Skilled in the Art: The Section 101 Case You've Never Heard Of. Plus, PTAB Predictions

ALM Media

Updated Fri, Mar 30, 2018, 3:33 AM

Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. A small inventor is trying to stop tech industry giants from unwinding his Federal Circuit decision that liberalized patent eligibility. I like one of his arguments, but the other not so much. Plus, the Federal Circuit is reviewing Get Out of PTAB Jail Free cards, and a well-connected Ropes & Gray partner has a bold prediction about the future of PTAB practice. Ping me with any tips or feedback. My email is sgraham@alm.com or you can find me on Twitter.

The Supreme Court's Stealth Patent Eligibility Case

If you're reading this briefing, you're probably familiar with the recent quintet of Supreme Court patent eligibility decisions: Bilski, Mayo, Myriad, Alice and ... Microsoft v. i4i. What's that you say—Microsoft wasn't about Section 101? The phrase "Section 101" only appears in the opinion once? OK, true. But don't tell James Hanrath, the Much Shelist partner representing inventor Steven Berkheimer in the biggest patent eligibility case in the courts right now. Hanrath obtained the bombshell Federal Circuit ruling in February that patent eligibility involves factual issues that sometimes can't be resolved on summary judgment. Now he's trying to beat back efforts by HP and the likes of amici Verizon, Electronic Frontier Foundation and the Computer and Communications Industry Association to reconsider the decision en banc. "In Microsoft, the Supreme Court expressly noted that Section 101 is a 'prerequisite for issuance of a patent,' that it involves factual determinations by the PTO during examination ... and that those same factual questions bear on a Section 101 patent-eligibility invalidity defense," Hanrath states in formal opposition filed Thursday. And that's true if you squint really hard. In the preamble to Microsoft v. i4i, Justice Sonia Sotomayor does explain that PTO examiners make factual determinations when deciding whether a claimed invention clears Sections 101, 102 and 103 and various other conditions of patentability. Two paragraphs later, she notes that the same factual questions "will also bear on an invalidity defense in an infringement action." It doesn't read like a judicial holding, and the rest of the opinion has nothing to do with Section 101. But fortunately for Hanrath, that's not his strongest argument. He also argues that the sometimes highly technical patent eligibility inquiry is "ill-suited for judicial decree based on attorney argument, subjective evaluation, and unstated factual explanation." Now that's got some ring to it. Need more context? I previously reviewed Morgan Lewis & Bockius partner Allyson Ho's en banc petition for HP here.

Ropes Partner: BRI Is on the Way Out at PTAB

The head of Ropes & Gray's PTAB practice has just issued a bold prediction. Scott McKeown says the Patent Trial and Appeal Board is gearing up to adopt aPhilips claim construction standard for post-grant proceedings in place of the more relaxed broadest reasonable interpretation. McKeown notes that new PTO director Andrei Iancu has been emphasizing predictability in patent proceedings. Iancu flagged in his confirmation hearings that aligning PTAB's claim construction with the district court standard would be a step in that direction. Such a change would have significant impact on IPR petitioners, even if the difference between the two standards is minor in practice, McKeown says. For one thing, petitioners would be held to a single construction—they wouldn't be able to advocate for broader constructions at the PTAB for invalidity and then narrower constructions in district court for non-infringement. McKeown says he expects "a fair amount of PTAB recalibration in 2018."

A License to Be Free From IPRs

Patent owners keep coming up with creative ways to stay out of the Patent Trial and Appeal Board. Twice this week, the Federal Circuit has decided to get involved. As I reported Wednesday, the appellate court has scheduled a June hearing on whether the PTAB must stand down when patents are assigned to a Native American tribe that asserts sovereign immunity. Now Ropes' Matt Rizzolo alerts me to MerchSource v. Dodocase VR. The Federal Circuit appears poised in this case to decide whether licensees can bargain away their right to challenge patents in an IPR. Licensee MerchSource, a consumer goods distributor, promised not to challenge the validity of Dodocase's three virtual reality viewer patents. Any disputes arising from the agreement "SHALL BE LITIGATED BEFORE THE COURTS IN SAN FRANCISCO COUNTY OR ORANGE COUNTY, CALIFORNIA" (emphasis in original). The deal went sour. Dodocase sued for declaratory judgment in San Francisco federal court, and MerchSource responded by petitioning for IPR. U.S. Magistrate Judge Elizabeth Laporte enjoined MerchSource from pursuing the IPRs. She ordered the company to email the PTAB and request a conference call during which it would formally seek to dismiss its IPR petitions. MerchSource argued that would violate the public interest in having the PTAB remove weak patents, but Laporte disagreed. "Other third parties may still challenge the validity of the Dodocase Patents through the PTAB, even if defendants have bargained away their opportunity to do so," she wrote in her March 26 order. The Federal Circuit stayed the injunction two days later, pending briefing from Dodocase. Under the America Invents Act, "anyone except the patent owner can seek PTAB review," Renner Otto partner Mark Johnson argues in MerchSource's petition to the Federal Circuit. "The PTAB’s analysis does not depend in any way on the existence or terms of a license or any other contract." Dodocase is represented by Marc Libarle of the Law Offices of Marc Libarle, Timothy Haller of Haller Law and Gabriel Opatken of Noble IP.

Oracle v. Google Fallout

I have to admit it. I was flat out wrong in my pre-argument prediction of how the Oracle v. Google appeal would go down. The reason was I couldn't believe the court would open itself to the criticism of first saying a jury trial was needed to resolve the case, and then rejecting that jury verdict. But that's what they've done, and now we're getting predictable reactions such as this from Techdirt, critiquing not only the result but the appellate process. I have to give the Federal Circuit judges credit for having thick skins. My quick report of the decision is here. Read my interview with Orrick partner Josh Rosenkranz here. For a much deeper exploration of the issues and history behind the case, check out the Harvard Journal of Law and Technology, which devotes its entire spring issue to software interface copyright.

SCOTUS at Full Strength for WesternGeco

Justice Samuel Alito is back on the WesternGeco v. ION Geophysical patent damages case, to be argued April 16. Alito had recused himself when the court granted cert in January. My ALM colleague Tony Mauro has the explanation here.

PTAB Busts Telebrands' Balloons

The patent pendulum is swinging back to patent owners—at least when it comes to water balloon patents. The Patent Trial and Appeal Board has rejected Telebrands Corp.'s challenge to Josh Malone and Tinnus Enterprises' Bunch O Balloons patents. Malone, Tinnus and licensee Zuru Inc. rode the patents to a $12.3 million jury verdict in the Eastern District of Texas last November. The PTAB had instituted PGR proceedings in 2016, casting some doubt on the verdict. But the board issued final written decisions last month turning back Telebrands' challenges. The decisions were made public this week. Sterne, Kessler, Goldstein & Fox's Rob Sterne, Jason Eisenberg, Jonathan Tuminaro, Dallin Glenn and Trent Merrell represented Tinnus before the board, along with Robert Spendlove of Laubscher, Spendlove & Laubscher. Telebrands, of "As Seen on TV" fame, is trying to stop the newest round of litigation by arguing improper venue under the Supreme Court's TC Heartland decision. But U.S. Magistrate Judge John Love found earlier this month that Telebrands has a regular and established place of business in EDTX based on its regular leasing of shelf space from retailers like Walmart and Walgreens. Love observed that Telebrands employs agents who monitor product placement and move products from back rooms to sales floors. Telebrands recently added Irell & Manella's Morgan Chu to a trial team that already features Boies Schiller Flexner, Cooper & Dunham and local counsel Lance Leeand Gregory Love. They're asking U.S. District Judge Robert Schroeder III to overturn Love's finding. A retail store is "not transformed into defendants’ place of business" just because it occasionally works with third parties, they argue.