Patent News:

Federal Circuit applies Benson, Alice, in holding bingo patent non-statutory (08/27/14)

1. A system for managing a game of Bingo which comprises:

(a) a computer with a central processing unit (CPU) and with a memory and with a printer connected to the CPU;

(b) an input and output terminal connected to the CPU and memory of the computer; and

(c) a program in the computer enabling:<

(i) input of at least two sets of Bingo numbers which are preselected by a player to be played in at least one selected game of Bingo in a future period of time;

(ii) storage of the sets of Bingo numbers which are preselected by the player as a group in the memory of the computer;

(iii) assignment by the computer of a player identifier unique to the player for the group having the sets of Bingo numbers which are preselected by the player wherein the player identifier is assigned to the group for multiple sessions of Bingo;

(iv) retrieval of the group using the player identifier;

(v) selection from the group by the player of at least one of the sets of Bingo numbers preselected by the player and stored in the memory of the computer as the group for play in a selected game of Bingo in a specific session of Bingo wherein a number of sets of Bingo numbers selected for play in the selected game of Bingo is less than a total number of sets of Bingo numbers in the group;

(vi) addition by the computer of a control number for each set of Bingo numbers selected for play in the selected game of Bingo;

(vii) output of a receipt with the control number, the set of Bingo numbers which is preselected and selected by the player, a price for the set of Bingo numbers which is preselected, a date of the game of Bingo and optionally a computer identification number; and

(viii) output for verification of a winning set of Bingo numbers by means of the control number which is input into the computer by a manager of the game of Bingo.

In Planet Bingo v. VKGS, the Federal Circuit panel (Hughes, Taranto, Bryson) reviewed and unanimously upheld a lower court's determination on summary judgment that a bingo management system is “abstract.” Among the justifications for this ruling:

  • “The district court correctly concluded that managing the game of bingo 'consists solely of mental steps which can be carried out by a human using pen and paper.'”
  • Like the claims at issue in Benson, not only can these steps be 'carried out in existing computers long in use,' but they also can be 'done mentally.' 409 U.S. at 67.”
  • The claims are similar to the claims at issue in Bilski v. Kappos and Alice, which the Supreme Court held were directed to abstract ideas.
    • Managing a game of bingo “is similar to the kind of “organizing human activity” at issue in Alice.

In response to Planet Bingo's argument that in real world use thousands if not millions of preselected Bingo numbers are handled by the claimed computer program making it impossible for the invention to be carried out manually, the court stated:

“But the claimed inventions do not require as much. At most, the claims require 'two sets of Bingo numbers,' 'a player,' and 'a manager.' We need not, and do not, address whether a claimed invention requiring many transactions might tip the scales of patent eligibility, as the claims fall far short of capturing an invention that necessarily handles 'thousands, if not millions' of bingo numbers or players.” (Emphasis added and internal citations removed.)

Supreme Court holds its "nose of wax" and extends "Abstract Idea" to systems (06/19/14)

In Alice Corporation v. CLS Bank, the Supreme Court held that a method of mitigating settlement risk, including steps of creating shadow records for each counterparty in a transaction, obtaining start-of-day balances based on real-world accounts, adjusting the shadow records as transactions are entered, and issuing end-of-day instructions to exchange institutions, using a computer, or a computer system for implementing the method, is an “abstract idea” and therefore not patentable under 35 U.S.C. § 101. The Court further held that,” [t]his court has long 'warn[ed] . . . against' interpreting § 101 'in ways that make the patent eligibility “depend simply on the draftsman's art.”'” Quoting Mayo quoting Flook, “The concept of patentable subject matter under §101 is not 'like a nose of wax, which may be turned and twisted in any direction. . . .' Holding that the system claims are patent-eligible would have exactly that result.”

Sotomayor, joined by Gisburg and Breyer, concurred but focused on the invention being related specifically to business-methods, which they characterize as “processes for organizing human activity” which “[n]ever had been patentable.”

Supreme Court reduces inducement (06/02/14)

In Limelight Networks v. Akamai Technologies (cached), the Supreme Court reversed the Federal Circuit's expansion of the applicability of inducement, which previously held a party can be liable for inducement if no single party performs all the steps in a patented method. The Supreme Court reverses, stating that the “Federal Circuit's analysis fundamentally misunderstands what it means to infringe a method patent. […] …under this court's case law, the patent is not infringed unless all the steps are carried out. This principle follows ineluctably from what a patent is.., and a patentee's rights extend only to the claimed combination of elements, and no further. …there has simply been no infringement of the method in which respondents have staked out an interest, because the performance of all the patent's steps is not attributable to any one person. And as both the Federal Circuit and respondents admit, where there has been no direct infringement, there can be no inducement…under §271(b).”

This ruling presumed that Federal Circuit was correct in it's interpretation of direct infringement under § 271(a) in Muniauction, Inc. v. Thomson Corp., 532 F. 3d 1318 (2008), which states that “the proposition that direct infringement requires a single party to perform every step of the method.” The Supreme Court remanded to the Federal Circuit whether that rule is correct. The Supreme Court held open the door for the Federal Circuit to say that a party could be liable for direct infringement even though they don’t personally perform all the steps. If so, this ruling by the Supreme Court would be moot.

Supreme Court un-defines "definiteness" (06/02/14)

In Nautilus v. Biosig Instruments (cached), the Supreme Court vacated and remanded to the Federal Circuit its reversal and remand of the district court's conclusion that that the phrase “spaced relationship” of electrodes of a heart rate monitor was indefinite. (If the electrodes touched, then that would short the circuit, and the heart rate of a person holding the sensor could not be determined.) The Supreme Court specifically overturns Federal Circuit precedent stating that, a claim is indefinite “only when it is 'not amenable to construction' or 'insolubly ambiguous'” 1). Instead, the Supreme Court holds that § 112 ¶2 requires:

“that a patent's claims, viewed in light of the specification and prosecution history, inofrm those skilled in the art about the scope of the invention with reasonable certainty. The definiteness requirement, so understood, mandates clarity, while recognizing that absolute precision is unattainable. The standard we adopt accords with opinions of this Court stating that “the certainty which the law requires in patents is not greater than is reasonable, having regard for their subject matter.” [Citations omitted].”

Supreme Court denies cert. in Baxter (05/20/14)

In Baxter Corp. v. Fresenius USA Inc., the Federal Circuit allowed a PTO Reexamination proceeding to declare a patent invalid even after a district court found it valid and infringed. In effect, the Federal Circuit allowed the PTO administrative ruling to overrule the district court. Today, the Supreme Court denied a certiorari petition filed by Baxter to appeal that Federal Circuit decision.

Supreme Court rejects "objectively baseless" standard in awarding attorney fees (04/29/14)

In Octaine Fitness v. Icon Health & Fitness, stating that the Federal Circuit's framework for implementing of 35 U.S.C. § 285 is “unduly rigid, and it impermissibly encumbers the statutory grant of discretion to courts,” The Supreme Court unanimously holds that:

an “exceptional” case in § 285 “is simply one that stands out from others with respect to the substantive strength of a party's litigating positoin (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. As in the comparable context of the Copyright Act, ”'[t]here is no precise rule or formula for making these determinations,' but instead equitable discretion should be exercised 'in light of the considerations we have identified.'” Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994).

In Highmark v. Allcare Health Management System, the Supreme Court restates its view in Octane that the determination whether a case is “exceptional” under §285 is a matter of discretion, and therefore the Federal Circuit must defer to the district court's ruling on fee-shifting except where the district court abused its discretion. Stated the court: “We therefore hold that an appellate court should apply an abuse-of-discretion standard in reviewing all aspects of a district court's §285 determination. Although questions of law may in some cases be relevant to the §285 inquiry, that inquiry generally is, at heart, 'rooted in factual determinations,' Cooter, 496 U.S. at 401.”

Some observations regarding Alice v CLS oral arguments (04/02/14)

Some interesting stuff in the transcript of arguments in Alice v CLS Bank before the Supreme Court. The court struggles to articulate how claims that could easily have been rejected under KSR obviousness analysis are unpatentable business method claims under 101.

Privity by way of indemnity obligation may start IPR clock (01/27/14)

In Atlanta Gas Light Company v. Bennett Regulator Guards Inc., the PTAB ruled that, because a privity between an indemnified party and its indemnitor does not begin until the indemnitor's obligation manifests by the indemnified party being sued, the one-year IPR clock did not run out. This suggests that the one-year clock will begin with respect to an indemnitor party upon the indemnified party being sued.

Exceptional "exceptional case" case (12/30/13)

In Kilopass Technology v. Sidense Corporation (cached), the Federal Circuit vacated and remanded a lower court ruling that the case was not exceptional.

Some key findings:

  1. Actual knowledge of objective baselessness of the plaintiff's claims are not required for the case to be exceptional.
  2. The court should not conclude that a case is not exceptional simply upon a finding that there is a lack of proof of subjective bad faith. Quoting Highmark Inc. v. Allcare Health Management, the Court states, “subjective bad faith only requires proof that the “lack of objective foundation for the claim 'was either known or so obvious that it should have been known' by the party asserting the claim.”
  3. Both subjective bad faith and objective baselessness is needed, but a finding of subjective bad faith can be arrived at by “a wide variety of proofs.” The court did not provide specific examples, but concludes with, “the retention of the subjective bad faith requirement may prove to have little effect on this case, as well as many that follow” (emphasis added).
  4. Bad faith and objective baselessness must be proved by clear and convincing evidence; the court notes that circuits are split on this matter.
  5. The court addressed criticism regarding fee shifting directly, noting that fee shifting is appropriate in circumstances other than bad faith/objective baselessness, noting prior decisions where exceptionality was found “where there has been willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Federal Rule of Civil Procedure 11, or like infractions” and reiterated that “[l]itigation misconduct and unprofessional behavior may suffice, by themselves, to make a case exceptional under § 285.”

In a concurring opinion, Judge Rader argued that the law should be changed to provide that objective baselessness be sufficient to support fee shifting, and that proof by a preponderance of the evidence should suffice. Judge Rader also supported a return to the “original standard” for exceptional cases, wherein “interests of the patentee and alleged infringer are adequately taken into account in the required evaluation of the totality of the circumstances.” Under standard, prior to 2005 when it was changed by Brooks Furniture, exceptional cases were found by “willful or intentional infringement, . . . vexatious or unjustified litigation, or other misfeasant behavior” was sufficient, and “unprofessional behavior was also found to be relevant to the award of attorneys' fees, and . . . suffice[d], by itself, to make a case exceptional.”

  • Hal Wegner's take: “The majority provided a detailed analysis of the history of Section 285 and may have, but for constraint against a panel deviating from binding precedent, gone further to reduce the bar to establish liability for Section 285 attorneys’ fees.”
  • I think this case marks a step along a path of liberalizing the standard for exceptional cases by the Federal Circuit. Although not explicitly stated, I think the effect of this decision is that the Federal Circuit is instructing districts to infer subjective bad faith on the basis of objective baselessness. That is, if the plaintiff should have known the case was objectively baseless, then plaintiff exercised bad faith by bringing the case in the first place, and fee shifting is justified.

Fed. Cir. defines "New Grounds" (10/22/13)

The CAFC may provide guidance in its decision In re Lutz Biedermann and Jurgen Harms.

In this case, the PTAB (then referred to as the BPAI) upheld the Examiner's rejection of the same claims on the same art and the same statutory basis, but provided a different rationale, relying on new facts, than the rationale provided and facts identified by the Examiner. The Appellant requested a rehearing, arguing that the Board issued a new ground of rejection. But the Board denied the rehearing and affirmed the examiner's rejection.

Judges Moore, Linn, and O'Malley remanded to the PTAB, stating that: “The articulated reasoning and factual underpinnings of an examiner's rejection are, thus, essential elements of any stated ground of rejection to which applicants are entitled to notice and a fair opportunity to respond” (emphasis added). The court quoted Leitham, 661 F.3d 1316:

[W]hile “the Board need not recite and agree with the examiner's rejection in haec verba to avoid issuing a new ground of rejection,” ”[m]ere reliance on the same statutory basis and the same prior art references, alone, is insufficient to avoid making a new ground of rejection when the Board relies on new facts and rationales not previously raised to the applicant by the examiner. This court's predecessor long acknowledged the right of the Board to make additional findings of fact based upon the Board's own knowledge and experience to fill in the gaps that might exist in the examiner's evidentiary showing. But the Board's power to do so is construed narrowly and when reliance upon such facts changes the thrust of the rejection, the Board's action does everything but cry out for an opportunity to respond.”

Fed. Cir. muddles 101 analysis

In CLS Bank Internat'l v. Alice Corp., the Fed. Cir. issued seven different opinions with the majority opinion by Lourie, Dyk, Prost, Reyna, and Wallach holding that Section 101 subject matter determinations must be made on a case-by-case basis. Stated the court: “Bright line rules may be simple to apply, but they are often impractical and counterproductive when applied to § 101” (Op. p. 17). Instead, the court held that the following analysis should be followed:

  1. First, determine whether the claimed invention fits within one of the four statutory classes set out in § 101.
  2. If so, then do any of the judicial exceptions apply, one of which is “abstractness.” The court acknowledges that “deciding whether or not a particular claim is abstract can feel subjective and unsystematic, and the debate often trends toward the metaphysical, littered with unhelpful analogies and generalizations” but explains “abstractness” only by way of the examples presented by precedents.
  3. Next analyze for preemption: With the pertinent abstract idea identified, the balance of the claim can be evaluated to determine whether it contains additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.

In her dissent, J. Newman found:

In deciding to rehear the patent dispute between CLS Bank and Alice Corporation, the en banc court undertook to remedy distortions flowing from inconsistent precedent on section 101. This remedial effort has failed. This failure undoubtedly reflects the difficulty of the question; I suggest that it also demonstrates that an all-purpose bright-line rule for the threshold portal of section 101 is as unavailable as it is unnecessary. Experience over two centuries of United States patent law supports this conclusion.

BPAI judges "storage medium" per say statutory (old news)

In In Ex Parte Hu, rendered February of 2012, the BPAI held that a claim to a “storage medium” is per se statutory, even without “non-transient” verbiage. Stated the panel:

“We find that the computerreadable storage medium is directed to a tangible storage medium, which can be read by a computer. While a computer-readable medium is broad enough to encompass both tangible media that store data and intangible media that carry a transitory, and propagating signal containing information, a computer readable storage

medium is distinguished therefrom as it is confined to tangible media for storing data.

1) 715 F.3d 891, 898 (2013) (quoting Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1347 (CA Fed. 2005)
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