Despite those who claim that only patent trolls file lawsuits in the Eastern District of Texas, it is Whirlpool Corporation that has brought a patent infringement lawsuit seeking to enforce U.S. Patent No. 10,010,820, which relates to a water filtration system, against defendant, Space Flex International, LLC. There are some who have always believed that operating companies simply never sue in the Eastern District of Texas, but those widely held beliefs are simply incorrect. Indeed, those familiar with Whirlpool’s enforcement strategy know well that the company regularly utilizes the Eastern District of Texas.

Whirlpool is seeking a preliminary and permanent injunction preventing Space Flex from engaging in infringing activities, a judgment that infringement has been willful, and a finding that the case is exceptional. Whirlpool is also seeking attorneys’ fees, as well as pre- and post-judgment interest in the event they prevail. A jury trial has been demanded.

There are two patents at issue in this case which have now been remanded back to the PTAB for further proceedings:

• U.S. Patent No. 8890954, titled Portable Digital Video Camera Configured for Remote Image Acquisition Control and Viewing. Issued to Contour in November 2014, it covers an integrated, hands-free, portable, wearable, viewfinderless point of view (POV) digital video camera equipped with a wireless Internet protocol and a global navigation and location positioning system.
• U.S. Patent No. 8896694, same title as the ‘954 patent. Also issued to Contour in November 2014, it claims a POV digital video camera system with GPS and Bluetooth capabilities for capturing action video, tracking data such as speed and elevation, as well as posting video online.

Contour IP, the patent owner, first asserted both of these patents against GoPro in a patent infringement suit filed in November 2015 in the District of Delaware; that case was transferred to the Northern District of California in August 2017. However, in April 2015, about six months before the patents were asserted against GoPro in Delaware, GoPro petitioned the PTAB for inter partes review (IPR) proceedings challenging the validity of both patents.

In both IPR petitions, GoPro submitted a 2009 sales catalog as prior art; the catalog disclosed a digital camera linked to a wireless viewfinder/controller that enables a user to preview the image before recording. Although the PTAB instituted both IPRs after making a determination that GoPro made a threshold showing that the catalog is prior art, both IPRs terminated in final written decisions which concluded that the catalog wasn’t disseminated or otherwise made available to the extent that persons ordinarily skilled in the art could have located it by exercising reasonable diligence.

On appeal, the Federal Circuit found that the PTAB erred in determining that a declaration from a GoPro employee, along with corroborating evidence, wasn’t sufficient to establish public accessibility of the catalog. The GoPro employee had testified that GoPro made the catalog accessible during an action sports vehicle trade show that occurred in July 2009, prior to the critical date of September 13th, 2009 (one year prior to the date of priority for both the ‘954 and ‘694 patents). The PTAB held that the dissemination at this trade show did not make the catalog publicly accessible because the trade show was only open to dealers and not the general public.

“The case law regarding accessibility is not as narrow as the Board interprets it,” the Federal Circuit found, noting that the PTAB only focused on one of several factors for determining public accessibility. Although the trade show was focused on action sports vehicles, the attendees were likely more sophisticated in that space than average consumers, making it more than likely that attendees were also skilled and interested in POV action cameras. “A dealer show focused on extreme sports vehicles is an obvious forum for POV action sports cameras,” the Federal Circuit’s opinion reads. The general public may not have been aware of the trade show but the appellate court found that dealers of POV action sports cameras would be part of the relevant audience. Thus, the Federal Circuit vacated the PTAB’s determination that the GoPro catalog was not prior art and remanded the case for further proceedings.

“As the coauthor and namesake of Hatch-Waxman, I have a keen interest in ensuring we have a well-functioning generic drug industry,” said Senator Hatch in a press release published last night. “My amendment will ensure that Hatch-Waxman continues to operate as originally intended by protecting the ability of generic drug companies to develop low-cost drugs while at the same time ensuring brand-name companies have sufficient protections in place to recoup their investments.”

In recent years inter partes review (IPR) at the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) has created an alternative path to challenge the patents of brand name drugs; a path alternative to the path envisioned in Hatch-Waxman. Those who support the Hatch-Waxman regime view IPRs as upending the careful Hatch-Waxman balance.

Senator Hatch’s amendment, the Hatch-Waxman Integrity Act of 2018, would require a generic manufacturer wishing to challenge a brand-name drug patent to choose between Hatch-Waxman litigation, which affords certain advantages such as being able to rely on the drug innovator’s safety and efficacy studies for FDA approval, and IPR, which is cheaper and faster than Hatch-Waxman litigation but does not provide the advantages of a streamlined generic approval process. Parties would not be able to use both. In this way, the amendment aims to fix the misuse of IPRs by generics as parallel and duplicate proceedings to disputes already in place under Hatch-Waxman.

Politically, this Hatch “pick a path“ amendment is going to be paired with S. 974, The CREATES Act of 2017 (H.R. 2212).  This legislation aims to enable the sharing of samples so that generics can compete more effectively.  You can learn more about the substance of the CREATES Act by reading Senator Leahy’s summary here. The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act enjoys broad, bipartisan support from Senators Leahy, Grassley, Feinstein, Graham, Durbin, Lee, Whitehouse, Cruz, Klobuchar, Kennedy, and Blumenthal.  Generics want the CREATES Act, and there are 28 co-sponsors.  The bill was voted out of the Judiciary Committee favorably, but Hatch voted against it.

Raising and connecting the Hatch-Waxman IPR fix to the CREATES Act balances two major interests of both the brand and generic industries.  Brand needs this Hatch-Waxman IPR fix and generics want CREATES.  Like Hatch’s original objective with Hatch-Waxman, each side gains something…resolving a major problem for them…and neither loses anything that they had any reasonable expectation that they would, or should, be able to maintain.

The dispute between WesternGeco, a company that develops technology for surveying the ocean floor, and ION Geophysical Corporation, a competitor, dates back to late 2007. In late 2007, ION began manufacturing components for its competing surveying system and shipping them to companies abroad. Those companies combined the components to create the surveying system that was indistinguishable from WesternGeco’s patented systems.

WesternGeco sued for patent infringement under §§271(f)(1) and (f)(2). At trial, WesternGeco proved that it had lost 10 specific survey contracts due to ION’s infringement. The jury found ION liable and awarded WesternGeco damages of $12.5 million in royalties and $93.4 million in lost profits. ION filed a post-trial motion to set aside the verdict, arguing that WesternGeco could not recover damages for lost profits because §271(f) does not apply extraterritorially. The District Court denied the motion. 953 F. Supp. 2d 731, 755–756 (SD Tex. 2013).

On appeal, the Federal Circuit found ION liable for infringement under §271(f)(1) but reversed the award of lost-profits damages under §271(f)(2). WesternGeco LLC v. ION Geophysical Corp., 791 F. 3d 1340 (2015). The Federal Circuit had previously held that §271(a), the general infringement provision, does not allow patent owners to recover for lost foreign sales. See Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F. 3d 1348 (Fed. Cir. 2013). The Federal Circuit reasoned that Section 271(f) should be interpreted the same way.

While the Supreme Court acknowledged that courts ordinarily presume that statutes apply only within the territorial jurisdiction of the United States, quoting Foley Bros. v. Filardo, 336 U.S. 281, 285 (1949), Justice Thomas explained there is an established two-step framework to decide questions of extraterritoriality. RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090 (2016). While ordinarily courts address the first step first, in this case the Supreme Court exercised its discretion to forgo the first step and address the second prong of the test. They did this, no doubt, because they concluded that the conduct relevant to the statutory focus was domestic.

Section 271(f)(2) focuses on domestic conduct. It provides that a company “shall be liable as an infringer” if it “supplies” certain components of a patented invention “in or from the United States” with the intent that they “will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States.” The conduct that §271(f)(2) regulates—i.e., its focus—is the domestic act of “suppl[ying] in or from the United States.” As this Court has acknowledged, §271(f) vindicates domestic interests: It “was a direct response to a gap in our patent law,” Microsoft Corp., 550 U. S., at 457, and “reach[es] components that are manufactured in the United States but assembled overseas,” Life Technologies, 580 U. S., at ___ (slip op., at 11). As the Federal Circuit explained, §271(f)(2) protects against “domestic entities who export components . . . from the United States.” 791 F. 3d, at 1351.

Thomas would go on to rather emphatically state: “The conduct in this case that is relevant to that focus clearly occurred in the United States, as it was ION’s domestic act of supplying the components that infringed WesternGeco’s patents.”

Appellants were generic drug manufacturers who filed Abbreviated New Drug Applications (“ANDAs”), seeking approval for generic versions of Vimpat®. Pursuant to applicable Hatch-Waxman provisions, Appellants certified in their ANDAs that the ‘551 patent was invalid, unenforceable, or that their proposed generic lacosamide products would not infringe the ‘551 patent.

Consequently, as is their right under Hatch-Waxman, UCB sued Appellants for patent infringement in the United States District Court for the District of Delaware. Appellants stipulated to infringement of claims 9, 10, and 13 of the ‘551 patent but maintained that these claims are invalid for obviousness-type double patenting, obviousness, and anticipation.

Following a bench trial, the district court made exhaustive fact findings based on the trial evidence and concluded that the asserted claims of the ‘551 patent were not invalid. Appellants appealled that decision, arguing that the district court misapplied the legal standards for obviousness-type double patenting, obviousness, and anticipation, and that the prior art anticipates and/or renders the ‘551 patent obvious.

The Federal Circuit held that the district court applied the correct legal standards in its obviousness-type double patenting, obviousness, and anticipation analyses, and found no clear error in its underlying factual findings. As a result, the Federal Circuit affirmed the district court’s ultimate conclusion that the asserted claims were not invalid.

A dismissal filed in Delaware ended a small chapter of the Apple/Samsung patent war. The docket in that case included only 18 items and the case had been stayed since August 2011 after Samsung brought patent infringement claims against Apple to the U.S. International Trade Commission. The dismissal terminating the Northern California case ended the much more contentious portion of the patent battle between these two companies. The dismissal is the penultimate filing in that case which involved a total of 3,956 docket entries filed with the district court alone.

The Northern California dismissal had the result of denying as moot various motions filed by either Samsung or Apple which were still pending at the time that the parties entered into the settlement. These included a motion filed by Apple for supplemental damages, pre-judgment interest and post-judgment interest, which was filed only on June 7th. This motion followed the district court’s previous ruling that an award of supplemental damages was necessary to compensate Apple for infringing sales not considered by the jury. The calculation of the supplemental damages award took August 25th, 2012, as the date from which to begin the calculation; this date was the day after the first jury verdict was entered in the case. Apple’s entitlement to supplemental damages was reiterated by the district court after a damages retrial that occurred in 2013. Apple argued in its motion that Samsung had waived any right to challenge Apple’s entitlement to compensation for additional infringing sales and that Samsung had admitted to continuing to sell six infringing models after the August 2012 jury verdict.

Another motion rendered moot by the Northern California dismissal is Samsung’s motion for an entry of judgement of invalidity on Apple’s claim for infringement of U.S. Patent No. 7844915, titled Application Programming Interfaces for Scrolling Operations. Samsung made this motion on the grounds that the Court of Appeals for the Federal Circuit had affirmed a final rejection of claim 8 of the ‘915 patent in a validity proceeding which played out at the Patent Trial and Appeal Board (PTAB). By denying Apple’s claim for infringement of the ‘915 patent consistent with the Federal Circuit’s holding on validity, Samsung would have avoided nearly $146 million worth of damages either wholly or partially attributable to infringement of the ‘915 patent. That’s a significant portion of the more than $548 million partial judgement entered by the district court in September 2015, following a previous remand from the Federal Circuit in this district court case; the partial judgement was upheld on appeal to the Federal Circuit in October 2015. The damages award for infringement of the ‘915 patent includes more than $113 million for lost profits on 10 products sold by Samsung. This award depends solely on infringement of the ‘915 patent as Apple did not seek lost profits for any other utility patents. Another $31 million in reasonable royalty damages on 11 products would have also been rescinded because, although the court found that the products infringed multiple patents, the jury adopted a damages model submitted by an Apple expert witness on damages which attributed a portion of the royalties specifically to infringement of the ‘915 patent. In the alternative, Samsung’s motion argued for relief under Federal Rule of Civil Procedure 60(b)(6), which covers grounds for relief from a judgement, based on the Federal Circuit’s finding of invalidity of the ‘915 patent claim.

Samsung’s post-trial motion for judgment as a matter of law was also rendered moot by the dismissal. Samsung had made this motion based on the grounds that no reasonable jury could have found that: any of Apple’s asserted design patents was applied to Samsung’s entire accused products; that Apple’s U.S. Patent No. D604305, titled Graphical User Interface for a Display Screen or Portion Thereof, applied to anything more than to the smartphones’ display screens; that Apple’s U.S. Patent No. D618677, titled Electronic Device, applied to anything more than to the smartphones’ glass front faces; and that Apple’s U.S. Patent No. D593087, also titled Electronic Device, applied to anything more than the smartphones’ glass front faces with bezels. These particular points related to findings made by the U.S. Supreme Court in its December 2016 decision in Samsung v. Apple that, in the case of a multicomponent product, the relevant article of manufacture for arriving at a damages award for patent infringement could be found to be only a component of the end product sold to consumers.

In response to the settlement between Samsung and Apple, Christopher Loh, partner at Fitzpatrick, Cella, Harper & Scinto, offered the following comment:

“One of the questions raised by Samsung’s post-trial motions is whether the jury properly could have found that Samsung’s phones, in their entirety, were the relevant ‘articles of manufacture’ as to Apple’s GUI design patent. In view of the settlement, it will be up to other litigants and other courts to answer that question.”

USAA is asserting a series of four patents in this case, including:

• U.S. Patent No. 8699779, titled Systems and Methods for Alignment of Check During Mobile Deposit. Issued in April 2014, it covers a system for depositing a check using a mobile device having a camera, a display and a processor configured to project an alignment guide in the mobile device’s display, monitor an image of a check within the camera’s field of view, determine whether the check image aligns with the alignment guide, automatically capture the image of the check when aligned with the guide, and transmit the captured image of the check to a depository.
• U.S. Patent No. 9336517, same title as the ‘779 patent. Issued in May 2016, it discloses a mobile device system wherein the alignment guide is associated with an information capture component to enable enhanced detection and extraction of information from a digital image of a check.
• U.S. Patent No. 9818090, titled Systems and Methods for Image and Criterion Monitoring During Mobile Deposit. Issued last November, it claims a system comprising an image capture device, a presentation device and a processor configured to monitor a target document in the image capture device’s field of view with respect to a monitoring criterion, control the presentation device to present feedback information describing an instruction for satisfying the criterion, determine whether that criterion is satisfied, and capture an image of the target document upon satisfaction of the criterion.
• U.S. Patent No. 8977571, titled Systems and Methods for Image Monitoring of Check During Mobile Deposit. Issued in March 2015, it covers a non-transitory computer-readable medium comprising computer-readable instructions for depositing a check into a user’s bank account.

As USAA’s complaint notes, the ‘779 and ‘571 patents generally cover the use of an alignment guide to reduce error rates in mobile check depositing, and the ‘090 and ‘571 patents generally cover improved computer systems which are able to capture high-quality check images. Such technology is critical to USAA, which serves members of the U.S. military and their families, because unlike traditional banks USAA reaches its customers remotely, not in brick-and-mortar bank facilities. USAA’s customers increasingly use the company’s website or mobile application to interact with the company’s services and the company developed these patents which cover the company’s Deposit@Home and Deposit@Mobile services.

USAA alleges that Wells Fargo Mobile Deposit remote deposit capture system, which was released years after either of USAA’s remote deposit services were first offered, infringes upon the asserted patents.

It will be interesting to see if any validity challenges under the Alice standard are brought by Wells Fargo to the district court.

“Having AIA trial proceedings use the same claim construction standard that is applied in federal district courts and ITC proceedings also addresses the concern that potential unfairness could result from using an arguably broader standard in AIA trial proceedings,” the NPRM says. “Under the proposed approach, the Office would construe patent claims and proposed claims based on the record of the IPR, PGR, or CBM proceeding, taking into account the claim language itself, specification, and prosecution history pertaining to the patent. The Office would apply the principles that the Federal Circuit articulated in Phillips and its progeny.”

The USPTO is also proposing to amend the rules for PTAB trials to add that the USPTO will consider any prior claim construction determination concerning a term of the claim in a civil action, or an ITC proceeding, that is timely made of record in an Inter Partes Review (“IPR”), Post-Grant Review (“PGR”), or Covered Business Method (“CBM”) proceeding.

The purposes of the proposed rule include, among other things, to ensure consistency in claim construction between the PTAB and proceedings in district court or at the ITC, and to increase judicial efficiency. “The Office’s goal is to implement a fair and balanced approach, providing greater predictability and certainty in the patent system,” the Notice of Proposed Rulemaking (“NPRM”) reads.

While there is much left to do in order to truly bring a fair and balanced approach to PTAB proceedings and to provide predictability and certainty in the U.S. patent system, this marks a very important first step. It would seem that Iancu’s words are not the typical political rhetoric one hears so frequently in Washington, DC. His words have meaning, and he seems interested in delivering. Hopefully, we will see more from the USPTO as he continues to familiarize himself with the inner workings of the Office, and particularly with the PTAB processes.

Certainly, it will be argued by those who support the PTAB that there is no difference, really, between BRI and Phillips, and perhaps they are right. Perhaps at the end of the day, there will be few cases decided by a change in the standard applied, but that doesn’t make the change any less significant. With this change, once the proposed rules become effective, the USPTO will be saying that issued patents, when reviewed at the USPTO, deserve the same respect as they receive in federal courts, and prior claim constructions issued by federal court judges and the ITC will be considered and not simply ignored. This alone brings a more balanced, sensible equilibrium to the system that was supposed to use post-grant challenges as an alternative, not another bite at the apple using easier standards with Administrative Patent Judges biased in favor of invalidating issued patents.

The NPRM, which was signed by USPTO Director Andrei Iancu on May 3, 2018, will officially publish in the Federal Register on Wednesday, May 9, 2018. Those wishing to submit comments should submit comments to ptabnpr2018@uspto.gov within 60 days from the official publication.

In September 2014, the examiner issued a final rejection, which rejected all 37 claims of the patent application on 35 U.S.C. § 103 for obviousness and 35 U.S.C. § 112 for not meeting the written description requirement and lack of enablement. The obviousness finding was based on two pieces of prior art: U.S. Patent No. 6442866, titled Method and Apparatus for Drying or Heat-Treating Products (“Wefers”) and issued in September 2002; and U.S. Patent Application No. 20050019209, titled Method and Device for Sterilizing Containers (“Burger”) and filed in July 2002. The examiner rejected most of the ‘895 patent applications claims after finding that Wefers disclosed every limitation of claim 1 except for the tumbling limitation, which was itself disclosed by Burger. The examiner rejected Durance’s argument that rotating the container to enhance tumbling of the organic material was not present in the Wefers and Burger combination; the examiner found that the organic material’s tumbling was an inherent function of all rotating containers. On the indefiniteness finding, the examiner found that the patent application’s specification did not meet the written description requirement under Section 112 because it did not discuss the rotational speed necessary to tumble the organic material.

After an examiner interview in December 2014, the examiner withdrew the rejection based on the Section 112 grounds but maintained the obviousness rejection based on Burger’s teaching of a transportation means rotating a container through a vacuum chamber from the inlet to the outlet. Durance appealed to the PTAB, arguing that Burger taught the application of plasma to the surface of containers and not the rotation of the containers to tumble the contents for balancing out the microwave radiation applied to the cylinders. Durance further argued that Wefers taught away from agitating products during transportation because it stressed the “gentle continual transport” needed to reduce maintenance expenses. The examiner answered this argument based on new grounds that there was no structural difference between Durance’s claimed invention and the combination of the prior art references. Although Durance argued that the examiner’s understanding of structural identity for rejection, which had never before been articulated, was extremely inaccurate as the claimed invention in the ‘895 patent application required the use of gears, not simply gravity. The PTAB sided with the examiner, finding that Durance’s arguments only addressed individual references and not the combination.

Durance appealed for rehearing by the PTAB, arguing that the Board erroneously ignored reply brief arguments related to the structural identity rejection. In not addressing arguments that the claimed structure is different than the Burger structure, the PTAB “misapprehend[ed] the law” on inherency by ignoring the argument that structural identity cannot be used to show that a method claim is inherently performed by a combination of prior art references. In denying the request for rehearing, the PTAB stated that it did not misapprehend the doctrine on inherency because it didn’t invoke that doctrine in affirming the examiner’s rejection. “In the interest of fairness,” the Board did consider Durance’s reply brief argument that the amount of material packed into the container affects whether the material would tumble, but the Board reiterated that it would not consider other reply brief arguments.

On appeal to the Federal Circuit, Durance argued that substantial evidence doesn’t support the PTAB’s finding that the combination of the prior art references taught the tumbling limitation either expressly or inherently. Durance also argued that the PTAB lacked substantial evidentiary support to show that a skilled artisan would modify Wefers to include the rotation feature disclosed by Burger.

In its discussion of the issues in the appeal, the Federal Circuit opined that “the Court is not confident in the Patent Office’s reasoning for its rejection of the Application” based upon the shifting arguments offered in the patent examiner’s rejections, as well as the PTAB’s argument on appeal that the Federal Circuit should find inherency in the first instance after the PTAB told Durance that inherency was never invoked. In analyzing 37 C.F.R. § 41.41(b), the relevant statute under which the PTAB waived Durance’s reply brief arguments, the Federal Circuit noted that the statute allows a patent owner to include responses to an examiner’s answer in a reply brief. Nothing in the statute bars the patent owner from addressing new arguments made by the examiner that were not articulated in the Final Office Action, the appellate court found.

The PTAB’s refusal to consider Durance’s reply brief arguments on structural dissimilarity between the patent application and the prior art references required vacating the agency’s decision and remanding the case back to the Board, the Federal Circuit held.