May 7, 2015
Software patents are a challenging field these days. The big news of late has been the effect of the Supreme Court’s June 2014 ruling in Alice v. CLS Bank, which has caused many patents — especially in the business method and software realms — to fall into the category of unpatentable abstract ideas. A decision this week by the Court of Appeals for the Federal Circuit — the court tasked with all federal patent appeals — further illustrates the stringent requirements for software patents and the danger of claiming software inventions in the means-plus-function form permitted under the Patent Act.
In a decision yesterday, May 6th, 2015, the CAFC affirmed a lower court decision invalidating a patent asserted by plaintiff EON Corp. IP Holdings, LLC against AT&T Mobility, Sprint, HTC, Qualcomm and Wirefly.
The Patent Act permits patent claims to be written in so-called “means-plus-function” language.
Section 112, paragraph 6 states that:
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.
35 U.S.C. § 112 ¶ 6.
That is, the claim may say “a means for <doing some function>” without specifying in the claim what the means is. In order to properly achieve patentability, however, the patent’s specification must detail a structure corresponding to the claimed function. Essentially, the specification has to disclose a means. If it fails to do so, the patent does not fully teach one of skill in the art how to implement the invention and is indefinite (therefore invalid).
In this case, the CAFC reminded us that while some inventions are amenable to the disclosure of a physical structure, “[i]t is well-established that the corresponding structure for a function performed by a software algorithm is the algorithm itself.” In this case it was also “uncontested that the only structure disclosed in the ’757 patent is a microprocessor,” not the algorithm.
EON, despite admitting the lack of structure, attempted to save its case and its patent. The court summarized: “EON relies on an exception to the algorithm rule created in In re Katz Interactive Call Processing Patent Litigation, 639 F.3d 1303 (Fed. Cir. 2011). Katz held that a standard microprocessor can serve as sufficient structure for ‘functions [that] can be achieved by any general purpose computer without special programming.’ Katz, 639 F.3d at 1316. In Katz, claim terms involving basic ‘processing,’ ‘receiving,’ and ‘storing’ functions were not necessarily indefinite because a general purpose computer need not ‘be specially programmed to perform the recited function.’ Id. However, other claim terms involving conditionally coupling calls were indefinite because those functions required special programming.”
The court called the Katz exception a “narrow” one and wrote, “it is only in the rare circumstances where any general-purpose computer without any special programming can perform the function that an algorithm need not be disclosed.” This case was not that rare circumstance.
The message to patent attorneys and those seeking software patents is clear. If claiming software in means-plus-function form, the actual algorithm must be disclosed in the specification. Patent attorneys should not rely on the general microprocessor exception as even the simplest control structures, such as an if-statement, may cause the algorithm to fall outside of the very narrow general purpose computer exception.
April 9, 2015
THIS CAUSE having been heard and considered, it is
ORDERED and ADJUDGED:
PER CURIAM (DYK, MAYER, and REYNA, Circuit Judges).
AFFIRMED. See Fed. Cir. R. 36.
That’s all she wrote. Literally. So read the entire order of The Court of Appeals for the Federal Circuit yesterday affirming the Southern District of New York’s summary judgment determination that a patent owned by seeming patent troll DietGoal represents an abstract idea, unpatentable under Section 101. This can’t bode well for DietGoal’s dozen or so other suits against website owners and app producers. The patent in suit is the latest to fall to the Supreme Court’s Alice standard.
The Abstract of the ’516 patent, while not determinative of the scope of the patent, certainly couldn’t have helped the plaintiff’s cause. It reads:
The method can include the following steps. First, the Meal Database and the Food Database can be prepared. Second, the user can use the Picture Menus to choose meals for a particular time period to correspond to a customized eating plan. Third, the user can decide whether or not to change one or more of the meals he has chosen for the particular time period. If the user decides to change his chosen meals, the user can edit or create new meals using the Meal Builder. If the user decides not to change his choices, or after the user changes his choices, the user can save the meals for the particular time period.
So…yeah. Make a list of meals (with pictures), pick one or more of those meals that you like and either change them or save them. That’s some innovative stuff right there. Judge Engelmayer of the Southern District of New York didn’t think so either, opining on summary judgment that “[t]he claims of the ’516 patent recite nothing more than the abstract concept of selecting meals for the day, according to one’s particular dietary goals and food preferences.” This suit, filed in 2012, likely would never have made it to court post-Alice.
March 24, 2015
The 18-year trademark dispute in B&B Hardware, Inc. v. Hargis Industries, Inc. has been decided by the Supreme Court in an opinion issued this morning (case 13-352). The Court summarized the facts as follows:
Respondent Hargis Industries, Inc. (Hargis), tried to register its trademark for SEALTITE with the United States Patent and Trademark Office pursuant to the Lanham Act. Petitioner, B&B Hardware, Inc. (B&B), however, opposed registration, claiming that SEALTITE istoo similar to B&B’s own SEALTIGHT trademark. The Trademark Trial and Appeal Board (TTAB) concluded that SEALTITE should not be registered because of the likelihood of confusion. Hargis didnot seek judicial review of that decision.Later, in an infringement suit before the District Court, B&B argued that Hargis was precluded from contesting the likelihood of confusion because of the TTAB’s decision. The District Court disagreed.The Eighth Circuit affirmed, holding that preclusion was unwarranted because the TTAB and the court used different factors to evaluate likelihood of confusion.
In a ruling that seems surprising at first blush, the Supreme Court held “[s]o long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply.”
This holding therefore permits issue preclusion before an Article III court to be based upon a finding by an administrative agency of the executive branch. The majority thoroughly and carefully explained that this was appropriate based on the “straightforward” idea that “once a court has decided an issue, it is forever settled as between the parties.” Citing the Restatement of Judgments, the Court explained further that the precluded issue need not be raised in two courts, but also “where a single issue is before a court and an administrative agency, preclusion also often applies.”
The Court’s opinion dealt with several technical issues, including the fact that Hargis did not advance an argument that giving issue preclusive effect to an administrative decision would be unconstitutional. Rather, Hargis based its argument on a narrow construction of the Lanham Act. Nonetheless, the Court did away with any Constitutional question, mentioning that “the Court has already held that the right to a jury trial does not negate the issue preclusive effect of a judgment, even if that judgment was entered by a juryless tribunal. See Parklane Hosiery Co. v. Shore, 439 U. S. 322, 337 (1979).”
The majority opinion summarized its reasoning:
The real question, therefore, is whether likelihood of confusion for purposes of registration is the same standard as likelihood of confusion for purposes of infringement. We conclude it is, for at least three reasons. First, the operative language is essentially the same; the fact that the registration provision separates “likely” from “to cause confusion, or to cause mistake, or to deceive” does not change that reality.3 See 2 Gilson §5.01[a], at 5—17 (explaining that “the same statutory test” applies). Second, the likelihood-of-confusion language that Congress used in these Lanham Act provisions has been central to trademark registration since at least 1881. See Act of Mar. 3, 1881, ch. 138, §3, 21 Stat. 503 (using a “likely to cause confusion” standard for registration). That could hardly have been by accident. And third, district courts can cancel registrations during infringement litigation, just as they can adjudicate infringement in suits seeking judicial review of registration decisions. See 15 U. S. C. §1119; 3 McCarthy §21:20.
While seemingly well-reasoned and thorough in its analysis, Justice Thomas writes in his dissent, “[t]he majority does not address the distinction between private rights and public rights or the nature of the power exercised by an administrative agency when adjudicating facts in private-rights disputes. And it fails to consider whether applying administrative preclusion to a core factual determination in a private-rights dispute comports with the separation of powers.”
The 7-2 decision firmly establishes that TTAB findings of likelihood of confusion can bar litigation of the same question in federal court and no separation of power question exists.
Opinion [PDF]: 13-352_B&B Hardware v Hargis SCOTUS
March 13, 2015
You gotta hear this one! In the ongoing saga of Kilopass v. Sidense, a patent infringement case in the Northern District of California. Kilopass brought the suit alleging infringement of three patents, false advertising, disparagement, intentional interference…the kitchen sink. Through several rounds of motions, the claims were all eventually dismissed and the dismissal affirmed by the Federal Circuit. Sidense moved for its attorney’s fees, asking for over $5 million (and a bump to $9 million based on a contingency bonus clause in its fee agreement).
Arguing against the fee assessment, Kilopass actually filed a brief arguing that faced with such a large fee award, ”Kilopass (a) would go bankrupt, (b) it would no longer be able to fulfill contracts with defense contractors, (c) these contractors would not be able to find adequate substitutes, and (d) this would in some way – which Kilopass has failed to articulate – result in harm to our nation’s safety.” Yes, they really made that argument. The fee award against them would be a threat to national security. A hail Mary if ever there was one.
As the judge said…the court was not persuaded. Fee award for $5.3 million.
PDF of the Order Here: Kilopass v Sidense Attorney’s Fees Order
January 29, 2015
The court set the stage on the technology:
Unitherm developed what it called the “Unitherm Process” for preparing pre-cooked sliced bacon. This process involved the use of a spiral ovens [sic] and super-heated steam. According to Unitherm, before it developed this process, there was no acceptable process for pre-cooking sliced bacon because all attempts had resulted in bacon that did not resemble a pan-fried product.
The relationship between the parties appears to have been a bit of a soap opera from the start. Unitherm, which claimed that its process was a trade secret, met with Hormel in June 2007, to discuss a potential business deal between the two companies regarding the process. No signed NDA was provided in court as evidence, but Hormel did not dispute the claim that one was signed around July 20, 2007. Of course, Unitherm also claimed that Hormel disclosed some Unitherm confidential information to a Unitherm competitor (FMC Technologies) at some point between the June meeting and the July 20 NDA. Hormel claimed to have remedied that situation and the parties entered into a joint development agreement in September 2012, despite the early hiccup.
Despite Unitherm’s position that its process was a confidential trade secret, the company filed a patent application on the process in January 2008, which published in due course in July of 2009. In April 2010, Hormel terminated the joint development agreement with Unitherm and less than 5 months later filed its own patent application on the process. After the Hormel patent application published, Unitherm sued Hormel alleging, among other counts, that Hormel misappropriated Unitherm’s trade secrets (under Minnesota law).
On Hormel’s motion to dismiss, the court dealt Unitherm the harsh reality of Trade Secret 101:
“[I]t is axiomatic that a thing patented cannot also remain a secret.”
In order for information to constitute a trade secret, it must be kept secret. As a quid pro quo for patent protection, one must publish a specification detailing the process to be patented. Unitherm published the information it claimed constituted its trade secret. The court, therefore, held that any activity regarding the supposed trade secret information after the July 2009 date of publication could not constitute misappropriation of a trade secret since no trade secret remained. In the court’s words: “The publication of the patent means that Unitherm no longer had a trade secret in the Process, and its misappropriation claim fails.”
While the full details of this particular story contain significant additional complexities, the lesson is pretty simple – trade secrets must be kept strictly confidential or they will be lost, period.
Plaintiff: Unitherm Food Systems, Inc.
Defendants: Hormel Foods Corporation; Hormel Foods Corporate Services, LLC
Court: U.S. DISTRICT COURT FOR THE DISTRICT OF MINNESOTA
Decision Date: January 27, 2015
Case Number: Civ. No. 14-4034 (D.Minn.)
Unitherm-v-Hormel-Trade-Secret-14-4034 (Opinion on Motion to Dismiss)
October 30, 2014
The Judicial Conference of the United States has recommended changes to the Federal Rules of Civil Procedure aimed at reducing the staggering costs of discovery in federal litigation.
According to the original story at Corporate Counsel, the Conference made the following 3 recommendations:
1) Discovery is to be “proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”
2) Judges have more discretion to require the requesting party to share the cost of locating the requested information.
3) Place limits on the sanctions that may be levied on parties for loss of electronically stored information (“ESI”) by requiring analysis of any prejudice to the other party and that sanctions should be no greater than necessary to cure the prejudice.”
The Supreme Court will now review the recommendations for adoption.
See: “New Discovery Rules to Rein in Litigation Expenses,” October 29, 2014.
April 30, 2014
Patent litigation has been a hot and growing judicial and legislative topic for several years now. On April 29, 2014, the Supreme Court delivered two opinions that may prove to define an inflection point leading to a downward trend in that recent growth.
The fervent attention to patent litigation has been due in large part to the growing number of patent infringement suits brought each year by those patent owners known as non-practicing entities (NPE’s) or more derisively as “patent trolls” (depending on your perspective). These are entities or individuals who own patents and sue to enforce them, but do not actually produce a product or service based on the patent. Supporters of such litigation point out that while small corporate or individual inventors may not have the resources to commercialize their patents, protecting those patents through litigation is the only way to properly compensate and incentivize inventive “little guys” who would otherwise be trampled by infringing, larger companies. Critics respond that NPE litigation actually stifles innovation and economic growth by unfairly rewarding patent owners who have taken no financial risk — especially when the patents are of questionable substance.
Tuesday’s Supreme Court decision in Octane Fitness v. Icon Health, No. 12-1184 represents a major lowering of the standard for patent defendants to show the court that the plaintiff should pay the defendant’s attorney’s fees when the defendant wins. The Patent Act allows for a grant of attorney’s fees in “exceptional cases.” Prior to this decision, a prevailing defendant had to show that the suit was “objectively baseless” and brought in “subjectively bad faith” to prove exceptional case status. These factors also had to be proved by “clear and convincing” evidence. The court’s holding in Octane says that standard is too rigid and that a determination of exceptional case status should be within the court’s reasonable discretion. Justice Sotomayor wrote:
An “exceptional” case, then, is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances.
So the test for exceptional case status should now be that the case “stands out from others” based on the totality of the circumstances. This is a major opening for a potential increase in fee awards.
On the same day, the Court also delivered its opinion in Highmark v. Allcare Health Management System, No. 12-1163. This opinion states that when a lower court does award attorney’s fees, an appeals court should only overturn that award if it finds that the lower court decision represented an abuse of judicial discretion. This standard is the standard most deferential to the trial court and means that (as interpreted by the Federal Circuit) appellate courts will only overturn fee awards when they find:
(1) the tribunal’s decision is clearly unreasonable, arbitrary, or fanciful; (2) the decision was based on an erroneous conclusion of law; (3) the tribunal’s findings are clearly erroneous; or (4) the record contains no evidence upon which the tribunal rationally could have based its decision.
(See Abrutyn v. Giovanniello, 15 F.3d 1048,1050-51, 29 U.S.P.Q.2d 1615, 1617 (Fed. Cir. 1994); W. Elec. Co. v. Piezo Tech., Inc., 860 F.2d 428, 430-31, 8 U.S.P.Q.2d 1853, 1855 (Fed. Cir. 1988); Heat & Control, Inc. v. Hester Indus., Inc., 785 F.2d 1017, 1022, 228 U.S.P.Q. 926, 930 (Fed. Cir.1986).)
In combination with the Octane decision, the Highmark case sets the stage for more findings of exceptional case status and a lower likelihood that such findings will be overturned on appeal. Now we wait to see if this significantly affects the rate of NPE patent litigation. Will the coffers of the NPE’s be cleaned out by the first loss? Will investors in the litigation shy away from the increased risk? Will defendants be emboldened to see cases through trial? Stay tuned!
January 24, 2014
The Supreme Court of the United States ruled on Tuesday, January 22 that a patent owner defending against declaratory judgment of non-infringement continues to bear the burden of proving infringement, even when the declaratory judgment plaintiff is a licensee.
In Medtronic, Inc. v. Mirowski Family Ventures, LLC (12-1128) the Supreme Court unanimously reversed the ruling of the Federal Circuit (that NEVER happens in patent cases, right?) that Mirowski, as the patent owner, held the burden of showing that licensee Medtronic infringed certain licensed patents, despite the case arising out of Medtronic’s declaratory judgment action. The court reasoned that:
- A patentee normally bears the burden of proving infringement of the patent;
- The stated operation of the Declaratory Judgment Act is to leave the rights of the parties unchanged, but simply to dictate procedure;
- “Burden of proof” is a substantive part of a claim, the kind which is to remain unchanged under #2.
The court also voiced concern that shifting the burden to a declaratory judgment defendant may create confusion in two regards. First, shifting the burden to a declaratory judgment defendant would force the defendant to “prove a negative” and “work in the dark” to attempt to negate every possible theory of infringement. Second, post-litigation confusion may remain if the declaratory judgment plaintiff loses his case simply for failure of proof, where the same actions by another party (or the same licensee in the future) may not constitute infringement in light of a more sufficient showing of evidence.
Opinion of the court: [here]
December 6, 2013
The US House of Representatives yesterday passed a proposed patent litigation reform bill aimed at making it much more difficult for non-practicing entities or “patent trolls” to bring patent infringement suits. The bill passed with major bipartisan support in a 325 to 91 vote. This bill, introduced by Representative Bob Goodlatte, sets new standards for suits by NPE’s, including such highlights:
- Significant increases in the pleading specificity requirements for patent suits
- Disclosure of the ultimate beneficiary of any damage award or settlement
- New double-patenting rules
- Judicially limited early discovery
- Early determination of patent validity
The passage of this bill, referred to as The Innovation Act, is sure to be followed quickly by introduction in the Senate of a sister bill sponsored by Representative Patrick Leahy, one of the sponsors of the American Invents Act, which introduced the most sweeping patent legislation reforms in decades last year.
The Innovation Act is sure to continue the dialogue/debate regarding patent infringement suits brought by those not commercializing the patented subject matter. On one extreme the argument will be raised that shell companies sweeping up dozens or even thousands of patents solely for the purpose of litigating them for profit is stifling of innovation, in contravention to the Constitution and the Patent Act. On the other extreme we’ll find the argument that in this age of costly, complex and time-intensive litigation, such enforcement represents the only real means for individual or small company inventors to protect their inventions and in turn spur further innovation. In true Goldilocks fashion, the answer likely lies somewhere in between. Whether the Innovation Act becomes law and whether it finds the happy medium is one step closer to determination.
New York Times report: http://www.nytimes.com/2013/12/06/business/house-bill-raises-bar-for-suits-over-patents.html?emc=edit_tnt_20131206&tntemail0=y&_r=0
August 20, 2013
“Blurs lines…” See what I did there?
I write this blog under the willful delusion that “normal” people – you know, ones who spend their time focused on things other than legal this and that – read it. With that perspective, I attempt to educate my readers about the workings of the legal system, and in particular, the area of intellectual property law, without getting bogged down in legal minutia. Well, it’s not often I get to give you normal people something you REALLY care about…like Pharrell, Robin Thicke and the great Marvin Gaye. So let’s make the best of it and use this situation to bore you with a lesson on declaratory judgment.
To watch gossip TV this week, you would gather that Robin Thicke, in response to being accused in the blog-o-sphere of ripping off Gaye’s “Got to Give it Up” (or Funkadelic’s “Sexy Ways” depending on who’s doing the accusing) has decided to go on the offensive by suing Gaye’s heirs and Funkadelic’s former label. But this is not exactly the case. Thicke is playing defense here in an effort to head off already-threatened litigation and to ensure he gets to do so in the court of his choosing.
The process is called declaratory judgment. Normally, a plaintiff in a civil lawsuit is the one who believes he or she has been wronged. They sue for damages or an injunction preventing certain actions by the defendant. In declaratory judgment, however, the plaintiff is simply asking a judge to declare the legal status of certain facts. Of course, you have to have a legitimate claim for the court to review. You can’t just walk in and ask a judge for an “advisory opinion” on a hypothetical situation. But when you are a potential defendant and you need to clarify the legal situation in order to make informed decisions about your business going forward, you may be able to seek declaratory judgment from the court.
Declaratory judgment is available when there is a bona fide “case or controversy” and you have standing with the court to ask for a resolution to the case or controversy. In this case, Marvin Gaye’s heirs and record label Bridgeport Music (owner of the rights to “Sexy Ways”) have been accusing Thicke, Pharrell and T.I. of copyright infringement but have not filed suit. Settlement negotiations have been going on in private. That threat gives Thicke et al the necessary case or controversy to ask for declaratory judgment. In order to bring the dispute to a close, and presumably to do so in a court of his choosing, Thicke filed the declaratory judgment action asking the court to rule that “Blurred Lines” does not infringe the copyright of “Got to Give it Up” or “Sexy Ways.”
Some say it makes Thicke look guilty and appear to be the bad guy. I say it’s a very good way to tell potential plaintiffs who want to cash in on the song’s success “we’re not gonna sit around and negotiate with you.” Smart move if you ask me.