Podcast # 10: Hepburn’s Choice and Patent Venue

In which we discuss the Supreme Court’s recent decision in TC Heartland v. Kraft Foods (May 22, 2017).

Intro music is “Rollin at 5” Kevin MacLeod (incompetech.com). Licensed under Creative Commons; By Attribution 3.0; creativecommons.org/licenses/by/3.0/

Contact Iain Cunningham by email at iaincunningham@me.com or on Twitter at @icunning. Tom Vigdal is on Twitter @vigdal.

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Economic Inequality v. Economic Unfairness

Why should we talk about law and how it can be used to create wealth versus being used for rent-seeking purposes?  A couple of reasons quickly come to mind.  First, many politicians are lawyers and one of their jobs is to make the lives of their constituents  better.  Utilizing those legal backgrounds to figure out innovative ways to grow the pie seems like a thing worth doing.

Second, the mood of the current day, and perhaps for roughly the last decade, is that we live in a time of vast economic inequality and that that inequality will lead to our demise.  I, and others, believe this to be an incorrect view.  As this paper points out, what people are unhappy about is economic unfairness, which is different from economic inequality.  Again, wealth creation, if done correctly, versus further rent-seeking from lawyers writing the laws could turn this around.

Showing possession of a coffee filter system: Rivera v. ITC

Written description decisions are unusually fact intensive. The court must answer (1) what exactly was invented? and (2) what exactly was claimed? Then the court must dissect the differences between the invention and the claims.

A patent has an adequate written description if it “reasonably conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date.”

In Rivera v. ITC, the patent concerned a coffee brewer that could accept both “cup” and “pod” containers. A “cup” is a small, self-contained plastic cartridge. A “pod” is a small disc-shaped filter containing coffee grounds. Cups and pods hold coffee grounds differently, so it’s a bit of a trick to develop a brewer that can use both.

But Rivera took their claim on a cup-or-pod brewer and asserted that a loose-grounds-inside-a-cup apparatus infringed. This was too far for the ITC and ultimately the Federal Circuit panel:

[T]he question is whether a pod adaptor assembly intended to allow compatibility between distinct brewing systems, also supports an undisclosed configuration that eliminates a fundamental component of one of those systems (i.e., the “pod”) through integration. It does not.

I’ve long supported meaningful enforcement of the written description requirement: Inventors should get patents on what they actually invented. The written description requirement helps enforce that basic (and fair) requirement.

 

Growing the Pie

Interesting paper putting forth the legal innovations that led to the birth of the corporate form, which allowed long-term capital commitments and brought wealth to a great many.

In an era of seemingly endless rent-seeking, it’s important to be reminded of the possibilities of legal innovation leading to wealth creation.

Edging towards a bright-line rule for CBM eligibility: Secure Axcess v. PNC Bank

Back in November 2016, the Federal Circuit narrowed the scope of patents eligible for Covered Business Method review. They held that a patent is not eligible for CBM review just because it could involve a financial transaction. Instead, the patent must have a claim that actually contains a financial activity element.

The Federal Circuit’s 2-1 decision in Secure Axcess v. PNC Bank reaffirms that narrowing, and adds that the litigation history of the patent (here targeting financial institutions) is also not relevant:

[A] patent owner’s choice of litigation targets could be influenced by a number of considerations, such as the volume of a particular target’s perceived infringement; the financial condition of the target; which targets are most likely to be willing to settle rather than bear the cost of litigating; available and friendly venues; and so on.

But Judge Lourie dissented, arguing that the patent specification and litigation history clearly described a patent on a “financial product or service,” regardless of whether the claims specifically include a financial transaction.

Will we have a bright-line rule, or an “all the circumstances” test? So far the bright-line rule has the upper hand.

An opportunity to re-read MedImmune: ArcelorMittal v. AK Steel

A complicated decision by the Federal Circuit gives us all an opportunity to review the MedImmune standard. Prior to MedImmune a licensed party could not bring an invalidity suit because it need not fear infringement (i.e., no case or controversy). MedImmune loosened that standard and essentially set forth a “look at all the circumstances” test.

So what if a party kinda asserts patent claims, but it’s really not clear, and then later gives a covenant not to sue. Somewhat predictably the “all the circumstances” test leads to a 2-1 split in ArcelorMittal v. AK Steel. The panel ends up disagreeing on whether the circumstances of a “covenant not to sue” moot the underlying controversy.

Aaaaaand… that’s really all you need to know unless you want the complicated details of this case.

When the PTO will listen to you, but the Federal Circuit won’t: Phigenix v. Immunogen

In Phigenix, Inc. v. Immunogen, Inc., a Federal Circuit panel concluded that a company can have standing to initiate an IPR against a patent, but not have standing to appeal the results of that IPR to the Federal Circuit. This standing gotcha arises because the Article III “case or controversy” requirement requires that a party:

must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [appellee], (3) that is likely to be redressed by a favorable judicial decision.

In this case Phigenix was a third-party biotechnology company in the same space as the patent owner, and initiated an IPR that the PTO ultimately closed after concluding that the claims were not obvious. Phigenix then of course sought to appeal that decision to the Federal Circuit under the relevant statute that says, “A party to an inter partes review . . . who is dissatisfied with the final written decision of the [PTAB] . . . may appeal the [PTAB]’s decision only to the . . . Federal Circuit.”

Not so fast. The Federal Circuit held that Phigenix could appeal the result, but that didn’t mean it had standing to actually get a decision:

Phigenix does not contend that it faces risk of infringing the ’856 patent, that it is an actual or prospective licensee of the patent, or that it otherwise plans to take any action that would implicate the patent.

Phigenix tried some other arguments surrounding standing, but the Federal Circuit methodically shut these down as well based on relatively solid Supreme Court jurisprudence. It’s hard to say this case is wrong given the case law, but it is no doubt frustrating to see patent decisions dodging the merits of patent validity. These decisions have major public consequences even if they are (very) technically advisory with respect to the advocating party.