NAPP eNews™ for July 2017

Dear NAPP Members and followers,

I hope this find you well, and your practices are thriving. If you are reading this as a new member, or are simply new to the patent profession, my goal is to provide updates on current patent issues important to patent practitioners.

2017 Annual Meeting and Conference in San Jose, July 27-29

Our early registration period has now lapsed; however, there is still time to register!

For those that have already registered, we thank you. For those still on the fence, we believe we have a great program scheduled, and your practice will benefit. But the programming is secondary, in my estimation, to the personal contacts new and renewed.

Thanks once again to Lisa Adelson and her Committee (now a sub-committee of the new Professional Development Committee) for their work thus far, and to Dan Krueger and members of the Marketing Committee for getting the word out.

If you have non-member or former member friends, we offer a 1-day option for $295. This is meant for new practitioners to try-out NAPP, and for former members to renew interest in NAPP. This includes all meals and social activities held that day. Member students and faculty members pay $75 for the full conference, while non-member students and faculty may register for $95. For full details, including hotel, airports, cancellation policy, and more, click here: http://www.napp.org/AMCSanJose. The Marriott block is full but we are negotiating with Marriott to open more rooms at the block rate, and investigating other hotels in San Jose and beyond. For those that prefer something a little different than the name brand hotels, the USPTO Regional Director, John Cabeca, has suggested the Hotel Clariana right next door to the USPTO.
If you have interest in being an Annual Meeting & Conference Sponsor/Exhibitor, please go to AMC San Jose Exhibitor site.

Board Elections

Please remember to vote in our Board elections. Visit www.napp.org/candidate2017 for details on candidates. If you cannot attend the Annual Meeting & Conference in San Jose this year, you can use the proxy voting system.

CAFC: Even groundbreaking discoveries can fall short of statutorily patentable subject matter

As reported by Warren Woessner on JDSUPRA.com, the CAFC has held that a patent claiming a correlation between a blood constituent and cardiovascular disease is not patent eligible under Section 101. In Cleveland Clinic Foundation v. True Health Diagnostics, Appeal no. 2016-1766 (Fed. Cir., June 16, 2017) a Fed. Cir. panel of Judges Lourie, Reyna and Wallach (Reyna writing) held that claims to a method of assessing a test subject’s risk of having atherosclerotic cardiovascular disease by comparing the levels of myeloperoxidase (MPO) in a sample from the test subject with predetermined levels of control subjects was unpatentable under Section 101.
The court wrote that “just like Ariosa, the method starts and ends with naturally occurring phenomena with no meaningful non-routine steps in between—the presence of MPO in a bodily sample is correlated to its relationship to cardiovascular disease. The claims are therefore directed to a natural law….The process steps here merely tell those ‘interested in the subject about the correlations that the researchers discovered.”’

Does not the US Constitution, Art. I, Section 8, Clause 8 grant Congress the power "To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries?"

Recent Congressional Hearings on Patent Issues

On June 13, the United States House of Representatives Committee on Judiciary, Subcommittee on Courts, Intellectual Property, and the Internet, chaired by Rep. Issa, R-CA, held discussions supposedly on the affect of the recent SCOTUS decision TC Heartland regarding proper venue for patent infringement cases. However, as pointed out by Steve Brachmann writing on IP Watchdog®, the discussion was mainly about the supposed scourge of “patent trolls”, and what further amendments to patent laws could be made to reduce this supposed problem. I encourage readers of this newsletter to read Bachmann’s commentary.

http://www.ipwatchdog.com/2017/06/18/house-ip-subcommittee-curb-patent-trolls-after-tc-heartland-decision/id=84640/

Professor Adam Mossoff (George Mason University, Antonin Scalia Law School), who spoke at last year’s NAPP AMC, noted that as used by many testifying before the subcommittee, the phrase “patent troll” “includes individuals, startups, universities and licensing operations. Licensing has been a key component of what has been the success of the U.S. patent system in driving our innovation economy for well over 200 years,” he said. Mossoff noted that one important point was that there are no actual rigorous studies following standardized norms providing statistical analysis to conclude that there has been widespread abusive litigation. He also pointed out that the current “troll” definition would apply to famed American inventors like Thomas Alva Edison and Nikola Tesla. “I never thought I’d hear Edison called a troll before Congress,” Issa said, chuckling in response. He also got a good laugh to hear Mossoff later cite his own study of 1,700 patent applications that received patents in Europe and China but not in the U.S.

Continued Prof. Mossoff:

“The decision in TC Heartland is very concerning given the erosion of patent rights” in the United States, noting the recent IP index released by the U.S. Chamber of Commerce which ranked the U.S. patent system as the 10th-strongest system in the world, tied with Hungary. “Adding TC Heartland to this mix further contributes to this deeply disturbing decline of what was once a gold standard patent system,” Mossoff said. “The advocates for more restrictive venue do not acknowledge the resulting costs to inventors, startups, small businesses, universities… But like the economic law of supply and demand, refusing to acknowledge the costs neither negates them nor makes them go away as a policy concern.”

Of course NAPP members have a vested interest in their clients seeking patents, but the increased erosion of patent rights, indeed the erosion of patentable subject matter and what constitutes infringement, should be a concern for all, not only those interested in strong patents rights. The turn toward trade secrets and secrets in general obviously leads to less disclosure of innovation, less designing around of valid patents, and ultimately less competition. It seems to me that if the real issue those proponents of the “patent troll” dialogue want is more competition, they should be on the side of reasonable scope patents and licensing, not secrets.

E.D. TX: Perception v. Reality

In the above-mentioned discussion of the TC Heartland case, there was a lot of discussion of the Federal District Court for the Eastern District of Texas (EDTX) being “patent friendly” and “patentee friendly”. There is also the perception that all cases are heard in the small East Texas town of Marshall. Reality check: the E.D. TX hears patent cases in Sherman, Plano, Texarkana, and Beaumont, Texas, as well as Marshall. These are not small towns. See for example: http://www.planotexas.org/133/Leading-Employers
http://www.texoma.cog.tx.us/departments/planning-development/community-economic-development/texoma-economic-development-district/industry/major-employers/

I also researched (shout out to JurisNotes) reported EDTX cases having the words “patent” and “invalid” since the Alice decision. There have been 15 reported EDTX case decisions with opinions; of these, 12 had validity determinations; of these, 7 held the patent claims invalid or ineligible. So at least since Alice, my research indicates that defendants, not plaintiffs, have about 60% chance of success on validity and eligibility.

Those practicing in the software patent arts may be interested in the Motio v BSP Software (E.D.TX. 2016) opinion. Again, thanks to JurisNotes, the asserted claim 1 of US Patent 8,285,678 was directed to the abstract idea of maintaining versions of electronic documents. However, it was the provision of an "automated agent" to solve the problem of a business intelligence system lacking native version control that amounted to significantly more than a patent on the idea of maintaining versions of electronic documents.

Claim 1. In a general purpose computer, a method for providing automatic version control to a business intelligence system, comprising:
creating an initial version of a business intelligence artifact in the business intelligence system, wherein the business intelligence artifact is a user-authored object that produces output when the business intelligence artifact is executed in the business intelligence system, and wherein the business intelligence artifact is selected from the group consisting of: a report specification and an analysis cube;
providing an automated agent that interfaces with the business intelligence system to provide automated version control to the business intelligence artifact; the automated agent independently performing the steps of:
automatically storing the initial version of the business intelligence artifact with a version control system;
detecting a request to the business intelligence system to modify the initial version of the business intelligence artifact to create a subsequent version of the business intelligence artifact that includes the requested modification; and
automatically storing the subsequent version of the business intelligence artifact in the version control system.

The automated agent consisted of software that interfaced with the business intelligence system. The claims of the patent described an invention that served as an addition to a business intelligence system, rather than claiming a monopoly on all version control systems. The invention did not simply use a computer to automate what was done previously, but instead improved upon what was previously done with computers, solving a computer specific problem (citing the DDR Holdings opinion for support). Moreover, the patent did not claim version control generally, but rather a specific method, using an automated agent distinct from a business intelligence system to improve the functionality of that system. Therefore, the claims described a particular method of providing one type of version control that did not preempt every application of the idea in a business intelligence system. This meaningfully limited the abstract idea of maintaining versions of electronic documents. At the very least, the patent disclosed a solution for the problem of providing version control to a business intelligence system that did not provide native version control.

STRONGER Patents Act of 2017

My initial reading of the STRONGER Patents Act of 2017:

1. Overrules Cuozzo Speed (BRI shall be used in IPR/PGR, institution decisions not appealable) and installs Phillips standards for interpreting claims (plain ordinary meaning consistent with the specification as understood by person of ordinary skill).
2. Provides patentees the right of interlocutory appeal to the CAFC of PTAB institution decisions, which may be granted in the discretion of the CAFC upon certain conditions (risk of “immediate, irreparable” harm to patentee, important issue of patent law, or institution was “manifestly erroneous”).
3. Provides patent owner more right to amend claims during an instituted IPR/PGR, and patentee may request PTAB to submit amended claims for review (“Expedited Patentability Report” - EPR) by examiner and right to appeal of examiner’s ruling to the PTAB and then CAFC.
4. Intervening rights, similar to reissue, for claims subject to EPR.
5. Attempts to eliminate multiple IPRs/PGRs on same claims for same reasons.
6. Bars institution of, stays, or terminates an IPR/PGR in light of prior civil court final judgment or ITC validity holding.
7. PTAB judges involved in institution decision barred from hearing/deciding merits during an instituted IPR/PGR.
8. Ex parte reexamination barred if filed after civil action service of complaint + 1 year.
9. Reinstalls injunctions: for claims proven infringed, not invalid and not unenforceable, courts shall assume irreparable injury and no adequate remedy at law.
10. For process patent claims, removes requirement that patent owner show a “single entity” practices all steps to prove another party is liable as a contributory or induced infringer.
11. Enhances micro-entity definition.
12. Expedited civil court proceedings for patent infringement suits against “small businesses”.
13. Targets senders of “Rogue and Opaque Letters” under section 59(a)(1) of FTC Act, and would preempt states laws that attempt to do the same.

Thank You!

I will be stepping down as NAPP President after the AMC. As outgoing president, I just wanted to say thanks to my fellow officers and board members, our Executive Director John Meidl and his predecessor Suzanne Morris, and Ralph Bizzarro at Capital Hill Management, and all devoted volunteers of the organization for their hard work the last two years. NAPP literally exists through the work of volunteers, the committees, and the board. I will remain on the board and look forward to working with the next president and board.

Respectfully,
Jeffrey L. Wendt
President