Patent Exhaustion Case Could Have Enormous Impact on Multinational Businesses

Earlier this year, the Federal Circuit ruled en banc in Lexmark v. Impression,[1] the most significant exhaustion ruling since the Supreme Court’s Quanta decision.[2] In response to Impression’s cert. petition, the Supreme Court called for the views of the Solicitor General. The U.S. has now filed its brief, recommending cert. be granted on both questions. Consistent with its views before the en banc Federal Circuit, the U.S. agrees with Judge Dyk’s dissent, and recommends strengthening the exhaustion doctrine, effectively overruling the Federal Circuit’s long-standing decisions in Mallinckrodt and Jazz Photo.[3] The two issues at stake relate to post-sale limits on use and resale, and whether foreign sales exhaust a patentee’s U.S. rights.

The Solicitor General’s recommendations make a cert. grant highly likely in this important case, which goes to the heart of two of the Supreme Court’s favorite patent topics: the scope of the patent right and the extraterritorial effect of U.S. patents. The strategic impact on large multinational businesses, complex licensing deals and so on is potentially enormous. Continue Reading

Federal Circuit Panel Splits in Important Decision Regarding Its Jurisdiction over Institution of IPRs

In Husky Injection Molding Systems Ltd. v. Athena Automation Ltd., Appeal Nos. 2015-1726, 1727 (Sept. 23, 2016), the panel majority, consisting of Judges Lourie (the opinion’s author) and Stoll, differed sharply with dissenting Judge Plager over the court’s jurisdiction to review the PTAB’s institution of an inter partes review. This decision could have broad implications. In his dissent, Judge Plager listed three categories of issues in addition to the issue before the court “that this court is obligated to consider” despite 35 U.S.C. § 314(d). Dissenting op. at 8.[1]

Husky, the patent owner, appealed from the board’s decision that assignor estoppel did not preclude institution of the IPR. A co-inventor of the challenged patent assigned the patent to Husky and subsequently left Husky and formed Athena, the petitioner. The board rejected Husky’s argument that assignor estoppel barred Athena from filing its petition. The board relied on 35 U.S.C. § 311’s broad statutory mandate that “a person who is not the owner of a patent may file with the Office a petition to institute an inter partes review of the patent.” After the board issued its final decision that the prior art anticipated some of the challenged claims, Husky raised the same estoppel issue in its appeal to the Federal Circuit. The panel majority held that it lacked jurisdiction to consider that issue because of the prohibition under § 314(d) that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” Continue Reading

A Split Panel of the Federal Circuit Debates the Standards for Definiteness

In Cox Communications, Inc. v. Sprint Communications Co. LP, Appeal No. 2016-1013 (Fed. Cir. Sept. 23, 2016), the panel, consisting of Chief Judge Prost (authoring the opinion) and Judges Newman and Bryson, unanimously reversed the district court’s summary judgment of invalidity for indefiniteness under 35 U.S.C. § 112, para. 2. But Judge Newman vigorously rejected the majority’s reasoning.

The asserted claims of the six patents in suit recite methods of transmitting over the internet telephone calls initiated on traditional telephones by converting the calls to packets of information and, after transmission, converting them back to traditional voice signals. All of the asserted claims recite using a “processing system,” which receives a signal from a traditional telephone network and processes the information to select the path that the voice call should take through the data network. The written description portions of the specifications disclose using look-up-tables for selecting a communication path. The following is an “exemplary” claim: Continue Reading

Important Federal Circuit Decision Provides More Clues on Software Eligibility

On Sept. 13, 2016, the Court of Appeals for the Federal Circuit gave applicants and patentees another tool with which to argue for the patent eligibility of their software innovations, finding that McRO’s lip-synchronizing patents were eligible under 35 U.S.C. § 101.  Judge Reyna, joined by Judges Taranto and Stoll, determined that representative claim 1 of the McRO patent was not directed to an ineligible abstract idea.  This is because the genus of rules limiting the claim contains sufficient specificity to go beyond the abstract by rendering and applying information, rather than merely organizing it, and avoids preempting all means of arriving at the result.

As we previously begged for a repeatable test not turning on subtleties of the individual matter,[1] we would enjoy ending the blog post here.  Unfortunately, we cannot. Continue Reading

Federal Circuit Holds PTAB Unreasonable in Denying Motion to Amend

In Veritas Technologies LLC v. Veeam Software Corp., Appeal No. 2015-1894 (Fed. Cir. Aug. 30, 2016), the Federal Circuit affirmed the PTAB’s conclusion of obviousness but vacated its denial of a conditional motion to amend and remanded for the PTAB to address the patentability of the substitute claims. The patent owner, Veritas, argued for a narrow construction of the unamended claims that it contended distinguished over the prior art, but the board rejected that construction as narrower than the broadest reasonable construction. Veritas had filed a conditional motion to amend to add narrower claims if the board concluded that the existing claims were unpatentable. But the board denied the motion to amend. Continue Reading

Federal Circuit Provides Guidance on Use of Common Sense in Obviousness Analysis

Last week, in Arendi S.A.R.L. v. Apple, the Federal Circuit reversed a Patent Trial and Appeal Board (PTAB) finding of invalidity in an inter partes review that relied on “common sense” to supply a claim limitation that was not disclosed by the prior art. When used to support a finding of obviousness, common sense is typically applied to provide a motivation to combine references, rather than to provide a limitation that is missing from the prior art. The court’s decision in this case is worth noting because it signals the Federal Circuit’s growing concern about conclusory PTAB findings of obviousness that are not supported by the record. Continue Reading

Defend Trade Secrets Act – A Budding Avenue for Trade Secret Enforcement

In June, agriculture giant Monsanto was the first to use the Defend Trade Secrets Act (DTSA) by filing a federal suit in the Eastern District of Missouri naming one former employee and a number of John and Jane Does as defendants.

The DTSA, 18 U.S.C. 1836, provides a federal civil action for filing a trade secret claim. Previously, the only federal relief was a criminal action under the Economic Espionage Act. One notable feature of the act is that it does not pre-empt traditional state law claims for trade secret misappropriation. In addition to providing a federal claim, the DTSA offers enhanced damages, ex parte seizure provisions and the ability to recover attorneys’ fees. To take advantage of the act, employers must accept its whistleblower immunity provisions and provide notice to their employees of the availability of such immunity.

From an intellectual property strategy perspective, recent decisions limiting the scope of patent and copyright protection have increased the importance of trade secrets in an intellectual property portfolio. For example, the Supreme Court’s Alice decision narrowing patentable subject matter relating to software has encouraged providing software as a service and maintaining source code as a trade secret. As a result, trade secret information often lies in the digital archives of companies, and increasingly, these archives are under attack from outside sources or through targeted recruitment of key employees. Monsanto’s facts are just one example of such efforts to misappropriate trade secret information. Continue Reading

PTO Provides Additional Guidance on Patent Eligibility of Life-Sciences Method Claims


On July 14, 2016, the PTO sent a memorandum to the examining corps regarding the recent rulings in Rapid Litigation Management Ltd. v. Cellzdirect, Inc., Appeal No. 2015-1570 (Fed. Cir. July 5, 2016), and Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015), cert. denied, No. 15-1102, 2016 WL 1117246 (June 27, 2016). After briefly describing the cases, the memorandum concludes that they “do not change the subject matter eligibility framework [of Mayo/Alice], and the USPTO’s current subject matter eligibility guidance and training examples are consistent with these cases.” The memorandum does acknowledge, however, that Rapid Litigation Management “provide[s] additional information and clarification on the inquiry for determining whether claims are directed to a judicial exception” to 35 U.S.C. § 101. Continue Reading

Federal Circuit Helps Clarify What Constitutes a Commercial Sale under Pfaff

In The Medicines Co. v. Hospira Inc., Appeal No. 2014-1469 (Fed. Cir. July 11, 2016), the Federal Circuit issued a unanimous en banc decision ruling that the on-sale bar was not triggered by a supplier’s sale of manufacturing services to an inventor largely because the title to the invention and the right to market the invention never passed from the inventor to the supplier.


The Medicines Company (MedCo) contracted with Ben Venue Laboratories (Ben Venue) to manufacture Angiomax, a drug product, which is covered by two of MedCo’s patents (U.S. Patent Nos. 7,582,727 and 7,598,343).  Slip op. at 5.  Before the critical date from which the on-sale bar of § 102(b) must be measured, MedCo paid Ben Venue a fee to manufacture three batches of product according to the patents-at-issue.  Slip op. at 6-7.  The batches were provided by Ben Venue and placed in quarantine with MedCo’s distributor, and only released and made available for sale after the critical on-sale bar date.  Slip op. at 7-8. Continue Reading