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08.20.17

The Federal Circuit Has Become the Go-To Place For Patent Appeals Arising From USPTO Errors

Posted in America, Courtroom, Patents at 7:19 am by Dr. Roy Schestowitz

Knit US flagSummary: Patent appeals that come to CAFC as a result of bad Patent Office decisions now outnumber the appeals coming from district courts (an extraordinary situation)

THE Court of Appeals for the Federal Circuit (CAFC) is the court which deals with many patent lawsuits and is one level below the Supreme Court. It’s the court which brought software patents to the US, but it’s also the court which now (after Alice at Supreme Court level) invalidates many of these, more so than district (lower) courts do, pro rata.

CAFC is essential to our understanding of US patent law. Litigation is down sharply in the US, at least when it comes to patent litigation, and trolls too are a dying (albeit not dead) breed.

In our efforts to keep abreast of CAFC, this past week we learned about its decision on patents pertaining to chemicals [1, 2] and found this article from James P. Cleary and Paul Brockland of Mintz Levin Cohn Ferris Glovsky and Popeo PC. This new reports confirms to us that the USPTO process is being further restricted/limited by courts:

Though the Federal Circuit’s decision extended waiver to post-merger communications in this case, waiver may not apply in many post-merger discussions. For instance, the Federal Circuit emphasized limiting the scope of waiver based on subject matter and fairness. Accordingly, although attorney submissions during patent prosecution may result in waiver, such waiver is less likely to extend to subsequent patent owners or later discussions with trial counsel. However, waiver may extend if a court finds the application and patent prosecution disclosures were made with an eye toward litigation.

Put in simple terms, submissions to the US patent office regarding legal waivers would be fewer. This might be applicable if, for example, a company like Red Hat gets sold with its patents.

In another new post, this one about Prism (mentioned here a few days ago), it says that the “Federal Circuit has denied Prism Tech‘s petition for en banc rehearing on the question of deference to district court factual-findings that underlay a decision on patent eligibility.”

Jason Rantanen, a Professor at the University of Iowa College of Law, took stock of CAFC decisions and said: “Given the increase in appeals from the PTO over the past few years, this graph is not all that surprising–but it’s still quite dramatic. As of mid-2017, the number of decisions in appeals arising from the PTO has exceeded the number of decisions from the district courts for the first time in the history of the Federal Circuit to my knowledge.”

Yes, and hence the importance of the CAFC’s pattern of decisions. As CAFC is a lot more likely to invalidate software patents (than district courts), this is good news too.

As patents and misconduct go hand in hand sometimes (we covered some examples of that), worth noting is the following report also:

Inequitable conduct in failing to disclose a reference is a defence to patent infringement that requires a showing of the materiality of a withheld reference and specific intent to deceive the US Patent and Trademark Office (USPTO) by withholding the reference during prosecution of the patent application. If proven, inequitable conduct renders the entire patent unenforceable.

In Regeneron Pharmaceuticals, Inc v Merus NV the Federal Circuit surprisingly affirmed that specific intent to deceive the USPTO can be inferred as a result of misconduct during a patent infringement lawsuit, even if such misconduct occurs several years after prosecution of the patent.

The basis for dismissing patent lawsuits seems to have become broader. CAFC in particular seems intolerant of anything that deems patents questionable.

There are exceptions, however, and one of these was covered a few days ago in relation to “programmable operational characteristic” in hardware. In this case, CAFC actually overturned a district court’s judgment in favour of patents, so Patently-O was quick to (cherry-) pick it:

In a split opinion, the Federal Circuit has sided with the patentee and reversed a the [sic] district court judgment that Visual Memory’s patent claims improperly encompass an abstract idea. The opinion filed by Judge Stoll was joined by Judge O’Malley. Judge Hughes wrote in dissent.

Claim 1 of asserted U.S. Patent No. 5,953,740 is directed to a “computer memory system” that includes a “main memory” and also a “cache” both connected to a bus that can then be connected to a processor. The inventive element, is that the cache’s operation is programmable – allowing it to work efficiently with different processors. The claim particularly requires “a programmable operational characteristic of said system determines a type of data stored by said cache.” In the words of the court, “the memory system is configured by a computer to store a type of data in the cache memory based on the type of processor connected to the memory system.”

We remind readers that CAFC was historically very problematic when it comes to patent because it facilitated an explosion in the number of patents. However, the Supreme Court overturned CAFC almost every time in recent years. We hope that CAFC is learning its lessons and correcting its ways to avoid any further embarrassments, namely the Justices calling CAFC out.

It’s time to help the patent bubble implode. It does nobody (except the patent ‘industry’) any favours.

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