, broad injunctions that merely instruct the enjoined party not to infringe are improper because such an order frustrates the remedy of contempt.” Id.

Total time from patent issuance to written decision: 163 days.

Note – This data comes from my own compilation of patent data combined with some of Prof. Rantanen’s work available here: Jason Rantanen, “Federal Circuit Docket Dataset”, https://doi.org/10.7910/DVN/EKSYHL, Harvard Dataverse, V3 (2021).  I’ll note that these are preliminary statistics and so it is possible that there is another case with a faster opinion.

One of the longest-delays from the past several years is found in Dome Patent LP v. Lee, 799 F.3d 1372 (Fed. Cir. 2015).  The patent at issue there was granted in 1981, almost 34 years before the appellate decision. US4306042 (Oxygen permeable contact lens material).  Dome had filed the infringement lawsuit in 1997 — not much before the time of patent expiration.  The defendants sent the patent through reexamination. After losing at the PTO on obviousness, the patentee filed a civil action to confirm patentability (this is no longer allowed for reexams). That whole process took more than a decade to resolve.  Finally in 2015, the Federal Circuit affirmed — holding the claims invalid as obvious.

New pending petition for certiorari in Interactive Wearables, LLC v. Polar Electro Oy, 21-1281 (Supreme Court 2022) on patent eligibility grounds.

The patents-in-suit are directed to an electronics hardware device comprising a content player/remote-control combination having numerous concretely-recited components that undisputedly qualifies as a “machine” or “manufacture” under the statutory language of 35 U.S.C. § 101. Nevertheless, the court below found the claims of the patents-in-suit invalid under Section 101, on a motion to dismiss, for claiming nothing more than the abstract idea of “providing information in conjunction with media content.”

As a justification for disregarding each recited structural component from its characterization of what the claims are “directed to,” the court resorted to a factual, enablement-style analysis of the level of detail in the specification and declared it insufficient to support patentability.

1. What is the appropriate standard for determining whether a patent claim is “directed to” a patent-ineligible concept under step one of the Court’s two-step framework for determining whether an invention is eligible for patenting under 35 U.S.C. § 101? [Repeat of American Axle question presented]

2. Is patent eligibility (at each step of the Court’s two-step framework) a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of art at the time of the patent? [Repeat of American Axle question presented]

3. Is it proper to apply 35 U.S.C. § 112 considerations to determine whether a patent claims eligible subject matter under 35 U.S.C. § 101? [New question]

In the case, the E.D.N.Y. district court dismissed the infringement lawsuit at the pleading stage — holding that the asserted claims were ineligible as a matter of law.  On appeal, the Federal Circuit affirmed with a R.36 opinion-free judgment.

Editors note – I invited Professor Nina Mendelson (University of Michigan Law School) to author a guest post after reading her 2020 Admin. Law Review article titled “The Permissibility of Acting Officials: May the President Work Around Senate Confirmation?”  The revived Arthrex case raises temporary appointments issues and asks whether Dir. Hirshfeld has the legal power to fulfill the expanded job as required by the Supreme Court’s decision. — Dennis Crouch

Guest post by Nina Mendelson,

Following one Supreme Court decision posing dangers for the integrity of all sorts of agency adjudication, the ongoing litigation in Arthrex v. Smith & Nephew, set for argument in the Federal Circuit next week on remand from the Court, may well spawn another ruling with important implications for the administrative state. That is the question of how much latitude agencies have to operate notwithstanding vacancies in principal officer positions. This post will cover the major statutory and constitutional questions raised in the case.

In Arthrex, a case arising out of the Patent Trial and Appeal Board’s invalidation of Arthrex’s patent claims, the Court’s majority found a constitutional violation in the statute’s allocation of inter partes review authority to the administrative patent judges (for the most part not-Senate-confirmed) who serve on PTAB, reasoning in part that, to assure political accountability, a Senate-confirmed principal officer must have final decision authority. A different coalition of Justices agreed on the remedy of severing the statutory review constraint on the PTAB’s inter partes review decisions. The Court figured this ruling would leave the Presidentially-appointed, Senate-confirmed US Patent and Trademark Office (“USPTO”) Director with full review authority in those cases.  (My colleague Rebecca Eisenberg and I have criticized United States v. Arthrex and its implications over at the Notice and Comment blog.)

Problem not solved, unfortunately.  Along with many other positions across the government requiring Senate confirmation, the USPTO Director post has been vacant since President Biden’s inauguration, now 14 months ago. Recent years have seen substantial delays in both presidential appointment and Senate confirmation of top officials, with plenty of blame to go around for widespread vacancies.

President Biden finally nominated Kathi Vidal as the next USPTO Director on January 13, 2022, and her confirmation is pending in the Senate. Meanwhile, Commissioner of Patents Drew Hirshfeld, appointed by the Secretary of Commerce and not Senate-confirmed, is presently claiming the office’s authority pursuant to a 2016 document executed by the then-USPTO Director Michelle Lee. The document, relying on the Director’s general management supervision authority, purports to grant the Commissioner of Patents the authority to carry out the “non-exclusive functions and duties” of the USPTO Director if both the Director and Deputy Director posts are vacant. On the agency’s website, Hirshfeld is not described as “acting USPTO Director,” but instead as “performing the functions and duties of the . . . Director.” In that capacity, Hirshfeld denied review of the PTAB decision invalidating Arthrex’s patent claims on October 15, 2021.

The parties have asked the Federal Circuit to address whether Hirshfeld’s claim to act based on the delegation document violates the main statute authorizing the selection and service of acting officials, which is the Federal Vacancies Reform Act (“FVRA”) of 1998, or the Appointments Clause. A lot turns on this issue, because, as I and others have written elsewhere, this tactic has been increasingly used to fill vacancies in Senate-confirmed posts without complying with the FVRA’s restrictions on “acting officials.” Officials have relied recently on delegations to claim the power to lead the Social Security Administration, Bureau of Land Management, and the Fish and Wildlife Service, not to mention to serve as the Deputy Director of Homeland Security. The result is a significant corps of shadow acting officials who use a title something like Hirshfeld’s:  not, “Acting Director” or “Acting Secretary,” say, but instead, “Performing the Duties and Functions of the [USPTO] Director.” Perhaps unlike Hirshfeld, these officials may have little experience and may claim the ability to serve long past the FVRA’s time limits. Professors Jody Freeman and Sharon Jacobs have characterized this practice as among those making agency personnel overly vulnerable to inappropriate Presidential staffing decisions. The Federal Circuit has an unusual opportunity to assess its legality.

Under the FVRA, the most recent iteration of the federal vacancies law first enacted in 1868, Congress carefully delimited who can serve as an “acting officer,” and for how long, when a Presidentially-appointed, Senate-confirmed (“PAS”) post is vacant. Appointments and confirmation take time under the best of circumstances, and Presidents need some ability to ensure the government can continue to operate. The FVRA authorizes acting service in a vacant PAS post by a “first assistant” or else a Presidentially-selected senior agency official (GS-15 level or the equivalent) or other official Senate-confirmed for a different post. The FVRA allows an acting official to serve for 210 days, extended to 300 days after a President’s first inauguration (or while a nomination is pending in the Senate and in some other circumstances).  But Hirshfeld is not qualified to “act” under these categories. He is not a “first assistant.” And although he likely was eligible to act under the FVRA as a senior agency official, the President did not select him.

Does the 2016 USPTO document authorize Hirshfeld to act even if the FVRA does not?  The FVRA’s main text suggests it cannot, because the statute’s “exclusivity provision” states that the statute is the “exclusive means for temporarily authorizing an acting official,” except for another statute “expressly” authorizing an acting official. The exclusivity provision specifically bars reliance on a statute “providing general authority” to an agency head to “delegate” or “reassign” duties. The FVRA’s legislative context also supports the conclusion that the delegation strategy is impermissible. At the time Congress took up the vacancies law for reform, Clinton Administration Attorney General Janet Reno had invoked the Justice Department’s organic statute to delegate the responsibilities of the Solicitor General and multiple Assistant Attorneys General, offices requiring Senate confirmation, to individuals whom the Senate had declined to confirm. That raised Congress’s ire. Besides the FVRA’s “exclusivity” provision discussed above, legislative history included statements that the bill was meant to clarify that this sort of reliance on general management statutes was foreclosed, (see p. 17), and to “restore [the] constitutionally mandated procedures” of Presidential appointment and Senate confirmation (see p. 8).

Some have argued that other language in the FVRA nonetheless implicitly permits the delegation strategy.  The argument here is based on the FVRA’s complex enforcement provision, 5 U.S.C. 3348. Section 3348 specifies – bear with me here — that an action taken “in the performance of any function or duty” that is not in conformity with the FVRA “shall have no force or effect” and, furthermore, may not be ratified later by a legally serving officer. But Section 3348 then defines “function or duty” “[i]n this section” as “any function or duty” that is “established by statute [or regulation]”—and “required by statute [or regulation] to be performed by the applicable officer (and only that officer).” For such a function or duty, the enforcement provision specifies that if the office is vacant, “only the head of such Executive agency” may perform it. Defenders of the delegation strategy have pointed out that the “required . . . to be performed by the applicable officer (and only that officer)” language means that the enforcement provision voids only nondelegable functions when carried out by an improperly selected official. In spite of statutory text limiting the special “function or duty” definition to “this [enforcement] section” (rather than the entire Act), delegation defenders go on to argue that delegable functions should be understood as broadly exempt from all the FVRA’s requirements. On that view, responsibilities of a vacant Senate-confirmed office may be delegated to any official notwithstanding the Act, unless they are functions vested by a statute or regulation in a particular “officer (and only that officer).” The government persuaded the D.C. Circuit to accept this argument in one recent case, but in a different agency setting, a D.C. district judge saw things differently. The main selling point of such a reading is that it would surely increase the flexibility of agency heads to get the government’s work done notwithstanding confirmation delays. Its advocates also claim support in some legislative history statements (e.g., p. 18).

On the other hand, legitimating the delegation strategy could largely eliminate the FVRA’s application and undercut the President’s incentive to formally appoint PAS officials and seek Senate confirmation. This is because courts have repeatedly found subdelegation of agency functions to be presumptively permissible, whether by statute or regulation. Meanwhile, statutory and regulatory provisions that restrict such delegations by assigning duties exclusively to a particular officer are very rare. This reading also would make trivial the language in the Act’s exclusivity provision specifically barring reliance on general delegation statutes. It would render the FVRA ineffective to address the concerns that motivated the 1998 Congress–the Clinton Administration Justice Department’s use of delegations to empower unconfirmed officials to carry out PAS office responsibilities. Some might be concerned that the FVRA would not be enforceable against delegations of PAS office authority because its main enforcement provisions apply to nondelegable functions. But the FVRA’s enforcement provision is not the sole means of enforcing the FVRA. Courts can set aside any agency action taken by unauthorized officials as contrary to law under the Administrative Procedure Act, though the action could still be upheld if it were ratified later by a properly serving official, as one federal district judge has explained.

(Arthrex also argues that the Court’s holding requiring a principal officer decision renders the USPTO Director’s review authority statutorily nondelegable under the FVRA, so that Hirshfeld cannot receive the authority by delegation. This argument is unpersuasive, however, because the Arthrex holding establishing directorial review is rooted in the Appointments Clause. The opinion eliminates statutory language rather than interpreting it.)

In assessing the challenge to Commissioner Hirshfeld’s review of the PTAB’s invalidation of Arthrex’s patent claims, the Federal Circuit thus has an important opportunity to weigh in on whether agencies can legally delegate around vacant PAS offices, without concern for the qualifications of the official or the length of time they serve, or whether, instead, the FVRA precludes the creation of such shadow acting officials.

All this said, if the Senate confirms Kathi Vidal as USPTO Director soon, the Administration has a chance to make this statutory issue disappear. Because the statute and regulations do not appear to preclude a USPTO Director from revisiting review of a PTAB decision, Vidal could independently reconsider and potentially ratify the October 15, 2021, Hirshfeld decision rejecting directorial review of the PTAB decision invalidating Arthrex’s patents.

Arthrex also challenges Hirshfeld’s service as an Appointments Clause violation. Despite that clause’s requirement of Presidential appointment and Senate confirmation for principal officers, constitutional doctrine has long tolerated at least some “acting” service by unconfirmed officials. Although the courts have yet to decide precisely how much service the Appointments Clause permits—or for how long—the likelihood that Arthrex will succeed in establishing a constitutional violation is small. The leading Supreme Court decision, United States v. Eaton, decided in 1898, approved as constitutional an unconfirmed acting general consul’s service in Bangkok. The consul general took a leave of absence for illness, and a missionary was designated to “act” by the consul general (with the State Department’s approval) for roughly ten months until a properly commissioned vice consul arrived. The Court upheld the acting officer’s service in the principal officer role as constitutional, noting that the officer was doing the work “under special and temporary conditions.” (The Court later described the acting official as a properly serving inferior officer.)

The precedential reach of Eaton today is unclear. Although the Court permitted ten months of acting service in Eaton, one might consider consular work comparatively lower impact and the need to cover the post significant, given the difficulties of travel from the U.S. to Bangkok at the time. Perhaps ten months of acting service would not be constitutionally tolerable for highly consequential domestic positions. But Justice Roberts, writing for a majority in National Labor Relations Board v. SW General, also commented that the FVRA represents “Congress . . . account[ing] for [the] reality” that a Senate-confirmed office’s responsibilities may go unperformed if a vacancy arises, thus giving the President “limited authority to appoint acting officials to temporarily perform” those responsibilities. (emphasis added). This was dicta, since the Court found that the service of the official in question violated the FVRA and did not reach the Appointments Clause issue. But the Court may have been hinting that the FVRA’s identification of eligible acting officials and minimum authorization of 210 days of service might be generally constitutionally acceptable. Justice Thomas, concurring, was the only Justice to argue that the official’s service of more than three years without Senate confirmation should be considered an Appointments Clause violation as well. Lower court rulings have offered little guidance, generally rejecting Appointments Clause challenges to acting officials, although one district court found an Appointments Clause violation in an unconfirmed official running the Bureau of Land Management for fourteen months pursuant to a delegation document that the court also found to be invalid.

In this case, Hirshfeld’s significant power to decide, unilaterally, the validity of patent claims challenged in inter partes review weighs in favor of a stricter reading of the Appointments Clause. Hirshfeld is not Senate-confirmed even in the Commissioner position. On the other hand, Hirshfeld is not exercising Cabinet-level powers, and President Biden submitted a nomination for Senate consideration less than a year after Hirshfeld began exercising the Director’s powers. Other officials serving based on delegation documents have served far longer than Hirshfeld. A ruling that Hirshfeld’s service violates the Appointments Clause could disrupt the operation of numerous agency offices, since many officials have served for similarly lengthy periods. I have argued that the Appointments Clause ought be interpreted to permit only very short periods of acting service for Cabinet-level principal officers and roughly four months for below-Cabinet-level principal officers such as the Director, far shorter than Hirshfeld’s service. But under current doctrine, as vague as it is, Arthrex’s Appointments Clause argument looks to be a long shot. If Kathi Vidal is confirmed and undertakes an independent review of the PTAB’s decision on the Arthrex patent claims, that may obviate the need to address the Appointments Clause issue altogether.

Otherwise, however, the Arthrex litigation is one of the rare cases in which a court may have the opportunity to address the legality of the in-the-weeds strategy of delegating powers around vacant PAS offices. To make the FVRA effective and to encourage the President’s proper use of the confirmation process, the Federal Circuit should interpret the FVRA to prohibit the practice.

Nina A. Mendelson is the Joseph L. Sax Collegiate Professor of Law at the University of Michigan Law School. 

Does the Temporary PTO Director have Arthrex Authority?

Is it time for Congress to overturn eBay v. MercExchange (2006) and create a presumption that an injunction will follow a determination of patent infringement?

— Dennis Crouch (@patentlyo) March 23, 2022

Cisco Systems v. SRI Int’l. (Supreme Court 2022) [Petition for Writ of Certiorari]

In a new petition for writ of certiorari, Cisco asks for guidance on whether enhanced damages under Section 284 require “egregious infringement behavior” or instead is it enough to find “deliberate or intentional infringement?”

The case has been up and down already.  Here are the basics:

The starting point for enhanced damages should begin with the statutory text found in 35 U.S.C. § 284.   The text is simple and open ended and does not place any substantive limitations on the court about when damages may be enhanced: “the court may increase the damages up to three times the amount found or assessed.” § 284.  Section 284 should be contrasted with Section 285, which allows for award of attorney fees to the prevailing party, but only in “exceptional cases.”

The Supreme Court discussed enhanced damages in some depth in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016).  In that case, the Supreme Court rejected the Federal Circuit’s somewhat rigid two-part test for enhanced damages in favor of a more flexible approach coupled with district court discretion.  The court’s “principal problem” with prior Federal Circuit precedent was “that it require[d] a finding of objective recklessness in every case before district courts may award enhanced damages.”  In Halo, the court noted that the objectively reckless standard meant that “many of the most culpable offenders”, “deliberate wrongdoers” could be excluded from punishment by cobbling together an excuse after-the-fact.  The court cited to its old precedent in Seymour v. McCormick, 16 How. 480 (1854) – focusing on punishing the “wanton and malicious pirate” who intentionally steals the patentee’s business.

For the most part, the old cases cited by the Supreme Court generally focus on “wanton and willful breaches” by the defendant as justification for enhanced damages.  Thus, we generally speak of enhanced damages only in terms of “willful infringement.” Some old cases used enhanced damages for full compensation, but the Supreme Court in Halo concluded that those justifications were eliminated by the merger of Law & Equity and the availability of attorney fees under Section 285.

With this background, the adjudged infringer here argues that it should not be held liable since – as the district court held, “[t]here is no substantial evidence that Cisco’s infringement was ‘wanton, malicious, and bad-faith.’”  The argument here was that the jury’s verdict of willfulness was wrong as a matter of law.  On appeal, the Federal Circuit concluded that a jury can find willfulness absent any showing of maliciousness or bad faith.  Rather, a jury verdict of willfulness can instead be supported by evidence of  “deliberate or intentional infringement.”  Here, evidence of knowledge of the patent followed by induced infringement and then coupled with weak trial defenses were sufficient for a reasonable jury to find the infringement willful.

The enhanced damages does not mention willfulness, but the courts have agreed that willfulness is a primary justification for enhancing damages. The ordinary procedure in these cases is that the judge permits the jury to determine willfulness and then  the judge herself decides whether to enhance damages.  The Cisco decision does not delve deeply into this, but the Halo could be read as requiring that the judge find that the defendant was culpable beyond simply intentionally infringing.  “The sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or—indeed—characteristic of a pirate.”

In Cisco, the district court identified additional reasons beyond just willful infringement: “Cisco’s  litigation conduct, its status as the world’s largest networking company, its apparent disdain for SRI  and its business model, and the fact that Cisco lost on all issues during summary judgment and trial, despite its formidable efforts to the contrary.”  On appeal, the Federal Circuit found those reasons sufficient for doubling the damage award even without a finding that the infringement was more egregious than your typical willful infringement.

[UPDATED on 4/3/2002 – Thanks to Prof. Tom Cotter for pointing out an error in my prior analysis.]

One note: the jury was instructed to only find willfulness upon “clear and convincing evidence” that the “defendant actually knew or should have known that its actions constituted an unjustifiably high risk of infringement of a valid and enforceable patent.”

Guest Post by Professor Jorge L. Contreras

On March 8, 2022, five U.S. senators[1] introduced the “Defending American Courts Act” (DACA) in the Senate Judiciary Committee.  If enacted, DACA would penalize parties that assert foreign anti-suit injunctions (ASIs) in U.S. patent infringement proceedings, effectively creating a statutory “anti-anti-suit injunction” (AASI) applicable in all courts across the U.S.  In this post, I briefly consider the reasons behind the DACA and its potential impact.

The Controversy over ASIs in FRAND Cases

The controversy over ASIs has been brewing for several years.  As I have discussed at length elsewhere, ASIs are in personam procedural remedies that have existed under the common law for centuries. Essentially, an ASI is issued by a first court to prevent a party from pursuing litigation in a second court when it would interfere with the proceedings in the first court. ASIs have been issued routinely by courts in the U.S. and UK, for example, to prevent a party from pursuing litigation over a matter that is subject to an arbitration agreement.

Beginning in 2012, however, ASIs emerged as litigation tools in suits involving the licensing of standards-essential patents (SEPs).  Under the rules of several major standards-development organizations (SDOs), SDO participants that hold patents that are essential to products implementing the SDO’s standards must license those patents to product manufacturers (implementers) on terms that are “fair, reasonable and nondiscriminatory” (FRAND).  Because SDOs, as a rule, do not specify the level of FRAND royalties, SEP holders and implementers sometimes disagree over the amounts that should be paid. Litigation ensues, both as to the SEP holder’s compliance with its FRAND commitment, and the implementer’s infringement of the SEPs (given that it does not yet have a license).  And because many of the markets for standardized products (e.g., smartphones, laptops and gaming devices) are international, litigation is often prosecuted in several countries simultaneously.

In 2012, Microsoft and Motorola were engaged in such a dispute.  Microsoft sued Motorola for violation of its FRAND commitments to two SDOs in a U.S. district court.  Motorola brought an infringement action against Microsoft in Germany.  The German court, finding infringement, issued an injunction against Microsoft’s infringing activity in Germany.  Microsoft then sought an ASI from the U.S. to prevent Motorola from enforcing the German injunction.  The district court granted the ASI on the basis that the parties were the same, the resolution of the U.S. matter would dispose of the German matter, and the continuation of the foreign litigation would frustrate U.S. policies against avoiding inconsistent judgments, forum shopping and engaging in duplicative and vexatious litigation (871 F. Supp. 2d 1089, 1098-100 (W.D. Wash. 2012), aff’d 696 F.3d 872 (9th Cir.)).

ASIs and FRAND Litigation in China

In 2017, the UK High Court (Patents) established a global FRAND royalty rate in Unwired Planet v. Huawei, a case involving the infringement of a handful of UK SEPs.  Courts in China soon followed suit, assessing FRAND rates applicable around the world (Peter Yu, Yu Yang and I discuss this trend here). In response, parties litigating FRAND cases in the U.S. sought ASIs to enjoin their counterparties from pursuing those actions in China, at least until U.S. courts could make their own FRAND determinations.  In at least two of these cases, U.S. courts issued ASIs prohibiting actions in China (TCL v. Ericsson, 2015 U.S. Dist. LEXIS 191512 (C.D. Cal.), and Huawei v. Samsung, No 3:16-cv-02787-WHO (N.D. Cal., Apr. 13, 2018) – both cases are discussed here).

Then, beginning in 2020, Chinese courts began to issue ASIs of their own, this time prohibiting competing actions in the U.S., Europe, India and elsewhere.  During the course of 2020, Chinese courts, including the Supreme People’s Court, issued an unprecedented five ASIs to prevent parties from pursuing foreign actions that could interfere with their own proceedings (these ASIs are discussed here).

In response to this move, courts in the U.S., Germany, France and India began to issue anti-anti-suit injunctions (AASIs), prohibiting the parties before them from seeking ASIs (discussed here and here and here).  Not surprisingly, some courts, including those in China, then issued anti-anti-anti-suit injunctions (AAASIs) to prevent parties from seeking AASIs – a procedural spiral that I have referred to as “anti-suit injunctions all the way down”.

Political Responses to Chinese ASIs

The increasing use of ASIs by Chinese courts has led to political responses in the U.S. and Europe.  In February, the European Union filed a complaint in the World Trade Organization over China’s lack of transparency in issuing ASIs against European parties. And in April 2021, the U.S. Trade Representative described China’s increasing use of ASIs as “worrying” in her Special 301 Report.

The DACA also seeks to address this situation.  Senator Thom Tillis, in introducing the bill, stated “The Chinese Communist Party’s attempt to make Chinese courts the world arbiter of intellectual property must be stopped.” The bill’s sponsors explain that its purpose is “to prevent China from stealing intellectual property from American companies through their corrupt court system.”  Thus, while the text of DACA speaks to all “foreign” ASIs, the bill seems targeted directly at Chinese proceedings.

The Defending American Courts Act

If enacted, DACA would impose two types of penalty on a party that seeks to restrict an action for patent infringement before a U.S. court or the International Trade Commission (ITC) through the assertion of a foreign anti-suit injunction.  First, the party is prohibited from challenging the asserted patent at the Patent Trial and Appeals Board (PTAB) (Sec. 2(c)).  Second, if the party is found to infringe the patent, the infringement will be presumed to be “willful” for purposes of enhancing damages under Section 284 of the Patent Act, and the action will be deemed “exceptional” when determining whether to award attorney fees under Section 285 (Sec. 2(b)).

The text of DACA is not particularly detailed, leaving open many questions regarding the proceedings, both foreign and U.S., that would be affected (e.g., Does DACA affect PTAB actions initiated prior to the assertion of a foreign ASI? If so, is there any effect on preclusion of district court invalidity challenges under the recent CalTech v. Broadcom case? Is an action still deemed “exceptional” for awards of attorneys’ fees even if the asserted patents are eventually invalidated?)  Hopefully some of these gaps will be filled as and if the bill moves through committee.  To this end, DACA also calls for the USPTO to conduct a study of “the harms resulting from anti-suit injunctions” (Sec. 3(a)(2)) within one year of the enactment of the Act.  Perhaps it would make sense for this study to be conducted before legislation like DACA is adopted, to determine what harm, if any, should be addressed, and what the most appropriate response might be.

DACA as a Legislative AASI?

Despite the rhetoric accompanying its introduction, the measures that would be imposed by DACA are relatively modest. While one could conceptualize DACA as a legislative version of the AASI, it does not actually prohibit parties from seeking or asserting foreign anti-suit injunctions in U.S. tribunals, nor would it direct U.S. courts to issue AASIs or take other actions in response to the assertion of foreign ASIs.

In fact, the AASIs already issued by courts in the U.S., Europe and India in response to Chinese ASIs are generally more punitive than the contingent measures that would be imposed under DACA.  For example, in Ericsson v. Samsung, No. 2:20-CV-00380-JRG (E.D. Tex. Jan. 11, 2021), a U.S. district court responded to an ASI issued to Samsung by a court in China by prohibiting Samsung from enforcing the ASI against Ericsson (under penalty of contempt) and ordering Samsung to indemnify Ericsson against any monetary penalties imposed by the Chinese court.

Thus, while the penalties imposed by DACA are meaningful and may, indeed, dissuade some litigants in U.S. matters from seeking foreign ASIs, it is not clear that they offer greater deterrents than the AASIs that U.S. courts are already empowered to issue.

DACA, of course, offers an ex ante deterrent, imposing a penalty before a foreign ASI is sought or asserted in the U.S.  However, courts in Germany have recently begun to issue preemptive AASIs ordering parties who have not yet initiated any actions in China not to do so, given the “prevalent trend of Chinese companies filing ASIs” (discussed here and here), and a Dutch court has also indicated that it might consider doing so.

What Goes Around Comes Around

A final thought: despite the explicit anti-China tenor of the comments accompanying DACA’s introduction, we should remember that ASIs are not Chinese inventions.  They are products of the common law and were first used in FRAND cases by U.S. courts against actions in China.  As my co-authors and I argue here, the Chinese courts effectively “transplanted” ASIs to China from the U.S. and UK.

Like ASIs themselves, it is not unlikely that the enactment of DACA in the U.S. will trigger foreign responses in kind.  What would happen if China, Germany and other countries adopted legislation similar to DACA, preventing U.S. companies in foreign courts from enforcing ASIs issued by U.S. courts? As a procedural mechanism in U.S. and foreign proceedings, the ASI has many legitimate uses.  Yet legislative deterrents imposed by other countries could limit the use of ASIs by U.S. parties when appropriate.  One risk of unilateral measures such as DACA is that they could trigger reciprocal actions by other countries that could cause more harm than good to U.S. companies and markets.  It is thus important that policy makers consider fully both the potential benefits of DACA, as well as its potential costs.  As noted above, the study called for under Section 3(a)(2) of DACA might be useful to conclude prior to the enactment of legislation of this nature.

[1] Thom Tillis (R-NC), Chris Coons (D-DE), Tom Cotton (R-AR), Mazie Hirono (D-HI), and Rick Scott (R-FL)

Congratulations and hearty welcome to Judge Leonard P. Stark who was sworn in today as #40.  The 40th Judge appointed to the Court of Appeals for the Federal Circuit.  The court is now back up to its full complement of 12 circuit court judges along with 7 judges on senior status.

The court released a photo showing Chief Judge Kimberly Moore administering the oath of office.  Judge Stark’s biography is available on the court’s website.

Spring 2022 is roaring forward – and this semester is an especially busy one for me. I’m teaching my usual Introduction to Intellectual Property course, together with an especially large Civil Procedure class (which at Iowa is 4 credit hours), and the Iowa Innovation, Business & Law Center is running an exciting speaker series on Genetics, Law and Society.  All of this has given me a terrific opportunity to really think about procedure, law, and data.  And it’s fortuitously come at a time when several related projects are coming to fruition.  In light of that, rather than write a bunch of mini-blog posts on my current projects, I thought I’d just write about them all at once.

A few months ago, Jonas Anderson, Paul Gugliuzza and I ran a series of posts on our project examining petitions for writs of mandamus at the Federal Circuit. I’m delighted that our paper, Extraordinary Writ or Ordinary Remedy: Mandamus at the Federal Circuit, forthcoming in the Washington University Law Review, is now available for everyone to read. (As usual with SSRN, if you get an infowall, you can bypass it by clicking the skip option on the login page; it’s there, although SSRN sometimes buries it).   We find that while overall mandamus is rarely granted by the Federal Circuit, in a key area–petitions involving venue arising from Texas–that is not the case.  We argue that the reason is not because the Federal Circuit is behaving in an “exceptionalist” way, but that the issue flows from systematic flaws in the patent litigation system that the Federal Circuit has little power to fix—namely, rules of venue and judicial case assignment that encourage plaintiffs to shop not just for favorable courts, but for individual judges.  There are lots of little nuggets of data in there as well for data fiends, including on the issue of petitions for permission to appeal.  Read it here:  https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4049186

One of the issues that we observed while writing this paper was the reality that, as Merritt McAlister had pointed out in Missing Decisions, many appeal terminations are not readily accessible to the public.  While opinions are routinely posted to federal appellate courts’ websites, non-opinion orders terminating cases rarely are (including a number of terminations of petitions for writs of mandamus).  I dug into this issue in more depth in a response essay that the University of Pennsylvania Law Review published last month called Missing Decisions and the United States Court of Appeals for the Federal Circuit, in which I compared all appeals in PACER to what the Federal Circuit actually publishes on its website, as well as what’s available in WestLaw and Lexis.  Overall, I observed that while the Federal Circuit has historically been very good at making opinions and precedential terminating orders available on its website, and has also been very good at posting Rule 36 summary affirmances since 2007, nearly all other orders terminating an appeal (including dismissals for lack of jurisdiction) were not.

I’m thus thrilled that it appears that the Federal Circuit has changed its practice.  In the last few weeks, the Federal Circuit has changed its  opinions and orders page to include dispositive orders:

The Federal Circuit publishes online all opinions, precedential orders, dispositive orders in writs petitions, Rule 36 judgments, non-ministerial orders relating to rehearing or en banc petitions or actions, dispositive orders constituting either judgment or mandate, and any errata notice or revised version for any of the preceding document types. …

This is an excellent balance between the morass of data that the court made available on its website in 2011-2014 (including orders on motions to extend time), and just posting opinions & rule 36 affirmances as that the court had previously done.  And based on my review of what they’ve been posting, they seem to be carrying through with this goal of making all dispositive orders available. These orders will provide more context for attorneys about the Federal Circuit’s decisionmaking, especially when it comes to areas that folks may not have really focused on but which were actually determinative. It’ll also ensure that legal research databases contain these orders going forward. I really want to commend Chief Judge Moore and the whole Federal Circuit, its clerks office, and the data management folks for making these key orders available.  Thanks to Dmitry Karshtedt for alerting me to this change!

That all leads into my third project in this set: an empirical study of data accessibility in published scholarship – that is, the accessibility of data once a researcher or research team has gathered all the data, analyzed it, and a law journal has published the article using it.  The draft of that paper, entitled Legal Research as a Collective Enterprise: An Examination of Data Availability in Empirical Legal Scholarship, is now available.  To conduct our study, my co-author Abigail Matthews and I, together with my amazing team of research assistants, examined all articles published in top-20 law journals by impact ranking, together with articles published in the Journal of Empirical Legal Studies, to ascertain (1) whether the article was an empirical legal study, and (2) for empirical legal studies, whether the article explained where to obtain the final dataset used in the article.  Overwhelmingly, we found that empirical studies published in law reviews don’t provide access to the data used in the study–at least by telling readers in the article itself where to find the data. Our finding validates a smaller sample observation that Chin et. al. just released finding similarly low levels of data accessibility, and we also find that factors that we expected to make a difference, such as less data available for qualitative studies, increased data availability over time, and greater data availability in the Journal of Legal Education (which has had a “data encouragement” policy since its inception) were either neutral or actually significant in the opposite direction than we expected.  While this paper may not be for all readers, if this is a subject that’s interesting to you, you can read the draft here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4057663

The USPTO Chief Economist Andrew Toole and his team have just released a new report on Intellectual Property and the U.S. Economy. Prior reports were issued in 2012 and 2016.

IP-intensive industries account for 41% of domestic economic activity and about 44% of US jobs. And, those jobs have higher wages, better benefits, etc — especially in the copyright and utility patent intensive industries.  The report itself includes an appendix explaining how it categorized these industries.

The report endeavors to provide solid information without over-claiming — for instance, the report does not attempt to discern the economic impact of IP rights themselves but rather focuses on industry level impacts.

Patent claims treatment of DISEASE-X by administering 100mg of DRUG-Y. Specification has no EVIDENCE that treatment actually works, no reduction to practice, and only speculative examples.

How should the claim be rejected? (Choose the best answer).

— Dennis Crouch (@patentlyo) March 16, 2022

I wrote today about a claim requiring a dosage be "therapeutically effective."

Survey: All patent claims include an implied "effectiveness" limitation — otherwise the claim would lack utility under Section 101.

— Dennis Crouch (@patentlyo) March 16, 2022

Biogen Int’l v. Mylan Pharmaceuticals (Fed. Cir. 2022) (en banc denial)

Back in December 2021, the Federal Circuit invalidated Biogen’s U.S. patent 8,399,514–affirming the lower court’s ruling of invalidity for lack of written description. 35 U.S.C. §112(a).

The appellate majority noted that this was the “sole reference,” the “one and only reference”, a “single passing reference” to 480 mg/day and that it appeared “at the end of one range among a series of ranges.”  The court  also contrasted the 480 mg/day disclosure with the specification’s disclosure of 720 mg/day that was specifically identified and elsewhere in the patent shown to be effective.  Although the patentee’s prophetic example recited effectiveness, at the time the patentee did not actually have evidence that the 480 mg/day dosage was effective.  Thus, the Federal Circuit concluded that “a skilled artisan would not have recognized, based on the single passing reference to a DMF480 dose in the disclosure, that DMF480 would have been efficacious in the treatment of MS, particularly because the specification’s only reference to DMF480 was part of a wide DMF dosage range and not listed as an independent therapeutically efficacious dose.”  We know now that 480 mg/day is effective —  but that knowledge is based upon post-filing research that cannot be added back into the written description.

The original opinion was penned by Judge Reyna and joined by Judge Hughes.  Judge O’Malley (now retired) wrote in dissent.

After losing, the patentee then petitioned for en banc rehearing with two written description questions (paraphrased below):

The Federal Circuit has now released its 6-3 decision denying the en banc petition.  Since Judge O’Malley is retired, she did not participate in the rehearing petition. Judges Stoll and Cunningham also did not participate.

Judge Lourie wrote in dissent, joined by Chief Judge Moore and Judge Newman. The trio argued that this case is a true outlier.

[I]n all [the] history [of the written description requirement], this case, in which every claim limitation is expressly described in the disclosure of the patent specification, is at the farthest end of the spectrum of cases where written description has not been found. It is an outlier.

Judge Lourie dissenting from the en banc denial.  The dissent particularly argues that the decision “blurs the boundaries between the written description requirement and the other statutory requirements for patentability. In doing so, the court has contributed to the muddying of the written description requirement.”

From my point of view, the majority was wrong to place so much emphasis on the fact that 480 mg/day was only mentioned once in the specification.  A single reference is certainly sufficient to satisfy written description.

However, I am also drawn-in by claim language that expressly requires that the 480 mg/day dosage be “therapeutically effective.”  The patentee expressly claimed the therapeutic effectiveness, but did not include enough in the specification to demonstrate that it actually was effective at the 480 mg/day dosage.

Trees for the Forest: Claiming Endpoints of a Range and Written Description

Today, the Federal Circuit also denied an en banc petition in another written description case focusing on claimed ranges, Indivior UK v. Dr. Reddy’s Labs (Fed. Cir. 2022).  In my post on the case, I wrote “Four points are not A range.” The basic holding: although the specification described several embodiments covered by the claims, it did not describe the full-scope of the claimed invention. No dissent in the Indivior denial.  Judge Lourie dissented in Biogen in favor of the patentee, but wrote the majority opinion invaliding the claims in Indivior.

Written Description: Four Points Are Not A Range

Nippon Shinyaku Co. v. Sarepta Therapeutics, Inc. (Fed. Cir. 2022) (en banc petition pending)

After a failed negotiation, Sarepta petitioned for Inter Partes Review of Nippon Shinyaku’s patents.  But, the two parties had a prior agreement to litigate patent disputes in Delaware courts (i.e., not before the PTAB).  After Sarepta petitioned for IPR, Nippon Shinyaku responded with an action in Delaware Federal Court for breach of contract seeking a preliminary injunction that would force Sarepta to withdraw its IPR petitions based upon the forum selection clause. The Delaware court (Judge Stark) sided denied preliminary relief and instead sided with the patent challenger – finding (1) evidence of breach was lacking and (2) the real irreparable harm would come from barring the IPR.  On appeal the Federal Circuit reversed based upon its own plain language interpretation of the contract.  The result then is that the district court should enter the preliminary injunction on remand.

Sarepta has now petitioned for en banc review: asking two procedural questions, including one on the Erie Doctrine.

Timing Part I: Before getting into the merits of the en banc petition, I want to look for a moment at timing issues.  The IPR petitions have been granted, but are currently stayed until April 24.  Of course, the PTAB is under a statutory duty to quickly complete its IPRs.  In my original post on the case, I suggested a likelihood that Sarepta would seek en banc review and subsequently certiorari in order to “run-out the clock” on the IPRs.  “While the appeal was pending the PTO granted all seven of the IPR petitions and an en banc petition followed by a petition for certiorari will easily eat-up that timeline.”  More on this timing issue toward the bottom of the post.

The petition asks two questions paraphrased as follows:

Do you remember Erie Railroad Co. v. Tompkins (1938)? In that famous decision, the Supreme Court held that federal courts sitting in diversity must apply state substantive law rather than principles of federal common law.  The lawsuit here asserts diversity jurisdiction for the state law contract claim and federal question jurisdiction over a separate set of declaratory judgment claims (asserting several Sarepta patents are invalid or not infringed).  In a mixed situation like this, the standard approach is that Erie applies to the claims whose jurisdiction are based upon diversity grounds.

The Federal Circuit’s opinion in the case does not cite Erie, but does purport to be answering “a question of contract interpretation under Delaware law.” So far so good.  The problem arises as you delve into further opinion. It quickly becomes clear that a good portion of the court’s conclusions are based upon “general principles” with no regard to Delaware law.  Another name for those general principles is Federal Common Law — the exact approach rejected in Erie.

The most Erie-offensive paragraph from the case is excerpted below:

As a general principle , this court has recognized that parties are entitled to bargain away their rights to file IPR petitions, including through the use of forum selection clauses. For example, in Dodocase VR, Inc. v. MerchSource, LLC , 767 F. App’x 930 (Fed. Cir. 2019) (nonprecedential), we affirmed a district court’s grant of a preliminary injunction on the basis that a defendant had likely violated a forum selection clause by filing IPR petitions, even though the forum selection clause did not explicitly mention IPRs. Even in Kannuu Pty Ltd. v. Samsung Electronics Co. , 15 F.4th 1101, 1106–10 (Fed. Cir. 2021), where we determined that the parties’ forum selection clause did not extend to IPRs, that determination was based on the specific language in the forum selection clause at issue in that case. Inherent in our holding in Kannuu was an understanding that a differently worded forum selection clause would preclude the filing of IPR petitions.

Nippon Shinyaku Co., Ltd. v. Sarepta Therapeutics, Inc., 25 F.4th 998 (Fed. Cir. 2022).   What is the problem here: (1) the court talks about “general principles” for determining whether this is a proper element of a contract rather than a question of Delaware Law; (2) the court references its own cases to prove the point (rather than Delaware cases; (3) Dodocase involved a question of California state law rather than Delaware state law; (4) Kannuu purported to interpret New York state law rather than Delaware state law.   Although these it makes sense to consider non-Delaware law cases in the attempt to make an Erie Guess in situations where there is no state precedent on-point.  However the Erie Guess is focused on divining Delaware Law rather than being bound by some general principal of law that arches across the states.  Here, the Delaware high courts have not faced the specific question of contractual waiver of IPR rights.  However, they have addressed the larger question of contracts that appear to waive statutory rights. In particular, the Delaware court have held that waiver must be “clearly and affirmatively expressed in the agreement.”  Kortum v. Webasto Sunroofs, Inc., 769 A.2d 113 (Del. Ch. 2000).  The Federal Circuit decision did not attempt to contend with this principle of Delaware Law.

Back to Timing: Although I see  merit in the en banc petition, its filing is also part of a timing game.  As soon as the Federal Circuit released its decision in February, Nippon Shinyaku asked Judge Stark to immediately enter the preliminary injunction.  Judge Stark refused–holding that the Federal Circuit has not yet issued its mandate and thus that the Federal Circuit held jurisdiction over the preliminary injunction issues in the case.  (That is a shaky decision, IMO since this was an interlocutory appeal.)  As back-up, Judge Stark further explained that “even if the Court did have jurisdiction over the preliminary injunction issues, the Court would exercise its discretion to defer further letter briefing until the Federal Circuit issues its mandate.”  So, Nippon Shinyaku’s only hope for quick entry of the preliminary injunction is expedited action by the Federal Circuit.  In that regard, the company has has requested the Federal Circuit issue an expedited mandate – ordering entry of the Preliminary Injunction to halt the IPRs.

The PTAB cases are currently stayed (until April 24, 2022), but the motion practice regarding the en banc petition could easily extend beyond that date.  Nippon Shinyaku explains:

Expedited issuance of the mandate would prevent Sarepta from, as Professor Dennis Crouch has hypothesized, using its motion for rehearing to “run-out the clock,” nullifying this Court’s decision. Dennis Crouch, Contractually Agreeing to Not Petition for Inter Partes Review , PATENTLY-O (Feb. 8, 2022), https://patentlyo.com/patent/2022/02/contractually-agreeing-petition.html. . . .

If Sarepta had not sought rehearing, the mandate would have issued on March 17. This would have provided ample time for any additional briefing in the district court and entry of the injunction by April 24, when the stay entered by the PTAB will expire.

But now that Sarepta has filed a petition for rehearing, the mandate will not issue until 7 days after the entry of the order denying rehearing. Even if no response to Sarepta’s petition is requested, issuance of the mandate could easily be delayed by 30 days or more.  . . .

To avoid nullification of this Court’s decision and to avoid the irreparable harm to Nippon Shinyaku already recognized in the panel opinion, this Court should issue the mandate no later than March 17, 2022, allowing the district court to enter an injunction before expiration of the PTAB’s stay. . . .

Petition for Expedited Mandate.   The Federal Circuit has ordered responsive briefing on the expedited mandate that appears to be due Monday 3/21 (If I have counted 5 days correctly).

Great litigating by folks at both Morgan Lewis and Finnegan Henderson.

Back to Erie: Despite being 84 years old, the case is still regularly cited — with about 200 citations by Federal appellate courts in the past 5 years.  None of those citations came from the Federal Circuit.  I’m not giving these figures to denigrate the Federal Circuit.  Rather, the lack of citations are not surprising. Erie focuses on diversity cases and ordinary diversity cases are never heard by the Federal Circuit.  The figure does show that the court is out of practice at thinking through the Constitutional implications of its state law interpretative questions.

Almirall, LLC v. Amneal Pharmas LLC (Fed. Cir. 2022)

The court here affirms a PTAB conclusion cancelling claims 1-8 of Almirall’s U.S. Patent 9,517,219 as obvious.  The patent claims a method of treating acne/rosacea using a particular formulation:

[note – I edited these for compactness]. The claim also indicates that the composition “does not comprise adapalene.”  This concentration of the active ingredient was already known, the idea behind the invention here was to have a product that works well, that customers like, and that has a long shelf life. Thus, the figure submitted to the PTO shows shelf-life:

The prior art includes the commercial product (Aczone) that includes 7.5% dapsone and no adapalene. For the IPR, the PTAB looked at a patent application publication (Garrett) that described the Aczone product in detail.  Garret taught a different gelling agent — Carbopol rather than A/SA as required in the patent.  A different reference (Nadau-Fourcade) taught the use of A/SA agents in roughly the same concentration range for use in acne/rosacea products.  The Board found the combination appropriate and concluded that the claims were invalid.

Presumption of Obviousness: On appeal, the patentee argued that the Board improperly presumed obviousness based upon overlapping ranges. The basic argument is that A/SA was brought from a different reference and there should not be a presumption that its concentration would obviously be the same in the new combination.  On appeal, however, the Federal Circuit affirmed the Board’s ruling — finding that the presumption was appropriate here because the evidence proved similarity between carbomers (disclosed in Garret) and A/SA agents (substituted from Nadau-Fourcade)

The Board also credited expert testimony that a person of ordinary skill in the art would have been able to immediately appreciate that the carbomers and A/SA agents at issue perform the same function and are interchangeable. Moreover, there was no evidence that A/SA agents would have different interactions with the other ingredients of the compositions relative to carbomer. Indeed, the Board credited expert testimony that a skilled artisan “would not have expected any incompatibilities in substituting” the gelling agents.

It was this close similarity in the substitution that allowed the range disclosures to create a presumption of obviousness.   In its decision, the court also notes that the stated presumption-of-obviousness is not any kind of burden shifting. Rather, it is simply shorthand for the proposition that overlapping ranges in the prior art justify a factfinder in concluding that the claimed range was  known in the art.  The patentee is free to provide evidence showing why its particular range is meaningful and thus non-obvious in the face of a similar disclosure range in the prior art.

Negative Limitation: The claims expressly exclude adapalene from the formulation. “[W]herein the … composition does not comprise adapalene.”  The key prior art reference (Garrett) does not even mention adapalene, and so, according to the patentee, we are left wondering whether Garrett might include the substance.  The Board rejected that argument as did the Federal Circuit.  In particular, the court restated its prior precedent that negative limitations need not be expressly stated in the prior art.  “[A] reference need not state a feature’s absence in order to disclose a negative limitation.” AC Techs., S.A. v. Amazon.com, Inc., 912 F.3d 1358 (Fed. Cir. 2019).

Reasonable Expectation of Success: Finally, the Court found that the Board had properly identified reasons to combine the references.  In particular, the patent challenger provided evidence that gelling compounds were effective and compatible substitutes. As such, the substitution of A/SA was a “predictable design choice.”  This falls within the Supreme Court’s guidance from KSR: “when a patent claims a structure already known in the prior art that is altered by the mere substitution of one element for another known in the field, the combination must do more than yield a predictable result.”

The court also places substantial weight on whether the substitution would have “a reasonable expectation of success.”  Here, though, expert testimony was provided regarding their interchangeability.  Further, [a] finding of a reasonable expectation of success does not require absolute predictability of success.”

Recent Headlines in the IP World:

New Job Postings on Patently-O:

Coffey v. OK Foods, 2:21-CV-02200, 2022 WL 738072 (W.D. Ark. Mar. 10, 2022)

Coffey applied for a job with large poultry producer OK Foods (owned by Bachoco). The online application required her to provide substantial personally identifiable information (PII), including her name, SSN, birthdate, etc.  She got the job.  At some point a few years later OK Foods computer system was hacked and Coffey’s information was exposed (along with that of thousands of other employees).   Coffey found out after being provided notice of the breach (as required by law).

Coffey sued OK Foods, bringing a class action for negligence, breach of implied contract, breach of confidence, invasion of privacy, breach of fiduciary duty, and breach of the covenant of good faith and fair dealing.

Concrete Injury for Data Breach: Coffey’s action suffers from the same problems seen in most large PII hacking cases — concrete harm.  Here, Coffey argues that she now suffers from an increased risk of future identity theft.   The defendant pointed the district court toward the 2021 decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021).  In TransUnion, the Supreme Court held that “mere risk of future harm” regarding a credit alert was not sufficiently concrete to satisfy the Constitutional standing requirements.

OK Foods requested dismissal for lack of standing, but the district court found that the allegations future risk in this case was substantial and concrete enough to survive a motion to dismiss. the district court particularly distinguished TransUnion. In that case, there was no evidence that the information had been disseminated to any third-parties.   On the other hand, in Coffee’s case everyone agrees that Coffee’s PII was obtained by a third party.  Coffee also provided evidence of recent unknown requests for credit on her credit report.   For the district court, this setup was enough to demonstrate standing.  The decision here is on the cusp and other courts would have dismissed.  Cases are more likely to proceed when the breach includes financial  or account login information such as user_IDs and passwords.

Arbitration Agreement in Job Application: When Coffee applied for the job, she also clicked “I agree” to a set of terms that included an arbitration agreement.  She argued, however, that the agreement is not binding because she was not provided a copy of the agreement to review and she does not recall ever actually signing the agreement.  The district court noted two problems with OK Foods’ evidence thus far presented: (1) OK Foods did not present the “exact materials” as they appeared on here screen during the 2016 application process; and (2) the download link provided does not show the arbitration package.  In addition, the evidence from OK Foods shows that a digitally signed arbitration agreement dated May 3, 2016, while Plaintiff alleges that she completed her online application in April 2016.

All these competing allegations and proofs create an issue of material fact and so the district court refused compel arbitration at this point.

Next steps in the case:

I recently posted a chart showing that there is a significant difference in technology focus of patents tied to US-Inventors as compared with Non-US-inventors.  The following chart looks at the file histories of U.S. patents and asks what percentage received a rejection prior to issuance (blue) and what percentage received a Section 101 rejection prior to issuance (issued patents 2015-2020).   Overall, 83% of the patents received some sort of rejection prior to issuance. The vast majority of these rejections are based upon prior art – and are primarily Section 103 obviousness rejections.  13% of these patents were rejected on eligibility grounds prior to issuance.

Applications from US Inventors were significantly more likely to be rejected on eligibility than non-US Inventors (15% vs 10%).  However, that difference can be fully explained by differences in the types of patents being obtained. For example, US applications are much more likely to patent in the business-method group (as well as 8 of the top-9 art unit groups most likely to receive 101 rejections).   But, within the art units  groups, there is typically no difference between US and Non-US inventions in terms of eligibility rejections.  Thus, for my sample of business method patents, 75% of the patents in each group (US and Non-US inventors) received an eligibility rejection.  The data do reveal some outliers. In 1660-plants, non-us-inventor patents received 15% more eligibility rejections than us-inventor patents; while in 2760-printers & graphics, non-us-inventor patents received 10% fewer.

Thaler v. Hirshfeld, App No. 21-02347 (Fed. Cir. 2022)

Prof. Ryan Abbott continues to push Thaler’s case on a global basis.  Thaler created an AI system that he calls DABUS.  DABUS created two separate inventions — a “Neural Flame” and “Fractal Container.”  Thaler filed for patent protection, but refused to name himself as the inventor — although he created DABUS, these particular inventions did not originate in his mind.   The USPTO rejected the applications — explaining US patents must name a human inventor.  Now the case is pending before the Federal Circuit.  The reality here is that Thaler could have claimed to be the inventor and the PTO would not have blinked-an-eye; and no other person or entity would have standing to challenge that result.  In a forthcoming article, I argue that the PTO’s don’t-ask-don’t-tell approach is a truly problematic legal fiction.  And, Thaler’s refusal to comply provides helpful exposure to the hypocrisy.

After being refused a patent, Thaler sued in district court, but the district court sided with the PTO and dismissed the case on summary judgment.  Now the appeal to the Federal Circuit.  Thaler argues:

The USPTO does not accept than an AI can be an “inventor.” This holding is simply inconsistent with the Patent Act’s plain language,  Congressional intent, and the Constitution. The District Court improperly endorsed an interpretation of the Patent Act that, for the first time, excludes an entire category of innovation from patent law protection. The result of which will be to discourage innovation, limit disclosure of trade secrets, and restrict commercialization of new products.

Thaler Brief.  The argument begins with an analysis of the Patent Act: (1) nothing in the Act actually requires human inventors; and (2) nothing in the Act requires “conception.”  Rather, the design of the system is to create an open incentive field to generally encourage innovation, disclosure, and commercialization.  Barring AI-created inventions from the patent sphere discourages each of these goals of the patent system.

One catch to the Thaler argument in the US is that the 2011 America Invents Act included a new definition of the term “inventor” that requires the inventor be an “individual” and required submission of a inventorship declaration from “each individual who is the inventor or joint inventor.” 35 U.S.C. §§ 100, 115.  The statute also provides a binary gender identification for inventors: “himself or herself.”  These changes suggest a human-inventor requirement, but there are also a number of cases interpreting “individual” to include non-human persons.  In addition, the law allows for a substitute declaration in cases where the inventor is legally incapacitated.  In this case, Thaler submitted that substitute declaration on behalf of DABUS.

Briefing appears complete in the case, and oral arguments will likely be scheduled for sometime this summer.

Briefs filed in the case:

Cartoon adapted from Peter Steiner’s famous work originally published in The New Yorker in 1993.

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