2019 Guidance Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112
2019 Guidance Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112
By Ellen Smith and Derek Kim
On January 4, 2019, the United States Patent and Trademark Office (“USPTO”) issued examiner guidance for examining definiteness of functional claim limitations under 35 U.S.C. § 112. Although the new guidance does not have the force of law, it is important to have a comprehensive understanding of this guidance because it will affect how claims will be examined under § 112.
In short, the patent examination process under § 112 ensures that the claims of an application have proper written description and enablement support under § 112(a) in the disclosure of the application, and that functional limitations (i.e., claim limitations that define an element in terms of the function it performs without reciting the structure, materials, or acts that perform the function) are properly treated as means (or steps) plus function limitations under § 112(f) and sufficiently definite under § 112(b).
The guidance focusses on software patents because courts have recognized a problem with broad functional claiming without adequate structural support in the specification. The USPTO guidance proposes to address this recognized problem in which the Federal Circuit stated that “[s]oftware patents typically…describe, in intentionally vague and broad language, a particular goal or objective [of the software].”
35 U.S.C. § 112(f)
In Williamson v. Citrix Online, LLC, the Federal Circuit recognized that some of its prior opinions established a heightened bar to overcome the presumption that a limitation expressed in functional language without using the word “means” is not subject to § 112(f).  The court concluded that such a heightened burden is unjustified and held that “[t]he standard is whether the words of the claim are understood by persons of ordinary skill in the art to have a sufficiently definite meaning as the name for structure.”
Specifically, instead of using the term “means” (or “steps”), a substitute term can act as a generic placeholder for the term “means” where that term would not be recognized by one of ordinary skill in the art as being sufficiently definite structure for performing the claimed function. In other words, when a claim term does not recite “means” (or “steps”), the presumption that § 112(f) does not apply can be overcome if the challenger demonstrates that the claim term fails to recite sufficiently definite structure or else recites function without reciting sufficient structure for performing that function. For example, terms such as “mechanism for,” “module for,” “device for,” “unit for,” “component for,” “element for,” “member for,” “apparatus for,” “machine for,” or “system for” may invoke § 112(f) claim interpretation.
With respect to § 112(f), examiners will apply § 112(f) to a claim limitation to determine if it meets the 3-prong analysis set forth in the Manual of Patent Examining Procedure (“MPEP”). The 3-prong analysis includes evaluating whether (1) the claim limitation uses the term “means” (or “step”) or a generic placeholder, (2) the term is modified by functional language, and (3) the term is modified by sufficient structure, material or acts for performing the function.
In addition, in order to determine whether a word, term, or phrase coupled with a function denotes structure, the new guidance tells examiners to check whether: (1) the specification provides a description sufficient to inform one of ordinary skill in the art that the term denotes structure; (2) general and subject matter specific dictionaries provide evidence that the term has achieved recognition as a noun denoting structure; and (3) the prior art provides evidence that the term has an art-recognized structure to perform the claimed function.
35 U.S.C. § 112(b)
The guidance provides that for a computer-implemented claim limitation under § 112(f), the specification must disclose an algorithm for performing the claimed specific computer function, or the claim is indefinite under § 112(b). In support, the guidance provides that in Noah Sys., Inc. v. Intuit Inc., the Federal Circuit has consistently required that the structure disclosed in the specification be more than simply a general purpose computer or microprocessor and that the specification must disclose an algorithm for performing the claimed function. In other words, special purpose computer-implemented § 112(f) claim limitations will be indefinite under § 112(b) when the specification fails to disclose an algorithm to perform the claimed function.
Notably, the guidance warns that the requirement for the disclosure of an algorithm cannot be avoided by arguing that one of ordinary skill in the art is capable of writing software to convert a general purpose computer to a special purpose computer to perform the claimed function. For example, the Federal Circuit disagreed that “a microprocessor can serve as sufficient structure for a software function if a person of ordinary skill in the art could implement the software function,” and held that “a person of ordinary skill in the art plays no role in determining whether an algorithm must be disclosed as structure for a functional claim element.”
The guidance also warns that the disclosed algorithm must be able to perform all of the claimed functions. For example, when the specification discloses an algorithm that only accomplishes one of multiple identifiable functions performed by a means-plus-function limitation, the specification is treated as if it disclosed no algorithm.
Lastly, the guidance provides that a computer-implemented functional claim may also be indefinite when the 3-prong analysis for determining whether the claim limitation should be interpreted under § 112(f) is inconclusive because of ambiguous words in the claim.
35 U.S.C. § 112(a)
With respect to the written description requirement under § 112(a), the guidance explains disclosure requirements for computer-implemented inventions claimed in terms of their functionality. The guidance provides that “[f]or computer-implemented functional claims, the determination of the sufficiency of the disclosure will require an inquiry into the sufficiency of both the disclosed hardware and the disclosed software […] due to the interrelationship and interdependence of computer hardware and software.” More specifically, it provides that “[w]hen examining computer-implemented, software-related claims, examiners should determine whether the specification discloses the computer and the algorithm(s) that achieve the claimed function in sufficient detail that one of ordinary skill in the art can reasonably conclude that the inventor possessed the claimed subject matter at the time of filing.”
In Vasudevan Software, Inc. v. MicroStrategy Inc., the Federal Circuit evaluated “whether the specification shows possession by the inventor of how accessing disparate databases is achieved.” Here, the Federal Circuit found that expert testimony raised “a genuine issue of material fact on whether the specification shows how to achieve the functionality of accessing disparate databases.” The guidance explains that the Federal Circuit concluded that there was a genuine issue of material fact as to whether the inventor had possession of an invention that achieved the claimed result based on the expert testimony that “specific portions of the specification explain ‘that serialized files can be used to correlate parameters from two databases,’ and that ‘those correlation parameters can be used to identify data in one database that is correlated to data in another.’”
With respect to enablement requirement under § 112(a), the guidance points out that “[n]ot everything necessary to practice the invention need to be disclosed.” The guidance notes that this is of particular importance with respect to the computer-implemented inventions due to the high level of skill in the art and the similarly high level of predictability in generating programs to achieve an intended result without undue experiment. Thereafter, it warns that “applicant cannot rely on the knowledge of one skilled in the art to supply information that is required to enable the novel aspect of the claimed invention when the enabling knowledge is in fact not known in the art.”
In view of the recent guidance, patent applications directed to computer-implemented inventions will receive heightened scrutiny under 35 U.S.C. § 112 during examination. We will assess how much impact this new 112 guidance will bring with respect to the allowance rate of software patents in the upcoming months. Meanwhile, applicants are advised to be particularly mindful when drafting patent applications directed to computer-implemented inventions, in order to ensure the inclusion of sufficient structural elements in the specification that carry out the functional limitations, and described with enough detail to show that the inventor had possession of how the functional limitation is achieved at the time of filing.
 See Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1327 (Fed. Cir. 2016) (Mayer, J., concurring).
 See Williamson v. Citrix Online, LLC, 792 F.3d 1339, 1349 (Fed. Cir. 2015).
 See id.
 See 2019 Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112 at page 5 (citing Williamson, 792 F.3d at 1349).
 See, e.g., MPEP §2181, subsection I.A.
 MPEP (9th ed. Rev. 08. 2017, Jan. 2018).
 See MPEP §2181, subsection I.
 See 2019 Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112 at page 10 (citing Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1367 (Fed. Cir. 2008).
 See Noah Sys. Inc. v. Intuit Inc., 675 F.3d 1302, 1312 (Fed. Cir. 2012).
 See EON Corp. IP Holdings LLC v. AT&T Mobility LLC, 785 F.3d 616, 623 (Fed. Cir. 2015); See also In re Aoyama, 656 F.3d 1293, 1297 (Fed. Cir. 2011)(stating “when the disclosed structure is a computer programmed to carry out an algorithm, the disclosed structure is not the general purpose computer, but rather that special purpose computer programmed to perform the disclosed algorithm.”)
 See id.
 See Noah Sys., Inc. at 1319.
 See 2019 Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112 at page 18.
 See id.
 See Vasudevan Software Inc. v. MicroStrategy Inc., 782 F.3d 671, 683 (Fed. Cir. 2015).
 See id.
 See 2019 Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112 at page 19 (citing Vasudevan, at 683).
 See 2019 Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112 at page 21 (citing Trs. of Bos. Univ. v. Everlight Elecs. Co., LTD., 896 F.3d 1357, 1364 (Fed. Cir. 2018)(explaining that while “the specification must enable the full scope of the claimed invention[,]” “[t]his is not to say that the specification must expressly spell out every possible iteration of every claim.”).
 See id.
 See id; See also MPEP § 2161.01, subsection III, and MPEP § 2164.08.
PTAB Institutes Unified Patents IPR Petition Despite Patent Owner’s RPI and General Plastic Challenges
PTAB Institutes Unified Patents IPR Petition Despire Patent Owner’s RPI and General Plastic Challenges:
On December 20, 2018, the Patent Trial and Appeal Board (PTAB) instituted Unified Patents’ petition for Inter Partes Review (IPR) of Patent No. 9,253,239, assigned to Bradium Technologies LLC. Bradium asserted that was deficient for failure to name all real parties-in-interest (RPIs) and also urged the PTAB to use its discretion to deny institution. The PTAB requested additional briefing regarding the RPI issued and, after considering the evidence, instituted review.
An IPR Petitioner must identify “each real party-in-interest for the party.” 37 CFR 42.8(b)The Petitioner is barred from filing an IPR if the IPR is filed “more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement.” 35 U.S.C. § 315(b).
Unified Patents’ business model is to file IPRs for the benefit the “technology zones” of its members. The PTAB found that this relationship does not make Unified’s members RPIs. Unified v. Bradium, IPR2018-00952, Paper 31 at 9.
This is the third time that the PTAB has found that Unified’s members are not RPIs following the Federal Circuit decision in AIT v. RPX, 897 F.3d 1336 (Fed. Cir. 2018). Unified v. Bradium, IPR2018-00952, Paper 31 at 5 (Institution Decision). In AIT, the Federal Circuit held that the PTAB’s RPI analysis, which almost exclusively focused on whether the non-party had control or the potential to control the IPR, was “unduly restrictive.” AIT, 897 F.3d at 1351. The Federal Circuit found that the PTAB should also have also considered “whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner.” Unified v. Bradium, IPR2018-00952, Paper 31 at 4, quoting AIT, 897 F.3d at 1351. The PTAB distinguished Unified’s activities from those of RPX, emphasizing that (1) Salesforce, the alleged RPI in the AIT case, “made a payment to RPX shortly before filing the IPR,” (2) Salesforce “discussed the patent and related litigation with RPX and a shared board member,” (3) RPX “negotiated a license on behalf of Salesforce,” and (4) “more importantly,” Salesforce “was time barred from filing its own IPR.” Unified v. Bradium, IPR2018-00952, Paper 31 at 10. In contrast, there is no evidence that Unified communicated with its members regarding the IPR or the litigations involving the ‘239 patent, there is no evidence that Unified and its members share officers or board members, and “most significantly,” there is no evidence that any of Unified’s members were time-barred from filing an IPR. Unified v. Bradium, IPR2018-00952, Paper 31 at 11.
The Board has consistently found that Unified Patents’ members are not RPIs and need not be listed on Unified’s IPR petitions. The Federal Circuit has not yet decided this issue.
Discretion Under 35 U.S.C. § 314(a)
If a previous IPR petition has been filed, the PTAB has discretion whether to institute a subsequent petition filed against the same claims of the same patent. The PTAB considers the following non-exhaustive Gen. Plastic factors when determining whether to institute the subsequent petition:
- whether the same petitioner previously filed a petition directed to the same claims of the same patent;
- whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
- whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;
- the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
- whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;
- the finite resources of the Board; and
- the requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.
Gen. Plastic Indus. Co. v. Canon Kabushiki Kaisha, Case IPR2016-01357, slip op. 15–16 (PTAB Sept. 6, 2017) (Paper 19) (precedential).
In the Unified v. Bradium proceeding, two judges of the PTAB panel decided to institute the IPR, while a third judge dissented, arguing that the PTAB should have used their discretion to deny institution. The main differences between the analysis of the majority and that of the dissent was with respect to Factor 1 (whether the same petitioner previously filed a petition) and Factor 3 (whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition).
With respect to Factor 1, both the majority and the dissent agreed that the fact that a new petitioner has challenged the ‘239 patent weighs against denying institution. However, the majority found that the fact that a new Petitioner has challenged the petition weighs “overwhelmingly against a discretionary denial in this proceeding,” and that the “majority does not, under our discretion, impute the actions of an unrelated petitioner on this petitioner.” See Unified v. Bradium, IPR2018-00952, Paper 31 at 20. The dissent found that the fact that there is a new petitioner merely “weighs against [exercising] our discretion to deny institution,” but did not find this factor to be “overwhelming.” See Unified v. Bradium, IPR2018-00952, Paper 31 at 46.
With respect to Factor 3, the majority found the fact that the new petitioner had access to both the preliminary response from the previous IPR and the decision whether to institute weighs against institution. Unified v. Bradium, IPR2018-00952, Paper 31 at 21. The dissent found that the timing of Unified’s filing “raises the potential for abuse” and that “petitioner indeed took advantage of ‘the opportunity to strategically stage their prior art and arguments.” Unified v. Bradium, IPR2018-00952, Paper 31 at 47-48.
Because the decision is highly discretionary, PTAB panels have reached inconsistent conclusions regarding whether a subsequent petition filed by a new petitioner should be instituted when the new petitioner is aware of the preliminary response and/or decision whether to institute. Companies considering whether to file an IPR petition when another company has already filed a petition should be aware that their petition could be denied.
John M. Bird is a partner in the Washington, DC Office of Sughrue Mion PLLC. His focus is on the protection and enforcement of designs and a wide range of electrical and mechanical technologies, including analytical/measurement systems, medical devices, HVAC systems, printers/copiers, telecommunications systems, data recording mediums, semiconductor fabrication, bearings, welding processes, sports equipment, footwear, and various automobile components, such as tires, transmissions, engines, fuel-injection systems, motors, lamps, steering systems, connectors/wiring, valves, and control/monitoring systems.
See his full biography here.
On January 7, 2019, the USPTO released revised Subject Matter Eligibility Guidance (the “Revised Guidance”) which provides revised guidelines for examiners to apply while evaluating patent subject matter eligibility.
The Revised Guidance acknowledges that properly applying the Supreme Court’s frame work for evaluating patent eligibility (the “Alice/Mayo test”) has proven to be difficult and has caused uncertainty. In particular, the proper scope and application of the abstract idea exception under Step 2A of the Alice/Mayo test has been unclear and difficult to determine.
To address these concerns, the Revised Guidance revises the examination procedures for determining whether a patent claim or patent application claim is directed to a judicial exception under Step 2A of the Alice/Mayo test by: (1) providing groupings of subject matter that is considered an abstract idea; and (2) clarifying that a claim is not “directed to” a judicial exception if the judicial exception is integrated into a practical application of that exception.
Following the Alice decision, the Office and the courts adopted an approach of comparing the claims at issue to those previously found to be directed to an abstract idea when considering subject matter eligibility. The Revised Guidance acknowledges that the foregoing approach was effective soon after Alice was decided but has since become impractical. For instance, the Revised Guidance acknowledges that similar subject matter has been described both as abstract and non-abstract in different cases. The growing body of precedent has become more difficult for examiners to apply in a predictable and consistent manner.
First, the Revised Guidance clarifies that only the following groupings of subject matter will be considered as abstract ideas:
- Mathematical concepts;
- Certain methods of organizing human activity; and
- Mental processes.
The Revised Guidance explains that claims that do not recite subject matter that falls within one of the above three groupings should not be treated as reciting an abstract idea, unless exceptionally approved by the Technology Center Director.
Second, the Revised Guidance sets forth a two-prong procedure to determine whether a claim is “directed to” a judicial exception under Step 2A of the Alice/Mayo test.
Under Prong One, examiners should evaluate whether a claim recites a judicial exception, i.e., a law of nature, a natural phenomenon, or an abstract idea as enumerated in one of the three groupings shown above. If a claim does not recite a judicial exception, the claim is patent eligible and the analysis is concluded. If the claim recites a judicial exception, then the analysis proceeds to Prong Two where examiners should evaluate whether the recited judicial exception is integrated into a practical application of the identified judicial exception. If the claim as a whole integrates the identified judicial exception into a practical application, then the claim is not “directed to” a judicial exception, and thus is patent eligible. If, however, the identified judicial exception is not integrated into a practical application, then the claim is determined to be directed to the identified judicial exception, and requires further analysis under Step 2B of the Alice/Mayo test.
Accordingly, Prong One provides a change in determining whether a claim recites an abstract idea by limiting the possible categories of abstract ideas to the above listed three groupings of subject matter. Further, examiners will no longer use the USPTO’s “Eligibility Quick Reference Sheet Identifying Abstract Ideas” (first issued in July 2015 and updated most recently in July 2018). Under Prong Two, the Revised Guidance provides that in determining whether a judicial exception recited in a claim is integrated into a practical application, examiners should give weight to all additional elements, whether or not they are conventional, and states that the analysis of well-understood, routine, conventional activity should be performed in Step 2B.
If it is determined that a judicial exception recited in a claim is not integrated into a practical application under Prong Two, then examiners should proceed to apply Step 2B of the Alice/Mayo test to evaluate whether the claim recites additional elements, specific limitation or combination of limitations that are not well-understood, routine, conventional activity in the field, which provide an inventive concept and amounts to significantly more than the judicial exception itself.
The Revised Guidance provides clearer delineations of what constitutes an abstract idea and steps in identifying whether a claim is directed to an abstract idea, nonetheless, it remains unclear as to what extent a judicial exception needs to be integrated into a practical application to be patent eligible. Further, whether the Federal Circuit will agree with the Revised Guidance, and/or to what extent the Federal Circuit will apply the Revised Guidance remains to be seen.
As the USPTO examiners will start examining patent application based on the Revised Guidance, patent eligibility examination of software-based claims may see a favorable shift toward patent applicants and the Revised Guidance may reduce the overall number of claim rejections under 35 U.S.C. § 101.
 Alice Corp. v. CLS Bank International (2014).
Petitioner should discuss the prosecution history of all relevant related patents when arguing that an issue was not previously considered by the Office
Petitioner should discuss the prosecution history of all relevant related patents when arguing that an issue was not previously considered by the Office
The Board has discretion to deny institution of an inter partes review under 35 U.S.C. 325(d) when “the same or substantially the same prior art or arguments previously were presented to the Office.” In SMR Automotive Systems USA, Inc. (“SMR Auto”) v. Magna Mirrors of America, Inc. (“Magna Mirrors”), IPR2018-00536 (PTAB Dec. July 9, 2018), the Board denied institution of an inter partes review, in part, because Petitioner did not include any discussion about the prosecution history of a related patent that the Board considered relevant to the § 325(d) inquiry.
In January 2018, SMR Auto filed a Petition for inter partes review for review of claims 1-11 of U.S. Patent No. 8,550,642 (“the ‘642 patent”). The ‘642 patent is directed to an exterior rearview mirror that includes a plano reflective element and an auxiliary reflective element mounted adjacent to each other (Decision, page 3).
In Ground 1, SMR Auto asserted that claims 1-11 are unpatentable under 35 U.S.C. §§ 102(a), (b), and (e), as being anticipated by U.S. Publication No. 2002/0072026, filed Dec. 20, 2000, published June 13, 2002 (“the ’026 publication”). The ’026 publication lists Niall R. Lynam, John O. Lindahl, and Hahns Y. Fuchs as inventors. The application that issued as the ’642 patent lists Niall R. Lynam as the sole inventor, and was filed August 21, 2012. (Id., pages 10-11).
SMR Auto alleged the ‘026 publication is prior art under 35 U.S.C. § 102(b) because the ‘642 patent should not be entitled to the May 20, 2003 priority date of the ‘872 provisional application, but rather is entitled only the priority date of its great grandparent U.S. Patent No. 7,934,843 (“the ‘843 patent”), which was filed on August 5, 2010. (Id., page 11). Further, SMR Auto alleged the ‘026 publication is prior art under 35 U.S.C. §§ 102(a) and 102(e) because the ‘026 publication is “by another” and was published on June 13, 2002, which is prior to the earliest possible effective filing date of May 20, 2003. (Id.).
In response, Magna Mirrors argued that the above issues of (1) whether the ‘642 patent is entitled to the May 20, 2003 priority date, and (2) whether the ‘026 publication qualifies as prior art because it is not the work of another were considered repeatedly during prosecution of the ’642 patent and its family. (Id.). During the prosecution of the ‘642 patent and the great grandparent ‘843 patent, the Examiner alleged that the claims were not entitled to the benefit of an earlier filing date. (Id., page 13). In response, Applicant submitted a Declaration from Niall R. Lynam declaring that the invention of the independent claims of the ‘843 patent was reduced to practice prior to June 13, 2002. Based on the Declaration, the Examiner allowed the claims. (Id., page 13).
Based on the prosecution history of the ‘843 patent, Magna Mirrors argued the Board should deny institution under 35 U.S.C. § 325(d) (Id., page 15). The Board agreed with Magna Mirrors that the issues of (1) whether the ‘642 patent is entitled to the May 20, 2003 priority date, and (2) whether the ‘026 publication qualifies as prior art were previously considered by the office. In explaining its reasoning, the Board stated that it was fatal to SMR Auto’s argument to not discuss the prosecution history of the ‘843 patent because the ‘843 patent is nearly identical to the ‘642 patent. (Id., pages 18-19).
Thus, the Board exercised its discretion under 35 U.S.C. § 325(d) and declined to institute inter partes review of claims 1-11 on the ground that the claims are unpatentable under 35 U.S.C. §§ 102(a), (b), and (e) as being anticipated by the ’026 publication. (Id., page 19).
In Ticketnetwork, Inc. v. Ceats, LLC, CBM2018-00004 (PTAB 2018) (Final Written Decision), the Patent Trial and Appeal Board (“the Board”) held that Ticketnetwork failed to establish standing under 37 C.F.R. § 42.302, and accordingly did not institute a covered business method (“CBM”) review of U.S. Patent No. 8,229,774 (the “’744 Patent”).
In 2010, Ceats sued Ticketmaster and others for infringement of a patent related to the ‘744 Patent. While the case ultimately resulted in the Federal Circuit affirming invalidation of the related patent, the parties to the instant CBM settled – Ticketmaster was granted a license to certain Ceats patents including the ‘744 Patent, wherein Ticketmaster was to pay a royalty to Ceats. (Decision, pages 6-7).
About a year and a half after the Federal Circuit affirmance, Ticketmaster sent a letter to Ceats purporting to terminate the license agreement. Ceats responded in a July 2015 letter and noted that they “have determined that [Ticketmaster is] . . . infringing on CEATS’ patent rights, including. . . [the ‘744 Patent]” . . . “. (Id., page 7).
Ticketmaster subsequently filed a declaratory judgment action against Ceats, arguing that: (1) the license agreement was unenforceable; (2) Ticketmaster does not infringe any of the patents referenced in Ceats ‘ letter; and (3) that the patents referenced in Ceats’ letter were invalid. (Id., page 7).
In June 2017, Ticketmaster moved to voluntarily dismiss the claims regarding non-infringement and invalidity. ((Id., pages 8-9).
Finally, in November 2017, Ticketnetwork filed a petition to instate CBM review on all eight claims of the ‘744 Patent. (Id., page 9).
Under § 42.302, only parties who “have been sued or charged with infringement . . . are permitted to file a petition seeking a CBM  review”. The Board defines “charged with infringement as ”a real and substantial controversy regarding infringement . . .[,] such that the petitioner would have standing to bring a declaratory judgment action in Federal court”. (Id., pages 4-5).
In support of their standing position, Ticketnetwork argued that at the time of filing the CBM petition (November 2017), Ceats’ July 2015 letter, coupled with Ceats’ statements in a summary judgment hearing for claims related to the licensing dispute, show that, under the totality of the circumstances, Ticketmaster was “charged with infringement” of the ‘744 Patent by Ceats. (Decision, pages 9-10).
Ceats on the other hand argued that “the letter and the statement at the summary judgment hearing [(wherein Ceats conceded that if the agreement was held unenforceable, Ticketnetwork would infringe]) are together or apart, not specific enough to meet the “charged for infringement” prong for CBM standing.” (Id., page 10).
Regarding Ceats July 2015, letter the Board held that since nearly 28 months had passed since Ceats sent the letter and when Ticketmaster filed the instant CBM petition, “whatever weight in favor of standing the July 2015 Letter had . . . has been considerably diminished”. The Board also gave little weight to the letter since the letter didn’t assert infringement of specific patent. (Id., page 14; see id., page 12; see also, Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009)).
As to Ceats statements at the Summary Judgment hearing, the Board explained that although Ceats indicated that it could sue for infringement if the agreement was terminated, Ceats never indicated that it actually planned to sue if the agreement was terminated. (Decision, page 15).
The Board also briefly touched upon a covenant not to sue provided by Ceats after the filing of the petition. Without reaching the issue of whether post petition filing conduct is relevant to the standing issue, the Board noted in apparent dicta that it does “not believe offering of a covenant not to sue weighs in favor of standing.” (Id., page 14).
Thus, the Board held that under the totality of the circumstances, Ticketnetwork had failed to demonstrate a “real” and “substantial” controversy sufficient to bring a declaratory judgment action or in this case, to file a CBM review petition.
In Campbell Soup Company, et al. v. Gamon Plus, Inc., IPR2017-00087, Paper 75 (PTAB 2018) (Final Written Decision), the Patent Trial and Appeal Board (“PTAB”) found that “an appreciable amount of Campbell’s increased commercial success of soup” was attributable to Gamon’s product covered by the claims and, thus, found claim 27 of U.S. Patent 8,827,111 B2 (“’111 patent”) patentable in view of this commercial success.
Campbell purchased from Gamon approximately $31 million of its iQ Maximizer gravity feed display racks over a seven-year period. The parties agreed that these display racks fell within the scope of at least claim 27 of the ‘111 patent, of which Gamon was the owner. During this seven-year period, Campbell noted a year-over-year positive sales lift in its condensed-soup brand by maintaining the same level of productivity while reducing inventory in stores of the products by 15%, thereby cutting costs to the stores. In a 2005 report to its investors, Campbell touted the benefits of the iQ Maximizer, reporting increased sales of soup by 8% by using gravity-feed shelving systems such as the iQ Maximizer. Campbell’s investor reports in subsequent years showed further sales increases and attributed these sales increases, at least partially, on gravity feed shelving display racks.
In an attempt to invalidate the claims of the patent, Campbell set forth several grounds of unpatentability, alleging the claims were invalid under 35 U.S.C. § 103(a). Ultimately, the Board relied on the Graham factors, in particular the commercial success factor, in determining that the claims were not obvious over the combination of references set forth by Campbell.
In asserting that the claims were nonobvious based on commercial success, Gamon relied on both its sales of the iQ Maximizer gravity feed display racks and Campbell’s increased sale of soup that was displayed using the iQ Maximizer racks. Campbell argued, however, that Gamon was required to show a nexus “directly attributable” to one or more limitations of claim 27 that were allegedly novel to succeed on its commercial success argument. The Board did not find Campbell’s argument persuasive, citing the Federal Circuit’s holding in WBIP, LLC v. Kohler Co. that “there is a presumption of nexus for objective considerations when the patentee shows that the asserted objective evidence is tied to a specific product and that product ‘is the invention disclosed and claimed in the patent.’” 829 F.3d 1317, 1329 (Fed. Cir. 2016). The Board found that Gamon tied the objective evidence to a specific product, i.e., the iQ Maximizer gravity feed display racks, and Campbell failed to rebut the presumption of a nexus.
Notably, the Board relied on Campbell’s expert that at least some of the increased soup sales were attributable to the iQ Maximizer gravity feed display racks. While it agreed that other factors impacted the commercial sales of the soup, the Board found that Gamon’s sales of the iQ Maximizer gravity feed display racks to Campbell and Campbell’s attribution of some increased soup sales to these gravity feed display racks provided a strong showing of commercial success, thereby finding claim 27 of the ‘111 nonobvious.
In view of the Board’s decision, it is clear that the commercial success is not limited to commercial success of the product within the scope of the claim at issue. Rather, if a patent owner can show that increased sales of another product are attributable to the product within the scope of the claim at issue, this may be sufficient to show commercial success of the product. Further, to rebut a patent owner’s “nexus” argument, a petitioner must show that the objective considerations are not tied to the entire product, not certain limitations within the claim(s) at issue.
OBJECTIVE EVIDENCE OF NON-OBVIOUSNESS OUTWEIGHS WEAK MOTIVATION TO COMBINE
Author: Hui Wauters
In Fox Factory Holding Corp. v. SRAM, LLC, Case No. IPR2016-01876 (April 2, 2018), the Patent Trial and Appeal Board (PTAB) found that Patent Owner’s extremely strong overall showing of objective indicia of non-obviousness overcomes Petitioner’s, at best, weak motivation to combine the references. Patent Owner has made a strong overall showing of objective indicia of non-obviousness, including industry praise, skepticism, and long felt need for all challenged claims 7–12 and 20–26, and a strong showing on commercial success for claims 11, 12, 25 and 26. Weighing all four Graham factors, the PTAB found that Petitioner has not shown, by a preponderance of the evidence, that the challenged claims would have been obvious over the combination of Hattan (US 3,375,022) and JP-Shimano (JP S56-442489).
The subject U.S. Patent No. 9,182,027 relates to a solitary chainring for use with a conventional chain in a bicycle drivetrain system that includes a bicycle crank.
Combining/Modifying Prior Art Elements
Petitioner argued that a person of ordinary skill in the art “would have known that it is critical to the operation of a bicycle for a bicycle chain to remain engaged with the bicycle chainring.” Petitioner contended that a person of ordinary skill in the art would have modified the offset-teeth sprocket wheel/deflector of Hattan, to include the alternating narrow and wide teeth of JP-Shimano, in order to “improve chain engagement and retention to the maximum extent possible, particularly for a solitary front chainring such as in Hattan.” Decision p. 14.
Patent Owner argued that Petitioner’s rationale does not make sense, because Hattan already purports to solve completely the problem of chain retention for all operating conditions and that the combination of Hattan and JP-Shimano would have rendered Hattan unsatisfactory for its intended purpose. Decision pp. 15-16.
The PTAB were not persuaded that modifying Hattan in view of JP-Shimano would render Hattan unsuitable for its intended use, but the PTAB did find that the potential for problems in the operation of Hattan resulting from such combination weighs against the combination. The PTAB determined that Petitioner has only shown, at best, that the evidence weighs slightly in favor of making the above modification of Hattan in view of JP-Shimano. Decision p. 22.
Patent Owner puts forth evidence (including articles, photographs and experts’ Declarations, etc.) of commercial success, licensing, copying, praise by others, and long-felt, unresolved need.
To be accorded substantial weight, there must be a nexus between the merits of the claimed invention and the evidence of secondary considerations. There is a “presumption of a nexus” when a product is “coextensive” with a patent claim. Decision p. 23.
In this regard, Petitioner argued that the patent owner’s chainring is not coextensive with the claimed invention because the Patent Owner’s chainring includes “hundreds of features” not claimed in the ’027 patent, many of which are instead claimed by other Patent Owner’s patents. Decision pp. 24-25.
However, according to the PTAB, “Unclaimed features do not prevent the presumption of a nexus, but they may be the basis for rebutting the presumption. To do so, a person challenging patent validity must show that the commercial success, or other objective evidence of non-obviousness, was due to ‘extraneous factors’ including ‘additional unclaimed features.’ ” Decision p. 25.
Having reviewed Patent Owner’s evidence, the PTAB found that the patent owner’s evidence supporting secondary considerations of non-obviousness had sufficient nexus to the challenged claims. Decision p. 34.
As to commercial success, the PTAB found that Patent Owner has presented extensive evidence that its chainrings have achieved significant sales volumes, have achieved large sales growth, have grown to a majority of their chainring sales, and have allowed them to grow from a small share to a significant share of the single chainring market. Decision pp. 35-36.
As to industry praise and skepticism, the PTAB found that Patent Owner has presented extensive evidence of industry praise and awards that its chainring products have received and that Patent Owner has made a significant showing of skepticism within the industry towards the effectiveness of the chainring regarding chain retention as provided by the challenged claims. Decision pp. 40-41.
As to long-felt need, the PTAB found that Patent Owner has shown strong evidence that a long-felt need existed in the bicycle industry for improved chain retention that did not increase the known problems of complexity, weight, and/or drivetrain friction. Decision p. 44.
As to licensing, the PTAB found that licenses explicitly mentioning the ‘027 patent and not entered into to settle litigation are entitled to some weight. Decision p. 47.
As to copying, the PTAB found that Patent Owner has shown some copying of its chainring product, which is covered by the ’027 patent, and thus this evidence of copying overall is entitled to some weight. Decision p. 51.
In conclusion, the PTAB found that the case of obviousness here is easily outweighed by the strong objective evidence of non-obviousness. Decision p. 52.
Hui Chen Wauters
Mrs. Wauters is a member of firm’s chemical/pharmaceutical practice group. Her experience includes client counseling, and preparation and prosecution of patent applications pertaining to chemical matters, materials science, pharmaceuticals and medical devices. Hui is fluent in Mandarin Chinese.
To view her full bio, click here.
PTAB Holds that a Merger Completed After the filing of Petition Can Create a Real Party-in-Interest Relationship
In Cisco Systems v. Hewlett Packard Enterprise Company, IPR2017-01933, Paper 9 (PTAB 2018) (Decision Denying Institution of Review), the Patent Trial and Appeal Board (“the Board”) held that a merger between Cisco and another company called Springboard that was completed after Cisco filed a petition for inter partes review (IPR) created a real party in interest relationship, and subsequently denied institution of the IPR.
On September 15, 2015, Hewlett Packard (HP) served Springpath with a complaint for patent infringement. On September 14, 2016, one day before the statutory deadline set forth in 35 U.S.C. § 315(b), Springpath filed a petition for IPR.
Cisco Systems filed a petition for IPR against HP on August 11, 2017, after Springpath had already filed for IPR. Subsequently, Cisco announced its intent to acquire Springpath on August 21, 2017, and completed the acquisition of Springpath on September 22, 2017, more than one month after Cisco’s petition had been filed.
The Board found that Springpath was a real party in interest, and that Cisco was merely acting as a proxy for Springpath. The PTAB then denied institution of the IPR for the following reasons. First, Cisco never disclosed the ongoing merger with Springpath in its petition or via updated mandatory disclosures. Although the merger was not yet complete at the time Cisco’s petition was filed, the Board found that Cisco should have advised the Board of the ongoing acquisition as well as the completion of the acquisition.
Second, the Board also found that Cisco could not provide any specific reasons why Cisco wanted to file for IPR independently of Springpath. Although Cisco stated that it filed the petition “for its own reasons,” the Board found this argument to be conclusory and unpersuasive. Also, since Cisco was not a party to the district court litigation, Cisco had no clear reason to file for IPR. Thus the Board concluded that Cisco was merely acting as a proxy for Springpath, which was barred under §315(b) from filing for IPR.
Cisco Systems v. Hewlett Packard Enterprise Company departs from previous Board decisions in two ways. First, prior Board decisions have heavily relied on the control factor to determine who is or is not a real party in interest. The control factor asks the question: does the party alleged to be a real party in interest have control over the petitioner, for the purpose of the IPR? In Cisco Systems, the petitioner was Cisco, a large publically-traded company, and the alleged real party in interest was Springpath, a much smaller company that Cisco acquired for $320 million. Presumably, Springpath was not exercising any control over Cisco. Instead, the Board’s decision hinged on whether Cisco was acting as a proxy for Springpath, regardless of the level of control Springpath had over Cisco.
Secondly, the Board’s decision in Cisco Systems might be construed as being inconsistent with the Board’s prior case of Synopsys v. Mentor Graphics Corp, IPR2012-00042, Paper 60 (PTAB 2014). In Synopsys, the Board held that it is “only privity relationships up until the time a petition is filed that matter; any later-acquired privies are irrelevant.” Paper 60 at 12.
In Synopsys v. Mentor, the patent owner Mentor Graphics had previously settled a patent infringement lawsuit with a company called EVE in 2006. Id. at 11-16. The petitioner Synopsys filed a petition on September 26, 2012, and subsequently Synopsys entered into an agreement to acquire EVE on September 27, 2012, one day after the petition was filed. Id. at 11-16. The Board held that the petition was not barred because there was neither a real party in interest relationship nor a privity relationship between Synopsys and EVE at the time the petition was filed, citing to 37 C.F.R. § 42.101(b). Id. at 11-16.
Accordingly, if the holding from Synopsys had been applied to the case of Cisco Systems, the result in Cisco Systems might have been quite different, because Cisco’s merger with Springpath was completed after Cisco filed a petition for IPR.
However, in Synopsys, Synopsys had an ongoing patent licensing dispute with Mentor Graphics prior to filing the IPR, and Synopsys therefore had a clear reason to file the IPR before acquiring EVE. See Mentor Graphics Corp. v. EVE-USA, 851 F.3d 1275, 1280-81 (Fed. Cir. 2017). In contrast, in Cisco Systems, Cisco could not explain why it had filed the IPR, and therefore the Board seemed to infer that Cisco’s reason for filing the IPR was to act as a proxy for Springpath, thus indicating that the real party in interest was Springpath, not Cisco.
Arun A. Shome
Email: firstname.lastname@example.orgArun Shome is an associate in the firm’s Electrical/Mechanical Group. He practices in all areas of patent law, including the preparation and prosecution of patent applications. He has experience across a broad range of technologies, such as implantable medical devices, automotive braking systems, valves, electronic cigarettes, manufacturing systems, and electrical motors.
Mr. Shome previously served as a Patent Examiner at the United States Patent and Trademark Office, where he examined medical device patent applications. He also has experience conducting prior art searches for patentability, invalidity, and freedom to operate purposes.
Two decisions regarding whether the same or substantially the same prior art or arguments have already been considered by the USPTO have been designated as “Informative”
Becton, Dickinson and Co. v. B. Braun Melsungen AG, IPR2017-01586, Paper 8 (PTAB Dec. 15, 2017) (Decision, Institution of Inter Partes Review) (Informative).
Kayak Software Corp. v. IBM Corp., CBM2016-00075, Paper 16 (PTAB Dec. 15, 2016) (Decision, Declining to Institute Covered Business Method Patent Review) (Informational).
In two decisions, designated as informative on March 21, 2018, the Board has offered guidance on when the Board will exercise its discretion, under 35 U.S.C. § 325(d), to deny institution of a post-grant proceeding because the USPTO has already considered the same or substantially the same prior art or arguments. “Informative” decisions provide the Board’s guidance on an issue but are not binding authority.
In Becton, Dickinson and Co., the Board identified six factors commonly considered when evaluating whether to deny institution under § 325(d):
(a) the similarities and material differences between the asserted art and the prior art involved during examination;
(b) the cumulative nature of the asserted art and the prior art evaluated during examination;
(c) the extent to which the asserted art was evaluated during examination, including whether the prior art was the basis for rejection;
(d) the extent of the overlap between the arguments made during examination and the manner in which Petitioner relies on the prior art or Patent Owner distinguishes the prior art;
(e) whether Petitioner has pointed out sufficiently how the Examiner erred in its evaluation of the asserted prior art; and
(f) the extent to which additional evidence and facts presented in the Petition warrant reconsideration of the prior art or arguments.
Becton at 17-18.
The Board was careful to note this list is “non-exclusive” and merely a list of commonly considered factors. Becton at 17 (emphasis in original).
In applying the factors, the Board gave little weight to the Petitioner’s use of a new reference, finding the new reference was mostly cumulative. The Board also gave little weight to the Petitioner’s submission of an expert declaration because the declaration did not: why the new reference would not be cumulative; explain how the Patent Owner’s previous arguments, made during prosecution, were in error; or offer sufficient underlying facts or data to support its position. Becton at 25, 27, 28. Accordingly, the Board found the factors weighed in the Patent Owner’s favor and denied institution on that ground. Becton at 28.
In Kayak Software Corp., the Board considered the effect of at patent’s prosecution history on determinations under 35 U.S.C. § 325(d). The patent at issue was filed over 12 years before it was issued which led to an extensive prosecution history including seven Office Actions and two decisions by the Board, both of which entered new grounds for rejection. See Kayak at 6-7; see also U.S. Patent No. 7,072,849.
The Petition was based on various combinations of four prior art references. However, three of these references had been thoroughly considered during the patent’s prosecution by both the Examiner and the Board. Kayak at 8. The prosecution history contained dozens of pages devoted to each reference. Kayak at 9. As such, the Board was unconvinced that any combination of these three references, regardless of whether or not that exact combination had been used in a rejection, could be the basis for institution in light of § 325(d). Kayak at 9. The Board found the fourth reference to be cumulative in part because the Petitioner relied on one of the three references to teach the same subject matter in another part of the Petition. Kayak at 10. The Board noted this was at least circumstantial evidence that the fourth reference was substantially similar. Kayak at 10.
Additionally, in dicta, the Board offered several possible scenarios in which similar prior art could still lead to institution, such as: clear error in the original prosecution; when the prior art was only cursorily considered; or raising an issue the USPTO was unaware of, like evidence of priority dates. Kayak at 11.
Brendan Seth O'Shea
Email: email@example.comBrendan O’Shea is an associate in the firm’s Electrical and Mechanical Patent Prosecution practice group, where he prosecutes patent applications for domestic and international clients.
Mr. O’Shea’s patent prosecution experience spans a wide range of technologies, including software and Internet-based applications, business methods, telecommunications, biomedical devices, and mechanical arts.
Claim Validity Upheld Based on Showing of Lack of Motivation to Combine References
Author: James A. Gromada
In Resmed Limited et al. v. Fisher & Paykel Healthcare Limited, Case No. IPR2016-01724, the Patent Trial and Appeal Board (PTAB) was presented with a question as to whether several claims of U.S. Patent No. 8,453,641 B2 (hereinafter “the ‘641 patent”) are unpatentable under 35 U.S.C. §103 as obvious over a combination of three references. The ‘641 patent is entitled “Apparatus for Measuring Properties of Gases Supplied to a Patient” and, as provided at column 2, lines 57-62 of the ‘641 patent, its stated purpose is “to measure various properties, for example temperature or humidity, at the end of a gas delivery tube or conduit using sensors mounted on a wire, such as a wire used for heating the gases flow[ing] through the tube or conduit, where the wire resides within the delivery tube or conduit.”
When a combination of prior art references is cited for the purpose of determining that a claim is unpatentable under 35 U.S.C. §103, a showing that a skilled artisan would have been motivated to combine the references in order to achieve the claimed combination is required. The Supreme Court has stated that “a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418-19 (2007). Instead, “a range of real-world facts to determine ‘whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue'” must be considered. Intercontinental Great Brands LLC v. Kellogg N. Am. Co., 869 F.d 1336, 1344 (Fed. Cir. 2017) (quoting KSR, 550 U.S. at 418).
The critical feature of the challenged claims of the ‘641 patent is the use of a heater wire for heating the conduit and also for carrying electrical signals from measuring sensors. The Petitioner, Resmed, relied on one cited reference, Edirisuriya, as teaching that “the heater wire itself could be used to carry electrical signals from measuring sensors,” although Edirisuriya does not explain how the heater wire can be used to carry electrical signals from a sensor. In response, the Patent Owner argued that a skilled artisan would not have been motivated to combine Edirisuriya with the other two cited references, MR810 and Gradon, because the use of the heater wire to carry electrical signals would have increased complexity and rendered the MR810-Gradon system inoperable. In particular, the Patent Owner argued that a temperature sensor cannot simply be added in series with a heater wire, because the heater wire requires a relatively high electrical current and power dissipation, whereas the temperature sensor requires a relatively low electrical current and power dissipation, and therefore, a simple substitution would lead to self heating.
In its analysis, the PTAB stated that “[w]ith respect to each of the proposed circuit designs that Petitioner contends a skilled artisan would have been aware of to implement the combined teachings, a skilled artisan would have been faced with the real-world fact that there was uncertainty as to the operability of the design,” because the proposed circuit designs “are not based on disclosure in the prior art” – Petitioner’s expert “confirms that he did not locate any prior art references disclosing a circuit design in which the heater wire is utilized to carry electrical signals from measuring sensors” – and because Petitioner did not provide sufficient evidence that any of the proposed circuit designs would be operable in any device.
Conversely, Patent Owner argued that “all three proposed circuit designs would have been inoperable.” In particular, Patent Owner’s expert stated that if the proposed Vishay thermistor was combined with the MR810 apparatus, the power dissipated would exceed the maximum rating of the Vishay thermistor, thereby destroying it, and further, that the Vishay thermistor is not typically used for temperature measurement. Petitioner’s expert agreed that “he would not use the proposed Vishay thermistor in combination with the MR810 heating wire because it would exceed the Vishay thermistor’s power dissipation specification, and that the heater wire and the supply voltage would need to be changed.”
Based on the above, the PTAB found “that the complexity of the proposed circuit designs and the lack of evidence provided by Petitioner describing additional circuitry and control logic that would be necessary to implement such circuitry in the proposed modified designs, which Patent Owner establishes are non-trivial, weigh against a finding of motivation to combine.” As a result, the PTAB held that “the motivation to eliminate an additional or external wire and reduced the number of contacts would have been outweighed by the countervailing real-world reasons not to combine the references,” and that “Petitioner’s challenges rest on impermissible hindsight reconstruction of the disclosure in the ‘641 patent.”
This case illustrates that a challenge to the validity of a patent claim can be effectively countered by the testimony of Patent Owner’s expert that there is no motivation to combine references. In particular, a convincing demonstration that there is uncertainty as to the operability of the proposed combination and/or a showing that practical, real-world considerations tend to weigh against combining the references may be decisive.
Mr. Gromada practices in all areas of patent law, including: patent preparation and prosection; patent litigation; patent reexamination (ex parte and inter partes); and counseling clients on intellectual property matters. He also engages in patent infringement and validity opinion practice and counseling, freedom-to-operate analysis, and due diligence work.
His experience includes a wide range of electrical and mechanical technologies, including radio frequent (RF) communcations technologies and equipment, cellular networks, medical devices, computer and Internet-related technologies, televisions and image display devices, computer gaming applications, and financial systems. Mr. Gromada was previously employed with Science Applications International Corporation (SAIC) as a research engineer in the defense intelligence industry.
See his full biography here.