If you were an appellate judge, I imagine that you would prefer to review a lot of matters as “issues of law.” The great thing about issues of law is that issues of law make the appellate court the final arbiter of a determination. As you know, issues of law are reviewed de novo. Issues of fact are reviewed with some level of deference to the factfinder.
In the previous post, I explained that there are several issues percolating at the Federal Circuit with respect to §101 that have not yet been resolved as issues of law or issues of fact. Perhaps the prospect of giving up de novo review has something to do with that delay.
Retired Chief Judge Rader was a staunch critic of the doctrine of claim vitiation. He explained that the tests for vitiation and equivalents are coterminous. The only difference was that the doctrine of claim vitiation was an issue of law (reviewed de novo) while the doctrine of equivalents was an issue of fact (not reviewed de novo). Therefore, one could assert the doctrine of claim vitiation for purposes of summary judgment, since there could be no fact issue to dispute. You can hear him explain this in the 2007 oral argument of Wleklinski v. Targus: [Listen]. See also his “Additional views” in the Nystrom v. Trex case.
While Judge Rader does not mention it, the adoption of de novo review for the doctrine of claim vitiation also made the appellate judges the final arbiters of a doctrine of claim vitiation analysis. They do not need to defer to any factfinder.
We will have to wait and see how the Federal Circuit resolves the §101 issues.
It is no secret that the Supreme Court has made a dog’s breakfast out of 35 U.S.C. §101. But, the Federal Circuit’s jurisprudence in this area of the law has not been the court’s finest hour, either. For example, while McRo v. Bandai was a good start, the Federal Circuit has been hesitant to address the role of facts/evidence in a patent eligibility analysis, in several ways.
As an aside, I made the mistake of working on this post while watching a video of Allen Iverson’s famous “Practice” press conference. Now every time that I think about these issues, I envision Allen Iverson sitting at the dais dressed in a black robe and my mind substitutes “evidence” for “practice” and “patent eligibility” for “game”:
Some of the ways that the Federal Circuit seems hesitant to address the role of facts/evidence of patent eligibility in its opinions are:
1) Acknowledging that patent eligibility is a question of law informed by underlying factual findings
While patent eligibility is a question of law, Federal Circuit opinions rarely recognize that previous CAFC panels have stated that there are underlying factual issues that can inform the analysis:
Whether a claim is directed to statutory subject matter is a question of law. Although determination of this question may require findings of underlying facts specific to the particular subject matter and its mode of claiming . . . .
Arrhythmia Research Technology v. Corazonix Corp., 958 F.2d 1053 (Fed. Cir. 1992).
It is well-established that “whether the asserted claims … are invalid for failure to claim statutory subject matter under 35 U.S.C. § 101, is a question of law which we review without deference.” AT & T Corp. v. Excel Commc’ns, Inc., 172 F.3d 1352, 1355 (Fed.Cir.1999). As a question of law, lack of statutory subject matter is a “ground [for affirmance] within the power of the appellate court to formulate.” Chenery, 318 U.S. at 88, 63 S.Ct. 454. While there may be cases in which the legal question as to patentable subject matter may turn on subsidiary factual issues, Comiskey has not identified any relevant fact issues that must be resolved in order to address the patentability of the subject matter of Comiskey’s application. Moreover, since we would review a Board decision on the issue of patentability without deference, see AT & T, 172 F.3d at 1355, the legal issue concerning patentability is not “a determination of policy or judgment which the agency alone is authorized to make.” Chenery, 318 U.S. at 88, 63 S.Ct. 454.
In re Comiskey, 554 F.3d 967 (Fed. Cir. 2009)(Judge Dyk writing for the court).
To their credit, many district court judges have not been shy to cite precedent that stand for the proposition that §101 is an issue of law informed by underlying factual issues. See, e.g., SINCLAIR-ALLISON, INC. v. FIFTH AVENUE PHYSICIAN SERVICES, LLC, No. CIV-12-360-M (W.D. Okla. Dec. 19, 2012); PROTOSTORM, LLC v. ANTONELLI, TERRY, STOUT & KRAUS, LLP, No. 08-CV-931 (PKC)(JO) (E.D.N.Y. June 5, 2015); WIRELESS MEDIA INNOVATIONS, LLC v. MAHER TERMINALS, LLC, Civil Action No. 14-7004 (D.N.Y. Apr. 20, 2015); EXECWARE, LLC v. BJ’S WHOLESALE CLUB, INC., Civil Action No. 14-233-LPS (D. Del. July 15, 2015); TRIPLAY, INC. v. WhatsAPP INC., Civil Action No. 13-1703-LPS (D. Del. Apr. 28, 2015); VS TECHNOLOGIES, LLC v. TWITTER, INC., Civil Action No. 2: 11cv43 (E.D. Va. Apr. 26, 2012); Cyberfone Systems, LLC v. Cellco Partnership, 885 F. Supp. 2d 710 (D. Del. 2012).
2) Identification of an abstract idea.
Despite the Supreme Court pointing to factual sources to support its conclusions that the claims in Bilski1 and Alice2 were directed to abstract ideas and that Mayo3 was directed to a natural phenomenon, the Federal Circuit has yet to confirm that a tribunal must always support an assertion of an abstract idea with factual evidence.
To its credit, the PTAB required such evidence in PNC Bank v. Secure Axcess, CBM2014-0100 (PTAB Sept. 9, 2014). And, the PTAB noted that the Supreme Court supported its determination in the Alice decision:
“We also find that Petitioner does not provide sufficient persuasive evidentiary support that the placing of a trusted stamp or seal on a document is “a fundamental economic practice” or a “building block of the modern economy.” SeeAlice, 134 S. Ct. at 2356 (citing various references concerning the concept of intermediated settlement, including an 1896 reference).”
PNC Bank v. Secure Axcess, CBM2014-0100 (PTAB Sept. 9, 2014).
This issue was before the court, for example, in IN RE VILLENA, No. 2016-1062 (Fed. Cir. Oct. 13, 2016). However, the court chose to decide that case by a Rule 36 Judgment;
3) Proof of (i) conventional, (ii) routine, and (3) well-understood activity in the “significantly more” analysis
The Federal Circuit has yet to confirm that factual evidence must be provided in order to prove that an ordered combination of claim elements is a (i) conventional, (ii) routine, and (iii) well-understood activity. At least this issue is on the radar screen of some of the judges. For example, in the oral argument of Apple v. Ameranth, Judges Reyna and Chen inquired about this type of inquiry. [Listen] and [Listen]. And, the USPTO Solicitor’s Office addressed the impact of a lack of evidence, as well: [Listen]. In IPLearn v. Microsoft, Judge Moore asked about evidence of conventionality: [Listen]. Unfortunately, the court issued a Rule 36 Judgment in that case.
The question of whether the “significantly more” inquiry — under step 2A of the Alice/Mayo test – is an “issue of law” or an “issue of fact” was before the Federal Circuit in January 2017 in America’s Collectibles Network v. The Jewelry Channel, Inc. USA. In this sound bite, you can listen to the appellant clearly tee up the issue for the Federal Circuit. [Listen] The court issued a Rule 36 Judgment, however.
Similarly, in In re Villena, Judge Taranto asked whether the inquiry into whether something is “conventional” could be anything other than a fact question: [Listen]. Unfortunately, the court issued a Rule 36 Judgment.
4) Secondary indicia of patent eligibility
Despite the opportunities to do so, the Federal Circuit has yet to recognize a principle of “secondary indicia of patent-eligibility.” Just as evidence of “secondary indicia of non-obviousness” can be used in a 35 U.S.C. §103 analysis, evidence of “secondary indicia of patent eligibility” should be permitted in a 35 U.S.C. §101 analysis. For example, if there is a nexus between a claimed invention and the claimed invention’s significant commercial success, it must not have been a (i) conventional, (ii) routine, and (iii) well-understood activity. If the Supreme Court is going to conflate §§101 and 103, then secondary indicia principles under §103 should be infused into the §101 analysis, as well.
This is an issue that has been raised in several oral arguments. For example, it was raised in Lending Tree v. Zillow : [Listen]. And, Judges Chen and Stoll observed that the argument had been made in Apple v. Ameranth: [Listen] and [Listen]. To its credit, the USPTO Solicitor’s Office even acknowledged in the oral argument of Apple v. Ameranth that secondary indicia should be considered as long as there is a nexus between the proffered secondary indicia and the claim elements: [Listen].
5) Standard of proof to establish patent ineligibility
The Federal Circuit recently passed up the opportunity to rule that the standard of proof required to establish patent ineligibility must be by “clear and convincing evidence.” See TRADING TECHNOLOGIES INTERNATIONAL, INC. v. CQG, INC., No. 2016-1616 (Fed. Cir. Jan. 18, 2017), at footnote 2:
2. The parties dispute whether the district court erred in requiring proof of ineligibility under § 101 by clear and convincing evidence. Because our review is de novo, and because under either standard the legal requirements for patentability are satisfied, we need not address this dispute.
TRADING TECHNOLOGIES INTERNATIONAL, INC. v. CQG, INC., No. 2016-1616 (Fed. Cir. Jan. 18, 2017).
1. In Bilski v. Kappos, the Supreme Court noted: ”In light of these precedents, it is clear that petitioners’ application is not a patentable “process.” Claims 1 and 4 in petitioners’ application explain the basic concept of hedging, or protecting against risk: “Hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class.” 545 F.3d, at 1013 (Rader, J., dissenting); see, e.g., D. Chorafas, Introduction to Derivative Financial Instruments 75-94 (2008); C. Stickney, R. Weil, K. Schipper, & J. Francis, Financial Accounting: An Introduction to Concepts, Methods, and Uses 581-582 (13th ed.2010); S. Ross, R. Westerfield, & B. Jordan, Fundamentals of Corporate Finance 743-744 (8th ed.2008). “ Bilski v. Kappos, 130 S. Ct. 3218, 3231 (2010).
2. In Alice v. CLS, the Supreme Court noted: ”On their face, the claims before us are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “`a fundamental economic practice long prevalent in our system of commerce.’” Ibid.; see, e.g.,Emery, Speculation on the Stock and Produce Exchanges of the United States, in 7 Studies in History, Economics and Public Law 283, 346-356 (1896) (discussing the use of a “clearing-house” as an intermediary to reduce settlement risk). The use of a third-party intermediary (or “clearing house”) is also a building block of the modern economy. See, e.g., Yadav, The Problematic Case of Clearinghouses in Complex Markets, 101 Geo. L.J. 387, 406-412 (2013); J. Hull, Risk Management and Financial Institutions 103-104 (3d ed. 2012). Thus, intermediated settlement, like hedging, is an “abstract idea” beyond the scope of § 101. ” Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S. Ct. 2347, 2356 (2014).
3. In Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289, 1295 (2012), the Supreme Court observed the factual findings in the patentee’s own patent:
The patent claims at issue here set forth processes embodying researchers’ findings that identified these correlations with some precision.
More specifically, the patents—U.S. Patent No. 6,355,623 (623 patent) and U.S. Patent No. 6,680,302 (302 patent)—embody findings that concentrations in a patient’s blood of 6-TG or of 6-MMP metabolite beyond a certain level (400 and 7000 picomoles per 8×108 red blood cells, respectively) indicate that the dosage is likely too high for the patient, while concentrations in the blood of 6-TG metabolite lower than a certain level (about 230 picomoles per 8×108 red blood cells) indicate that the dosage is likely too low to be effective.
Mayo Collaborative v. Prometheus Labs., 132 S. Ct. 1289, 1295 (2012).
To the extent that the use of these factual observations in Bilski, Mayo, and Alice was mere dicta by the Supreme Court in interpreting its prior decisions, the Federal Circuit noted In Insurance Co. of the West v. US, 243 F.3d 1367, 1372 (Fed. Cir. 2001) that the Federal Circuit is obligated to follow dicta of the Supreme Court in its interpretation of prior cases:
There was a funny sound bite from back in June, shortly after the Enfish decision had been issued. Judge Lourie initially noted that everybody cites Enfish in 101 proceedings. Judge Chen quipped “not so much attention to DDR Holdings though” — Judge Chen authored DDR Holdings for the court. [Listen].
The oral argument in SANY HEAVY INDUSTRY CO., LTD. v. International Trade Commission, No. 2015-1780 (Fed. Cir. Oct. 11, 2016) is a bit of a mystery. It is not available on the Federal Circuit web site. When I inquired about this a few months ago, I was told that it was sealed until it could be redacted. Still, it has not shown up on the court’s web site as of today. The court issued a Rule 36 Judgment in the case; so, the slate is pretty clean in that respect, as well.
To what liberality of construction these claims are entitled depends to a certain extent upon the character of the invention, and whether it is what is termed in ordinary parlance a “pioneer.” This word, although used somewhat loosely, is commonly understood to denote a patent covering a function never before-performed, a wholly novel device, or one of such novelty and importance as to mark a distinct step in the progress of the art, as distinguished from a mere improvement or perfection of what had gone before. Most conspicuous examples of such patents are: The one to Howe of the sewing machine; to Morse of the electrical telegraph; and to Bell of the telephone. The record in this case would indicate that the same honorable appellation might be safely bestowed upon the original air-brake of Westinghouse, and perhaps also upon his automatic brake.
Eibel Process Co. v. Minnesota & Ontario Paper Co., 261 U.S. 45, 43 S. Ct. 322, 67 L. Ed. 523 (1923).
The Patent Office treated the Dickinson invention as a primary or generic one. So did the Court of Appeals of the District of Columbia (25 App. D.C. 316), Judge Rose of the District Court of Maryland (Hildreth v. Lauer & Suter Co., 208 Fed. 1005), and the Circuit Court of Appeals of the Fourth Circuit (Lauter & Suter Co. v. Hildreth, 219 Fed. 753). In this view, after a consideration of the record, and for the reasons stated, we concur. The history of the art shows that Dickinson took the important but long delayed and therefore not obvious step from the pulling of candy by two hands guided by a human mind and will to the performance of the same function by machine. The ultimate effect of this step with the mechanical or patentable improvements of his device was to make candy pulling more sanitary, to reduce 35*35 its cost to one-tenth of what it had been before him, and to enlarge the field of the art. He was, therefore, a pioneer.
Hildreth v. Mastoras, 257 U.S. 27, 34-35 (1921)(emphasis added).
Judge Stoll of the Federal Circuit will be the featured speaker at a CLE event at the Denver Patent Office next Friday. The link is available [here].
The Federal Circuit’s opinion in Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc. should be coming out soon. It has been roughly four months since the oral argument.
I wonder what duty the USPTO owes to the Supreme Court to notify the Court when leadership changes at the USPTO. When certiorari was granted in Bilski, the appeal was captioned Bilski v. Doll [Link]. By the time the decision issued, Director Kappos had taken over and the decision was captioned Bilski v. Kappos. Currently, the Tam (perhaps “Doe” v. Tam) case is pending at the Supreme Court.
If you missed it, the Klingon language copyright case settled last month.
The monkey selfie copyright appeal is pending at the Ninth Circuit.
The Federal Circuit sat en banc today to hear the oral argument of Parkinson v. DOJ. While not an intellectual property case, I think it is always interesting to listen to the CAFC’s en banc proceedings.
The recording of the oral argument is available [here ].
The oral argument of the day is Golden Bridge Technology, Inc. v. APPLE INC., No. 2016-1537 (Fed. Cir. Jan. 27, 2017).
The oral argument in this case raises the issue of whether the Federal Circuit’s decision in Shum v. Intel should be overruled in view of recent Supreme Court decisions. Recent Supreme Court decisions emphasize the discretion of a district court to award attorney’s fees in patent and copyright cases (Octane Fitness and Kirtsaeng II) as well as enhanced damages in patent cases (Halo) — as opposed to more rigid and rules-based approaches.
The recording of the oral argument is available [here].