Personal Property? Not so much!

In a recent post at IPWatchdog’s Gene Quinn questioned PTAB’s strange allowance of serial challenges to patents even after rejecting other challenges to them. Suggesting a more efficient solution he said

“One and done challenges to patents are a fiscally conservative and responsible approach to government, and the only legitimate way to treat what the Patent Act tells us is supposed to be a property right – by at some point settling title of the patent at least insofar as challenges at the United States Patent and Trademark Office are concerned.”  Within his post, Gene says ” a patent is not a property right like any other.”

Sadly, as the saying goes, “Truer word were never spoken!”

The status of patents as personal “property” has been shrinking for a decade, a trend that must be reversed if TTO’s expect commercialization to survive the trend’s shrinkage of investment capital. The Patent Act’s Sec 261 states that:

“Subject to the provisions of this title, patents shall have the attributes of personal property.”

Really? If you own a car, somewhere in your files is a “Certificate of Title” proving that you own it. Whatever your job, driving habits, use or non-use they have no bearing on your attributes of auto ownership. Under the law, all owners are treated equally. Produce a valid Certificate and you can trade it in. If stolen, it must be returned. Continue reading Personal Property? Not so much!

Canada’s “Promise Doctrine” to Continue Weakening Patent Reliability

Canada’s pernicious ” Promise Doctrine” has been upheld by a NAFTA tribunal in which Eli Lilly claimed that Canada’s unique judicially-created “promise doctrine” by which patented subject matter is strictly held to the application predicted specifics of its patent application claim even though new uses have emerged since its development and use. In contrast to SCOTUS “over-broad” concerns underlying continuing US patent eligibility, Canada’s unique requirement that the “promise” (i.e. its described future post development use) creates and absolute limitation on its enforceability for any other use. So, if a patent claim describes a process to prevent apples from quickly turning brown when cut can be similarly used for pears, its patent protection applies only to apples.

Driven by Canadian generic drug makers seeking to narrow patent protection, the doctrine is inconsistent with AIA mandated First to File patent prosecution requirements which compel early applications to assure patent protection for early stage innovation. But often during its development and use the method to accomplish A. is later found to accomplish B as well. In virtually all other patent venues the A. Patent would provide exclusivity protection to its applicability to B. Continue reading Canada’s “Promise Doctrine” to Continue Weakening Patent Reliability

Death by a Single Cut

Yesterday at the USPTO I had the privilege of serving on the opening panel of the 12th Annual Advanced Patent Law Institute sponsored by The Texas University School of Law, Antonin Scalia Law School at George Mason University and the USPTO itself. The panel was organized and moderated by Rob Sterne and former CAFC CJ Paul Michel. It included Damon Matteo, Paul Stone, Peter Detkin and Paul Evans, all of whom are prominent, accomplished investors in innovation. Our audience of more than 200 advanced practitioners, judges, and USPTO personnel, included USPTO Director Michelle Lee. For the remainder of the two-day conference, its emphasis would be to sharpen its attendees’ legal skills. But for its first 75 minutes, patent non-investability was the panel’s sobering focus. Continue reading Death by a Single Cut

Take Back the Rights

On March 9, 2017, I will be serving on a panel moderated by former Federal Circuit Court CJ Paul Michel and Robert Sterne Esq. at the USPTO. The UT Panel on the Global Patent Landscape is a well-attended, mixed assembly where patent jurists and practitioners gather to consider patent law developments and trends from a more detached and wider vantage point than daily contention with individual cases allows. Wearing my university hat, I will be joined by representative panelists Paul Evans, Paul Stone, Peter Detkin and Damon Matteo each of whom expertly exercises keystone roles in our innovation ecosystem. Sadly, although there are many pressing issues confronting the IP community our panel preparation calls have inevitably focused on one overriding issue.

Inadvertently or not, SCOTUS, Congress, CAFC and PTAB have combined to drape an iron curtain of enforcement cost and uncertainty over patent enforcement, weakening US patents to the point of risk-adjusted irrelevance. For under-resourced patent holders, a growing cohort growing larger with expanding litigation overuse of post grant process, patents’ statutory presumption of validity has become a presumption of non-enforceability. Biopharma interests may still count on patents, but incumbent ICT operating companies whose efficient infringement business model has substantially reduced patent values see their value now only as weapons to preserve global market share and/or as clubs to beat down component product pricing, daring their suppliers to assert.  In short U.S. Patents are rapidly losing their critical investment attracting role within our national innovation ecosystem. The question now is what we can do about it?   Continue reading Take Back the Rights

Early Stage Innovation’s Chance to Save Itself

Congressional pursuit of HR 9-type comprehensive patent reform seems to have slowed. Maybe inventors, investigators and investors can breathe easy for a while. Or not! Unless universities and others engaged in early stage commercialization can convince Congress now that Bayh-Dole-based commercialization is the bridge created by Congress to connect past and future congressional R&D funding to the public benefits of jobs, growth and medical progress contemplated by its annual R&D appropriation, trouble lies ahead. R&D funding on one side of the commercialization bridge must reliably cross to its public benefit side or Congress will invest its billions elsewhere.
Google was just tagged with a $ 20M patent infringement damages award. Despite AIA’s built-in deterrents, big tech’s efficient infringement business model exposes ICT firms to similar damages. Continue reading Early Stage Innovation’s Chance to Save Itself

Hard Times Ahead

Congressional pursuit of HR 9-type comprehensive patent reform seems to have slowed. Maybe we can all breathe easy for a while. Or not!  Unless universities can convince Congress that Bayh-Dole based commercialization is the key to the growth and medical progress intended by past and future R&D funding, they are targeted for trouble.

Google was just tagged with a $ 20M patent infringement damages award.  Big tech’s efficient infringement business model exposes big ICT firms to similar damages. On a pure cost-benefit basis, the enforcement protection provided by HR 9-type legislation is still compelling to big ICT aggregators. Beyond denying court access to most patent holders, HR-9 reduces the cost of the ICT components they aggregate, which increases their ICT’s share of consumers’ purchase price. Moreover, their past investments in PR-spawned patent trolls, junk science analysis, academic blather and indirect judicial influence are getting stale but haven’t reached their “sell by date”. Big tech has new pressing priorities and they no longer have the president in their thrall, but as long as Reps. Goodlatte and Issa run IP issues in House Judiciary, any IP legislation that comes their way can be converted into all or any part of HR 9. More than one bill may be on the way and in this year’s budget battle R&D funding is in jeopardy. (Read more at Ipstrategic.com)

House Judiciary Chair Goodlatte publicly admitted that recent judicial responses to issues addressed by HR 9 have reduced its urgency. His IP Subcommittee Chair Issa has indicated that the HR 9 issues are more likely to be addressed on a “modular” rather than on a comprehensive basis. Both blame universities for stalling HR 9 after it had earlier passed the House by a vote of 325 to 91. They have said that fixing the venue problem would be considered depending on how it is addressed by the SCOTUS in the now pending Heartland case. Senator Hatch has said that fixing the venue problem should await Heartland but also said however heartland is decided the venue issue needs to be addressed by Congress

Then there’s the Alice/ Mayo controversy outlined and explained in an IPWatchdog post by Manny Schecter.  A number of major IP players including; The American Bar Association’s Section on IP, AIPLA, IPO and PhRMA have expressed the need for a Section101 fix. IPO is already circulating a draft bill. It thus seems highly likely that if and when the House and Senate Judiciary Committees find the time to deal with Alice/Mayo, patent reform will be in play again.

We must use this temporary “lull” to explain to our congressional delegations how Bayh-Dole commercialization is the bridge to the public benefit contemplated by Congress when it annually appropriates $130 bn. to R&D. State budget cuts to universities should alert us to what may happen at the federal level. Budget issues lie at the heart of DC’s current chaos. Deficit hawks are circling like buzzards and every dollar appropriated in the past for R&D has been eye-balled and will be sought by other desperate interests on the congressional chopping block. Listen to William Bonvillain, who directs MIT’s Washington Office;

“Citing federal budget trends, with an expected tax cut and infrastructure spending program as well as a possible dismantling of the Affordable Care Act, William Bonvillian, director of MIT’s Washington office, said that discretionary federal spending is set to be squeezed. That, in turn, can be expected to hit scientific research budgets, he said, and in turn, the federal and university based research community. “There is going to be a challenge” to research and development programs, Bonvillian said. “We’re going to need to tell the story, that R&D is actually a key part of the solution, it’s part of growth. But the challenge this time in telling that story is going to be even greater than usual.”

Research universities must explain to their congressional delegations why R&D must be funded and its Bayh-Dole based commercialization must be protected iso congressional funds already in the pipeline can produce the future jobs and beneficial scientific progress they expected when they voted to support it. And they must do it now, HR 9’s choke-hold on private sector investment leads eventually to reduced congressional R&D appropriations. But in the budget battle now fully underway unless universities actively justify their commercialization of federally- funded R&D, other influential interests on the Hill who care little about scientific study but care a lot about their own survival see R&D’s annual funding as a source to save themselves.

 

More on Judge Gorsuch

The Judge Gorsuch concurrent Gutierrez opinion calls for fresh analysis of the venerable Chevron Doctrine, according to which agency interpretations of ambiguous statutory language are routinely deferred to by the courts. According to Judge Gorsuch, this gives the Executive branch what amounts to unconstitutional Article I law-making authority clearly conferred on Congress by Article II. Continue reading More on Judge Gorsuch

State Research University Immunity from PTAB Review

In a recent post, patent law guru Dennis Crouch discussed PTAB’s 11th Amendment Sovereign Immunity decision exempting state research universities and their affiliates from IPR review.

For those of us inclined to suspect PTAB’s justifiable fears of constitutional elimination (which also could nullify AIA itself which has no savings clause) one reader’s anonymous comment was intriguing …

“Believe me, PTAB considered all angles before this decision. My informed speculation would be this decision is from the solicitors office and the political branch and was given to the panel. It’s pure self preservation. To ignore the 11th as this juncture, would create a SCOTUS scenario, in which the entire framework of the IPR construct would need to be squared against a separation of powers and federalism framework implicated by the purpose behind the 11th amendment. Screwing the requestor and dismissing under the 11th, allows the IPR construct to survive another day. And the longer PTO can keep the IPR construct in place, the better chance it has to survive.”

Sovereign Immunity Excuses University of Florida from IPR Challenge by Dennis Crouch

As public universities continue to obtain more patents, issues of sovereign immunity continue to arise. In a recent decision, the Patent Trial and Appeal Board (PTAB) dismissed a trio of inter partes review proceedings against the University of Florida based upon its claim of sovereign immunity.[1]

The 11th Amendment to the US Constitution limited the “Judicial power of the United States” so that it does not “extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”[2] Although the text of the amendment appear to include several important limitations that might exclude an administrative action (“judicial power; “suit in law or equity”), the Supreme Court has broadly interpreted the statute precluding many adjudicative administrative proceedings.  For anyone who is not an American lawyer, you may need to pause here to recognize that each of the 50 American states are treated as sovereign governments and, although the Federal Government sets the “supreme law of the land,” its powers are limited by the U.S. constitution and federalist structure.

The Supreme Court has interpreted this amendment to encompass a broad principle of sovereign immunity, whereby the Eleventh Amendment limits not only the judicial authority of the federal courts to subject a state to an unconsented suit, but also precludes certain adjudicative administrative proceedings, depending on the nature of those proceedings, from adjudicating complaints filed by a private party.  Following Supreme Court precedent from other areas of law, the Federal Circuit held in Vas-Cath[3] that Missouri’s sovereign immunity allowed it to avoid an interference proceeding.

The petitioner Covidien argued that the PTAB should think of the IPR as an in rem action directed at the patent rather than at the patent owner.  However, the PTAB rejected that argument – finding that the procedural elements of inter partes reviews and estoppel provisions make it look much like contested litigation – the very thing protected by the 11thAmendment.

The Panel:

On the whole, considering the nature of inter partes review and civil litigation, we conclude that the considerable resemblance between the two is sufficient to implicate the immunity afforded to the States by the Eleventh Amendment. Although there are distinctions, such as in the scope of discovery, we observe that there is no requirement that the two types of proceedings be identical for sovereign immunity to apply to an administrative proceeding. Further, we note that there are several similarities between civil litigation and inter partes review that are not unlike those compared in Vas-Cath for interferences.

Outcome here – Dismissed before Institution based on Sovereign Immunity of the patentee.  Moving forward it will be interesting to see whether the Federal Circuit is willing to hear an appeal or instead apply the standard law that institution decisions are not subject to appeal.

The dispute between the parties extends back to a license agreement between UFL and Medtronic/Covidien of the patent at issue. UFL exerted its right to audit the books, but was refused by Medtronic.  UFL then sued in state court on the contract.  Medtronic counterclaimed for DJ of invalidity/noninfringement and removed the case to federal court on the patent claims and on diversity grounds.  The district court however remanded back to state court on sovereign immunity grounds.  That remand is now on appeal at the Federal Circuit, although the court has just issued a show-cause – asking whether the case should be transferred to the 11th Circuit.  Under the AIA-revised statute, cases go to the Federal Circuit if either the civil action “arises under” US patent law or a “compulsory counterclaim” arises under patent law.  Here, it is clear that the counterclaim is a patent claim, but the big question is whether it is “compulsory” – normally defined as one that “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.”[4]

Of interest though, in the order to show cause, the court suggests that it might keep the case in the “interest of justice” rather than transfer it. [5][federalcircuitjurisdictionorder]

= = = =

[1] See Covidien LP v. University of Florida Research Foundation Inc., Case Nos. IPR 2016-01274; -01275, and -01276 (PTAB January 25, 2017).

[2] U.S. CONST. amend. XI.

[3] Vas-Cath, Inc. v. Curators of Univ. of Missouri, 473 F.3d 1376 (Fed. Cir. 2007).

[4] Fed. R. Civ. P. 13(a)(1)(A).

[5] 28 U.S

 

Justice Gorsuch?

We believe it will be messy but Judge Gorsuch will be confirmed as Justice Gorsuch. Significantly his textual originalism tilts his constitutional analysis towards limiting the kind of federal agency overreach we have come to expect from USPTO’s IPR. We suspect he similarly will be suspicious of AIA’s legislative history shenanigans, some of which occurred after its passage. He thus is unlikely to support efforts by any USPTO Director to administratively bend AIA’s ambiguities in ICT tech’s direction. Continue reading Justice Gorsuch?

Patent Eligibility and the 115th Congress

House Judiciary Chairman Goodlatte has invited the press to an announcement today of his committee’s agenda for the 115th Congress. As always we anxiously await hearing his priorities regarding this year’s version of his HR 9, Sec 101 patent eligibility clarification, and other issues of importance to the survival of research university commercialization. Gene discussed the SCOTUS spawned Alice-Mayo eligibility doctrine yesterday in a post regarding IPO’s endorsement last weekend of legislation to clarify the doctrine. Continue reading Patent Eligibility and the 115th Congress