April 2014

Supreme Court Rejects Federal Circuit’s Exceptional Patent Case Standard

A unanimous Supreme Court announced that the Federal Circuit’s “objectively baseless” test for awarding attorney fees to the prevailing party in patent cases is “unduly rigid, and it impermissibly encumbers the statutory grant of discretion to district courts.”  Octane Fitness, LLC v. Icon Health & Fitness, No. 12-1188, at 7 (U.S. Sup. Ct. Apr. 29, 2014). Per the Court, the analysis “begins and ends” with 35 U.S.C § 285.  Section 285 states that “[t]he court may in exceptional cases award reasonable attorney fees to the prevailing party.”  Id.  The Court looked to the ordinary meaning of “exceptional” in ruling that an “exceptional” case is one that “stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and facts of the case) or the unreasonable manner in which the case was litigated.”  Id. at 7-8.  The Court went on to direct district courts to determine the issue on a cases-by-case basis, considering the totality of the circumstances.  Id.  Moreover, the Court rejected the requirement that an “exceptional case” requires clear and convincing proof.  Id. at 11.  Rather, it need only be shown by a preponderance of the evidence.  Id.       The take away?  As… Read More »Supreme Court Rejects Federal Circuit’s Exceptional Patent Case Standard

Claims Directed to Encoding Digital Data Held to Be Patent-Eligible

A summary judgment motion alleging that claims of U.S. Patent No. 5,446,747 do not recite patent-eligible subject matter has been denied in France Telecom S.A. v. Marvell Semiconductor, Inc., No. 12-cv-04967-WHO (ND Cal. April 14, 2014).  The claims at issue were directed to coding and decoding digital data. In resolving § 101 issues following the “integrated approach” set forth in CLS Bank Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013) (en banc), the court must consider whether the claimed invention fits within one of the four statutory classes set forth in the statute. If so, the court must review whether one of the judicial exceptions (law of nature, abstract idea, natural phenomenon) applies. Software-based patent claims typically involve the abstract idea exception. A patent claim that preempts an abstract idea as a whole is not eligible for patent protection. The court noted the “integrated approach” is not the only test for resolving § 101 issues laid out in CLS Bank. Three Federal Circuit judges, including Chief Judge Rader, prefer the “meaningful limitations” test. The court in France Telecom, however, decided to apply the “integrated approach” since more Federal Circuit judges were persuaded to apply that test in… Read More »Claims Directed to Encoding Digital Data Held to Be Patent-Eligible

PTAB Invalidates First Design Patent in Inter Partes Review

On April 22, 2014, the Patent Trial and Appeals Board (“PTAB”) ruled that a design patent claim in U.S. Patent No. D617,465 (the ‘465 Patent) is unpatentable as obvious.  Munchkin, Inc. v. Luv N’ Care Ltd., No. IPR2013-00072 at 2.  The PTAB’s decision comes less than a year after the proceeding was initiated, and is the first time a design patent was subject to inter partes review. By way of background, in January 2012, Luv N’ Care sued Munchkin and Toys R Us in federal court for infringing the ‘465 patent.  On December 12, 2012, Munchkin and Toys R Us filed a petition requesting inter partes review of the ‘465 patent’s claim.  Munchkin and Toys R Us asserted that certain prior art (depicted below left) rendered the ‘465 patent claim (depicted below right) unpatentable as obvious. After construing the ‘465 claim, the PTAB applied the “ordinary observer” test, and determined there was a reasonable likelihood that the observer would view the designs as substantially the same, and, therefore, be deceived.  On April 25, 2013, the PTAB granted Munchkin’s and Toys R Us’ petition for inter partes review. On April 22, 2014, less than a year later, the PTAB issued its… Read More »PTAB Invalidates First Design Patent in Inter Partes Review

PTAB Finding of Invalidity Does Not Trump Federal Court’s Final Judgment

The Covered Business Method Patent review procedure created by the America Invents Act may be a powerful tool for attacking business method patents, but CBM cannot overcome all court proceedings, at least if Versata Software, Inc. v. SAP America, Inc., No. 2:07cv153-RSP (April 21, 2014), is any guide.  In this case, Magistrate Judge Payne held that a non-final ruling of the Patent Trial and Appeal Board (PTAB) that patent claims were invalid was not a basis for disturbing a final judgment awarding damages to Versata, especially where the award had been scrutinized by the Federal Circuit and the district court.  Moreover, Magistrate Judge Payne stated that his ruling would not have been any different event if the PTAB ruling had been final. Before considering SAP’s motion to vacate the judgment based on the PTAB ruling, the court considered the question of a stay.  SAP had previously sought a stay based on the factors set forth in Section 18 of the America Invents Act, which established the CBM program.  The court had earlier declined to stay the case, and did so again, finding that all factors weighed against a stay. The case had been tried, so there were no efficiencies to… Read More »PTAB Finding of Invalidity Does Not Trump Federal Court’s Final Judgment

Financial Business Method Claims Held Not Patent-Eligible (and Invalid for Indefiniteness)

The clear trend of district courts invalidating business method patent claims has continued in Intellectual Ventures I, LLC v. Capital One Financial Corp., No. 1:13-cv-00740 (E.D. Va. April 16, 2014).  Further, the court provided some lessons for claim drafters in holding claims of one patent invalid for indefiniteness under 35 U.S.C § 112. Intellectual Ventures (IV) alleged that Capital One infringed U.S. Patent No. 7,603,382 (“Advanced internet interface providing user display access of customized webpages”) and U.S. Patent No. 8,083,137 (“Administration of financial accounts”).  The court granted Capital One’s motion for summary judgment of invalidity under 35 U.S.C. § 101 with respect to both patents, and added insult to IV’s injury by also holding certain claims of the ‘382 patent invalid for indefiniteness under 35 U.S.C. § 112(b). The asserted claims of the ‘137 patent were directed to “user-selected pre-set limits on spending that are stored in a database that, when reached, communicates a notification to the user via a device.”  The ‘382 patent, on the other hand, included system and method claims directed to providing “web site navigation data to the user in accordance with personal preferences provided by the user.” Countering Capital One’s arguments of patent-ineligibility, IV argued… Read More »Financial Business Method Claims Held Not Patent-Eligible (and Invalid for Indefiniteness)

Abandonment of Android Trademark Makes Google the Senior User

After the owner of a registration for the “Android Data” trademark alleged that Google infringed the mark, the Seventh Circuit has affirmed the district court’s entry of summary judgment, based on a finding that the “Android Data” mark had been abandoned.  Specht v. Google, Inc., No. 11-3317 (7th Cir. April 4, 2014). Erich Specht’s application “to register the trademark “Android Data” with the United States Patent and Trademark Office . . . was approved in 2002.”  However, at the end of 2002, Android Data Corporation (ADC), to which the mark was assigned, ceased operations.  In 2003, Specht unsuccessfully attempted to find a buyer for ADC’s assets. In December 2007, Specht included the “Android Data” mark in a mass mailing marketing software.  He made no sales. Specht’s next use of the mark was in April 2009, “when he resurrected his website, albeit with a slightly different URL (android-data.com) because his previous URL had by then been registered by a third party.”  Specht had “also assigned the Android Data mark to ADI [The Android’s Dungeon, Incorporated], retroactive to the December 2002 asset transfer.” Google released a public beta version of its Android operating system in November 2007, a month before Specht’s mass… Read More »Abandonment of Android Trademark Makes Google the Senior User

Patent Infringement Claims Requiring a Combination of the Covered Product and Other Components Excluded From Indemnification

A recent decision from the U.S. Court of Appeals for the Eleventh Circuit, Am. Family Life Assur. Co. v. Intervoice, Inc., No. 12-13210, 2014 U.S. App. LEXIS 5585 (11th Cir., March 27, 2014), illustrates the need for careful consideration of intellectual property infringement indemnification clauses, and exclusions thereto, especially for products that do not work or operate independently. American Family Life Assurance Company (“Aflac”) sought indemnity from Intervoice, Inc. (“Intervoice”) for a third party’s patent infringement claims associated with, in part, an interactive voice response system purchased from Intervoice.  The U.S. District Court for the Middle District of Georgia granted summary judgment in favor of Intervoice, finding that Aflac had no right to indemnity for the third party’s claims from Intervoice under the purchase agreement for the system.  On appeal, the 11th Circuit affirmed the District Court’s decision in favor of Intervoice, finding that the indemnity provision of the purchase agreement unambiguously excluded third party’s claims from coverage. Aflac had sought indemnity from Intervoice for patent infringement claims by Ronald A. Katz Technology Licensing LP (“RAKTLP”).  As noted by the 11th Circuit, the parties acknowledged that RAKTLP’s claims against Aflac only covered Intervoice’s system in combination with one or more… Read More »Patent Infringement Claims Requiring a Combination of the Covered Product and Other Components Excluded From Indemnification

Customer Suits Alone Do Not Confer Declaratory Judgment Jurisdiction

DataTern, Inc. sued Microsoft’s and SAP’s customers alleging infringement of U.S. Patent Nos. 5,937,402 and 6,101,502.  Microsoft and SAP then brought actions against DataTern seeking declaratory judgments of non-infringement.  The Federal Circuit affirmed the district court’s finding that it had jurisdiction over all claims except Microsoft’s claims against the ‘402 patent, because DataTern’s claim charts for Microsoft products under the ‘402 patent were based solely on third party, and not Microsoft, materials.  Microsoft Corp. v. DataTern, Inc., No, 2013-1185 (Fed. Cir. April 4, 2014). DataTern had sent Microsoft and SAP customer claim charts “alleging infringement based on the customers’ use of Microsoft’s ADO.NET and SAP’s BusinessObjects software.”  The claim charts used SAP and Microsoft documentation, except that “the ’402 patent claim charts cite only to third-party-provided (i.e., not Microsoft-provided) ADO.NET documentation for several claim limitations.”  In denying DataTern’s motion to dismiss after Microsoft and SAP brought suit, the district court found that the following facts weighed in favor of jurisdiction over the declaratory judgment actions: (1) the claim charts in the customer lawsuits; (2) the indemnification demands from Appellees’ customers; (3) DataTern’s conditional counterclaims; (4) DataTern’s reference to Appellees’ “infringement” in its proposed scheduling order; and (5) DataTern’s refusal to… Read More »Customer Suits Alone Do Not Confer Declaratory Judgment Jurisdiction

Writ of Mandamus in Patent Infringement Venue Transfer Motion

AVS sued Toyota and Gulf States—a Texas-based Toyota dealer—for patent infringement in the Eastern District of Texas.  Toyota and Gulf States filed a motion (1) to sever the claims against Gulf States; (2) to transfer the claims against Toyota to a more convenient forum under 28 U.S.C. § 1404(a); and (3) to stay the claims against Gulf States pending resolution of the transferred case.  The Federal Circuit has now granted Toyota’s request for a writ of mandamus after the district court denied the motion.  In re Toyota Motor Corp., No. 2014-113 (Fed. Cir. April 3, 2014). In denying the transfer motion, the district court concluded that the convenience factors did not indicate that the transferee forum would be “clearly more convenient.”  And, based on the transfer denial, the court also denied the severance-and-stay requests, indicating there was little reason to grant them. Toyota petitioned for writ of mandamus, asking the Federal Circuit, to order the district court to transfer the case under 28 U.S.C. § 1404(a). On review, the Federal Circuit noted that in balancing the convenience factors, the district court found that several favored transfer, two were neutral, but none favored retaining the claims against Toyota in Texas.  While… Read More »Writ of Mandamus in Patent Infringement Venue Transfer Motion

Investors in a Separate Corporation that Files an IPR Petition Are Not Real-Parties-in-Interest

Clouding IP is the assignee of U.S. Patent No. 6,738,799 (the ‘799 patent).  The ‘799 patent is related to a method of file synchronization using a signature list.  Clouding asserted the ‘799 patent in a host of lawsuits, including one against Google.  More than one year after the Google case was filed, Unified Patents filed a petition to institute Inter Partes Review (IPR) of certain claims of the ‘799 patent.  In granting the petition, the Patent Trial and Appeals Board (PTAB) rejected the patent owner’s argument that Google was a real-party-in-interest.  Unified Patents, Inc. v. Clouding IP, LLC, Case IPR2013-00586, (PTAB March 21, 2014 (decision on institution of Inter Partes Review). Clouding had submitted a Patent Owner Preliminary Response, arguing that the IPR should not be instituted because Google, not Unified Patents, was the “real party in interest” under 35 U.S.C. § 312(a)(2).  Because Clouding sued Google more than one year before the Petition was filed, Clouding argued that the Petition was barred under 35 U.S.C. § 315(b). In support of its argument, Clouding pointed to a Bloomberg Online article identifying Google as a founding member of Unified Patents. Clouding also pointed to another article claiming that Unified Patents “counters… Read More »Investors in a Separate Corporation that Files an IPR Petition Are Not Real-Parties-in-Interest