District Court of Delaware Narrowly Applies the IPR Estoppel Provisions by Stephen Lewellyn, Esq.

A recent Delaware district court decision narrowly interpreted the estoppel provision of an Inter Partes review (IPR) to not include prior art and arguments that could have been raised, but were not raised by the Petitioner in the IPR. Intellectual Ventures I LLC v. Toshiba Corp., Civil Action No. 13-453, Slip Op. (DN 559) at 25–27 (D. Del. Dec. 19, 2016) (Memorandum Opinion).

Judge Robinson, arriving at the narrow interpretation first looked to the statutory language of 35 U.S.C. § 315(e)(2), which states in relevant part: “[t]he petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a) … may not assert [] in a civil action arising in whole or in part under section 1338 of title 28 … that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”

Recognizing that the prior art and arguments at issue could have reasonably been raised by the Petitioner in the IPR, and under the statute the Petitioner would be estopped from raising them in the district court case, Judge Robinson looked to the Federal Circuit’s literal interpretation of the above language and found no estoppel. Particularly, in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016), the Court determined that because PTAB did not institute an IPR on a particular ground the Petitioner “did not raise – nor could it have reasonably raised – the [rejected] ground during the IPR.”

Finding no estoppel, Judge Robinson stated: “Although extending the [Federal Circuit’s] logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.”

I predict this decision will be appealed to the Federal Circuit to weigh in on estoppel when prior art could have been, but were not raised by the IPR Petitioner. Nevertheless, as it stands now, at least in the District of Delaware, the estoppel provision does not seem to apply in such circumstances.

A Change in Design Patent Damages by Kyle Chapin, Esq.

On December 6, 2016, the Supreme Court of the United States issued a decision in the latest installment of the Samsung v. Apple saga of cases. In the opinion authored by Justice Sotomayor, the Supreme Court broadened the interpretation of the term “article of manufacture” as it is used in the determination of damages for design patent infringement cases. See Samsung Electronics Co., LTD., et al., Petitioners v. Apple Inc., 580 U.S. ____ (2016).

Before this case, Courts interpreted the term “article of manufacture” as it is used in 35 U.S.C. §289 to include the entire end-product sold by the infringer. This means that a patent owner would then be able to recover all of the profits associated to that product as damages.

In affirming the District Court’s $399 million damages award to Apple, the United States Court of Appeals for the Federal Circuit used Samsung’s entire smart phone as the “article of manufacture”. Whereas, the patents that Apple asserted against Samsung only covered the bezel that extends along the perimeter of the face of the Apple smartphone, a rectangular front face with curved corners and a raised rim, and a grid of 16 colorful icons on a black screen. Id at 3. These patents do not cover any of the electronic components that provide the phone with its function.

In this case, the Supreme Court broadened the previous interpretation of the term “article of manufacture” to also include a component of a completed end-product rather than the end product in its entirety. Id. at 8. In broadening the term, the Supreme Court declined to resolve whether the article of manufactures for the design patents at issue in this case were the entire smartphone or the specific component described in each design patent. Id.

What does this case teach us? Damages in design patent infringement cases are no longer required to include all of the profits made by the infringer. This decision allows design patent damages to be calculated by the amount of profits a jury determines came from the inclusion of the “article of manufacture” in the completed end product.

New Copyright Regulations Require Action by Internet Service Providers for designating agents under the Digital Millennium Copyright Act by Alexandra Taylor, Esq.

As the United States Copyright Office continues to modernize its processes to be in line with current technology, the Office has implemented new regulations that require action on behalf of Internet service providers who wish to take advantage of the safe harbor provision of the Digital Millennium Copyright Act.

The DMCA provides safe harbor protection for ISPs from copyright infringement liability based on certain categories of conduct by the ISPs: (1) transitory digital network communications, (2) system caching, (3) information residing on systems or networks at direction of users, and (4) information location tools.

In order to qualify for this safe harbor protection, certain ISPs must designate an agent to receive notifications of claimed copyright infringement by (1) making contact information for said agent available for public viewing on the ISP’s website, and (2) provide that same contact information to the Copyright Office for the Office’s directory of designated agents.

Previously, the Copyright Office maintained a paper-based directory of designated agents. However, the new copyright regulations require all ISPs that have designated an agent with the Copyright Office prior to December 01, 2016 to submit a new designation electronically using the Office’s online registration system by December 31, 2017. Any designation not made through the Office’s online registration system will expire and become invalid after December 31, 2017. During the transition period from paper-based to the electronic directory, the Copyright Office will maintain two directories of designated agents in both forms of paper and electronic.

The Copyright Office has further advised that during the transition period, to search for an ISP’s most up-to-date designation, begin by using the electronic directory; the paper-based directory should only be consulted if an ISP has not yet designated an agent in the electronic directory.1

1 https://www.copyright.gov/dmca-directory/.

Don’t View an Infringement as a Lottery Ticket by William Brees, Esq.

 

The United States District Court for the Northern District of California recently granted a Motion for Summary Judgment in case that should remind potential plaintiffs not to sleep on their rights. In Dropbox, Inc. v. Thru Inc., the Court granted Dropbox, Inc. summary judgment on Thru, Inc.’s counterclaims for trademark infringement under the Lanham Act (Federal Law), trademark infringement under California common law, unfair competition under California Law, and cancellation of Dropbox, Inc.’s Federal trademark registration.

In trademark law, if one party used a trademark prior to another party in for similar goods or services and in the same region, the first party will usually be able to stop the second party from using the trademark with those goods or services. Thru Inc. used the trademark DROPBOX for file sharing software in 2004, four years prior to use of the DROPBOX trademark by Dropbox, Inc. Thru Inc. learned about Dropbox and its use of the DROPBOX trademark in 2009. But Thru Inc. didn’t take any action until 2008 when Counsel for Thru Inc. asserted its priority in communications with Dropbox, Inc. Thru failed to file any sort of action until 2014 when it filed a Petition for Cancellation against the Federal Trademark Registration that had by that time issued to Dropbox, Inc. for the DROPBOX trademark. Dropbox, Inc. eventually countered by filing the suit in the Northern District of California.

Through discovery, Dropbox, Inc. learned that Thru Inc. was well aware of its use of the DROPBOX trademark as well as its business dealings from 2009 to 2014, when it eventually filed the Petition for Cancellation. Several Email chains involving Thru Inc. executives referred the perceived infringement of the DROPBOX trademark as a “lottery ticket” to be cashed in by filing a lawsuit at the time when Dropbox, Inc. was attempting to take its business public through an Initial Public Offering. Rather than filing a lawsuit to enforce the rights the facts show it should have had in the trademark, Thru Inc. waited until the most opportune time as it watched Dropbox, Inc. gain in both popularity and users.

Watching Dropbox, Inc. grow wound up costing Thru Inc. the ability to enforce the rights it had in the DROPBOX trademark. Trademark owners need to be mindful that acting in a timely fashion to stop an infringement is usually going to be a more effective approach than counting on a big payday down the road.

Federal Circuit: Institution of a Covered Business Method review requires the claims to be more than “incidental to” or “complementary to” financial activity by Stephen Lewellyn, Esq.

On November 21, 2016, in Unwired Planet, LCC v. Google Inc., the Federal Circuit issued yet another precedential opinion on patent review by the Patent Trial and Appeal Board (PTAB). Unwired’s patent is directed toward a method of allowing users to set privacy policies to restrict access to a wireless device’s location. The PTAB found the claimed method fell within the scope of a business method patent and found the claims invalided under 35 U.S.C. § 101.

Unwired appealed the PTAB’s final written decision arguing the PTAB used an incorrect definition of a covered business method patent and, under the correct definition, the patent is not a covered business method patent. In sum, the Court agreed and overturned the PTAB. This decision is important because it is the first time the Federal Circuit has weighed in on the scope of a business method patent in view of the statutory definition.

The statutory definition of a business method patent is “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” AIA § 18(d)(1). The Court found that the Patent Office adopted this definition without alteration during its regulatory process in implementing patent review under AIA, but in reaching “its decision in this case, the Board [PTAB] did not apply the statutory definition.

Rather, PTAB looked to whether “the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity.” In applying this approach, PTAB relied upon the patent specification explaining the claimed method could be related to services or goods providers whose business is geographically oriented, e.g., hotels, restaurants, etc. The Court plainly rebuked this approach as rendering the statutory definition “superfluous,” because the phrases “incidental to” or “complementary to” extend beyond the definition’s limits. The Court explained: “The patent for a novel lightbulb that is found to work particularly well in bank vaults does not become a CBM patent because of its incidental or complementary use in banks.”

The Court, apparently disturbed by PTAB’s “incidental to” or “complementary to,” further commented that a patent covering a ditch digging machine does not become a CBM patent when dirt is sold from use of the ditch digger. This is so “because the claims of the ditch-digging method or apparatus are not directed to ‘performing data processing or other operations’ or ‘used in the practice, administration, or management of a financial service or product,’ as required by the statute.

This discussion provides much needed and useful guidance for those deciding whether to file a CMB review or for those faced with defending a CMB review.

Concrete Elements Overcome Otherwise Abstract Subject Matter by Kyle Chapin, Esq.

On October 18, 2016, a Federal District Court in Nevada denied a motion to dismiss patent infringement claims that argued the patents-at-issue were ineligible under Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). See CG Technology Development, LLC, et al. v. BWIN.Party, Inc. et al., (Case No. 2:16-cv-00871-RCJ-VCF, D. Nev. 2016). This decision in CG Technology may have provided patent applicants with a road map to patenting an invention that otherwise would be held as abstract under 35 U.S.C. § 101.

In CG Technology, the patents-at-issue are related to online gambling on a mobile device. Id. In its analysis, the Court acknowledges that the processes claimed in the patents-at-issue “can largely be conducted in the abstract.” Id. at 8. However, in determining that the patents-at-issue do not contain abstract material, the Court relied on various claim elements requiring that the device determine the location of the gaming device to overcome Alice Corp. Id. The Court determined that “physical locating a mobile device via computer to determine the game configuration (monetary versus non-monetary) makes the process sufficiently concrete to survive Alice Corp.” Id. at 11.

For example, claim 19 of U.S. Patent Number 8,771,058 recites the limitation: “determining a first location of a mobile gaming device.” The Court in CG Technology stated that this limitation is “concrete enough to take the claim outside the scope of Alice Corp.’s ‘abstract idea’ exception to patentability under §101.” Id. at 8. The Court reasons that act of locating a mobile device using software cannot be conducted in one’s head, which is enough to not be considered an abstract concept. Id. at 9.

It is unclear whether this decision will be appealed, as the patent infringement aspect of this case is still currently pending in the Nevada District Court. However, the decision in this case certainly provides, at least for now, a guidepost in overcoming an abstract challenge under Alice Corp.