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2 Quarterly Federal Circuit and Supreme Court Review - Impacts on Intellectual Property September 23, 2015 Presented By: Marc Lorelli Co-Chair Litigation MLorelli@BrooksKushman.com Frank A. Angileri Co-Chair Post-Grant Proceedings 2 FAngileri@BrooksKushman.com

3 Agenda Divided Infringement: Akamai Techs., Inc. v. Limelight Networks, Inc. PTAB Trial Practice: Versata Development Group, Inc. v. SAP America, Inc., and In re Cuozzo Speed Technologies, LLC 3

4 Akamai Techs., Inc. v. Limelight Networks, Inc. Direct infringement in divided infringement situations U.S. Patent No. 6,108,703 Method of delivering website content using geographically-distributed Content Delivery Network ( CDN ) 4

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8 Akamai Techs., Inc. v. Limelight Networks, Inc. Direct infringement in divided infringement situations U.S. Patent No. 6,108,703 Claims require tagging data elements (objects) for delivery via CDN network (typically performed by website owner) Claim Language: for a given page... tagging the embedded objects to be served from different locations 8

9 Akamai v. Limelight Prior Cases Case Akamai I, 629 F.3d 1311 (Fed. Cir. 2010) Akamai II, 692 F.3d 1301 (Fed. Cir. 2012) (en banc) Limelight v. Akamai (Akamai III), 134 S. Ct (2014) Akamai IV, 786 F.3d 899 (Fed. Cir. 2015) Akamai V, 2015 WL (Fed. Cir. Aug. 13, 2015)(en banc) Result Direct infringement based on actions by third parties requires principal/agent relationship: single entity rule Liability may be based on active inducement, 271(b) Indirect infringement impossible without direct infringement; Akamai II vacated and remanded Reaffirms single entity rule, liability requires principal/agent relationship, contractual relationship, or joint enterprise Per curiam decision vacating Akamai IV 9

10 Akamai V Section 271(a) is not limited solely to principal-agent relationships, contractual arrangements, and joint enterprise, as the vacated panel decision held. Rather, to determine direct infringement, we consider whether all method steps can be attributed to a single entity. 10

11 Limits of Direct Infringement Liability? Defendant may be liable for direct infringement of method claim if: 1. It performed all the recited process steps; or 2. Steps performed by third parties are attributable to the defendant 11

12 Attribution Scenarios Questions of Fact Direction or Control of Recited Steps: Principal/Agent Relationship, Contractual Arrangement, or Defendant conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance Joint Enterprise 12

13 Joint Enterprise Joint Enterprise requires: 1. an agreement, express or implied, among the members of the group; 2. a common purpose to be carried out by the group; 3. a community of pecuniary interest in that purpose, among the members; and 4. an equal right to a voice in the direction of the enterprise, which gives an equal right of control. 13

14 Significance Federal Circuit backs away from strict application of single entity rule Application will be fact-intensive Limelight provided detailed, mandatory step-bystep instructions to tag content; If Limelight s customers do not follow these precise steps, Limelight s service will not be available. 14

15 A Moving Target? Federal Circuit makes it clear that in the future other factual scenarios may warrant a finding of divided infringement. Clients must continue to assess the risk of liability resulting from the sale of products that may be used by customers to practice patented processes 15

16 Client Advice: Liability Risk In many settings, it may be practically not feasible to avoid liability risk as attributable is a question of fact If feasible, avoid detailed instructions directing third parties to perform recited operations If feasible, avoid user agreements that condition receipt of benefit on compliance with instructions, or disclaim obligation if instructions not followed 16

17 Client Advice: Avoid the Need for Divided Infringement If possible, claim processes in ways that can be practiced by single actors either by a single competitor or actions attributable to it through well-established contractual relationship or agency principles. Akami example: tagging the embedded objects... Modification: embedded objects are enabled to be tagged Liability for active inducement or contributory infringement will not be available in many cases due to the high intent standard. Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct (2011) 17

18 AIA PTAB Trials Available as of 9/16/2012 Three formats Inter partes review (IPR) Covered business method (CBM) Post-grant review (PGR) for AIA FITF patents 18

19 Federal Circuit Reviews PTAB Practices In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268 (Fed. Cir. Jun. 8, 2015) Versata Development Group, Inc. v. SAP America, Inc., 793 F.3d 1306 (Fed. Cir. July 9, 2015). 19

20 In re Cuozzo Speed Technologies, LLC U.S. Patent No. 6,778,074, entitled Speed limit indicator and method for displaying speed and the relevant speed limit. IPR proceeding PTAB ruled that 3 claims were invalid as obvious PTAB applied grounds not raised in petition 20

21 Federal Circuit Panel Decision February 4, 2015 divided decision, the Fed Cir ruled: PTAB decision to institute IPR proceeding was not appealable, either prior to or after the PTAB s final decision. See 35 U.S.C. 314(d). Broadest reasonable interpretation is proper claim construction standard for IPR. PTAB properly denied Cuozzo s request to amend because the proposed claims were broader than the original claims in some respects Affirms final determination that the three claims were obvious. 21

22 Decision on Request for Rehearing Court declines rehearing en banc in 6-5 vote Judge Dyk argued: Congress well aware of USPTO BRI rules AIA delegates to USPTO adoption of rules govering PTAB trials Inappropriate for court to act with proposed reform legislation pending in Congress. 22

23 Decision on Request for Rehearing Chief Judge Prost dissented: IPR intended to be a trial-like alternative, therefore district court claim construction standard should apply. Legislative history silent BRI inappropriate where patentee lacks liberal ability to amend claims 23

24 Versata Development Group, Inc. v. SAP America, Inc. CBM review Affirms PTAB final decision that Versata s pricing method an ineligible abstract idea, applying two-step Mayo/Alice analysis. 24

25 Decision to Institute Trial Not appealable prior to final decision. St. Jude Medical, Cardiology Division, Inc. v. Volcano Corp., 749 F.3d 1373 (Fed. Cir. 2014) (decision not to institute not appealable) In re Dominion Dealer Solutions, LLC, 749 F.3d 1379 (Fed. Cir. 2014)(decision not to institute review not subject to challenge through mandamus). 25

26 35 U.S.C. 324 Institution of post-grant review (a) Threshold. The Director may not authorize a postgrant review to be instituted unless the Director determines that the information presented in the petition filed under section 321, if such information is not rebutted, would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable. (e) No Appeal. The determination by the Director whether to institute a post-grant review under this section shall be final and nonappealable. 26

27 35 U.S.C. 325(d) (d) Multiple Proceedings. Notwithstanding sections 135 (a), 251, and 252, and chapter 30sections 135 (a), 251, and 252, and chapter 30, during the pendency of any post-grant review under this chapter, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the post-grant review or other proceeding or matter may proceed, including providing for the stay, transfer, consolidation, or termination of any such matter or proceeding. In determining whether to institute or order a proceeding under this chapter, chapter 30, or chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office. 27

28 35 U.S.C. 315(d) (Inter partes review) (d) Multiple Proceedings. Notwithstanding sections 135 (a), 251, and 252, and chapter 30sections 135 (a), 251, and 252, and chapter 30, during the pendency of an inter partes review, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the inter partes review or other proceeding or matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter or proceeding. 28

29 Inventions Eligible for CBM Review CBM available for patents that claim[] a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, but excludes patents for technological inventions. AIA 18(d)(1) 29

30 Inventions Eligible for CBM Review Fed Cir rules that CBM not limited to inventions for financial institutions. The statutory definition makes no reference to financial institutions as such, and does not limit itself only to those institutions. Versata s pricing method more akin to creating organizational management charts and thus not a technological invention. 30

31 Claim Interpretation Standard Court follows Cuozzo Speed, rules that broadest reasonable interpretation is proper claim construction standard for CBM review. 31

32 Patent Eligibility Challenges A petitioner may challenge validity based on eligible subject matter, 35 U.S.C It would require a hyper-technical adherence to form rather than an understanding of substance to arrive at a conclusion that 101 is not a ground available to test patents under either the PGR or [CBM] processes. 32

33 Significance Federal Circuit prone to defer to USPTO on PTAB procedures Decisions recognize that PTAB system was intended to be robust, cost-effective alternative to federal court litigation Federal Circuit reluctant to obstruct PTAB trials with collateral litigation, such as APA or mandamus 33

34 USPTO Proposed PTAB Rule Revisions (August 19, 2015) Clarify that the PTAB will continue to construe claims using the broadest reasonable interpretation standard, except for patents that will expire during proceedings and therefore cannot be amended; Allow patent owners to submit new testimonial evidence, such as an expert declaration, with their opposition to a petition to institute a proceeding; Require a Rule-11 type certification that papers are supported by the facts and law, and not submitted for an improper purpose; Impose word-count limits on the length of most papers. 34

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