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.
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?
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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?
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.
CHIEF JUSTICE ROBERTS: And it seems
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:
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).
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,].
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:
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].
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.
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].
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].
The oral argument of the day is from In re Burgos. This oral argument was particularly interesting for its discussion of the Supreme Court’s Funk Bros. decision. Also, there was some discussion of the USPTO’s subject matter eligibility examples. This is a good oral argument to listen to closely. See if you think the argument presented by the Office is based entirely on the findings and reasoning of the PTAB — or are views of the “Office” or “Solicitor’s Office” interjected to supplement the argument. Shouldn’t the CAFC be basing its review only on the reasoning and facts relied upon by the PTAB.
You can listen to the oral argument here:
You can review the Rule 36 Judgment [here].
The invention sounds interesting. I downloaded the original application from Public Pair. It is available [here].
Update March 31, 2018
I am having a bit of “poster’s remorse” after publishing the above post and listening to the oral argument again. I think the Associate Solicitor actually did a nice job of repeatedly trying to bring the panel back to the reasoning and factual findings of the PTAB. The Federal Circuit panel on the other hand framed a lot of their questions in terms of “What is the Office’s position . . .” with respect to hypotheticals and the Office’s subject matter eligibility examples. That’s all well and good; but, at the end of the day review of agency determinations are supposed to be based on the reasoning and factual findings of the agency tribunal, namely the PTAB.
If you are interested in today’s Federal Circuit decision on copyright fair use in Oracle v. Google, the oral argument is available here:
The Federal Circuit decision is available [here].
Director Andrei Iancu has posted his greetings to the IP world on the USPTO Director’s Blog. You can see his message [here]. He says in part:
We will continue working with inventors, innovators, and entrepreneurs to ensure that when they disclose their inventions, we properly scope and protect their best ideas by granting strong and predictable IP rights. We will also cement our IP system as balanced, efficient, and industry neutral. Whether we’re working with a small inventor with a big idea, or a big company with a small improvement, or everyone else who comes before us, each customer who comes through our doors can be assured that they will receive the highest quality service.
35 U.S.C. §293 is a long-arm statute that applies to non-resident owners of patents. Historically, it allowed non-resident patent owners to be sued in D.C. District Court; however, that was revised to the Eastern District of Virginia with the passage of the AIA. The statute reads:
35 U.S.C. 293 NONRESIDENT PATENTEE; SERVICE AND NOTICE.
Every patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the Eastern District of Virginia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.
(Amended Jan. 2, 1975, Public Law 93-596, sec. 1, 88 Stat. 1949; amended Sept. 16, 2011, Public Law 112-29, sec. 9, 125 Stat. 284.)
See https://www.bitlaw.com/source/35usc/293.html .
It might be of interest to foreign patent owners if someone were to write an article outlining the best jurisdictions where service of process should be designated. Foreign patent owners might prefer the Eastern District of Texas, for example, rather than defaulting to the E.D of Virginia.
The Supreme Court of the United States heard oral argument this week in Upper Skagit Tribe v. Lundgren. The issue presented is:
Whether a court’s exercise of in rem jurisdiction overcomes the jurisdictional bar of tribal sovereign immunity when the tribe has not waived immunity and Congress has not unequivocally abrogated it.
You can listen to the oral argument here: