Top Ten Patent Cases * April 24, 2014

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1 Top Ten Patent Cases * April 24, 2014 Two Supreme Court Merits Arguments Next Week M = S. Ct. Merits Stage P = S. Ct. Petition Stage FC = Federal Cir. x x Conference Scheduled Rank Case Name Issue Status 1 M Nautilus v. Biosig 112(b) Indefiniteness Argument April 28 x 2 M Teva v. Sandoz Appellate Deference (Cybor) Merits Briefing 3 M Limelight v. Akamai Joint Induced Infringement Argument April 30 x. 4 M Alice v. CLS Bank. 101 Patent-Eligibility Awaiting decision 5 M Highmark v. Allcare Rule 52(a) Appel. Deference. Awaiting decision 6 M Octane Fitness 285 Exceptional Case Awaiting decision 7 M NLRB v. Canning Vacancies Reform Act Awaiting decision 8 M Petrella v. MGM Laches Awaiting decision 9 P Baxter v. Fresenius Finality Conference May P Maersk Drilling 271(a) Extraterritoriality CVSG Order outstanding P Kimble v. Marvel Post-Expiration Royalties Response due April 23 FC Consumer W dog v. WARF Post-Grant Standing Awaiting decision P WildTangent 101 Patent-Eligibility Certiorari vote on Hold P Minemyer v. R-Boc Seagate Damages Certiorari vote on Hold P Lighting Ballast Appellate Deference (Cybor) Petition due May 22 P Caret ( Mass. v. Utah ) S. Ct. Original Jurisdiction Response due April 30 P Baxter v. Fresenius Finality Response due April 7 P Rudolph De Novo Review Conference April 25 P NSK v. ITC Appellate Review Response due April 28 P Voda v. Medtronic De Novo Appellate Review Certiorari vote on Hold FC In re Packard 112(b) Indef. (Miyazaki) Awaiting decision P Kilopass v. Sidense Rule 52(a) Appel. Deference Petition due June 8 FC In re Broadcom Supreme Court GVR GVR December 9 P Akamai v. Limelight Joint Induced Infringement Certiorari vote on Hold P Commil v. Cisco 271(b) Scienter Awaiting Conference P Cisco v. Commil Jury Trial Response due April 16 P Bancorp v. Sun Life 101 Patent-Eligibility Certiorari vote on Hold P Kobe Properties Highmark Damages Certiorari vote on Hold P Accenture Global Bilski II Conference May 2 About the List: See the Endnote. TopTen2014Apri24

2 Supreme Court Term ending June 2014 Argument Session Non-Argument Session Conference Certiorari decisions are announced as part of an Orders List issued at 9:30 AM on the first regularly scheduled session (blue or red) following a Conference (green). The Orders Lists are published at Merits decisions are issued on blue or red session days and late in the Term on other dates announced several days in advance by the Court. The decisions are announced in open Court at a session beginning at 10:00 AM, and electronically published by the Court at All cases argued during the current Term will be decided not later than June 30, (In the extremely rare situation where no decision is reached by June, the case can be reset for argument in the next Term.) Supreme Court Merits Decision Scoreboard DECIDED CASES October 2013 Term Case Principal Issue Status 1 Nautilus v. Biosig 112(b) Indefiniteness Argument Apr Limelight v. Akamai 271(b) Induced Joint Infringmt. Argument April 30 3 Medtronic v. Boston MedImmune Burden of Proof DECIDED Jan Alice v. CLS Bank 101 Patent-Eligibility Argument Mar Highmark v. Allcare Rule 52(a) Appellate Deference Argument Febr Octane Fitness 285 Exceptional Case Argument Febr NLRB v. Canning Vacancies Reform Act Argued Jan Petrella v. MGM Laches Argued Jan.21 Discussion of each decided case follows on the next page: 2

3 DECIDED CASES THIS TERM Medtronic v. Boston Scientific: MedImmune Challenge, Burden of Proof In former Top Ten No. (4) Medtronic Inc. v. Boston Scientific Corp., U.S. (2014)(Breyer, J.)(decided January 22, 2014, discussed in Top Ten Patent Cases at p. 3), opinion below, 695 F.3d 1266 (Fed. Cir. 2012)(Linn, J.), a unanimous 9-0 Supreme Court reversed the Federal Circuit in the context of a licensee patent validity challenge under MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118, 128 (2007), to hold that, when a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee. An Anti-Patentee Philosophy at the Supreme Court: Beyond a microscopic legal analysis of the precedents, the Court concludes with a patent policy statement emphasizing the importance of the rights of industry versus the patentee: The public interest, of course, favors the maintenance of a well-functioning patent system. But the public also has a paramount interest in seeing that patent monopolies... are kept within their legitimate scope. Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 816 (1945). A patentee should not be... allowed to exact royalties for the use of an idea... that is beyond the scope of the patent monopoly granted. Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U. S. 313, (1971). And [l]icensees may often be the only individuals with enough economic incentive to litigate questions of a patent s scope. Lear, Inc. v. Adkins, 395 U. S. 653, 670 (1969). The general public interest considerations are, at most, in balance. They do not favor a change in the ordinary rule imposing the burden of proving infringement upon the patentee. Federal Circuit opinion on remand: The Federal Circuit issued its opinion on remand on March 11, 2014, Medtronic Inc. v. Boston Scientific Corp., Fed. App x (Fed. Cir. 2014)(Linn, J.). * * * * * * * * * * * * * * * * * * 3

4 TOP TEN PENDING PATENT CASES (1) Nautilus v. Biosig 112(b) Indefiniteness In Nautilus, Inc. v. Biosig Instruments, Inc., Supreme Court No , opinion below, Biosig Instruments, Inc. v. Nautilus, Inc., 715 F.3d 891, 900 (Fed. Cir. 2013)(Wallach, J.), petitioner reawakens the ghost of United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942), the last major Supreme Court case where claims were invalidated for indefiniteness under what today is 35 USC 112(b). Status: Argument April 28, First Question Presented: Does the Federal Circuit s acceptance of ambiguous patent claims with multiple reasonable interpretations so long as the ambiguity is not insoluble by a court defeat the statutory requirement of particular and distinct patent claiming? The Datamize Line of Case Law: The appellate court below reprised a familiar line of recent case law from the Federal Circuit on indefiniteness: A claim is indefinite only when it is not amenable to construction or insolubly ambiguous. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1347 (Fed. Cir. 2005) (internal quotations and citations omitted). In and of itself, a reduction of the meaning of a claim term into words is not dispositive of whether the term is definite. And if reasonable efforts at claim construction result in a definition that does not provide sufficient particularity and clarity to inform skilled artisans of the bounds of the claim, the claim is insolubly ambiguous and invalid for indefiniteness. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357, 1371 (Fed. Cir. 2008) ( Star Scientific I ) (citations omitted). Thus, a construed claim can be indefinite if the construction remains insolubly ambiguous Star Scientific[, Inc. v. R.J. Reynolds Tobacco Co., 655 F.3d 1364, 1373 (Fed. Cir. 2011)]; see also Exxon Research & Eng'g Co. v. United States, 265 F.3d 1371, (Fed. Cir. 2001) (accepting the district court's claim construction and separately undertaking an analysis of the claims at issue to determine indefiniteness); Union Pac. Res. Co. v. Chesapeake Energy Corp., 236 F.3d 684, , 692 (Fed. Cir. 2001) (same); Minn. Min. and Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 976 F.2d 1559, 1567 (Fed. Cir. 1992) (same). 4

5 Biosig v. Nautilus, 715 F.3d at 898. Seventy-Plus Years Since United Carbon: In 1942 more than seventy years ago the Court in United Carbon the Court invalidated claims under what today is 35 USC 112(b) where such claims create a zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement of claims, [a policy which] would discourage invention. United Carbon Co. v. Binney & Smith Co., 317 U.S. 228, 236 (1942). (text continues on the following page) IPO, ABA, AIPLA: Insolubly Ambiguous Standard Thrown under the Bus: In amici briefs, the three major bar and industry groups known as strong supporters of the patent system Intellectual Property Owners (IPO), the American Bar Association (ABA) and the American Intellectual Property Law Association each found the insolubly ambiguous test of the Federal Circuit too difficult to swallow. Each sought to do damage control so that while it is implicit that each organization sees the Supreme Court has throwing out the Federal Circuit test, defense lines are drawn by the three organizations in an attempt to blunt the outcome of the Supreme Court decision. Achilles Heel of the IPO, ABA and AIPLA: A common thread of the amici is that the prosecution history can be used to interpret the scope of claims. The Achilles heel of this argument is that the prosecution history relied upon by the appellate tribunal was post-grant testimony of the inventor many years after grant. How did the three organizations deal with the fact that the claims could be deciphered only based upon post-grant prosecution history? They ignored the issue. (i) IPO Bluntly Rejects the Insolubly Ambiguous Test: In [the opinion below], the Federal Circuit held that a claim is indefinite under 35 U.S.C. 112 only when it is not amenable to construction or insolubly ambiguous. IPO files this brief because it believes that the Federal Circuit s current insolubly ambiguous standard is not consistent with the language of 35 U.S.C. 112(b) or this Court s precedent. 5

6 (ii) AIPLA Throws Insolubly Ambiguous under the Bus: While th[e] definiteness principles [of the Federal Circuit] are nothing new, shorthand phrases trying to convey what those principles mean can be dangerous. They can take on a life of their own and mislead by their brevity. The Federal Circuit s not capable of construction and insolubly ambiguous language has that tendency and should be disapproved for that reason. Although that language is correct in a sense, it can also suggest that a patent claim is definite so long as a court chooses to adopt any text as a construction. That is not correct. (iii) ABA Explains Away Insolubly Ambiguous as Shorthand : Of the three amici briefs, the American Bar Association does perhaps the best job of damage control of the three organizations. As part of its defense of the current system, it found it necessary to candidly admit the need for patent reform; it invoked reference to the President [having] issued a set of legislative recommendations and executive orders for patent reform. ABA Brief, p. 7. Quite unique as an advocacy piece was Amicus making reference to a New York Times op-ed piece by none other than the Chief Judge of the lower court. Id., pp Yet, ABA could not avoid dealing with the insolubly ambiguous test: [I]nsolubly ambiguous is not an expression of a rigid rule but rather a shorthand manner of summarizing the myriad of ways in which a patent claim can fail to satisfy the definiteness requirement of Section 112. ABA Brief, p. 16. United Carbon, Awakening the Sleeping Giant: The United Carbon case has never been cited by the Supreme Court for the issue of indefiniteness in the entire history of the 1952 Patent Act. Cf. Markman v. Westview Instruments, 517 U.S. 370, 387 n.13 (1996)(citing United Carbon in support of the role of jury and judge). Prior to the 1952 Patent Act United Carbon was cited only twice. See Great Atlantic & Pacific Tea Co. v. Supermarket Equipment Corp., 340 U.S. 147, 149 (1950)(citing United Carbon for the proposition that the [inventive feature] is not mentioned in the claims, except, perhaps, by a construction too strained to be consistent with the clarity required of claims which define the boundaries of a patent monopoly. ); Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1, 12 (1946)(citing United Carbon, 317 U.S. at 236, for the proposition that unless frightened from the course of experimentation by broad functional claims like 6

7 these, inventive genius may evolve many more devices to accomplish the same purpose. ). Persistence Pays Off; Previous Attempts to Rouse the Ghost of United Carbon: Would the Court have sufficient interest to gain four votes for certiorari in an area of law that has been dormant at the Court for more than seventy years? Previous attempts to raise the ghost of United Carbon have failed. Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 655 F.3d 1364 (Fed. Cir. 2011), cert. dismissed under Rule 46.1, R.J. Reynolds Tobacco Co. v. Star Scientific, Inc., 133 S. Ct. 97 (2012); Star Scientific, Inc. v. R.J. Reynolds Tobacco Co., 655 F.3d 1364 (Fed. Cir. 2011), cert. dismissed under Rule 46.1, R.J. Reynolds Tobacco Co. v. Star Scientific, Inc., 133 S. Ct. 97 (2012); Wellman, Inc. v. Eastman Chem. Co., 642 F.3d 1355 (Fed. Cir. 2011); cert. den., Eastman Chem. Co. v. Wellman, Inc., 132 S. Ct (2012); Enzo Biochem, Inc. v. Applera Corp., 605 F.3d 1347, (Fed. Cir. 2010)(Plager, J., dissenting from den. of panel reh g ), cert. den., Applera Corp. v. Enzo Biochem, Inc., 131 S. Ct (2011). (2) Teva v. Sandoz Appellate Deference (Cybor) In Teva Pharms. USA, Inc. v. Sandoz, Inc., Supreme Court No , opinion below, 723 F.3d 1363 (Fed. Cir. 2013)(Moore, J.), petitioner challenges the Federal Circuit standard of appellate deference under Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), as most recently reaffirmed by the appellate tribunal in Lighting Ballast Control LLC v. Philips Electronics North America Corp., F.3d (Fed. Cir. 2014)(en banc). The Teva case represents a continuation of the issue of FRCP 52(a) deference in a case argued earlier this year and now awaiting decision, Top Ten No. (5) Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.,, Supreme Court Status: Merits briefing stage. Certiorari was granted March 31, The case will be briefed over the Spring and early Summer and set for argument this Fall during the October 2014 Term; a decision is expected in the first half of next year before the end of the Term at the end of June

8 Question Presented: Whether a district court's factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires. The writer acknowledges involvement with a party to the proceedings below; he thus offers no comment on what the outcome of this case should be and merely provides the following historical context of Rule 52(a): Historical Background, Rule 52(a) in Dennison: Dennison Mfg. Co. v. Panduit Corp., 475 U.S. 809 (1986), is the first Supreme Court review of a patent issue of the Federal Circuit, and the only merits review of a patent decision of that Court before 1990: The Federal Circuit [in its obviousness ruling] did not mention Rule 52(a), did not explicitly apply the clearly-erroneous standard to any of the District Court's findings on obviousness, and did not explain why, if it was of that view, Rule 52(a) had no applicability to this issue. We therefore lack an adequate explanation of the basis for the Court of Appeals' judgment: most importantly, we lack the benefit of the Federal Circuit's informed opinion on the complex issue of the degree to which the obviousness determination is one of fact. In the absence of an opinion clearly setting forth the views of the Court of Appeals on these matters, we are not prepared to give plenary consideration to petitioner's claim that the decision below cannot be squared with Rule 52(a). Instead, we grant the petition for certiorari, vacate the judgment, and remand the case to the Court of Appeals for further consideration in light of Rule 52(a). Dennison, 475 U.S. at 811. Responsive to Dennison the dean of the Federal Circuit took to the pages of the AIPLA Quarterly Journal: [T]he criticism I hear of the [Federal Circuit] most often is that we have been doing de novo fact finding and delving into the record on our own when we should not. I am probably one of the offenders. But I have to say that I do not know how one can decide whether a finding of fact is clearly erroneous without delving into the record, and surely we have the right to make such a decision. Giles S. Rich, Thirty Years of this Judging Business, 14 AIPLA Q. J. 139, 149 (1986). 8

9 (3) Limelight v. Akamai Joint Indirect Infringement In Limelight Networks, Inc. v. Akamai Techs., Inc., Supreme Court No , opinion below, Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012)(en banc)(per curiam), active inducement infringement of a combination claim was found under 35 USC 271(b) despite the fact that no single party performed each and every element of the combination so that there was no direct infringer under 35 USC 271(a). Status: Merits Argument April 30, Question Presented in Limelight: [The patent claims] a method involving redirecting requests for Internet content and selecting optimal servers. The Federal Circuit acknowledged that neither [the accused infringer] nor customers using [the accused infringer's service directly infringe [the] patent under 35 U.S.C. 271(a) because no one performs all the steps of the patented method. (continued on next page) Finnegan announcement of the Dunner debut: There s a reason Donald Dunner is known as the dean of the patent bar. He s argued more than 160 cases at the U.S. Court of Appeals for the Federal Circuit a record and the Federal Circuit s chief judge has dubbed him a superstar advocate. And at age 82, he told AmLaw, There s a first time for everything. On Feb. 26, Dunner will argue his first case before the U.S. Supreme Court, speaking on behalf of Allcare in the closely watched case Highmark Inc. v. Allcare Health Management Systems, Inc. Dunner prevailed for Allcare before the Federal Circuit. When he appears at the Supreme Court, he plans to take a different approach as the high court focuses on a very specific question, while the Federal Circuit addresses many issues. And, he noted, the Supreme Court is not just there to correct errors, but to decide the law that has far-reaching consequences. In preparing for his Supreme Court debut, Dunner said The time needed to prepare depends on the case. But I always spend as much time as I need to completely master the issues so I will be able to answer any questions that could be asked. Adding, I make every minute count. Finnegan Henderson Website, (reproducing At (Long) Last, a Supreme Court Debut, The AmLaw Litigation Daily (January 28, 2014)). 9

10 Supreme Court Debut, A Possible First Finnegan Win: Donald R. Dunner has had a record number of high profile patent cases at the Federal Circuit but only this year made his Supreme Court argument debut in the Highmark case that was argued February 26th. (In fact, he had also been counsel of record in Limelight but on February 27th the electronic docket sheet of the Supreme Court showed that Seth Waxman has been nominated for counsel of record (a déjà vu situation that reprises what happened in Microsoft Corp. v. i4i Ltd. Partnership, 131 S. Ct (2011).) A Dunner victory as counsel of record in Highmark would represent a first victory for anyone in his firm arguing a patent case before the Supreme Court. As with Microsoft v. i4i, Dunner has been counsel to a winning party where he had been counsel of record at the Supreme Court as in Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005), argued at the Supreme Court by E. Joshua Rosenkranz. The Federal Circuit nevertheless held that [the accused infringer] could be liable, under 35 U.S.C. 271(b), for inducing infringement if (1) it knew of [the] patent; (2) it performed all but one of the steps of the method; (3) it induced its customers to perform the final step of the claimed method; and (4) the customers performed that step. The question presented is: Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. 271(b) even though no one has committed direct infringement under 271(a). (4) Alice v. CLS Bank: 101 Patent-Eligibility In Alice Corp. Pty. Ltd v. CLS Bank Intern., Supreme Court Docket No , opinion below, CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013)(en banc)(per curiam), replacing the vacated panel opinion, 685 F.3d 1341 (Fed. Cir. 2011)(Linn, J.), Petitioner challenges denial of patent-eligibility under 35 USC 101. Status: Awaiting decision (argued March 31, 2014). 10

11 Question Presented: Whether claims to computer-implemented inventions including claims to systems and machines, processes, and items of manufacture are directed to patent-eligible subject matter within the meaning of 35 U.S.C. 101 as interpreted by this Court.? Discussion: Generally, a petition will seek to show a conflict with the Supreme Court or other Circuit Courts of Appeal. Here, instead, the central theme of the petition is that the Federal Circuit is hopelessly, internally conflicted and is unable to provide guidance on software patent eligibility. The petition makes repeated references to the plurality opinion below (Lourie, J.) as presenting an impossible regime for the innovative community to follow: The Federal Circuit has left no doubt that it is irreconcilably fractured. The uncertainty that now plagues and will, absent [Supreme Court] intervention, continue to plague the patent system will cause severe harm and waste for innovators and litigants, as well as lower courts and the Patent and Trademark Office. Moreover, neither the judgment nor the analysis offered in the plurality opinion can be reconciled with this Court s precedents. What makes the current state of legal disarray completely intolerable is that patented inventions are the engine of much of the nation s and the world s economic growth, which will be needlessly stifled unless the standards for patentability are much clearer than they are today. The Court should grant certiorari in order to bring much-needed clarity to the application of section 101 to computer-implemented inventions. (5) Highmark v. Allcare: Appellate Deference (Rule 52(a)) In Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.,, Supreme Court , proceedings below, 701 F.3d 1351 (Fed. Cir. 2012)(Order den. pet. for reh g en banc), panel opinion, 687 F.3d 1300 (Fed. Cir. 2012), the en banc petitioner challenges the Federal Circuit standard of de novo review of a fact-based determination, here, an exceptional case determination under 35 USC

12 Highmark, A first for Donald R. Dunner. See the boxed blue text under No. (3) Limelight. Status: Awaiting decision; argued February 26, (Highmark and Octane Fitness were both argued the same morning). Question Presented: The Patent Act provides that a court in exceptional cases may award reasonable attorney fees to the prevailing party. 35 U.S.C A case is exceptional if it is objectively baseless and brought in bad faith. After living with this case for more than six years, the District Court found that it was objectively baseless and brought in bad faith, and it awarded fees. Over a strong dissent, a Federal Circuit panel reversed, holding that a district court s objective baselessness determination is reviewed without deference. The Federal Circuit denied rehearing en banc by a vote of six to five. One of the two pointed dissents from that denial accurately observed that the decision below deviates from precedent * * * and establishes a review standard for exceptional case findings in patent cases that is squarely at odds with the highly deferential review adopted by every regional circuit and the Supreme Court in other areas of law. The question presented is: Whether a district court s exceptional case finding under 35 U.S.C. 285, based on its judgment that a suit is objectively baseless, is entitled to deference. A Deeply Fractured En Banc Panel: Plural dissenting opinions were issued dissenting from denial of rehearing en banc, including a principal opinion by Moore, J., joined by Rader, C.J., O Malley, Reyna, Wallach, JJ., dissenting from the denial of the petition for rehearing en banc. (6) Octane Fitness 285 Exceptional Case In Octane Fitness, LLC v. Icon Health and Fitness, Inc., Supreme Court No , opinion below, Icon Health & Fitness, Inc. v. Octane Fitness, LLC, 496 Fed. Appx. 57 (Fed. Cir. 2013)(Lourie, J.), Petitioner challenges the Federal Circuit standard for determining whether a case is exceptional under 35 USC 285. Status: Awaiting decision; argued February 26, (Highmark and Octane Fitness were both argued the same morning). 12

13 Question Presented: Does the Federal Circuit s promulgation of a rigid and exclusive two-part test for determining whether a case is exceptional under 35 U.S.C. 285 improperly appropriate a district court s discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants? The Baluch Analysis, Why not the Bar-B-Que Case? There has been much discussion and now legislation in Congress that seeks to modify the standards for attorney fees under 35 USC 285. The question may be fairly asked: If Octane Fitness overturns the Federal Circuit standard, will accused infringers be better off with a judicial result than the statutory fix now pending in Congress? As noted by Andrew S. Baluch, two of the current members of the Court in the Firehouse No. 1 Bar-B-Que case have spoken on this issue while on the D.C. Circuit: in the context of a parallel provision in the Lanham Act: Something less than bad faith, we believe, suffices to mark a case as exceptional..... [W]e think exceptional, as Congress used the word in section 35 of the Lanham Act, is most reasonably read to mean that the word is generally understood to indicate uncommon, not run-of-the-mine. Andrew S. Baluch, Will the Supreme Court Bar-B-Que the Federal Circuit s Exceptional Case Test? Early Views of Justices Ginsburg and Scalia, IP Litigation Current (October 24, 2013), (quoting Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 771 F.2d 521, 526 (D.C. Cir. 1985) (Ginsburg, J.)(Wald, Ginsburg, Scalia JJ., Wald, J., dissenting), rhg. En banc den., 774 F.2d 1180 (1985). In the petition phase, little attention had been paid to the Firehouse No. 1 Bar-B-Que case which was not cited in the petitioner s opening brief in Octane Fitness and was only cited in its Reply Brief as the last case in a string citation (without recognition of the authorship). 13

14 Federal Circuit misses the forest for the trees : In a policy-focused amicus brief by some of America s leading technology companies, a powerful case is presented for repudiation of the rigid Federal Circuit formula for determining when a case is exceptional under 35 USC 285. The Federal Circuit s Section 285 jurisprudence misses the forest for the trees. By cabining the grounds for finding a case exceptional to narrow categories of egregious conduct, the court has lost sight of Section 285 s purpose as an exception to the American Rule when, under the totality of the circumstances, equity requires that the prevailing party not bear some or all of the fees it incurred. To be clear, Section 285 plainly makes the awarding of fees the exception, not the rule. But exceptional is not synonymous with almost never. Fee shifting under Section 285 should be available to district courts in practice, not merely on paper, when sound equitable discretion dictates that a non-prevailing party has acted in a manner beyond the bounds of acceptable litigation behavior and should therefore bear the consequences of its actions by paying some or all of its opponent s reasonable litigation expenses. * * * Amici Companies agree with petitioner that this Court should afford district courts the needed flexibility to award attorney fees under 35 U.S.C. 285 to help deter abusive litigation tactics as Congress intended. This Court should adopt petitioner s equitable discretion test for defining exceptional, and apply it not only evenhandedly to prevailing plaintiffs and defendants alike, but also without regard to status as a practicing or non-practicing entity. Neither party nor patentpracticing status should be factored into the determination of whether a case is exceptional. Instead, exceptional status warranting fees should focus on the specific litigation positions and conduct pressed by the losing party in litigation. Amicus Brief Of 3M, General Electric, Procter & Gamble and Johnson & Johnson in Octane Fitness (December 9, 2013). (7) NLRB v. Canning Vacancies Reform Act In NLRB v. Canning, Supreme Court No , the Court must decide the limits of Recess Appointments to bypass Senate confirmation of government leaders. The Court may shed light on the consequences of such a bypass that may have relevance to the current Administration plan for short term leadership of the U.S. Patent and Trademark Office in apparent violation of the Vacancies Reform Act. Status: Awaiting decision (argument January 13, 2014). 14

15 Questions Presented: The Recess Appointments Clause of the Constitution provides that [t]he President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session. Art. II, 2, Cl. 3. The questions presented are as follows: 1. Whether the President's recess-appointment power may be exercised during a recess that occurs within a session of the Senate, or is instead limited to recesses that occur between enumerated sessions of the Senate. 2. Whether the President's recess-appointment power may be exercised to fill vacancies that exist during a recess, or is instead limited to vacancies that first arose during that recess. A third question is raised by the Supreme Court sua sponte in its Order granting certiorari: In addition to the questions presented by the petition, the parties are directed to brief and argue the following question: Whether the President's recess-appointment power may be exercised when the Senate is convening every three days in pro forma sessions. NLRB v. Canning, 133 S. Ct. 2861, (2013). Vacancies Reform Act Safety Valve: In an Amicus Brief filed by the self-styled Political Scientists and Historians, this group of amici point out that individuals may be appointed with the consent of Congress to serve temporarily in a position if the need is urgent. Federal Vacancies Reform Act, 5 USC 3345 (2012). Someone from within the department can occupy a vacancy for a short time until an actual appointment is made. In this way, Congress allows for the government to continue operating even in emergency or unforeseeable situations and Presidents can keep offices filled whatever the Senate's reasons are for not confirming nominees. Immediately thereafter, this group of amici note that President Obama has already filled 560 vacancies using the Act. See U.S. Gov't Accountability Office, Federal Vacancies Submissions[.] Id. n. 14 (citations omitted) Implications for the Patent Office: The Administration has bypassed the Senate confirmation process for the more than 400 days since Under Secretary Kappos announced his impending resignation. The Administration has followed a unique 15

16 strategy of appointment of a Deputy Under Secretary and simultaneous resultant appointment of an Acting Under Secretary that raise questions of violation of the Vacancies Reform Act. To the extent that the Supreme Court issues guidance as to the consequences of violation of Senate confirmation to appoint an Acting Under Secretary, this may shed light on the consequences of the unique Administration bypass of the Senate confirmation process in the case of the Patent Office. (8) Petrella Laches In Petrella v. Metro-Goldwyn-Mayer Inc., No , opinion below, 695 F.3d 946 (9th Cir. 2012), the Court seeks to resolve an issue of laches in the context of copyright law which could have a spillover impact on the law of laches in patent law under A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc). Status: Argued January 21, 2014; a decision should be forthcoming before the end of June Question Presented: The Copyright Act expressly prescribes a three-year statute of limitations for civil copyright claims. 17 U.S.C. 507(b). The three-year period accrues separately for each act of infringement, even if it is one of a continuing series of acts of infringement. The federal courts of appeals have divided over whether the nonstatutory defense of laches can bar a civil copyright suit brought within the express threeyear statute of limitations. Three circuits forbid any application of laches or restrict the remedies to which it can apply. Two other circuits strongly disfavor laches and restrict it to exceptional circumstances. The Ninth Circuit not only does not restrict laches or the remedies to which it can apply, but has also adopted a presumption in favor of applying laches to continuing copyright infringements. The question presented is: Whether the nonstatutory defense of laches is available without restriction to bar all remedies for civil copyright claims filed within the three-year statute of limitations prescribed by Congress, 17 U.S.C. 507(b). 16

17 Discussion: A close relationship is often perceived by the Court between patent and copyright issues. In the opinion below, the Ninth Circuit relies upon Federal Circuit patent precedent to support its copyright ruling. Petrella, 695 F.3d at 959 (citing the en banc Federal Circuit ruling in A.C. Aukerman, 960 F.2d at 1041, for the proposition that [e]quitable estoppel can be a complete defense against a claim, as to both legal and equitable remedies. ). (9) Baxter v. Fresenius Finality In Baxter Int l, Inc. v. Fresenius USA, Inc., Supreme Court No , proceedings below, Fresenius USA, Inc. v. Baxter Int l, Inc., _ F.3d (Fed. Cir. 2013)(Order), panel opinion, 721 F.3d 1330 (Fed. Cir. 2013)(Dyk, J.), petitioner challenges the decision of a divided panel that determined that a final holding of invalidity in a post-grant proceeding trumps a prior adjudication of validity in a District Court proceeding, resulting in elimination of a final damages judgment of $ 14 million. Status: Conference is scheduled for May 15, If certiorari is granted, the case would be briefed into the summer and argued in the first months of the October 2014 Term that runs through June Questions Presented: Fresenius brought a declaratory judgment action challenging the validity of patents owned by Baxter, and Baxter counterclaimed for infringement. The district court held that Baxter s patents were valid and infringed, and entered judgment awarding past damages, an injunction, and a transitional royalty. The U.S. Court of Appeals for the Federal Circuit affirmed in part and reversed in part. The Federal Circuit held that claims of U.S. Patent No. 5,247,434 are not invalid. But because it invalidated other claims of Baxter s patents, the court remanded solely for recalculation of the transitional royalty and reconsideration of the injunction. On remand, the district court recalculated the transitional royalty and again entered judgment for Baxter. While Fresenius s second appeal was pending, the U.S. Patent and Trademark Office cancelled claims 2631 of the 434 patent based on an ex parte reexamination requested by Fresenius. Over the dissent of four judges who would have granted rehearing en banc, the Federal Circuit held that the PTO s decision required reversal of the judgments against Fresenius. The questions presented are: 17

18 1. Whether an Article III court s final judgment may be reversed based on the decision of an administrative agency. 2. Whether a final determination of liability that has been affirmed on appeal may be reversed based on the decision of an administrative agency merely because an appeal regarding the post-verdict remedy is pending. A Nutshell Primer on Why Certiorari Should be Granted: The only member of the Federal Circuit to have been elevated to that Court from a District Court explains the practical significance of the decision of the Federal Circuit in her dissent from the denial of the petition for rehearing en banc: The majority opinion here, coupled with [Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, 1313 (Fed. Cir. 2013)(en banc)], will interfere with litigants ability to access the courts to redress their grievances in a meaningful way and will drastically limit the case management options available to district court judges. Bosch created an incentive for district courts to bifurcate liability determinations from damages and willfulness trials and all other remedial determinations. Courts will be tempted to try to limit the time and resources spent on patent cases by seeking an interlocutory review of their claim construction and liability determinations. In all but those cases where liability determinations in favor of an alleged infringer are affirmed, however, such bifurcations will drag out the litigation, causing multiple appeals and probably multiple remands. Where that occurs, after the panel opinion in this case, even years of litigated decisions, which may be affirmed piecemeal, could be rendered meaningless by much later PTO decisions. And, when trial courts come to understand the fragility of their judgments, stays in the face of reexaminations which the PTO grants over 92% of the time will become inevitable. Fresenius Order, F.3d at (O Malley, J., joined by Rader, C.J., Wallach, J., dissenting from den. of pet. for reh g en banc)(footnote omitted). 18

19 Petitioner s Introduction: Over the dissent of four judges who would have granted rehearing en banc, the Federal Circuit held that, even where the validity of patent claims has already been affirmed on appeal, the PTO s cancellation of those claims in an ex parte reexamination requires reversal of a final district court judgment if any issue in the district court case remains subject to appeal. Specifically, the Federal Circuit held that in an appeal from a limited remand on post-verdict remedies, Fresenius could rely on the PTO s reexamination decision to negate both the Federal Circuit s prior judgment that Baxter s claims were not invalid and the judgment of past damages that Fresenius had never appealed. This unprecedented reliance on an administrative decision to reopen a final judgment and reverse a determination by an Article III court creates a circuit split, threatens the finality of judicial decisions, raises grave constitutional concerns, and diminishes the stability of the patent system. Federal judges and commentators alike have recognized the significance of the Federal Circuit s decision in this case. Three dissenters from the denial of rehearing en banc noted that [w]ell-established law recognizes finality in situations like the one presented here where the merits are conclusively decided even though other issues may remain. They warned that the majority creates a circuit split on this important issue by adopting a view of finality [that] is significantly out of step with the law as it stands today. A fourth dissenter wrote separately to highlight the constitutional problems created by the Federal Circuit s ruling that an executive branch agency can override the judgments of Article III courts. She warned that the court had weakened the incentive to innovate by reducing the reliability of the patent grant, even when the patent has been sustained in litigation. Id. 95a. She also noted the gamesmanship and abuses that are now facilitated, with no balancing benefit to the public. * * * [T]he Federal Circuit s decision in this case creates a circuit split, presents important and recurring questions regarding the finality of judicial decisions and the relationship between judicial and administrative proceedings, and disrupts the settled expectations of patent owners. 19

20 (10) Maersk Drilling 271(a) Extraterritoriality In Maersk Drilling USA, Inc. v. Transocean Offshore Deepwater Drilling, Inc., Supreme Court No , opinion below, Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340 (Fed. Cir. 2012)(Moore, J.), Petitioner challenges the extraterritorial expansion of United States patent law by expansion of the scope of offshore activity that can result in direct infringement liability under 35 USC 271(a). Status: On October 7, 2013, the Court issued an invitation to the Solicitor General to file a CVSG brief to educate the Court whether the Government recommends grant of review. There is no time limit for a CVSG filing. Question Presented: Whether offering, negotiating, and entering into a contract in Scandinavia to provide services using a potentially patented device constitutes an offer to sell or sale of an actually patented device within the United States, under 35 U.S.C. 271(a). Discussion: As explained in amicus brief, the Federal Circuit considerably expanded the extraterritorial reach of th[e 271(a) offer offer to sell] provision: there can be infringement if negotiations take place anywhere in the world, so long as the potential sale may be in the United States, even if that sale is never consummated. As a result, there can now be liability in circumstances where no activity has ever taken place within the United States. Such an approach is squarely contrary to the Supreme Court s articulation of a presumption against the extraterritorial application of U.S. law. Brief of Intellectual Property Law Professors (original emphasis). The Court at some point will grant certiorari to deal with issues of extraterritorial expansion of 271(a). The question, now, is whether this case is an appropriate vehicle to do so. 20

21 Kimble v. Marvel Post-Expiration Royalties In Kimble v. Marvel Enterprises, Inc., Supreme Court No , opinion below, 727 F.3d 856 (9th Cir (Callahan, J.), petitioner challenges the rule of Brulotte v. Thys that a patentee s use of a royalty agreement that projects payments beyond the expiration date of the patent is unlawful per se. Status: Response due April 23, 2014 (thrice extended). If certiorari is granted, the case would be argued in the October 2014 Term that runs through June Question Presented: Petitioners are individuals who assigned a patent and conveyed other intellectual property rights to Respondent. The [Ninth Circuit] reluctantly held that Respondent, a large business concern, was absolved of its remaining financial obligations to Petitioners because of a technical detail that both parties regarded as insignificant at the time of the agreement. App. 2-3; 23. Specifically, because royalty payments under the parties contract extended undiminished beyond the expiration date of the assigned patent, Respondent s obligation to pay was excused under Brulotte v. Thys Co., 379 U.S. 29, 32 (1964), which had held that a patentee s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se. A product of a bygone era, Brulotte is the most widely criticized of this Court s intellectual property and competition law decisions. Three panels of the courts of appeals (including the panel below), the Justice Department, the Federal Trade Commission, and virtually every treatise and article in the field have called on this Court to reconsider Brulotte, and to replace its rigid per se prohibition on postexpiration patent royalties with a contextualized rule of reason analysis. The question presented is: Whether this Court should overrule Brulotte v. Thys Co., 379 U.S. 29 (1964). Discussion: If this case originated from the Federal Circuit as part of a split opinion, this would be a slam dunk case for grant of certiorari. It is difficult to argue with Petitioner that Brulotte v. Thys is out of step with the current state of the law, a point persuasively argued in an amicus brief by Professor Mark Janis on behalf of a group of leading academics including Professor Rochelle Cooper Dreyfuss. Absent widespread publicity about this case, it is difficult to see grant of certiorari. 21

22 Consumer Watchdog v. WARF Post-Grant Standing In Consumer Watchdog v. Wisconsin Alumni Research Foundation, Fed. Cir. App. No , the Board in an inter partes reexamination had confirmed the patentability of WARF s disputed claims; a key issue raised by the Court on appeal is whether the patent challenger lacks appellate standing under Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). After a merits argument an Order issued: The PTO and the United States are requested to file brief(s) concerning whether Consumer Watchdog has standing to pursue this appeal. [The parties] each may file a responsive brief[.] Order dated December 4, Status: Awaiting decision; second argument March 13, 2014 ( limited to standing)(rader, C.J., Prost, Hughes, JJ.). The parties are invited to participate in oral argument in January [2014]. Order dated December 4, 2013; emphasis added. As of February 7, 2014, no argument had been posted on the Federal Circuit website. Discussion: Patent challenger Consumer Watchdog has a procedural right to appeal to the Federal Circuit an inter partes reexamination defeat at the PTAB, but, given that Consumer Watchdog has no direct stake in the outcome such as by way of use of the invention, the issue is whether Consumer Watchdog has standing to take an appeal to the Federal Circuit. Implications for AIA Post Grant Proceedings: Post grant proceedings under the Leahy Smith America Invents Act Inter Partes Review and Post Grant Review permit public interest groups to challenge patents. If the public interest group loses at the PTAB there is a statutory procedural right to appeal to the Federal Circuit just as there is for inter partes review that is the subject of the Consumer Watchdog case. 22

23 Michelle K. Lee vs. David Kappos One of the signature aspects of the Leahy Smith America Invents Act was the creation of the Post Grant Review system where members of the public are free to challenge the validity of recently granted patents. The ability of the public to appeal an adverse decision favoring the patentee is a cornerstone of this procedure. Whereas the Kappos Administration strongly supported the Post Grant Review system, now, just two years later under an acting-in-fact head of the Agency, this central aspect of the new Post Grant Review system is opposed by the very same Agency that had supported this legislation in the run-up to enactment in September In the context of whether the public has a right to appeal an adverse decision in an inter partes reexamination, the PTO has flipped positions and now argues that the public has no right to appeal absent a certain but undefined level of standing : This Court s jurisdiction extends only to cases and controversies under Article III. Consequently, although PTO may decide questions of patentability in a reexamination proceeding without regard to the requirements of Article III, this Court cannot review PTO s decisions in such a proceeding unless the irreducible minima of Article III are present. Except at the behest of a party with a concrete and particularized interest in the question presented, neither this Court nor any other Article III tribunal has the power to render judgment. WildTangent 101 Patent-Eligibility In WildTangent, Inc.. v. Ultramercial, LLC, Supreme Court No , opinion below sub nom Ultramercial, LLC v. WildTangent, Inc., 722 F.3d 1335 (Fed. Cir. 2013)(Rader, C.J.), previous proceedings, WildTangent, Inc. v. Ultramercial, LLC, 132 S.Ct (2012)(GVR vacating panel opinion, Ultramercial, LLC v. WildTangent, Inc., 657 F.3d 1323 (Fed. Cir. 2011)(Rader, C.J.)), the petition revisits software patent-eligibility under 35 USC 101. Status: Certiorari vote on hold. (WildTangent was considered at the Conference on January 24, 2014, but no decision whether to grant certiorari has been announced. A vote whether to grant certiorari is apparently on hold pending a 23

24 merits decision in Alice v. CLS Bank, which will be argued March 31, 2014, and decided in either late May or in June. If certiorari is granted, the case would be argued in the October 2014 Term that runs through June 2015.) Question Presented: When is a patent s reference to a computer, or computerimplemented service like the Internet, sufficient to make an unpatentable abstract concept patent eligible under 35 U.S.C. 101? The Majority Opinion: In a nutshell, the majority ruled that because eligibility requires assessing judicially recognized exceptions against a broad and deliberately expanded statutory grant, one of the principles that must guide our inquiry is these exceptions should apply narrowly. Indeed, the Supreme Court has cautioned that, to avoid improper restraints on statutory language, acknowledged exceptions thereto must be rare. Ultramercial,722 F.3d at The court added that, [a]s a practical matter, because judicially acknowledged exceptions could eviscerate the statute, application of this presumption and its attendant evidentiary burden is consistent with the Supreme Court's admonition to cabin exceptions to 101. Id. The Author of the Overruled Prometheus Opinion: The third member argued that the majority had an obligation to concisely faithfully follow the rationale of the Supreme Court Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct (2012). Ultramercial,722 F.3d at 1354 (Lourie, J.)( I concur in the result reached by the majority, but I write separately because I believe that we should concisely and faithfully follow the Supreme Court's most recent guidance regarding patent eligibility in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct (2012). It is our obligation to attempt to follow the Supreme Court's guidance in Mayo rather than to set forth our own independent views, however valid we may consider them to be. ) 24