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05.15.18

The Patent Microcosm is Still Looking for Ways to Bypass CAFC/PTAB Invalidation of Many US Patents

Posted in America, Law, Patents at 7:28 am by Dr. Roy Schestowitz

If they cannot crush PTAB IPRs (Oil States), then they attack the court, and failing that they attack AIA (the law)

Trolly-O Patently-O
As the old saying goes: “Throwing shit against the wall and seeing what sticks

Summary: In pursuit of patent maximalism (i.e. a status quo wherein US patents — no matter their age — are presumed valid and beyond scrutiny) pundits resort to new angles or attack vectors, ranging from the bottom (IPRs) to the top (Supreme Court)

THE week has just begun, but there’s already plenty of news about the Court of Appeals for the Federal Circuit (CAFC), which rules/deems many patents granted by the USPTO to be invalid.

Under the title “CAFC Affirms Rejection of Application for Incorrect Inventorship” Watchtroll has just covered what was covered by Patently-O before. That was yesterday. Patently-O has meanwhile gone on to covering what was covered by Techrights over the weekends. It’s about an HTC case demonstrating the impact of TC Heartland on patent aggression in the US. Here are some key bits:

In re ZTE (Fed. Cir. May 14, 2018) is an important case establishing that the plaintiff has the burden of proving proper venue in patent cases.

In May 2018, the Federal Circuit denied HTC’s writ-of-mandamus request on improper-venue grounds — holding that – like most issues – appeal of improper venue decision should ordinarily wait until final judgment. See, Dennis Crouch, The US Venue Laws Do Not Protect Alien Defendants, Patently-O (May 9, 2018); In re HTC Corp., 2018 U.S. App. LEXIS 12182 (Fed. Cir. 2018). Less than one-week-later, the Federal Circuit has swung the other way — this time granting ZTE’s motion for writ of mandamus on the issue of improper venue. The ZTE panel (Judges Reyna, Linn, Hughes) did not cite HTC, nor are there any overlapping judges with the HTC panel (Chief Judge Prost, and Judges Wallach and Taranto). Of course, TC Heartland was an improper venue case that went to the Supreme Court on mandamus.

[...]

In TC Heartland, the Supreme Court ruled that patent-venue is a unique patent law question. Here, the Federal Circuit has extended that general principle to hold that sub-determinations such as burdens-of-proof related to improper venue challenges are also issues of patent law for the Federal Circuit to decide.

[...]

Here, the district court had placed the burden on the defendant ZTE of proving improper venue – on remand that burden needs to shift. The appellate panel went on to caution the lower court about finding a “regular and established place of business” in E.D. Texas based upon an “arms-length contract for service” with a call center provider.

The bottom line is, aside from the fact that foreign companies have less control over the venue of litigation (we covered this a few days ago), there’s more of a burden on the accused rather than the accuser.

Patently-O then wrote about the America Invents Act (AIA) of 2011. Dennis Crouch noted that a precedent being vacated “means that the “financial services” limitation of the covered-business-method [CBM] provisions are again up for interpretation.” The ‘beef’ of his argument (speaking of IPRs, PGRs and CBMs):

In the America Invents Act (AIA) of 2011, Congress created a trio of AIA-Trials: Inter Partes Reviews; Post Grant Reviews; and Covered Business Method (CBM) Reviews.

The CBM program is particularly targeted at claims for data processing or other operations used in the “practice, administration, or management of a financial product or service” and not covering “technological” inventions. In PNC Bank v. Secure Axcess, the Federal Circuit narrowly interpreted the eligibility for CBM review – holding that the claims themselves must be directed to a financial service. A patent does not qualify for CBM simply because it can be used in the financial service industry.

Patently-O is generally very AIA-hostile, at least in the sense that it attacks PTAB and IPRs routinely (in a thinly-disguised fashion). Anything that casts a shadow on AIA would likely be seen as desirable by Patently-O, which went further yesterday when it wrote about CAFC’s assessment of PGRs. Crouch said that “USPTO is empowered to decide AIA-style patent challenges regardless of whether any actual controversy exists between the patent-challenger and the patent owner.”

This is important because bogus (wrongly-granted) patents need to be squashed even when there’s no court battle, perhaps just threats thereof. In his article “Injured by Estoppel” Crouch says this:

A major limitation on Federal Court policy-setting is the actual-controversy limitation housed in Article III of the U.S. Constitution. “Article III” courts are limited to hearing “actual cases and immediate controversies.” Hollingsworth v. Perry, 133 S. Ct. 2652 (2013). As an executive agency, the USPTO is not so limited. Rather, the USPTO is empowered to decide AIA-style patent challenges regardless of whether any actual controversy exists between the patent-challenger and the patent owner. Thus, when Altair Pharma filed its Post Grant Review petition, the USPTO did not even need to consider whether Altair had any interest in the litigation. However, even in AIA-trials, the case-or-controversy issue arises upon appeal to the Federal Circuit since the Federal Circuit is an Article III court bound by the case-or-controversy jurisdictional limit. Here, the PTAB sided with the patentee Paragon and a major element stumbling block for Altair’s appeal was proving it had standing.

Estoppel can be used to prevent the assessment/trial (or petition/litigation) from proceeding. In this particular case PTAB did not ‘veto’ the examiners, so to speak. The net effect is the same though; as the patent maximalists like to put it, the patent “survived”. If they cannot get rid of PTAB and cannot even slow it down, then “estoppel” and other tricks are likely to be used. Basically anything which can deny patent justice, instead giving leeway to patent maximalists…

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