Does Aatrix Software Provide Software Patent Owners Shelter From The “Alice Storm”?

On February 14, 2018, a Federal Circuit panel in Aatrix Software, Inc. v. Green Shades Software, Inc., No. 2017-1452, overturned a Middle District of Florida decision that held patent claims to systems and methods for importing data into viewable form on a computer to be patent-ineligible under 35 U.S.C. § 101.  According to the majority opinion authored by Judge Moore, the lower court erroneously granted dismissal of the case “in the face of factual allegations” concerning the non-routine and unconventional character of the claimed elements “that, if accepted as true,” would preclude dismissal.  In dissent, Judge Reyna criticized the majority for “attempt[ing] to shift the character of the § 101 inquiry from a legal question to a predominately factual inquiry.”

Indeed, the Aatrix majority opinion represents a significant departure from what the Federal Circuit has repeatedly recognized as the “possible and proper” practice of resolving patent eligibility challenges on the pleadings, a practice that legions of district court decisions have observed over the three years since the Supreme Court’s seminal decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).  Under Alice and its progeny, claims directed to an abstract idea can still be patent-eligible if they contain unconventional or non-routine (“inventive”) elements that individually or in combination limit the application of the idea.  Numerous Federal Circuit panels have affirmed district court ineligibility decisions that were based on the court’s own reading of the elements a patent owner alleged were inventive in light of the patent’s intrinsic record (i.e., the claims, specification, and prosecution history). Continue Reading

Tempnology – The Latest Ruling On Protecting Trademark Licensees in Licensor Bankruptcy

In the US, trademark licensees are not expressly given expanded rights when their licensor files bankruptcy. This is in contrast to licensees of other intellectual property and is the result of the interpretation of Section 365(n) and Section 101(35A) of the Bankruptcy Code.

In Mission Prod. Holdings, Inc. v. Tempnology, LLC (In re Tempnology, LLC), No. 16-9016, the First Circuit Court of Appeals has revisited the question of whether the rights of trademark licensees should be equalized with those of licensees of other IP in licensor bankruptcy. In a recent blog post, Mark Salzberg, a partner in our Restructuring and Insolvency team in Washington, discusses Tempnology and its practical implications for trademark licensees. Click here to read the post.

California Court Weighs In On Patent Venue In Multi-District States

As reported in our prior blog post, the Federal Circuit appears poised to decide whether a corporation can be sued for patent infringement in any federal district in its state of incorporation.  In a recent order in the Central District of California case of Realtime Data LLC v. Nexenta Systems, Inc., No. 2-17-cv-07690-28 SJO (JCx), the court has addressed the issue pending before the Federal Circuit, and concludes the answer is “no.”

“… the Court finds that, in the context of 28 U.S.C. § 1400(b), a corporate defendant ‘resides’ only in the state of its incorporation and, within that state, only in the judicial district in which it maintains its principal place of business.”

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Brand Owners Can Restrict Online Sales To Preserve Luxury Image, says ECJ

Beauty products

The European Court of Justice (“ECJ”) has provided an interesting decision in the recent case of Coty Germany GmbH (“Coty”) v Parfümerie Akzente GmbH (“Parfümerie Akzente”). The case confirms that luxury manufacturers can restrict sales of their products via online marketplaces, in order to preserve the luxury image of the goods.

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Another Domestic Industry Lesson For Section 337 Litigants

The requirement of establishing a “domestic industry” in articles protected by a patent is a unique and important aspect of Section 337 litigation.  Without it, the statute’s exclusionary remedies against imports that infringe a patent cannot be invoked.  The statute enumerates the types of activities that can satisfy the “economic prong” of the domestic industry requirement: namely, significant investment in plant and equipment, significant employment of labor or capital, or substantial investment in engineering, research and development, or licensing.  However, that seemingly simple list has spawned numerous disputes and a significant body of precedent that can act as a counterweight to early disposition of the domestic industry issue, no matter how desirable that goal can be as a cost-saving measure. Continue Reading

USITC Rings In The New Year By Designating An Investigation For Early Disposition

Under a pilot program initiated in 2013, the U.S. International Trade Commission (ITC) may designate an investigation for early disposition if it believes that there is a potentially case-dispositive issue warranting the program’s speedy (100-day) treatment.  Since the program’s inception, the ITC has employed it sparingly, with only a handful of investigations garnering entry into the program.  Indeed, in the last three months of 2017, the ITC issued orders denying requests for entry into the early disposition program in four separate investigations (see our prior posts here and here).

On January 17, 2018, however, the ITC’s Notice of Institution designated Certain IOT Devices and Components Thereof (IOT, The Internet of Things)—Web Applications Displayed On A Browser, Inv. No. 337-TA-1094 for early disposition, just the sixth such designation the ITC has made since the program was implemented.  The designated issue is “whether the complainant has satisfied the domestic industry requirement.”  Chairman Schmidtlein filed a Memorandum indicating she did not support the use of the early disposition program in this investigation because it would impose unwarranted costs given that any decision “is likely to come after March 5, 2018,” which, the respondents contend, is the patent-in-suit’s expiration date.  The presiding Administrative Law Judge subsequently scheduled a hearing for March 14-15, 2018 and has set a May 2, 2018 deadline for his decision.

Victory In Case Applying Wood v Capita Principles

Squire Patton Boggs has secured victory for its client in the Court of Appeal in one of the first cases to apply the Supreme Court’s seminal ruling in Wood v Capita on the approach to contractual interpretation.

What happened in this case?

Squire Patton Boggs acted for Process Components Limited (PCL).

KPTL was a company operating in the field of powder processing and handling. Its business consisted of four areas known as ‘Unit Machines’, ‘Systems’, ‘Mucon’ and ‘Spares’. KPTL owned a number of intellectual property rights, including the brand name ‘KEK’, which was a registered trade mark (No. 2506657).

On 30 June 2009, KPTL went into administration. It entered into two asset sale agreements; one with PCL for the assets of the Mucon and Spares businesses (the ‘PCL Agreement’) and, ten days later, an agreement with KGL for the assets of the Unit Machine and Systems businesses (the ‘KGL Agreement’). PCL and KGL also entered into an agreement by which PCL licensed KGL to use intellectual property rights that had formerly belonged to KPTL (the ‘Licence’).

The asset sale agreements were unclear on which of KPTL’s intellectual property rights had been transferred to PCL and KGL respectively. The High Court held that, properly construed, the PCL Agreement transferred the intellectual property rights in the Mucon and Spares divisions to PCL. KGL had appealed against that, and other aspects of, the High Court’s ruling.

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Here’s a Nug of Information: California Is Now Accepting Cannabis-Related Trademarks

With the New Year, the California Secretary of State announced that it is now accepting applications for cannabis-related trademarks.  This is welcome news for California cannabis businesses, which have struggled to obtain protection for their growing brands.

As previously discussed, to date it has been difficult, if not impossible, for cannabis-related businesses to successfully register trademarks for their products or services at either the federal or state levels.  At the federal level, this is because using or distributing cannabis is still illegal, and the United States Patent and Trademark Office (USPTO) will not register marks for illegal activities.

In the past, California has generally declined to register marks for cannabis-related goods or services—even once those goods and services became legal in California—because its policy was to provide protection consistent with the USPTO.  Thus, the Secretary of State’s new policy to allow such applications is a marked shift that will help cannabis-related businesses protect their increasingly valuable brands. Continue Reading

Look Out Below: The New Year’s Mixed Signals On Patent Eligibility

Challenges to patent eligibility under 35 U.S.C. § 101 have become so routine in patent litigation that it is easy to overlook the opinions that seem to issue almost daily from the district courts and, less frequently, from the Federal Circuit.  If one were to judge solely by the tenor of recent cert petitions filed with the Supreme Court, however, one would likely conclude that the lower courts are still fundamentally confused as to how to properly apply the Supreme Court’s two-step analysis for ineligible “abstract ideas” set forth in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).  For example, an amicus brief in support of a cert petition in Recognicorp, LLC v. Nintendo, No. 17-645 (denied, Jan. 8, 2018) argues that, at least in the context of data processing patents, “[t]he lower courts and the PTO have misunderstood the Mayo-Alice test and have created indeterminate and overly restrictive patent eligibility doctrine under Section 101.”  Other recent petitions in which cert was denied have taken the lower courts to task for either improperly looking beyond the claims to assess patent eligibility or, to the other extreme, looking only at the claims.  This is not to mention the argument that eligibility is not a cognizable defense at all in patent litigation, an issue also denied certiorari by the Supreme Court last year. Continue Reading

Illinois District Court Reaffirms Broader Interpretation Of IPR-Estoppel

As we previously reported (here), the U.S. District Court for the Northern District of Illinois in an August 2017 decision in Oil Dri Corp. v. Nestle Purina Petcare Co., No. 1-15-cv-01067 (N.D. Ill., Aug. 2, 2017) joined the seeming trend of courts interpreting estoppel against patent challengers in inter partes review (IPR) proceedings more broadly than previously had been the case.  According to this broader view, the prohibition provided in 35 U.S.C. § 315(e)(2) against asserting in litigation invalidity grounds that the petitioner “reasonably could have raised during” an IPR is not limited to grounds litigated in the IPR trial phase but covers grounds that could have been raised in the IPR petition had the petitioner been reasonably diligent.  Applying this interpretation, the Court found that estoppel barred the assertion of four of seven patent references that the Court concluded a “skilled searcher conducting a diligent search reasonably could have been expected” to discover.  It reserved its decision on the three remaining references pending further argument.

Now, the Court has issued its opinion on those remaining references, finding that they, too, cannot be asserted in the pending district court litigation because they were shown to be in the IPR petitioner (Purina)’s possession prior to the filing of the IPR petition and therefore “reasonably could have been raised” in the IPR petition.  Despite an intervening decision of another district court that bucked the trend toward broader interpretation of the IPR-estoppel statute (Koninklijke Philips N.V. And Philips Lighting North America Corp., v. Wangs Alliance Corp., No.  1-14-cv-12298-DJC (D. Mass., Jan. 2, 2018) (discussed in a prior post)), the Illinois court doubled down on its view that “the purpose of IPR proceedings” as “an efficient alternative to litigation” justified its approach to IPR estoppel; and, citing a Wisconsin decision, it added that a party who challenged a patent’s validity in an IPR should not be allowed to hold some references “‘in reserve for a second bite at the invalidity apple.’”