Sovereign Immunity, Tribes, & IPR

tribal lands
Tribal lands in the US

A strange way to help immunize US patents from IPR attack has recently emerged – the “sovereign immunity defense”.

IPR attacks: Since the America Invents Act (ACA) went into effect in 2013, a popular way to invalidate patents has been to challenge them in Inter Partes Review (IPR) proceedings. IPR proceedings are a USPTO (Federal) Patent Trial and Appeal Board (PTAB) proceeding where challengers can argue that a given patent is not novel, or is obvious, in view of various published prior art.

Sovereign Immunity: The Eleventh Amendment to the US Constitution reads: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”

Background: The University of Maryland (UMD) owned patent 7,635,386, covering a method of repairing cardiac valves. In May 2017, UMD successfully overcame an IPR challenge by arguing that UMD, as part of the State of Maryland, was therefore immune from the PTAB and IPR under the Eleventh Amendment (Sovereign Immunity).

OK… maybe so. Certainly UMD was able to cite various cases supporting their view. PTAB agreed and dismissed the challenge.

They did what? Allergan PLC, a multinational pharmaceutical company with its own patents to protect, decided to push this concept to the limit.  Allergan sold some of their patents to the St. Regis Mohawk Tribe (located in New York) and then immediately licensed the patents back again. In September 2017 Allergan then argued that since this tribe is also a sovereign government, “the tribe’s” patents also had sovereign immunity to IPR challenges!

Well, points for creativity! I don’t think anyone has ever thought of this angle before. Certainly the tribe was very happy to supplement its Casino business.

We will have to see how this plays out.  In terms of sovereignty, the tribes’ legal status, “domestic dependent nations”, is best described as “it’s complicated”. Has Allergan invented a new form of “patent laundering“? Patent law just took a bizarre turn.

While the courts sort this one out, enjoy the enclosed map of the continental US, showing the larger tribal lands in color. Are these the new frontier in creative patent law strategies?

Beware the “on-sale bar”

Victim of the on-sale bar

A patent is invalid if the invention was sold more than a year before filing (on-sale bar), and the recent “Helsinn v Teva” case shows that the courts can be harsh.  

A patent applicant can accidentally ruin their own patent in various ways.  In the US, one error is to first sell an invention (presumably in the form of a product), and then wait more than a year to file the patent. This error violates the 35 USC 102 on-sale bar of classic (pre-2012) patent law. This error also violates the latest 2012 AIA version of patent law, which phrases this as “on sale, or otherwise available to the public”.

However, the relationship between an “invention” and a “product” isn’t always clear, and it also isn’t always clear if a “sale” has taken place.  If I privately show you a cardboard box and say “I have an invention inside, want to buy it sometime if it works?”, and you say “Maybe”, is this a sale that invalidates a later patent?  In the event of doubt, how will the courts rule?  Will they err on the side of protecting the patent, or invalidating the patent?

In their May 1, 2017 “Helsinn Healthcare via Teva Pharmaceuticals” decision, the Federal Circuit took a harsh and patent unfriendly approach. Indeed, this ruling was so harsh that Lamar Smith, the Congressional sponsor of the 2012 AIA law, stated that the court was ignoring the intent of Congress.

To greatly simplify the Helsinn case: back in 2001, Helsinn was doing FDA clinical trials on the efficacy of various palonosetron drug formulations to reduce nausea during chemotherapy. During these trials, they signed a supply agreement with MGI (another company) stating that if the FDA approved some of Helsinn’s various drug formulations, and if MGI subsequently made purchase orders for these drug formulations, and if Helsinn subsequently accepted these purchase orders, then Helsinn would sell the drug to MGI. In 2003, after the clinical trials were successful, but before FDA approval, and before any actual product changed hands, Helsinn began filing for various patents.

Teva, a competitor, decided to challenge these patents as being invalid due to the “on-sale bar”. But was there really a sale? Was there an invention yet? Was it disclosed to the public? A lower court ruled in favor of Helsinn, but the Federal Circuit reversed.

The Federal Circuit used the Uniform Commercial Code (UCC – a set of laws intended to “save” ambiguous contracts by automatically supplying missing terms) to argue that there was a “sale” despite all the “ifs” and ambiguity. They then argued that the invention was in the (undelivered) product and that the invention existed before clinical proof that it actually worked.  Strangely, they even argued that the AIA “on sale, or otherwise available to the public” language didn’t apply because… this would change past practice. Apparently Congress, (despite good reasons and clear intent) somehow doesn’t have enough authority to make these changes?

The case is presently being appealed, but the moral is: be careful.

Inventorship and co-inventors

Participants: RRZE (CC BY-SA 3.0) license

US patent inventorship criteria are tricky, but “conception” of the invention and “intellectual domination” are more important than reduction to practice.

If multiple people are involved with your invention, one issue that commonly arises is: “who gets listed as inventor or co-inventor, and in what order?”

For academic and scientific papers, there is a common order – the junior person who did most of the work often goes in front, the senior professor or principal investigator who may or may not have done much work goes at the end, and other persons go in the middle as co-authors according to usually unwritten criteria. So long as no one is seriously offended, the co-author list otherwise doesn’t matter too much.

Many inventors begin their careers by writing academic papers, and often make the mistake of thinking that the same rules apply to patents.

However, patents are different.  You probably wouldn’t let a friend put his name on the deed to your house unless you want to give him co-ownership.  Patents are more like property deeds.  In the US, just who is and who isn’t a patent inventor can make a big difference in terms of who ultimately owns the patent.  As a result, patents have their own set of rules as to who is and who isn’t considered an inventor.

So what are the rules for inventorship? The USPTO rules are covered by MPEP 2137.01 INVENTORSHIP.  These rules were worked out through a number of court cases, and are occasionally a bit fuzzy and open to interpretation.  At the risk of oversimplification, the main idea is that the inventor is the person who conceived of the invention, and not necessarily the person (such as a supervisor) who suggested working on the problem, or the person (such as a technician or programmer) who did the hands-on work to reduce the invention to practice (e.g. make a working prototype). In fact, reduction to practice is usually not necessary.

Other considerations, such as the issue of “intellectual domination”, are also important.  An inventor who is “intellectually dominating” an invention may still be able to use suggestions from others without making them co-inventors.

Things can get tricky. Sometimes the supervisor’s suggestion is really the key insight behind an invention,  making the supervisor an inventor. Similarly, sometimes the person reducing the invention to practice ends up solving unexpected problems, and these solutions form a key part of the invention, making the “technician” an inventor.  Here looking at the invention’s claims can help sort things out.  Who was responsible for what?  Note, however, that claims can change during the examination, and sometimes an inventor can end up being added to an invention, or left on the “cutting room floor” as a result.

In any event, the best time to consider these issues is in advance of filing.  It is also important to discuss assignment in advance of filing as well since the usual goal is to have 100% of the invention assigned to the same persons or organizations.


Goodbye Texas Eastern District


But armadillos love patent trolls!

In the TC Heartland v. Kraft Food case, the Supreme Court ruled that the Eastern District Court of Texas is no longer patent litigation central. Goodbye forum shopping. 

In a strange quirk of patent law, a single judge from Marshall Texas (population 24,000) has been deciding more than 25% of the US patent infringement cases. If you wanted to sue someone for patent infringement and wanted a friendly court, the Eastern District Court of Texas was the place for you.

Put it this way: so much patent litigation happened here that Samsung actually sponsored a local Marshall Texas ice skating rink, just to keep the locals happy.

This is very unusual.  Corporations are typically sued in their state of incorporation or in the primary state where they do business.  However, patent litigation has had its own set of rules.  For nearly a generation, lower courts have interpreted these rules as implying that corporations can be for sued for patent violations nearly anywhere in the US.

It didn’t take long for patent litigation experts to figure out that if this was the rule, then why not sue where the courts are friendliest? This practice is also called “forum shopping”.

The local economy around Marshall Texas had been struggling.  What to do? In what may have been a bit of a “race to the bottom”, the Federal Court and local juries in Marshall Texas became increasingly patent-plaintiff-friendly.  Lots of attorneys with big corporate expense accounts started flying to Marshall.  Good for the local economy, but it starts to look a bit fishy…

In the recent TC Heartland v. Kraft Food decision, the Supreme Court decided that this had to stop.  They ruled that if Congress had intended this sort of thing, Congress would have said so plainly.  They also pointed out that there wasn’t much of a basis for the “file anywhere” interpretation. So goodbye “file anywhere” rule.  And for the most part, goodbye Eastern District Court of Texas.

Going forward, the new hot spots for patent litigation may become Delaware (many corporations are incorporated there), California (high tech industry), and other high-tech areas.

Utility patents

Caveman inventor
Wheel: both a machine and a method!

Utility patents are the best way to protect most inventions. But to get one, you have to convince a USPTO examiner that your application is worthy.

Utility patents are by far the most common type of patent.  In fact, the term “patent” almost always means “utility patent”.  Almost all of the famous patents in history – the telephone, light bulb, transistor, airplane, motion picture, are utility patents.

What is a utility patent?  Under US law, utility patents are the type of intellectual property (IP) that covers: “a new and useful process (e.g. a method of doing something), machine, manufacture, or composition of matter (e.g. a drug), or a new and useful improvement thereof.

Note the underlined new. To get a utility patent application allowed (granted), the applicant has to prove to skeptical USPTO examiners that the invention really is new, and not just a trivial (obvious) tweak to older prior art.

Here “useful” means that the invention must have some actual benefit (isn’t clearly impossible or too illegal) and does more than just being decorative.

Utility patents are often the hardest type of IP to get. USPTO examiners usually attempt to use prior art to reject new applications. They expect applicants to rebut their rejections, often several times, before allowing the application.  This process is called patent prosecution. If the applicant does not successfully rebut the various rejections, the application goes abandoned.

Legally, a US patent gives the owner the right to sue to collect royalties/damages and/or to attempt to block someone else from practicing the invention in the United States, but not internationally. The exact scope of legal protection is determined by the patent claims.

Patent valuation: Patent valuation is dictated in part by the desires of others to practice the invention, the effectiveness of the patent in thwarting these desires (what the claims cover), and the invention’s potential market size. If a particular patent covers an invention that no one else wants to practice, that patent isn’t going to be worth much!

Assuming maintenance fees are paid at 3-4, 7-8, and 11-12 years after issue, US utility patents typically last for 20 years from initial filing, sometimes more if the USPTO has taken too long to review the application. After that, they expire and become public domain.

35 USC 287: Marking inventions

Remember to mark your products!

To avoid damaging your patent rights, mark your products with patent numbers. The law covers devices but not methods, so marking software is a bit tricky.

You probably have noticed that some products are marked with the word “patent” and a list of patent numbers. These are usually written in small type somewhere on the product or on its packaging. If you (as a patent holder) are planning to start producing your own patented products, what happens if you don’t include this marking?

Because it is hard to tell what is and isn’t patented, Congress passed the 35 USC 287 statute (Federal law) to protect the public from accidental patent infringement. The law holds that absent such marking, your ability to recover past damages from an infringer can be very limited.  For example, past damages may only extend back to the time that you first sent a notice letter to the infringer. This law also covers your patent licensees (who often forget such markings) as well, so remember this for license negotiations.  Otherwise, your licensee could end up damaging your rights.

Although traditionally actual patent numbers had to be marked on the product, a few years ago it became OK to just use “virtual marking”. Here, just marking “patent or pat”, followed by a publically accessible web page address, is enough.  Virtual marking has advantages, but make sure the web page is actually “up”.

To prevent inadvertent loss of rights, it may seem safer to always err on the side of marking, but don’t overdo it.  There is a different law, 35 USC 292, designed to protect the public against false patent marking. So the general rule of thumb is to try to provide adequate patent notice, but avoid being deceptive.

35 USC 287 has some “bugs” and “features”

Bugs: Untended consequence — the law somewhat favors patent trolls. A patent holder who doesn’t produce anything (and hence has nothing to mark) can still recover past damages from up to six years earlier.

Features: Because it is hard to affix a mark to a method, 35 USC 287 generally doesn’t apply to methods patents.

But what about software and software implemented inventions? Software patents often contain a mixture of methods claims and device claims. However, software typically runs on (or is stored in) some sort of physical object. So is software covered by 35 USC 287 or not?  If so, what to mark, and how to mark it? What about websites and apps?

The courts have not been consistent here, and the law is still evolving. However, a fair number of court cases have required marking. It is safest to assume that patent marking is likely required, and then examine legal aspects as they apply to the specifics of your situation.

Thales patent eligibility ruling

HMD display
Not the Thales Head Mounted Display!

A recent Federal Circuit case, Thales Visionix Inc. v United States, continues the process of restoring sanity to the ongoing “Alice” patent eligibility mess.

As previously discussed, since the Supreme Court’s 2014 “Alice” decision, patent law has been burdened with an unworkable “is it abstract?” test for patent eligibility. This test is similar to a medieval test to determine witches:  Step 1:determine if the test subject is a witch abstract”;  Step 2:if so, does the witch float? is there something more?”

The Federal Circuit, charged with cleaning up patent law, has been slowly chipping away at this nonsense. In two earlier cases (Enfish and Rapid Litigation), the Federal Circuit established at least a few reasonable step 1 rules (such as read the entire claim), and now we have another.

Thales Visionix had a patent on a motion-tracking Head Mounted Display (HMD).  This patent claimed a HMD arrangement of inertial sensors and signal processing elements, used in the F-35 fighter jet. Any enemy pilot blown up by this HMD system might not consider this to be “abstract”, but a lower US court was not so easily impressed. They used their own “Alice: it’s abstract” weapon to shot down the HMD patent.

In the absence of rules (the Supreme Court thoughtfully declined to provide any), lower courts have often used a type of “guilt by association” logic, where if a given patent claim has some elements in common with another claim previously ruled to be abstract, then that claim is also abstract. The lower court argued that the Thales patent claims were abstract because the claims allegedly “used mathematical equations (previously determined to be abstract) for determining the relative position of a moving object to a moving reference frame”.

However the Federal Circuit disagreed.  They determined that just because a claim contains a patent ineligible (abstract) concept (e.g. mathematical equations) does not mean that the entire claim is (step 1) “abstract.” Rather, the question is if the patent ineligible concept (math, natural law) is being used to improve some other technique. If so, then the claim as a whole is not abstract. This is similar to their earlier, more biotech-focused, ruling in the Rapid Litigation case.

So as a medieval logic analogy, just because a woman has a cat does not automatically mean that the woman is a witch, if the cat is unusually good at catching mice. If improved mouse catching can be shown, the step 1 conclusion is that the woman is not a witch. There is no need to go on and subject the poor woman to a step 2 “witch float” test.  This is good, because there is a high casualty rate at step 2.

Patent claim charts

Patent claim chart, with one row not matching
Patent claim chart, with one row not matching

Think that someone is infringing on your patent?  Worried you are infringing, or want to show a patent reads on prior art?  Analyze with patent claim charts.

The basic idea behind a patent claim chart is to first break a given patent claim down into a series of smaller sections, and then to determine if each smaller section matches a corresponding aspect of a target of interest. This target may be a potentially infringing product or service, another patent, or even a public domain product or service (to try to show that a patent may be invalid).

Patent claim charts usually follow a row and column table format.  One column contains various sections from a claim of interest, spread out over a number of rows.  Another column contains various aspects of a target of interest, also spread out over a number of rows.  Rows containing sections from the claim column are compared with rows containing aspects from the target column.

If can be shown that every row from the claim column exactly matches up to one or more rows from the target column, then this suggests that claim does describe the target. Note, however, that although every claim row must match with a target row, there is usually no reverse requirement that every target row match-up with a claim row.

Sounds simple, but the devil is in the details.  Since patent claim charts are often part of an adversarial process, each side may feel under pressure to “slant” their claim charts in a way that favors their particular position.

Claim charts can be slanted in many ways.  One of the most common ways is to write the chart in a way that skips over important details, often by not breaking the claim down into small enough sections.

Some of the comparisons may not be accurate.  Also, remember that individual claim terms can sometimes be misleading because they may have been defined in the text of the patent application (or during prosecution), in a somewhat unexpected way.

So read and write claim charts with caution and skepticism.  Don’t use sloppy claim charts to initiate any legal action.  Of course, don’t blindly accept claim charts from others without doing your own independent analysis.

Halo and reckless infringement

The Halo decision
The Halo decision

The Halo decision; and how to avoid court-ordered punitive damages for culpable patent infringement (recklessly infringing known patents)

One problem that both startups and established corporations face is what to do in situations where their product might infringe on someone else’s patent.  If the corporation ends up in court, and a judge determines that the infringement was somehow unusually extreme (e.g. egregious), then the judge may punish the offender by awarding up to three times actual damages (punitive damages). This can severely damage or destroy the infringer.

But what is “unusually extreme”?  Is it when an engineer is worried about a particular patent, or a competitor sends a warning letter, but the company proceeds anyway?  How close does the product have to match the patent?

The law has been going back and forth on this.  Earlier the rules were strict. Then the rules became so lax that punitive damages were hardly ever awarded. Now, in the June 2016 case of Halo Electronics v. Pulse Electronics, SCOTUS (Supreme Court of the United States) has clarified that the rules are somewhat in-between these two extremes.

In the Halo decision, SCOTUS clarified that what is relevant is “culpability”, which in essence is the state of mind of the person (actor) at the time of the conduct.  In a corporate setting, this is likely the state of mind of the decision makers at the time they either decided to launch the product, or decided to keep selling in the face of some knowledge of infringement.

In particular, the issue is one of acting recklessly (not like a normal person) and/or with willful misconduct while knowing that there was a patent infringement issue.  The court can determine this if the majority of the evidence supports this conclusion (i.e. preponderance of the evidence standard).

Getting advice of legal counsel:

Earlier, when the rules were strict, the courts, in essence, created a duty to get the advice of legal counsel before acting. However later, when the rules were lax, there was not much of a need for this.  Courts in this era set the threshold for punitive damages so high that such damages were almost never awarded.

Now, with the present rules, the situation is in-between.  Failure to get the advice of legal counsel does not automatically prove that a company acted recklessly. However getting advice before acting (e.g. launching a product) can help prove lack of recklessness. Timely advice can help establish that the company acted with normal caution, thus hopefully avoiding punitive damages.  But note that there is a timing issue:  the legal standard is the state of the mind at the time of the (infringing) conduct. SCOTUS is not impressed by legal arguments concocted afterwards.

Reviving abandoned patents

The reanimation of dead patents!
The reanimation of dead patents!

Have an accidentally abandoned US patent or patent application?  These can often be revived if you promptly file a USPTO petition for revival.

It just so happens that your friend here is only mostly dead. There’s a big difference between mostly dead and all dead.” Miracle Max, “The Princess Bride”.

The USPTO declares both patents and patent applications to be “abandoned” for various reasons. Patents are usually declared abandoned for failure to pay maintenance fees. Patent applications are usually declared abandoned for failure to respond to USPTO office communications (and pay any needed fees) within the time stated on the office action.

Don’t despair.  Many of these are initially only “mostly dead”, rather than “all dead”, and can be revived by promptly filing a petition to “revive”, paying the appropriate revival fee (and other fees due), and generally fixing whatever other problem caused the abandonment in the first place.

The key word here is “prompt”.  Here, the USPTO attempts to distinguish between “unintentional abandonment” and “intentional abandonment”.  As you might imagine, this can be a rather subjective determination that can often be decided by the length of the delay and explanations of the circumstances.

A determination of “intentional abandonment” means that the patent is legally now “all dead”, which is why it is important to act promptly.

The issue of what is “unintentionally abandoned” is a tricky gray area in patent law. Although often a form statement such as, “the entire delay was unintentional” will suffice, the longer the delay, the more that this strains credibility, and the greater the chance that additional explanation will be required/and or the petition to revive may be denied.

The general rule is thus that you should try to initiate the revival actions as quickly as possible.  Fortunately, this is “quick” by legal standards, rather than “quick” by video gamer standards.

As a very rough and informal rule of thumb, which you should not rely upon, petitions filed within about six months of abandonment often have a good chance of succeeding. Petitions filed up to two years after abandonment can often also work (although the risk of rejection may increase). Even after two years or more, a petition to revive may be accepted, but here the situation does become more problematic. The petitions office may require more of an explanation for the delay, and the chances that the petition will be denied can be substantially greater.

Note that “expired” patents – patents that have died because their full patent term (often 20 years from the filing date) is up, are “all dead”.  They cannot be revived.