parallel patent proceedings before the ptab and federal...
TRANSCRIPT
Parallel Patent Proceedings Before the PTAB and Federal Court Post-AIA Navigating Litigation Stays, Discovery and Settlements Concurrent With PTAB Review
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THURSDAY, MARCH 19, 2015
Presenting a live 90-minute webinar with interactive Q&A
Michael L. Kiklis, Partner, Oblon Spivak McClelland Maier & Neustadt, Alexandria, Va.
Eric W. Schweibenz, Partner, Oblon Spivak McClelland Maier & Neustadt, Alexandria, Va.
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Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP
PARALLEL PATENT PROCEEDINGS
BEFORE THE
PTAB AND FEDERAL COURT
POST-AIA
PRESENTED TO: PRESENTED BY: STRAFFORD LIVE CLE WEBINAR MICHAEL L. KIKLIS ERIC W. SCHWEIBENZ MARCH 19, 2015
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 5
AGENDA
Background for Presentation Procedural Differences Between District Courts and
PTAB • 35 U.S.C § 101 • Claim construction • Amending claims
Litigation Strategies • Estoppel • Stays
Discovery Implications Settlement Implications Patent Validity Implications
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 6
BACKGROUND: THE AIA
America Invents Act • Effective as of September 16, 2012
• Very popular and widely viewed as success
• Fast, inexpensive, and lethal
• Inter Partes Review (IPR)
• Covered Business Method Patent Review (CBM)
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP
BACKGROUND: AIA STATISTICS AS OF
MAR. 5, 2015
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BACKGROUND: AIA STATISTICS AS OF
MAR. 5, 2015
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BACKGROUND: AIA STATISTICS AS OF
MAR. 5, 2015
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BACKGROUND: THE AIA
IPRs, CBMs, and PGRs • Fast – 12 months from institution to final written
decision
• Inexpensive – costs a fraction of a patent litigation
• Lethal (statistics as of 1/12/2015):
o ≈75% of IPRs reaching final written decision
render all instituted claims unpatentable
o ≈12% render some claims unpatentable
o ≈12% result in all claims being found patentable
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BACKGROUND: THE AIA
IPRs, CBMs, and PGRs • Easier to kill patent
o Broad claim constructions (early in proceeding)
o Lower standard for proving invalidity
• Make a record
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BACKGROUND: THE AIA
Inter Partes Review • Limited to patents and printed publications
• Restrictions
o Must initiate within 1 year after service of
complaint
o Prior DJ invalidity challenges bar later use of
IPR
• Standard – reasonable likelihood that petitioner
would prevail with respect to at least one claim
challenged
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BACKGROUND: THE AIA
Covered Business Method Patent Review
• All statutory defenses allowed: 101, 112, 102, 103
• Virtual automatic stay
• Limited to Covered Business Method Patents –
financial product or service, but does not include
technological invention
• Must have been sued or charged with infringement
• Standard – more likely than not that at least one
claim is unpatentable
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BACKGROUND: THE AIA
Post Grant Review
• First-to-file Patents (March 16, 2013)
• Must be filed within 9 months of issuance
• All statutory defenses allowed
• Prior DJ invalidity challenges preclude PGR
• Standard – more likely than not that at least one
claim is unpatentable
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Alice Corp. v. CLS Bank (2014) - § 101 Framework • Step 1 - Determine whether claims are directed to a law of
nature, natural phenomena, or abstract idea;
• Step 2 - If so, then ask “What else is there in the claims
before us?”
o Consider elements of claim individually and as an ordered
combination to determine if the additional elements
“transform the . . . claim into patent-eligible” subject
matter.
o This is a “search for an ‘inventive concept’ . . . An element
or combination of elements that is ‘sufficient to ensure
that the patent in practice amounts to significantly more
than a patent upon” the abstract idea.
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Step 1: • The Court refers to two books and states:
o The claims are drawn to the “abstract idea” of intermediated settlement, which is a fundamental concept
o It “is a building block of the modern economy” • Compared to Bilski:
o Like Bilski’s hedging, intermediated settlement is an abstract idea.
o “In any event, we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case. It is enough to recognize that there is no meaningful distinction between the concept of risk hedging in Bilski and the concept of intermediated settlement at issue here.”
• No clear guidance
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Step 2: • A claim that recites an abstract idea must include
“additional features” to ensure “that the [claim] is more than
a drafting effort designed to monopolize the [abstract idea].”
• Per Mayo, need more than “apply it.”
• The computer implementation must supply the necessary
“inventive concept” – what does “inventive concept” mean?
• Mere recitation of a generic computer is not enough
• Nor is limiting the claim to a technological environment
• “[T]he relevant question is whether the claims here do more
than simply instruct the practitioner to implement the
abstract idea of intermediated settlement on a generic
computer. They do not.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Step 2 (cont’d): • The claim elements separately are “purely conventional”
• “In short, each step does no more than require a generic
computer to perform generic computer functions.”
• Considered as an ordered combination, the claims “simply
recite the concept of intermediated settlement as performed
by a generic computer.”
o They do not improve the functioning of the computer
itself
o “Nor do they effect an improvement in any other
technology or technical field.”
o Safe harbors?
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
System and C-R Medium Claims
• “Petitioner conceded below that its media claims rise or
fall with its method claims.”
• System claims
o Purely functional and generic
o None of the hardware recited “offers a meaningful
limitation beyond generally linking” the method to a
“particular technological environment” –
implementation on a computer
o “Put another way, the system claims are no different
from the method claims in substance.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Ultramercial, Inc. v. Hulu, LLC (Fed. Cir. Nov. 14, 2014) • Holding:
o Claims invalid under § 101
• Rationale:
o The panel “found” an abstract idea with little analysis
o The panel performed a point-of-novelty analysis
– Specifically acknowledging that novelty is involved in
Alice’s second step
o The panel also applied the MOT test
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Ultramercial, Inc. v. Hulu, LLC (con’t) • Perhaps the biggest issue is that where the Fed Cir originally
reversed the district court because of the procedural context
(subsidiary questions of fact needed to be decided before a
motion to dismiss under 12(b)(6)), they now felt very
comfortable just killing the patent, even over the supposed
presumption of validity. This is significant.
• Mayer continues providing his thoughts on 101
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
7/8/2014 S.D.N.Y. DietGoal Innovations LLC v. Bravo Media LLC (Div. of
NBC Universal Media, LLC)
Claims invalid under § 101 Summary Judgment
7/16/2014 D. Del. Comcast IP Holdings I, LLC v. Sprint Communs. Co. L.P. Claims invalid under § 101 Summary Judgment
8/19/2014 D.N.J. Data Distrib. Techs., LLC v. Brer Affiliates, Inc. Denied Motion to Dismiss
9/2/2014 E.D. Tex. Loyalty Conversion Sys. Corp. v. Am. Airlines, Inc. Claims invalid under § 101 Motion to Dismiss
9/3/2014 D. Del. Genetic Techs. Ltd. v. Lab. Corp. of Am. Holdings Claims invalid under § 101 Motion to Dismiss
(Magistrate Judge
Opinion only)
9/3/2014 D. Del. Tuxis Techs., LLC v. Amazon.com, Inc. Claims invalid under § 101 Motion to Dismiss
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
9/3/2014 D. Del. Walker Digital, LLC v. Google, Inc. Claims invalid under § 101 Summary Judgment
9/4/2014 C.D. Cal. Eclipse IP LLC v. McKinley Equip. Corp. Claims invalid under § 101 Motion to Dismiss
9/5/2014 E.D.
Mich.
Autoform Eng'g GMBH v. Eng’g Tech. Assocs. Denied Summary Judgment
9/11/2014 M.D. Fla. Every Penny Counts, Inc. v. Wells Fargo Bank, N.A. Claims invalid under § 101 Summary Judgment
9/18/2014 D. Del. Helios Software, LLC v. Spectorsoft Corp. Claims valid under § 101 Summary Judgment
9/19/2014 N.D. Cal. Open Text S.A. v. Alfresco Software Ltd. Claims invalid under § 101 Motion to Dismiss
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
9/22/2014 C.D. Cal. McRO, Inc. v. Namco Bandai Games Am., Inc.
(consolidated case combining 20 cases) and McRo, Inc. v.
Valve Corp. (consolidated case combining 3 cases)
Claims invalid under § 101 Motion to Dismiss
9/29/2014 C.D. Cal. CMG Fin. Servs. v. Pac. Trust Bank, F.S.B. Claims invalid under § 101 Summary Judgment
9/29/2014 N.D. Ill. Card Verification Solutions, LLC v. Citigroup Inc. Denied Motion to Dismiss
9/30/2014 N.D. Cal. Cogent Med., Inc. v. Elsevier Inc. Claims invalid under § 101 Motion to Dismiss
11/3/2014 C.D. Cal. Enfish, LLC v. Microsoft Corp. Claims invalid under § 101 Summary Judgment
11/3/2014 C.D. Cal. Cal. Inst. of Tech. v. Hughes Communs., Inc. Claims invalid under § 101 Summary Judgment
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
11/12/2014 C.D. Cal. Ameranth, Inc. v. Genesis Gaming Solutions, Inc. Denied Summary Judgment
12/15/2014 D. Del. Joao Bock Transaction Sys., LLC v. Jack Henry &
Assocs.
Claims invalid under § 101 Summary Judgment
12/16/2014 N.D. Cal. OpenTV, Inc. v. Netflix Inc. Some claims invalid under
§ 101 (2 patents) and denied
as to other claims (1 patent)
Summary Judgment
12/17/2014 D. Del. IpLearn v. K12 Inc. Claims invalid under § 101 Summary Judgment
12/18/2014 D. Del. Cloud Satchel, LLC v. Amazon.com, Inc. Claims invalid under § 101 Summary Judgment
12/18/2014 D. Del. Intellectual Ventures I LLC v. Mfrs. & Traders Trust Co. Some claims invalid under
§ 101 (3 patents) and denied
as to other claims (1 patent)
Motion to Dismiss
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
12/23/2014 D. Utah KomBea Corp. v. Noguar L.C. Claims invalid under § 101 Summary Judgment
12/23/2014 C.D. Cal. MyMedicalRecords, Inc. v. Walgreen Co. Claims invalid under § 101 Motion to Dismiss
12/23/2014 C.D. Cal. Morsa v. Facebook, Inc. Claims invalid under § 101 Motion to Dismiss
12/23/2014 S.D. Tex. Fairfield Indus. v. Wireless Seismic, Inc. Denied Motion to Dismiss
12/30/2014 W.D. Tex. Morales v. Square, Inc. Claim invalid under § 101 Motion to Dismiss
1/2/2015 N.D. Cal. Bascom Research, LLC v. LinkedIn, Inc. Claims invalid under § 101 Summary Judgment
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
1/12/2015 C.D. Cal. Mortg. Grader, Inc. v. Costco Wholesale Corp. Claims invalid under § 101 Summary Judgment
1/15/2015 D.N.H. E. Coast Sheet Metal Fabricating Corp. v. Autodesk, Inc. Claims invalid under § 101 Summary Judgment
1/20/2015 N.D. Cal. Open Text S.A. v. Box, Inc. Claims invalid under § 101 Motion to Dismiss
1/20/2015 N.D. Cal. Synopsys, Inc. v. Mentor Graphics Corp. Claims invalid under § 101 Summary Judgment
1/21/2015 E.D. Va. CertusView Techs., LLC v. S&N Locating Servs. Claims invalid under § 101 Motion to Dismiss
1/27/2015 D. Del. Money Suite Co. v. 21st Century Ins. & Fin. Servs. Claim invalid under § 101 Motion to Dismiss
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
1/29/2015 N.D. Ill. Vehicle Intelligence & Safety LLC v. Mercedes-Benz
USA, LLC
Claims invalid under § 101 Motion to Dismiss
2/6/2015 E.D. Va. In re TLI Communs. LLC Patent Litig. Claims invalid under § 101 Motion to Dismiss
2/9/2015 M.D. Fla. Stoneeagle Servs. v. Pay-Plus Solutions Denied Motion to Dismiss
2/10/2015 M.D. Fla. Enpat, Inc. v. Tenrox Inc. Claims invalid under § 101 Summary Judgment
2/11/2015 C.D. Cal. Essociate, Inc. v. 4355768 Canada Inc. and Essociate,
Inc. v. Clickbooth.com
Claims invalid under § 101 Motion to Dismiss
2/13/2015 E.D. Tex. Smartflash LLC v. Apple, Inc. Denied Summary Judgment
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - COURTS
Date District Case Name Outcome Procedural Context
2/18/2015 W.D. Wis. Ameritox, Ltd. v. Millennium Health, LLC Some claims invalid under
§ 101 (1 patent) and denied
as to other claims (1 patent)
Summary Judgment
2/24/2015 N.D. Ill. Trading Techs. Int'l v. CQG, Inc. Denied J.M.O.L.
2/24/2015 D. Del. Intellectual Ventures I, LLC v. Motorola Mobility LLC Some claims invalid under
§ 101 (1 patent) and denied
as to other claims (1 patent)
Summary Judgment
3/3/2015 E.D. Tex. Clear with Computers, LLC v. Altec Indus. Claims invalid under § 101 Motion to Dismiss
3/10/2015 N.D. Cal. Hewlett Packard Co. v. ServiceNow, Inc. Claims invalid under § 101 Summary Judgment
3/11/2015 D. Del. Tenon & Groove, LLC v. Plusgrade S.E.C. Claims invalid under § 101 Summary Judgment
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – SAP America, Inc. v. Versata
Development Group, Inc. (CBM2012-00001) • Claim 17 – a method of determining a price
• Claim 27 – a computer-implemented method of
determining a price
• Claims 26 and 28 – computer-readable storage media
claims implementing the methods of Claims 17 and 27
• Claim 29 – “apparatus” for determining a price including
computer program instructions capable of performing the
same method steps recited in Claim 27
• PTAB analyzed all claims together
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – SAP America, Inc. v. Versata
Development Group, Inc. (CBM2012-00001) • “The key question is, therefore, whether the claims do
significantly more than simply describe the law of nature or
abstract idea.”
• The abstract idea: “determining a price using organizational
and product group hierarchies, which are akin to
management organizational charts.”
• Having found an abstract idea, “we must further analyze
Versata’s claims to determine whether they incorporate
sufficient meaningful limitations. . . .”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – SAP America, Inc. v. Versata
Development Group, Inc. (CBM2012-00001) • Mental steps test: “while the challenged claims are drafted
to include computer hardware limitations, the underlying
process . . . could also be performed via pen and paper.”
• General purpose computer: “The claimed invention . . .
requires only routine computer hardware and
programming.”
• Additional meaningful limitations: “the additionally claimed
steps . . . are well-known, routine, and conventional steps.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – CRS Adv. Tech., Inc. v. Frontline Tech. Inc. (CBM2012-00005) • Holding – All challenged claims (method and system) are
unpatentable under § 101
• “[T]he terms ‘one or more computers,’ ‘website,’ and
‘communication link’ at issue in this case do not impose
meaningful limits on the challenged claims’ scope.”
• Compared technology limitations to those of: o SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319 (Fed. Cir. 2010)
o Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir. 2013)
o Dealertrack, Inc. v. Huber, 674 F.3d 1315, (Fed. Cir. 2012)
o Bancorp Servs. v. Sun Life Assurance Co., 687 F.3d 1266 (Fed. Cir.
2012)
o Accenture Global v. Guidewire Software, 728 F.3d 1336 (Fed. Cir. 2013)
• Note: PTAB did not discuss/use CLS Bank decision
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – Interthinx, Inc. v. CoreLogic Solutions, LLC (CBM2012-00007) • Found all claims (method claims) unpatentable:
o Patent Owner: Under M-O-T, “the computer plays a necessary and vital role to the development and storage of the predictive and error models.”
PTAB: “Although the preamble recites a computer implemented process, none of the claim elements, with the possible exception of the ‘storing’ limitations, specifically recites a relationship to the computer.”
o Patent Owner: “[T]he claims pass the Federal Circuit’s ‘mental process test’ because they … cannot be performed entirely manually or in the human mind.”
PTAB: “However, the claims …do not tie necessarily these steps to a computer or a particular application.”
o Patent Owner: “[T]he claims satisfy the “abstract idea” test for patentable subject matter because, rather than being tied preemptively to a field of use, they are narrowly tied to a specific application”
PTAB: “A claim is not patent eligible if, instead of claiming an application of an abstract idea, the claim instead is drawn to the abstract idea itself.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – U.S. Bancorp v. Retirement Capital
Access Management Co. (CBM2013-00014) • Found all claims (method and system) unpatentable
• First case after CLS
• Abstract idea – (not disputed) advancing funds based on future
retirement payments, which is “an economic practice long
prevalent”
• Preamble reciting “computerized method” ignored (relying upon
Digitech)
• Used mental steps test
• Method required only a generic computer
• Noted that “preemption is only one test” to use
• System claims requiring only “use of a computer in a generalized
fashion” does not meaningfully limit the claims
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – SAP America Inc. v. Lakshmi Arunachalam (CBM2013-00013) • Found claims (method) at issue unpatentable • Abstract idea – “claim 1 recites an abstract method, i.e.,
performing a real-time Web transaction by displaying and providing at least one application a user selects to access checking and savings accounts, and transferring funds (i.e., debiting or crediting) in response to user signals from an input device.”
• “The remaining limitations in claim 1 do not contribute any patent–eligible subject matter. The service network atop the Web … is an abstract concept under which customers and service providers communicate over a network so that the service provider can service the customer…. This does not impose a meaningful limitation on the scope of the claim.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – SAP America Inc. v. Lakshmi Arunachalam (CBM2014-00018) • Found claims (method) at issue unpatentable • Dependent claim 9 and 10 at issue
o Depend upon claim 1, which was found unpatentable under 101 in CBM2013-00013
• Claims 9 further limits claim 1 by reciting that the transaction is a loan requested from a lender across the Web from a Web application.
• Claim 10 further limits claim 1, reciting that the Web transaction is vehicle purchased with bank financing across the Web from a Web application.
• “Claims 9 and 10 do not add limitations that contribute to patent eligibility.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – Salesforce.com, Inc. v. Virtualagility, Inc. (CBM2013-00024) • Found claims at issue (system, method, and “data storage device”)
unpatentable • Abstract idea – “we find that the challenged claims are directed to an
abstract idea, the creation and use of models to aid in processing management information by organizing and making the information readily accessible by the collaborators of the project”
• “The model, as described by the specification, is a disembodied concept that is not tied to a specific algorithm or specialized computer.”
• “[T]he claims do not recite a specialized algorithm that could move the claims from the abstract to the concrete.”
• “[W]ith respect to the processor, we note that at least operations (ii) through (vi) actually are carried out by the user, albeit, via the processor.”
• “[S]imply executing an abstract concept on a computer does not render a computer ‘specialized,’ nor does it transform a patent-ineligible claim into a patent-eligible one.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – International Securities Exchange, LLC v. Chicago Board Options Exchange, Inc. (CBM2013-00049) (CBM2013-00050) (CBM2013-00051) • Found claims at issue (method and system) unpatentable • The patents relate to automated trading systems for option
contracts. • Specifically, the claimed inventions are directed to methods for
managing the risk of a maker of an options market in an automated trading system.
• Abstract idea – “we conclude that the concept of managing trading risk (“risk management”) is an economic practice long prevalent in our system of commerce and squarely within the realm of abstract ideas.”
• “The claims contemplate using a generic computer to perform ‘well-understood, routine, conventional activit[ies]’ previously known to the industry.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – Dell Inc. v. Disposition Services LLC (CBM2013-00040) • Found claims at issue (method and system) unpatentable • “The ’944 patent ‘relates to a system and method for the
controlled disposition of selected capital assets.’” • Abstract idea - “We are persuaded that, like risk hedging in
Bilski and intermediated settlement in Alice, the idea of handling a customer’s asset in such a way that the customer can verify that its handling instructions were followed is unpatentably abstract.”
• “[T]he claims of the ’944 patent do not add any inventive concept to the abstract idea of handling a customer’s physical item in such a way that the customer can verify that its handling instructions were followed.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101 - PTAB
PTAB Approach – Fidelity National Information Services, Inc. v. Check Free Corporation (CBM2013-00030) (CBM2013-00031) (CBM2013-00032) • Found claims at issue (method, system, “computer-
implemented method,” and “computer program product, comprising a computer usable medium”) unpatentable
• The patents at issue generally related to electronic commerce and an electronic bill payment systems
• Abstract idea - “The computer implementation associated with comparing the account number and the credit limit are incidental to the fundamental economic concept of having a third party intermediate a settlement either by crediting the payee from the third party’s funds (as in a credit transaction) or from the payer’s funds (as when the amounts exceed the payer’s credit limit with the service provider).”
• “A computer used for its most basic function, the performance of repetitive calculations, does not impose a meaningful claim limitation.”
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PROCEDURAL DIFFERENCES: 35 U.S.C. § 101
Tips for using § 101 as a defense • Uncertainty in state of law
o Make a good factual record
o Make a good legal record
• The window is open for raising it in a motion to dismiss
• Use defense at the district court or the PTAB?
o Speed
o Collateral estoppel
o Chances of success
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 43
PROCEDURAL DIFFERENCES: CLAIM CONSTRUCTION
District Courts • Provide claim construction briefing schedule
o E.D. Texas – opening claim construction briefs due about 8 months after Initial Case Management Conference
o N.D. Cal – opening claim construction briefs due about 5.5 months after Initial Case Management Conference
o Markman hearing o District Court issues claim construction opinion
• Standard
o “[O]rdinary and customary meaning” Phillips v. AWH Corp. (Fed. Cir. 2005)
o Construes patent in light of claim language, specification, prosecution history, and, if necessary, extrinsic evidence
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PROCEDURAL DIFFERENCES: CLAIM CONSTRUCTION
PTAB • Petitioner challenging claims must identify at least “[h]ow
the challenged claim is to be construed.” o Provide statement that claim terms take on ordinary or
customary meaning o Point out any claim terms that have special meaning and
definition in specification o Patentee not required to propose any claim constructions
• Standard o “broadest reasonable construction in light of the specification
in which it appears.” 37 C.F.R. § 42.100(b). Applies even if district court has already construed same claims
o Expired patents
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PROCEDURAL DIFFERENCES: CLAIM CONSTRUCTION
PTAB Review’s Effect on District Court Proceedings
• APJs have experience in construing claims and prior art
o May lead district court to show deference to PTAB
analysis
• District Court can compare arguments made at PTAB
with those made in litigation
• The arguments/analysis of PTAB proceeding may
influence claim construction arguments in district court
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 46
PROCEDURAL DIFFERENCES: CLAIM CONSTRUCTION
District Court’s Effect on PTAB Proceedings • PTAB will carefully consider claim construction and
related arguments from parallel Dist. Ct. proceedings –
SAP v. Versata
o However, because of different claim construction
standards, may not adopt
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 47
PROCEDURAL DIFFERENCES: CLAIM CONSTRUCTION
Must Present Majority of Case in Petition
• Patent owner may reveal claim construction within 3
months after filing petition in patent owner’s preliminary
response
• PTAB construction at 6 months
• Motion to amend claims will occur by 9 months
Speed of the PTAB proceeding makes argument
coordination challenging if district court action
proceeds in parallel
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 48
PROCEDURAL DIFFERENCES: AMENDING CLAIMS
Amending Claims During PTAB Review – Motion to Amend - 37 C.F.R. § 42.121(a) • A patent owner may file one motion to amend a
patent, but only after conferring with PTAB o Due date: Unless due date is provided in PTAB order, a motion to
amend must be filed no later than the filing of patent owner response.
o Scope: A motion to amend may be denied where: (i) The amendment does not respond to a ground of
unpatentability involved in the trial; or (ii) The amendment seeks to enlarge the scope of the claims of
the patent or introduce new subject matter. o A reasonable number of substitute claims: A motion to amend may
cancel challenged claim or propose reasonable number of substitute claims
o Presumption is only one substitute claim needed to replace each challenged claim, and it may be rebutted by a demonstration of need
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 49
PROCEDURAL DIFFERENCES: AMENDING CLAIMS
Amending Claims During PTAB Review –
Content- 37 C.F.R. § 42.121(b) • A motion to amend claims must include a claim
listing, show the changes clearly, and set forth:
o The support in the original disclosure of the
patent for each claim that is added or amended;
and
o The support in an earlier-filed disclosure for
each claim for which benefit of the filing date of
the earlier filed disclosure is sought.
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 50
LITIGATION TACTICS: ESTOPPEL
Inter Partes Review and Post Grant Review
• Cannot assert any ground of invalidity that it raised or
reasonably could have raised
o Only applies if IPR reaches a final written decision
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 51
LITIGATION TACTICS: ESTOPPEL
CBM Review
• Estoppel only applies to what was actually raised
o Only applies once PTAB has renders final written
decision
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 52
LITIGATION TACTICS: STAYS
CBM – Factors Considered
• Whether stay will simplify issues and streamline trial
• Whether discovery is complete
• Whether stay will unduly prejudice moving party
• Whether stay will reduce the burden of litigation
May immediately appeal adverse decision on stay to
CAFC
Implementation by District Courts
• Likely to grant if filed after CBM has been instituted by
PTAB
o D. Del and E.D. Tex have denied if not yet instituted
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 53
LITIGATION TACTICS: STAYS
IPR – Factors Considered
• Stage of litigation
• Potential to simplify issues
• Potential prejudice to patent owner if granted
Implementation by District Courts
• Courts are likely to grant stays (as of March 10, 2015):
o ≈302 granted
o ≈138 denied
o ≈37 Granted/Denied in part
• More likely to grant stays after PTAB has instituted IPR
o But have denied for being too late
o Advisable to review judge’s previous rulings
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 54
LITIGATION TACTICS: STAYS
Implementation by District Courts (N.D. Cal.)
• 46 granted, 13 denied in part granted in part, 14 denied
o Heavily consider whether litigation at early stage
o Has required that all defendants agree to be bound
by estoppel – they may not assert in the suit that the
claim is invalid on any ground that party requesting
IPR could have raised/reasonably raised during IPR.
Pi-Net Int’l, Inc., No. 12-cv-09458, -4959, -4962, Oct.
3, 2013
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 55
LITIGATION TACTICS: STAYS
Implementation by District Courts (E.D. Tex.)
• 23 granted, 3 denied in part granted in part, 24 denied
o Granted stay where all defendants stipulated to be
estopped from asserting invalidity as to the
references which the PTO agreed to consider.
o Non-petitioner defendants could raise references that
were not included as part of the IPR.
o All defendants could still maintain that asserted
claims are invalid under 35 U.S.C. § 112. Unifi Sci.
Batteries, LLC, 12-cv-224, -223, -225, -221 (Jan. 14,
2014).
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 56
LITIGATION TACTICS: STAYS
Implementation by District Courts (D. Del.)
• 33 granted, 2 denied in part granted in part, 13
denied
o Has applied limited estoppel where all defendants
who were not actually IPR petitioners agreed to
be estopped from asserting any obviousness
combinations that were actually presented to the
PTO, but allowing defendants to re-assert
anticipatory references. In re Bear Creek Tech.,
12-md-2344 (Jul. 17, 2013).
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 57
DISCOVERY TACTICS: PTAB
Limited discovery including depositions
of fact or expert witnesses
• Entitled to routine discovery o Includes all exhibits cited
oDeposition of party’s witnesses/declarants
oRelevant information inconsistent with
position taken
• May request additional discovery by
motion
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DISCOVERY TACTICS: PTAB
Additional Discovery
Parties may agree between themselves (37 CFR § 42.51(b)(2))
For IPR – 35 U.S.C. § 316 (A)(5) “such discovery shall be limited to . . . what is
otherwise necessary in the interest of justice”
For PGR – 35 U.S.C. § 326 (A)(5) “such discovery shall be limited to evidence
directly related to factual assertions advanced by either party in the proceeding” • PTAB Rules of Practice, at 49 - While a good cause standard requires a party to show
a specific factual reason to justify the needed discovery, under the interests-of-justice
standard, the Board would look at all relevant factors. Specifically, to show good cause,
a party would be required to make a particular and specific demonstration of fact.
Under the interests-of-justice standard, the moving party would also be required to
show that it was fully diligent in seeking discovery and that there is no undue prejudice
to the non-moving party. In contrast, the interests-of-justice standard covers
considerable ground, and in using such a standard, the Board expects to consider
whether the additional discovery is necessary in light of the totality of the relevant
circumstances.
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 59
DISCOVERY TACTICS: PTAB
Additional Discovery – “Interests of Justice” - IPR2012-00001 –
Garmin v. Cuozzo, Paper No. 26, March 5, 2013 – 1. More Than A Possibility And Mere Allegation – Party requesting discovery
should already possess evidence tending to show beyond speculation that in fact
something useful will be uncovered
– 2. Litigation Positions And Underlying Basis – Asking for other party’s litigation
positions and underlying basis for those positions is not necessary in the interest
of justice
– 3. Ability To Generate Equivalent Information By Other Means – Information a
party can reasonably figure out or assemble without a discovery request would
not be in the interest of justice to have produced by the other party
– 4. Easily Understandable Instructions
– 5. Requests Not Overly Burdensome To Answer – Burden includes financial
burden, burden on human resources, and burden on meeting the time schedule
of IPR. Requests should be sensible and responsibly tailored according to a
genuine need
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 60
DISCOVERY TACTICS: DISTRICT COURTS
Much broader scope of discovery
• “Parties may obtain discovery regarding any
nonprivileged matter that is relevant to any party’s claim
or defense” –
o Does not have to be admissible at trial, just
reasonably calculated to lead to admissible evidence.
• Entitled to more information via interrogatories,
depositions, etc.
• Longer period of time to gather information
• More expensive
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 61
SETTLEMENT IMPLICATIONS
IPR/CBM Proceedings • “The parties may agree to settle any issue in a proceeding, but the
Board is not a party to the settlement and my independently
determine any question of jurisdiction, patentability, or Office
practice.” 37 C.F.R. § 42.74(a).
o Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007
Board terminated involvement of Petitioner, but
independently decided to independently proceed to a final
written decision.
Found that res judicata and collateral estoppel did not limit
Board’s ability to decide the challenges at issue
Cancelled challenged claims as unpatentable
District Court Proceedings • Settlement ends the litigation
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 62
PATENT VALIDITY: IMPLICATIONS
Inter Partes Review
• Only invalidity arguments under 35 U.S.C. §§ 102 and 103 –
patents and printed publications
• Preponderance of evidence standard
CBM Review and PGR
• Can rely on any statutory defense: §§ 101, 102, 103 and 112
• Preponderance of the evidence standard
District Court Proceedings
• May rely on any form of prior art
• May rely on all arguments, including 35 U.S.C. §§ 101 and
112
• Clear-and-convincing evidence needed to invalidate a claim
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 63
PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter, No. 2011-cv-1334, -1355 (Fed. Cir.
July 2, 2013)
• Technology: ‘434 patent directed to a hemodialysis
machine with an integrated touch screen interface
• Brief Chronology:
o Fresenius brings DJ suit against ‘434 patent
o Judgment against Fresenius – ‘434 not invalid and
infringed
o While litigation pending, reexamination determined that
all asserted claims invalid
o Post-judgment damages remain pending
o Fresenius argues that Baxter no longer has cause of
action
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 64
PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter (cont’d)
• Issue: Whether cancellation of claims during
reexamination proceeding by the PTO must be given
effect in litigation where merits issues finally decided,
but some damages issues remain on appeal
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 65
PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter - Timeline
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 66
PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter – Statutory Backdrop
• Reexamination statute modeled from Reissue
o Suit for past infringement only allowable for claims
that survive reexamination in “identical” form
• General Rules:
o Cancelation of claims = claims void ab initio
Patentee loses any cause of action based on
canceled claims, pending litigations moot
o Similarly, cancelation of claims cannot be used to
reopen final damages judgment
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 67
PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter – Baxter’s Argument on Appeal
• District Court’s 2007 judgment is “final” and “binding”
between the parties and, therefore, has res judicata effect
within the pending litigation
• CAFC:
o “It is important here to distinguish between different
concepts of finality…. We are … not dealing with
finality for purposes of determining the potential res
judicata effect of this infringement litigation on another
suit. We are concerned instead with whether the
judgment in this infringement case is sufficiently final
so that it is immune to the effect of the final judgment in
the PTO proceedings.
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PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter – CAFC Holding
• 2007 judgment may have been given preclusive effect in
another infringement case between parties, but it was not
sufficiently final to preclude application of the intervening
final judgment in reexam
o 2007 judgment did not “end[] the litigation on the merits
and leave[] nothing for the court to do but execute the
judgment.” Quoting Mendenhall v. Barber-Green Co., 26 F.3d 1573, 1580
(Fed. Cir. 1994).
• Where the scope of relief remains to be determined, there is
no final judgment binding the parties (or the court)
o Even if liability already established
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 69
PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter – CAFC Holding
• CAFC rejected Baxter’s argument that allowing a PTO
determination to control the outcome of pending litigation
offends separation of powers, citing Plaut v. Spendthrift
Farm, Inc., 514 U.S. 211 (1995)
o Plaut should not be read to impose restrictions on
reopening cases before there is a final judgment ending
the case
o Similarly, Plaut recognized that “when a new law makes
clear that it is retroactive, an appellate court must still
apply that law in reviewing judgments still on appeal that
were rendered before the law was enacted, and must
alter the outcome accordingly.”
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 70
PATENT VALIDITY: IMPLICATIONS
Fresenius USA v. Baxter – CAFC Holding
• If damages issues remain pending, a district court’s
finding that an asserted patent is “not invalid” is subject
to “reversal” via reexamination
• In other words, without a final (non-appealable)
judgment, a reexamination finding of invalidity can erase
a prior damages award
o Finality means that there is nothing for the court left
to do but execute the judgment
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP 71
PATENT VALIDITY: IMPLICATIONS
Versata Software v. SAP America, 106 USPQ 2d. 1648
(Fed. Cir. 2013)
• Technology: computerized pricing engines
o Versata’s “Pricer” won 35% of bids pre SAP
o Pricer sales went to zero after SAP entered market
• At trial: Versata awarded
o $260 million lost profits
o $85 million reasonable royalties
o Decision affirmed by CAFC in May 2013
• CBM:
o Prior to CAFC litigation decision, SAP sought Covered
Business Method Patent Review
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PATENT VALIDITY: IMPLICATIONS
Versata Software v. SAP America, 106 USPQ 2d. 1648 (Fed.
Cir. 2013) • Jan 2013: PTAB rejects Versata’s preclusion/estoppel arguments
o “As the final judgment in the related Versata v. SAP litigation is currently
on appeal to the Federal Circuit, we hold that the district court’s
judgment is not sufficiently firm to be accorded conclusive effect for
purposes of 37 C.F.R. 42.302 as it is still subject to reversal or
amendment.”
• May 2013: CAFC affirms litigation holding. Remand to consider scope of
injunction
• June 2013: PTAB finds asserted claims invalid under 101 as “disembodied
concept”
o SAP asks Federal Circuit to stay the case until Versata appeal
completed
• Nov 2013: Versata appeals PTAB decision to Federal Circuit
• Jan 2014: Supreme Court denies litigation cert. petition
Copyright © 2015 Oblon, McClelland, Maier & Neustadt, LLP
THE SUPREME COURT ON PATENT LAW
“In this well organized, readily accessible and highly readable treatise, Michael Kiklis analyzes the serial interventions by the Supreme Court that keep altering the purely statutory patent law as interpreted by the Federal Circuit and understood by patent practitioners. Because these alterations are continuing and even accelerating, practitioners need to anticipate where the Court is headed next if they are to serve their clients well. By stressing trends and explaining dicta for what it may portend, Kiklis provides an invaluable chart for navigating shifting seas." – Paul Michel, former Chief Judge, United States Court of Appeals for the Federal Circuit “In this one volume, Michael Kiklis has filled in a critical gap in our understanding of modern American patent law. Every person interested in the field must study the current Supreme Court’s take on patents, and there is no better source than this treatise.” – Tom Goldstein, Publisher, Scotusblog.com
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