Archive for April, 2018

“Negative Public Franchise” and “Negative Franchise Right”

Friday, April 27th, 2018

I thought this was interesting — a Google search does not return any results for the terms “negative public franchise” or “negative franchise right.”  We often think of patent rights as negative rights.  So, I was curious if there are any other negative public franchises or negative franchise rights.




Article suggestion: The tax implications of Oil States

Wednesday, April 25th, 2018

Now that we have been told that patents are “public franchises,” it might be useful for someone to discuss the tax implications of the Oil States holding. Does the holding of Oil States require any revision to the tax code? Can a “public franchise” be taxed?  Can an owner of a patent be taxed for both “public franchise” purposes and “personal property” purposes?  Do any companies with large patent portfolios now owe back taxes for failing to pay a “public franchise” tax? Are any owed a refund?  Are some states better for “public franchise” tax purposes than other states?  The Court notes:  “Finally, our decision should not be misconstrued as suggesting that patents are not property for purposes of the Due Process Clause or the Takings Clause.”  What about the taxing and spending clause?

Beyond the tax questions, are there any other complications caused by deeming a patent a “public franchise”?  Residency?  Nationality?  Restraints on alienation?


Totally unrelated issue — if you can’t patent an “abstract idea” because it is “part of the storehouse of knowledge of all men … free to all men and reserved exclusively to none,” should you be able to tax it?

If (a) the FCC grants a public franchise by granting a party sole use to a portion of the radio spectrum and (b) the radio spectrum is a natural phenomenon, is the FCC granting a public franchise to a natural phenomenon?  Why should the FCC be able to grant public franchises on natural phenomenon if the USPTO cannot?

Lucia v. SEC and ALJ independence and accountability

Monday, April 23rd, 2018

There were some interesting questions today in the oral argument of the ALJ case of Lucia v. SEC.  I think it is interesting to look at tangentially related cases to see if they hint where the Court is going with its IP cases.  Several of the questions focused on ALJ independence and accountability.


JUSTICE KENNEDY:  Could you address

14    the question that Justice Kagan and I asked

15    Mr. Perry?  Assume that the perception and fact

16    of fairness and — and impartiality are

17    enhanced by independence.  How does that factor

18    into what you’re arguing, and is it a proper

19    consideration for us in this case?



11             JUSTICE KAGAN:  Mr. Wall, all of these

12    things go to the same thing.  You know, you -­

13    you want to keep decisional independence as

14    something that you’re not interfering with.

15             There are different ways to interfere

16    with decisional independence.  One is by

17    docking somebody’s pay.  One is by having a

18    removal power that you hang over your head.

19    And another is by being the person who gets to

20    decide who gets the job or not.

21             And so all of these things in some

22    manner tie the adjudicator more closely to the

23    political system.  And the APA came up with

24    this foundational compromise which had as a

25    very significant part of it that the hearing

1    examiners, the adjudicators, would have some

2    detachment, would have some insulation from the

3    political system.  Not the way an Article III

4    judge does, but still something.

5             And you want to ratchet that down.

6    And the question is, isn’t that interfering

7    with decisional independence?



8             CHIEF JUSTICE ROBERTS:  One of the

9    principles that caused the drafters to give the

10    authority to appoint officers to the President

11    was the important one of accountability.

12             MR. METLITSKY:  Exactly.

13             CHIEF JUSTICE ROBERTS:  And in this

14    case, if — if the individual were an officer,

15    he would have to be appointed by the

16    Commission, and people would know who was

17    responsible for whatever conduct or misconduct

18    or decisions he would — he would take.

19             But in this case, you don’t have that

20    accountability.  The Commission can say:  Don’t

21    blame us.  We didn’t do it.  The President can

22    say:  Don’t blame me.  I didn’t appoint them.

23    And, instead, it’s something in the

24    administrative bureaucracy which operates as

25    insulation from the political accountability

1    that the drafters of the Constitution intended.





to me, I mean, we’ve heard about the

independence of the adjudicator.  You seem to

be suggesting that he is not an officer because

he doesn’t have the kind of independence that

has been suggested the APA and other things

were designed to promote.

The transcript is available [here].

You can listen to the oral argument here:

Federal Circuit Conflicted over Whether Alice Changed the Law

Saturday, April 21st, 2018

The Federal Circuit’s decision in Voter Verified, Inc. v. Election Systems Software, LLC __ F.3d __ (Fed.Cir. 2018) seems to be in conflict with the Federal Circuit’s earlier decision in INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC., __ F.3d __ (Fed. Cir. 2017).  In Voter Verified, Inc., the court proposes that Alice “did not alter the governing law under §101.”  In contrast, in Inventor Holdings, LLC, the court states that Alice created a “significant change in the law.”  Moreover, the Voter Verified, Inc. decision fails to even mention the court’s earlier decision in Inventor Holdings, LLC.

Reproduced below are portions of the two opinions:

Second, we find that Alice was a significant change in the law as applied to the facts of this particular case. Prior to Alice, the state of the law for computerimplemented business transaction inventions was less than clear, given this court’s divided en banc opinion in CLS Bank International v. Alice Corp., 717 F.3d 1269, 1273 (Fed. Cir. 2013). As we later explained, post-Alice, in Mortgage Grader, Inc. v. First Choice Loan Services Inc., “a § 101 defense previously lacking in merit may be meritorious after Alice. This scenario is most likely to occur with respect to patent claims that involve implementations of economic arrangements using generic computer technology, as the claims do here.” 811 F.3d 1314, 1322 (Fed. Cir. 2016). Like the claims at issue in Mortgage Grader, the ‘582 patent’s claims are directed to an “economic arrangement” implemented using “generic computer technology.” These issues were significant, if not determinative, of the Court’s holding in Alice.

INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC., __ F.3d __ (Fed. Cir. 2017)(slip op. at page 12)(Judges Wallach, Chen (Author), Stoll).

Turning to the first condition, we conclude that Alice, which was decided after the first litigation ended, did not alter the governing law of § 101. In Alice, the Court applied the same two-step framework it created in Mayo in its § 101 analysis. Alice, 134 S. Ct. at 2355 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 77–79 (2012)). The Court stated, “[f]irst, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.” Id. (citing Mayo, 566 U.S. at 77–78). If so, it stated, one must then determine “what else is there in the claims before us?” Id. (quoting Mayo, 566 U.S. at 78). Just as it did in Mayo, the Court characterized the second inquiry “as a search for an inventive concept,” id. at 2355 (internal quotation marks and citation omitted), that is “sufficient to transform the claimed abstract idea into a patent-eligible application,” id. at 2357 (internal quotation marks and citation omit- ted). It is thus evident from the Court’s reliance on Mayo that it was merely applying the same test as it set out in Mayo, and did not materially change it. See id. at 2355, 2357 (citing Mayo for the rule of law). We therefore hold that Alice did not alter the governing law under § 101.

Voter Verified, Inc. v. Election Systems Software, LLC __ F.3d __ (Fed.Cir. 2018)(slip op. at page 7)(Judges Newman, Lourie (Author), Reyna).


Berkheimer Memo

Thursday, April 19th, 2018

Earlier today, the USPTO issued guidance to examiners with respect to Berkheimer v. HP.  You can see the memo [here].


Update 4/20/18:

The USPTO has requested comments on the Berkheimer Memo via a Federal Register notice that is available here:  [Federal Register : Request for Comments on Determining Whether a Claim Element Is Well-Understood,].

WesternGeco, LLC v. Ion Geophysical Corporation

Monday, April 16th, 2018

The Supreme Court heard oral argument today in WesternGeco v. Geophysical.  The transcript of the oral argument is available [here].

The audio of the oral argument is available here:


Oral Argument of the Day: Mobile Telecommunications v. United Parcel Service, Inc.

Thursday, April 12th, 2018

The oral argument of the day is from Mobile Telecommunications v. United Parcel Service, Inc. 

The oral argument recording is available here:

The CAFC’s Rule 36 Judgment is available [here].

Brenner v. Manson — footnote 6.

Saturday, April 7th, 2018

In the Supreme Court’s opinion in Brenner v. Manson, there is an interesting footnote, footnote 6, that makes a comment about whether the then-Commissioner of the USPTO was bound by determinations of the Board of Patent Appeals and Interferences.  The footnote reads:

[6] We find no warrant for this curious limitation either in the statutory language or in the legislative history of § 1256. Nor do we find persuasive the circumstance that the Commissioner may not appeal adverse decisions of the Board of Appeals. 35 U. S. C. §§ 141, 142, and 145 (1964 ed.). As a member of the Board and the official responsible for selecting the membership of its panels, 35 U. S. C. § 7 (1964 ed.), the Commissioner may be appropriately considered as bound by Board determinations. No such consideration operates to prevent his seeking review of adverse decisions rendered by the CCPA.

That remark is informed by the oral argument from Brenner v. Manson.  First, Justice Byron White had this exchange with Paul Bender, arguing on behalf of the USPTO:

Byron R. White:  Mr. Bender, is the Board of Appeals in the Patent Office, under the control of the Commissioner or not?

Paul Bender:  I don’t know what control means —

Byron R. White:  Well I mean that —

Paul Bender:  — the statute says the Commissioner is in charge of the whole Patent Office.

Byron R. White:  Yes.

Paul Bender:  The Board of Appeals is part of the Patent Office.

Byron R. White:  He can’t go up from there, can he?

Paul Bender:  No, he is part of the Board of Appeals.

Byron R. White:  Yes.

Paul Bender:  It would be wholly anomalous after they —

Byron R. White:  That’s what I wanted to know.

Paul Bender:  Yes, there’s no question that he cannot go.

The statute provides —

Byron R. White:  But he’s part of the Board.

Paul Bender:  Yes, he’s a member of the Board.

And I take it the reason is that he’s not only a member of the Board but the Board is under his jurisdiction, he is the head of the Patent Office, it wouldn’t make any sense.

The only reason to which they give is indeed what Mr. Justice White just mentioned.

Namely, that the Commissioner is the — cannot go to the Court of Customs and Patent Appeals, and so they say therefore the Commissioner shouldn’t be able to go to the Supreme Court.

Well, the reason the Commissioner can’t go to the Court of Customs and Patent Appeals is what we’ve just said.

It’s his own decision.

He couldn’t challenge the decision he had just rendered, but the Court of Customs and Patent Appeals can as it has here decide against him.

And in view of that, I see no reason why he shouldn’t then be able to invoke the jurisdiction of this Court.

Later in the oral argument, Dean Laurence, arguing on behalf of the patent applicant, responded with these remarks:

Dean Laurence:  A primary examiner.

And at this point, let me very quickly describe, because I think Mr. Justice White asked a question whether the Board of Appeals was under control of the Commissioner.

Let’s look at the Patent Office for a moment.

We have — when an application is filed, a group of people called examiners and there is of course in the hierarchy a primary examiner.

Now, the primary examiner and all of his helpers are arms of the Commissioner.

The Commissioner is charged with examining the patent.

So as far as we are concerned here, a primary examiner is the Commissioner.

Now, if the examiner by the Commissioner says, “I won’t allow that patent for any reason at all because it’s not in compliance with the Section 112 which says you must fully describe how to make and how to use the claimed invention.”

Or any other reason, then the applicant has recourse to a Board of Appeals.

Now the Board of Appeals is not under the control of the Commissioner.

The Board of Appeals is a separate body.

The members of the board are nominated by the President, confirmed with the advice and consent of the Senate, and they sit as a board.

The Commissioner of Patents is a member of the Board of Appeals but he does not control the Board of Appeals and cannot reverse a decision of the Board of Appeals.

Insofar as I’m aware, it’s never been done.

I do not believe it can be done.


Berkheimer’s brief in response to petition for en banc review

Tuesday, April 3rd, 2018

If you were looking for a copy of Berkheimer’s brief in response to HP’s petition for en banc review in the case of Berkheimer v. HP, the brief is available here: [Berkheimerbrief].

Oil States oral argument

Tuesday, April 3rd, 2018

It looks like it will be a little less than two weeks before the Supreme Court issues any new opinions.  So, with Oil States on the verge of being decided, I thought it might be of interest to re-post the Oil States oral argument.  It is available below:


The transcript is available here: [TRANSCRIPT].