January was an exciting month for patent professionals still attempting to make sense of the fallout from the Supreme Court’s 2014 Alice Corp. v. CLS Bank International decision. Hot on the heels of its Jan. 10 decision in Finjan, Inc. v. Blue Coat Systems, Inc., the Court of Appeals for the Federal Circuit decided Core Wireless Licensing v. LG Elecs., Inc. on Jan. 25, affirming denial of LG’s summary judgment motion seeking to invalidate Core Wireless’ display interface patent claims for being directed to an exception to statutory subject matter under 35 U.S.C. § 101. In combination with Finjan and earlier decisions, this potentially establishes a trend that courts are increasingly comfortable differentiating between patent claims done on a computer and the maligned “do it on a computer” claims that are the target of much eligibility exception concern.
Core Wireless sued LG, alleging infringement of claims in U.S. Patent nos. 8,713,476 and 8,434,020, both titled “Computing device with improved user interface for applications.” The patents specifically seek to allow users to quickly access data and functionality from un-launched applications using a menu listing, particularly in devices with small form factors. Claim 1 of U.S. Patent No. 8,713,476 was analyzed as representative.
A computing device comprising a display screen, the computing device being configured to display on the screen a menu listing one or more applications, and additionally being configured to display on the screen an application summary that can be reached directly from the menu, wherein the application summary displays a limited list of data offered within the one or more applications, each of the data in the list being selectable to launch the respective application and enable the selected data to be seen within the respective application, and wherein the application summary is displayed while the one or more applications are in an un-launched state.
Claim 1 of U.S. Patent No. 8,434,020 was also analyzed, and it follows a similar structure and includes many of the same terms identified as significant by the court (including “reached directly” and “un-launched state”).
Evaluating these claims, the court turned to its earlier decisions in Visual Memory, Thales, Enfish and Finjan, all of which make clear the importance of analyzing the claims with specificity and searching for technological improvements or unconventional solutions that indicate eligibility. The court rejected LG’s overbroad characterization that the claims are merely an application of the abstract idea of an index. Rather, “these claims are directed to a particular manner of summarizing and presenting information in electronic devices” that require specific manners of use with specific limitations on available data in specific device states. As with earlier decisions, the opinion looked to the specification to discern a problem and claimed unconventional solution. Because of the particularity of the solution, the court found the asserted claims were not directed to an abstract idea in Step 2A of the eligibility framework and did not proceed to Step 2B.
The synopsis of the lower court’s reasoning provides further pointers as to the difference between a “do it on a computer” abstract claim and eligible innovation realized using computers.
It held that the claims are not directed to an abstract idea because, even crediting LG’s characterization of the claims as directed to “displaying an application summary window while the application is in an unlaunched state,” the concepts of “application,” “summary window,” and “unlaunched state” are specific to devices like computers and cell phones. J.A. 9561. The court explained “LG identifie[d] no analog to these concepts outside the context of such devices.” Id. It further noted even “if claim 1 were directed to an abstract idea, it would still be patent eligible at least because it passes the machine-or-transformation test.” J.A. 9562.
This language is useful for disentangling subject matter eligibility from patentability in view of prior art. The search for an “inventive concept” and discussion of “well-understood, routine, and conventional” uses of computers inheres confusing parallels with obviousness under 35 U.S.C. § 103. Even the helpful guidance of Finjan that eligibility exists where a computer file enables a computer “to do things it could not do before” blurs the lines between eligibility and novelty. The district court’s discussion makes clear that, where the claims are directed to specific technology with no context outside devices, they should not be found abstract.
While Core Wireless is hardly the first matter involving software or computer functionality where eligibility is shown, many earlier decisions seemed to decide by exception rather than rule. DDR admonished its own application by speaking against a broad rule and was lost in a red tide of decisions finding ineligibility. Bascom was similarly decided under Step 2B and injects substantial room for argument as to what constitutes an “ordered combination.” Enfish and Visual Memory are regularly distinguished from software cases by limiting their applicability to claims improving the computer system itself as opposed to claims that add to user-controlled functionality. McRO concerned detailed claims receiving substantial attention as lacking preemption risk. If the rapid-fire decisions finding eligibility of “pure” software in Finjan and Core Wireless suggest a trend, it is that the Court of Appeals for the Federal Circuit is developing a comfort level that no longer requires finding eligible software claims to be the exception to the exception to eligibility.
Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc., et al., nos. 2016-2864 and 2017-1922 (Fed. Cir. Jan. 25, 2018), slip op. at 2-3.
Step 2A is at times referred to as “Step One.” However, by the framework describing steps 1, 2A and 2B, Step One involves determining whether the claim is a process, machine, manufacture or composition of matter. See, e.g., MPEP § 2106.
Core Wireless at 4 quoting Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc., No. 2:14-CV-911-JRG-RSP, 2016 WL 1106438, at *4 (E.D. Tex. Mar. 20, 2016).
See, e.g., Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347, 2350, 189 L. Ed. 2d 296 (2014)
In Finjan v. Blue Coat Systems, the Court of Appeals for the Federal Circuit rendered a decision containing interesting rulings on patentable subject matter (affirming the District Court determination that certain claims were patent eligible) and reasonable royalty damages (vacating part of a jury verdict for failure to adequately apportion the royalty base). This article examines the patent-eligibility ruling, which is interesting in itself and also because the opinion was authored by Judge Dyk and joined by Judge Hughes, both of whom have a pronounced history of finding claims ineligible.
Claims 1, 7, 11, 14 and 41 of U.S. Patent No. 6,154,844 (the ’844 patent) recite a system and method for providing computer security by attaching a security profile to a downloadable. Claim 1 of the ’844 patent, which the District Court found representative for § 101 purposes, reads:
1. A method comprising:
receiving by an inspector a Downloadable;
generating by the inspector a first Downloadable security profile that identifies suspicious code in the received Downloadable; and
linking by the inspector the first Downloadable security profile to the Downloadable before a web server makes the Downloadable available to web clients.
At claim construction in the District Court, the parties agreed that “Downloadable” should be construed to mean “an executable application program, which is downloaded from a source computer and run on the destination computer.” Additionally, the District Court construed “Downloadable security profile that identifies suspicious code in the received Downloadable” to mean “a profile that identifies code in the received Downloadable that performs hostile or potentially hostile operations.”
Section 101 Analysis
The court begins its patent-eligibility analysis by noting that at step one, i.e., Alice Step 2A, we must first examine the ’844 patent’s “claimed advance” to determine whether the claims are directed to an abstract idea. In cases involving software innovations, this inquiry often turns on whether the claims focus on “the specific asserted improvement in computer capabilities or, instead, on a process that qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool.” Opinion at 5. Only when the claim is deemed to be “directed to” an abstract idea under Step 2A does the analysis proceed to Step 2B, which asks whether the claim includes “significantly more.”
As can be seen in the discussion below, the court found that the “behavior-based” virus scan recited by claim 1 constitutes improvement in computer functionality, and thus claim 1 is not “directed to” an abstract idea under Step 2A of the Alice test. This result is interesting given the superficial breadth of claim 1, and it reinforces that the lesson drawn from the Visual Memory decision is that a robust written description including specific statements concerning how the disclosed invention improves upon the prior art can be key to showing that the claims are not directed to an abstract idea and thus are patent eligible under § 101. Even broader claims that do not recite the technical detail and improvements can be saved by a robust written description.
Alice Step 2A
The court began its Step 2A analysis by noting that in Intellectual Ventures I, the court found that “[b]y itself, virus screening is well-known and constitutes an abstract idea,” and that performing the virus scan on an intermediary computer – so as to ensure that files are scanned before they can reach a user’s computer – is a “perfectly conventional” approach and is also abstract. In contradistinction, the court said, “Here the claimed method does a good deal more.” Opinion at 6.
According to the court, claim 1 scans a downloadable and attaches the virus scan results to the downloadable in the form of a newly generated file: a “security profile that identifies suspicious code in the received Downloadable.” The court referenced the District Court’s claim construction decision emphasizing that this “identif[y] suspicious code” limitation can be satisfied only if the security profile includes details about the suspicious code in the received downloadable, such as all potentially hostile or suspicious code operations that may be attempted by the Downloadable.
The security profile must include the information about potentially hostile operations produced by a “behavior-based” virus scan. According to the court, this operation is distinguished from traditional, “code-matching” virus scans that are limited to recognizing the presence of previously identified viruses, typically by comparing the code in a downloadable to a database of known suspicious code. The court then found that this behavior-based virus scan in the ’844 patent constitutes improvement in computer functionality. Id.
The court noted that the behavior-based approach to virus scanning was pioneered by Finjan and is disclosed in the ’844 patent’s specification. In contrast to traditional code-matching systems, which simply look for the presence of known viruses, behavior-based scans can analyze a downloadable’s code and determine whether it performs potentially dangerous or unwanted operations – such as renaming or deleting files. Because security profiles communicate the granular information about potentially suspicious code made available by behavior-based scans, they can be used to protect against previously unknown viruses as well as “obfuscated code” – known viruses that have been cosmetically modified to avoid detection by code-matching virus scans. The court further commented that the security profile approach also enables more flexible and nuanced virus filtering. According to the court, after an inspector generates a security profile for a downloadable, a user’s computer can determine whether to access that downloadable by reviewing its security profile according to the rules in whatever “security policy” is associated with the user, and administrators can easily tailor access by applying different security policies to different users or types of users. Opinion at 7.
Importantly, the court cited Enfish for the proposition that software-based innovations can make non-abstract improvements to computer technology and be deemed patent-eligible subject matter at Step 2A. Id. The claims in Enfish recited a database architecture that used a new, self-referential logical table and were deemed non-abstract because they focused on “an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.” Enfish, 822 F.3d at 1336. (See our previous discussions of Enfish here and here.) Similarly, according to the court, the method of Finjan’s claim 1 “employs a new kind of file that enables a computer security system to do things it could not do before.” Opinion at 8. “The security profile approach allows access to be tailored for different users and ensures that threats are identified before a file reaches a user’s computer. The fact that the security profile ‘identifies suspicious code’ allows the system to accumulate and utilize newly available, behavior-based information about potential threats. The asserted claims are therefore directed to a non-abstract improvement in computer functionality, rather than computer security writ large.” Id.
Blue Coat had argued that Finjan’s claims, even if directed to a new idea, remain abstract because they do not sufficiently describe how to implement that idea. In response, the court distinguished the cases cited by Blue Coat, including Affinity Labs and other similar cases, which the court said hearken back to the foundational patent law principle that a result, even an innovative result, is not itself patentable. Opinion at 9. “Here the claims recite more than a mere result. Instead, they recite specific steps – generating a security profile that identifies suspicious code and linking it to a downloadable – that accomplish the desired result. Moreover, there is no contention that the only thing disclosed is the result and not an inventive arrangement for accomplishing the result. There is no need to set forth a further inventive concept for implementing the invention. The idea is non-abstract and there is no need to proceed to step [2B] of Alice.” Id.
For software-related inventions, patent eligibility can be established at Alice Step 2A by showing that the disclosed invention results in an improvement to the operation of the underlying computer system. This analysis can and should include construing the claims and reviewing the written description to determine whether and how the claimed subject matter makes non-abstract improvements to computer technology. In this regard, the studious reader might question whether the court’s decision in this case can be squared with Intellectual Ventures I LLC v. Symantec, which also involved software filtering technology. We believe the court distinguished Finjan’s invention from that of Intellectual Ventures I based on what it believed to be novel features of the Finjan invention, even though those features are not explicitly recited in the claims. In other words, the court was reading into the claims certain aspects from this specification. It did not even attempt to do this in Intellectual Ventures I, perhaps because there was nothing in the specification that could save the claims. The take-home lesson in this regard is that it’s important to consider the specification before deciding patent eligibility.
 The Alice test is articulated in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014). In summary, the Supreme Court instructs us to use a two-step framework to distinguish patents that claim laws of nature, natural phenomena and abstract ideas from those that claim patent-eligible applications of those concepts. Alice, 134 S. Ct. at 2355. At the first step, we determine whether the claims at issue are directed to a patent-ineligible concept. If they are, we then consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application. This is the search for an “inventive concept” – something sufficient to ensure that the claim amounts to “significantly more” than the abstract idea itself.
On December 15, 2017, the Court of Appeals for the Federal Circuit struck down as unconstitutional the clause within 15 U.S.C. § 1052(a) (“Section 2(a)”) banning registration of a trademark that “[c]onsists of or comprises immoral…or scandalous matter.”
The In re Brunetti decision came in the wake of Matal v. Tam, a recent Supreme Court case holding that Section 2(a)’s ban on registering “disparaging” trademarks amounts to unconstitutional viewpoint discrimination.
Federal Circuit Judges Dyk, Moore and Stoll concluded that the refusal to register trademarks consisting of immoral or scandalous matter necessarily bans speech based on content, in violation of the First Amendment. Such content-based restrictions are subject to strict scrutiny review, which requires the government to prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest.
The court first affirmed the Trademark Trial and Appeal Board’s (“TTAB”) finding, though, that trademark applicant Erik Brunetti’s mark, FUCT, used in connection with a clothing brand, is vulgar and therefore scandalous. TTAB evidence had included online search engine results, dictionary definitions and use of Mr. Brunetti’s mark in the marketplace on products containing sexual imagery. The court rejected Mr. Brunetti’s contention that his mark is not vulgar, but rather is a coined abbreviation for “Friends yoU Can’t Trust,” and noted the United States Patent and Trademark Office’s (“USPTO”) history of equating “scandalous” and “vulgar” marks.
Turning to the constitutional issues in the case, the court rejected the government’s argument that Section 2(a) does not implicate the First Amendment because trademark registration is a government subsidy program or a limited public forum. As the Supreme Court noted in Tam, the government subsidy framework does not apply to trademarks, where applicants for registration pay fees to the USPTO rather than receiving any funds. Furthermore, trademarks function as commercial source indicators, and the fact that they exist on the Principal Register does not transform them into a limited public forum. The court characterized the Principal Register as a database, analogizing government ownership of private land merely because such land is maintained on a government list.
As it had in In re Tam, 808 F.3d 1321 (Fed. Cir. 2015), the court expressed concern over potential content-based censorship of trademarks and other speech the government registers, such as copyrighted works. The test for whether a trademark is barred by Section 2(a) asks whether a substantial composite of the public would find the mark “shocking to the sense of truth, decency, or propriety; disgraceful; offensive; disreputable; . . . giving offense to the conscience or moral feelings; . . . or calling out for condemnation.” This test necessarily targets expressive speech, and indeed, the court determined this test’s results change as frequently as do the general population’s moral and ethical viewpoints over time.
The court held Section 2(a) unconstitutional after strict scrutiny review, holding that this provision targets the expressive aspects of speech – rather than its commercial function as a source indicator – and undoubtedly restricts speech based on content. Nor can Section 2(a) survive under intermediate scrutiny analysis, as the government does not have a substantial interest in promoting certain marks over others and cannot possibly apply the test consistently, as the test hinges on popular opinion of what is “scandalous.” Even if the government did have a substantial interest in protecting the public from certain marks – which the court held it does not – Section 2(a) would not directly advance this interest because marks that fail to register can still be used in commerce.
The court’s Brunetti decision does not come as a surprise following the Supreme Court’s striking down of the Section 2(a) ban on “disparaging” trademarks. While the Brunetti court lamented commercial use of vulgar marks, consistency dictates that these offensive words and images may join the likes of similarly vulgar copyrighted works registered by the government. The government has yet to articulate a substantial interest in restricting this speech, and until it does, marks formerly deemed too “vulgar” for registration might now have a better chance to move forward.
On my drive to work, there was a trash bag on the freeway, then a box, and later a couple of bags flying around. I wondered where this garbage came from. There were a number of likely candidates: a small pickup truck loaded with miscellaneous junk, a dump truck and a large truck with a cargo box full of construction debris. In the end, I never could identify the source because I never saw any trash fall out of these vehicles. This reminded me of the debate over patent quality. Certainly, the U.S. Patent Office has taken sharp criticism for issuing so-called garbage patents, and procedures like inter partes review, covered business method review and post-grant review were created by Congress to address the quality of issued patents. While some of the criticism is a reaction to troll activity, it is clear that careful scrutiny of patents will only increase as the U.S. patent system continues to evolve.
This increased scrutiny collides with the trend toward commoditized patent drafting. Patent portfolio managers have to deftly balance application budgets against the need for high application quality. From the standpoint of managing portfolios encompassing a wide variety of attorneys and patent agents drafting patent applications for clients, my approach has been to clearly set expectations, leverage efficiencies of scale and employ a team approach.
In terms of setting expectations, it all starts with communication. This requires talking with the client at the outset to define quality work product from their viewpoint and the goals for the application, then conveying that expectation to the attorney or agent drafting the application. In managing this process, it is critical to help the person drafting the application account for time contributions from other team members and budget for review and revision, which in most cases is where budgets break down.
Leveraging efficiencies of scale boils down to assigning work consistently to help drafters obtain the benefit of writing about familiar technology. Similarly, maintaining a core team provides consistency and efficiency in drafting the applications. This requires paying attention to quality-of-life issues, workloads and retention of team members. While you cannot control the frequency and number of disclosures that cover similar technology, working with the client to understand the pace of innovation and distribution of disclosures among firms can help guide creation of drafting teams to maximize available efficiencies.
The team approach to drafting still relies on an individual drafting the application, but involves multiple team members working on similar technology. I look for team members who bring insight from both a patent drafting/prosecution perspective and a litigation perspective to increase the likelihood that the application will survive not only patent office review, but also a Patent Trial and Appeal Board or district court challenge. Some of the payoffs from the team approach are different perspectives on the same technology, shared insights from cumulative experience of both drafting and prosecuting applications, and a sense of camaraderie. All these things contribute to producing high-quality applications that are on budget and on time.
In particular, the goal is to put team members in a position to succeed. In addition to the process outlined above, this requires being mindful of intangibles and motivating team members. It is simplistic to think that compensation alone motivates good work. In my experience, I have found that the best performers enjoy the technology, like working with particular inventors, feel that their efforts are part of a bigger goal, enjoy working with their team members and thrive on sharing their experiences with the team.
Outside counsel may ask, “How do I make sure I have a good team in place?” In addition to looking for consistently good work product, I would look carefully at who is managing the team. Ask that person about his or her approach to putting together and managing a team. I would also pay attention to inventor feedback indicating a genuine interest in the technology and enthusiasm for the work as a positive indication that team members are properly motivated. In contrast, frequent turnover and inconsistent work product would be red flags. Providing feedback regarding quality of work product and positive/negative team member experiences can allow the team manager to address potential issues and continue to refine the team.
If you have more specific questions about patent drafting issues or my approach, please feel free to contact me by email at email@example.com.
In Legend3D, Inc. (Petitioner) v. Prime Focus Creative Services Canada Inc. (Patent Owner), Case IPR2016-00806, the Patent Trial and Appeal Board (Board) lifted a stay of a pending reissue application following a Final Written Decision, thereby allowing the Patent Owner another opportunity to pursue amended claims. Although the Federal Circuit recently determined that the PTAB can no longer place the burden of establishing the patentability of amended claims on the patent owner in IPR proceedings, patent owners may want to consider pursuing alternative claims in a reissue proceeding, given the ex parte nature and procedural flexibility that reissue offers.
Here, the sequence of events was as follows:
March 28, 2016: IPR filed.
29, 2016: Reissue application filed.
2, 2017: Order staying reissue application.
18, 2017: Final Written Decision and denial of Patent Owner’s motion to amend.
8, 2017: Stay of reissue application lifted following lapse of appeal period.
23, 2017: Second preliminary amendment filed in reissue application.
Based on the issuance of the Final Written Decision, and the fact that no appeal was taken, the Board considered the IPR proceeding completed (IPR2016-00806, Paper 79 at 3). The Board also noted that Patent Owner stated that its second preliminary amendment in its reissue application would present claims patentably distinct from the original patent claims (id.).
The Board reasoned that, in view of the completion of the IPR, there was no longer a concern about duplicate efforts and inconsistencies between proceedings (id. at 4). In addressing Petitioner’s arguments that the reissue application was infected by Patent Owner’s misrepresentations during the IPR, the Board noted that Patent Owner must present to the Office the complete record of the IPR proceeding, and that the Office would examine the reissue application in light of the complete record (id.).
Accordingly, this case is a good example of a patent owner keeping its options alive despite a cancelation of all claims in the IPR. Although examined in view of the IPR record and subject to the requirements of the reissue provisions, the ex parte prosecution of a reissue application provides significant flexibility and advantages to a patent owner, especially one tasked with persuading the Office that its amended claims are patentably distinct from those addressed in an IPR.
See Aqua Products, Inc. v. Matal, 2015-1177 (Fed. Cir. 2017).
37 C.F.R. § 42.73(d)(3)(i): Patent applicant or owner. A patent applicant or owner is precluded from taking action inconsistent with the adverse judgment, including obtaining in any patent: (i) A claim that is not patentably distinct from a finally refused or canceled claim; …
In Travel Sentry, Inc. v. Tropp, Appeal No. 16-2386 (Fed. Cir. Dec. 19, 2017), the Federal Circuit clarified the scope of joint infringement under 35 U.S.C. § 271(a). Specifically, the court provided guidance on performing analysis under Akamai’s two-pronged joint infringement test, which states that joint infringement may arise when an alleged infringer (1) conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method, and (2) establishes the manner or timing of that performance. Broadly speaking, Travel Sentry reaffirms the lessons from Akamai and subsequent cases; namely, the standard for joint infringement has been relaxed, and attribution may be found despite the absence of a principal-agent relationship, contractual obligation or joint enterprise. Travel Sentry, slip op. at 15.
At issue in Travel Sentry were U.S. Patent Nos. 7,021,537 (the ’537 patent) and 7,036,728 (the ’728 patent). The claims of the ’537 and ’728 patents are directed to methods for improving airline luggage inspection by use of dual-access locks. The basic idea is that each piece of luggage can be unlocked by both a customer’s personalized key and the Transportation Security Administration’s (TSA’s) master key. This allows travelers to lock a checked bag while also allowing the TSA to open, search and relock the bag as necessary. Claim 1 of the ’537 patent is representative, and includes the following steps:
Providing customers with a dual-access lock having special identifying features.
Marketing the dual-access lock in a manner that indicates that luggage utilizing the lock will be subjected to a special screening procedure by the luggage-screening entity (e.g., the TSA).
The special identifying features of the dual-access lock signaling to the luggage-screening entity that the lock should be opened using a master key.
The luggage-screening entity, acting pursuant to a prior agreement, identifying the dual-access locks via the special identifying features and using a master key to unlock the lock. at 4-5.
The plaintiff’s theory for joint infringement was that Travel Sentry performed the first two steps of the claimed method directly, TSA performed the last two steps of the claimed method, and TSA’s actions should be attributable to Travel Sentry for purposes of infringement liability analysis under 35 U.S.C. § 271(a). See id. at 11-12. The main piece of evidence offered to show that the Akamai test was satisfied was a memorandum of understanding (MOU) between Travel Sentry and the TSA. Among other things, the MOU stated that (1) Travel Sentry would provide master keys for the dual-access locks to the TSA, (2) the TSA would accept and distribute the master keys and training materials, (3) the TSA would make good faith efforts to use the master keys and relock the searched luggage, and (4) either party could terminate the MOU upon 30 days’ notice. Id. at 6-8.
In granting summary judgment for noninfringement, the district court assumed that Travel Sentry performed the first two steps and the TSA performed the final two steps of the patented claim; however, the district court found that the TSA’s actions could not be attributed to Travel Sentry. Id. at 12. The district court discounted the MOU, stating that the TSA “faces no consequences” for not following the patented method steps and the TSA “certainly does not take direction from Travel Sentry on the manner or timing of its luggage screening.” Id. Accordingly, the district court found that there was “no evidence that Travel Sentry had any influence whatsoever on the third and fourth steps of the method carried out by the TSA.” Id.
On appeal, the Federal Circuit vacated the district court’s entry of summary judgment, holding that there were “genuine disputes of material fact regarding whether [defendant] directs or controls the performance of [the final two] steps of the claimed methods.” Id. at 3-4. Before applying the law to the facts of this case, the court provided a useful summary of the current law on joint infringement, with emphasis on the Akamai and Eli Lilly decisions. Against this legal framework, the Federal Circuit began its analysis of the present case by stating that the district court interpreted Akamai too narrowly. Id. at 20. According to the court, Akamai “made clear” that the restrictive view of attribution for purposes of joint infringement is no longer the governing law. Id. The court proceeded to identify a number of specific errors the district court made in its Akamai analysis. Id.
First, the district court “misidentified the relevant activity at issue, broadly defining it as ‘the luggage screening mandated by Congress.’” Id. at 21. Relying on the details of the MOU, the Federal Circuit determined that a narrower definition of the relevant “activity” was required. Specifically, the court found that the appropriate definition was “screening luggage that the TSA knows can be opened with the passkeys provided by Travel Sentry,” which is what is required by the last two steps of the patented claim. Id. The court warned against defining the relevant “activity” too broadly, as that would typically lead to a faulty finding that the first prong of the Akamai test was not satisfied. Id. at 21-22. Furthermore, the court stated that the “activity” analysis should not “generalize from an agreement between two entities to engage in only limited aspects of an activity that the relevant activity is the entire set of activities.” Id.
Second, the district court “misapprehended what types of ‘benefits’ can satisfy Akamai V’s first prong.” Id. at 21-23. This error flowed naturally from the district court’s overly broad definition of the relevant activity. Id. at 22. According to the Federal Circuit, when the relevant activity is properly defined (i.e., screening luggage specifically identified as having the dual-access lock), a reasonable juror could find that TSA receives a benefit from being able to identify, open and relock luggage having the dual-access lock. Id. at 23. Contrary to the district court’s belief, why the TSA screens luggage – Congressional mandate – was irrelevant. Id. What mattered to the court was how the TSA screened luggage (i.e., in the manner proscribed under the MOU), and whether the TSA received a benefit from the chosen screening method. Id. The court then noted that the benefit could be “tangible (e.g., a reduction in the number of claims submitted by aggrieved travelers or an improvement in the health of its employees) or intangible (e.g., promotion of the public’s perception of the agency).” Id.
The district court’s third error under the Akamai test’s first prong was that it “mischaracterized what is required for one to ‘condition’ a third party’s participation in an activity or receipt of a benefit on the third party’s performance of one or more claim steps.” Id. at 23-24. This error is linked to the district court’s faulty “activity” and “benefit” analysis. When you substitute the Federal Circuit’s “activity” and “benefit” results into the “condition” requirement, the question becomes: Could a reasonable juror find that the TSA only receives the benefits of the lock system (e.g., reduction in claims, improved public perception, etc.) by performing the last two claim steps (i.e., identifying the dual-access locks and using the master key)? Id. The Federal Circuit answered this question in the affirmative. Id.
The district court also erred in its analysis under the Akamai test’s second prong when it determined that no reasonable juror could find that “Travel Sentry has established the manner or timing of TSA’s performance” of the final two claim steps. Id. at 25-26. The district court viewed the MOU as mere guidance, which TSA could decide to follow or not. Id. To the extent that the district court’s reasoning was based on a “mastermind” theory of liability, the Federal Circuit made clear that this “theory is no longer the governing standard.” Id. at 25-26. In the court’s view, the simple fact that the “TSA cannot unlock luggage bearing Travel Sentry certified locks for screening or realize the benefits of such screening unless it performs the final two claim steps” was dispositive. Id. at 27.
Finally, the Federal Circuit emphasized the importance of context, stating that “[P]rinciples of attribution are to be considered in the context of the particular facts presented.” Id. at 29 (citing Akamai V, 797 F.3d at 1023). The court cited Grokster, a case relied upon to formulate Akamai’s two-prong test, for the proposition that “an actor ‘infringes vicariously by profiting from direct infringement’ if that actor has the right and ability to stop or limit the infringement.” Id. (citing Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005)). Here, as in Grokster, Travel Sentry had the right and ability to stop or limit TSA’s ability to practice the final two claim steps, and this additional context tends to support a finding that attribution is appropriate. Id.
This case, as well as Akamai and Eli Lilly, makes clear that the standard for joint infringement has been relaxed. Traditionally required elements, such as control, legal obligation, supervision, etc., are no longer required to justify attribution. Courts may be willing to find attribution where there is “evidence that a third party hoping to obtain access to certain benefits can only do so if it performs certain [patented] steps identified by the defendant, and does so under the terms prescribed by the defendant.” Id. at 20.
 Judges Lourie, O’Malley and Taranto sat on the panel for the Federal Circuit. The opinion was authored by Judge O’Malley.
 “Joint” or “divided” infringement refers to a situation where the acts necessary to give rise to liability for direct infringement are shared between two or more actors but can be legally attributed to a single actor.
 See BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008).
 The court listed a number of actions Travel Sentry could have taken, such as terminating the MOU, discontinuing its practice of replacing passkeys that are damaged or lost, and changing the design of future locks.
In Merck Sharp & Dohme Corp. v. Hospira, Inc., the Federal Circuit affirmed the lower court’s ruling that the asserted claims of Merck’s U.S. Patent No. 6,486,150 (the ’150 patent) were obvious despite evidence of commercial success and copying by others. Concerned that the majority’s opinion constituted a shortcut around a proper Graham analysis, Judge Newman dissented and highlighted the court’s inconsistent application of secondary considerations of nonobviousness in the context of establishing a prima facie case of obviousness. The decision is also noteworthy for its clarification of the so-called blocking patent and the effect of such a patent on evidence of commercial success.
Ertapenem is an antibiotic known to be susceptible to degradation by hydrolysis of the lactam nitrogen (red circle) and dimerization at the pyrrolidine nitrogen (blue square). Although the prior art taught that ertapenem stabilized from dimerization, the claims at issue in the ’150 patent were directed to methods of manufacturing a formulation of the drug stabilized from both dimerization and hydrolysis. Intending to manufacture a generic version of Merck’s ertapenem formulation, Invanz®, Hospira informed Merck that it had filed an abbreviated new drug application (ANDA) with a paragraph IV certification, and Merck sued for infringement.
At trial, the district court found that the asserted claims of the ’150 patent were obvious even though the prior art was silent regarding multiple steps of Merck’s claimed process, because the “recipe” was known in the art and the previously untaught steps were merely routine manufacturing steps. Agreeing with the district court’s analysis, the Federal Circuit explained that the steps were simply “experimental details.” Thus, one skilled in the art and having knowledge of the principles in the prior art would have employed the steps to solve the problems of degradation of ertapenem.
Having found that the district court did not commit legal error in ruling that the previously untaught steps “would have been discovered by routine experimentation while implementing known principles,” the court next addressed Merck’s objective evidence of nonobviousness. The Federal Circuit agreed with the district court that Merck’s product enjoyed commercial success but determined that the lower court’s analysis that such evidence was weakened because of the existence of a blocking patent (a patent directed to ertapenem itself) was flawed. The court acknowledged that it previously held that when a patent precludes market entry and has exclusive statutory rights stemming from FDA marketing approvals, objective evidence of commercial success can be discounted. But here, the court noted that developers of new compounds often obtain a package of patents protecting the product, including compound, formulation, use, and process patents, and that such patents often result from a restriction requirement or from continuing improvements in a product or process. Accordingly, the court stated that multiple patents do not necessarily detract from evidence of commercial success of a product or process, which speaks to the merits of the invention, not to how many patents are owned by a patentee. Instead, the court clarified that commercial success is a fact-specific inquiry that may be relevant to an inference of nonobviousness, “even given the existence of other relevant patents.” Nonetheless, the majority did not find clear error in the district court’s holding that the evidence of commercial success would not overcome the weight of evidence that the asserted claims were obvious.
Evidence of copying by others as indicia of nonobviousness was also presented to the district court. Specifically, the evidence indicated that Hospira, after multiple alternative processes failed to yield a stabilized ertapenem, resorted to a process that the lower court found would infringe the ’150 patent. Here, Hospira argued that evidence of copying is not compelling in the context of ANDA cases because the Hatch-Waxman Act requires generic manufacturers to copy the approved drug. The Federal Circuit agreed with the lower court that the Act does not require the generic manufacturer to copy the New Drug Application (NDA) holder’s process of manufacturing the drug. In any event, the Federal Circuit agreed with the district court that the evidence of copying by Hospira of Merck’s patented process would not “overcome the weight of the competing evidence of obviousness.”
In her dissenting opinion, Judge Newman admonished the Federal Circuit for its inconsistent approach to analyzing obviousness cases and argued for a return to the standard of evaluating obviousness recited in Graham and reconfirmed in KSR International Co. v. Teleflex, Inc., 550 U.S. 398, 399 (2007), that “established the factual premises and fixed the placement of burdens.” She cited several cases in which the court, in her opinion, “recognized and correctly applied the Graham factors” and several cases as evidence of a “shortcut” analysis in which the court “converted three of the four Graham factors into a self-standing ‘prima facie’ case, whereby the objective considerations must achieve rebuttal weight.” This analysis, according to Judge Newman, diminishes objective evidence to a rebuttal role and “distorts the placement and the burden of proof,” even though the court has previously said that the most probative evidence pertaining to obviousness may often be objective indicia and that they should be “considered as part of all the evidence, not just when the decision maker remains in doubt after reviewing the art.” Because the district court stated that secondary indicia such as copying and commercial success “simply cannot overcome a strong prima facie case of obviousness,” Judge Newman would have remanded the case to the lower court for reconsideration under a proper Graham analysis, i.e., with the proper “analytic criteria under the four Graham factors.”
This case is a reminder that the Federal Circuit’s approach to analyzing the Graham factors is not consistent and, according to at least Justice Newman, evidence of secondary considerations of nonobviousness needs to be part of all the evidence, not a rebuttal to the first three factors. The case also sets forth that the existence of a blocking patent or requirements of the Hatch-Waxman Act do not necessarily diminish evidence of commercial success or copying.
 Merck Sharp & Dohme Corp. v. Hospira, Inc., No. 2017-1115 (Fed. Cir. Oct. 26, 2017).
 Slip op. at 4.
 Id. at 9.
 Id. at 10.
 Merck Sharp & Dohme Corp. v. Hospira, Inc. at 10 (citing Merck & Co. v. Teva Pharm. USA, Inc., 395 F.3d 1364, 1377 (Fed. Cir. 2005).
 Id. at 10-11. However, it is not clear whether the existence of FDA rights in combination with another patent would have diminished the evidence of commercial success.
 Id. (emphasis included).
 Id. at 5.
 Id. at 11 (emphasis added).
 Merck Sharp & Dohme Corp. v. Hospira, Inc., at 2-3 (Newman dissent).
 Id. at 3.
 Id. at 4 (citing Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1538-39 (Fed. Cir. 1983).
 Id. at 6.
The Federal Circuit in In re Cray, Inc., Appeal No. 2017-129 (Fed. Cir. Sept. 21, 2017), has provided extensive guidance to district courts on the meaning of an alleged infringer’s “regular and established place of business” under the second prong of the patent venue statute, 28 U.S.C. § 1400(b). It granted a petition for a writ of mandamus to do so in order to carry out its mandate to bring uniformity to patent law. Slip op. at 6-7 (citing Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1574 (Fed. Cir. 1984); In re Queen’s Univ. at Kingston, 820 F.3d 1287, 1291 (Fed. Cir. 2016)).
Although § 1400(b) and its substantively identical predecessor statute date back to 1897 and have received numerous interpretations by federal courts of appeals, for almost the past three decades patent owners could sue alleged infringers wherever they did business under the general venue statute, 28 U.S.C. § 1391, rendering § 1400(b) null. See Allen Sokal, The Supreme Court, Reversing the Federal Circuit, Holds That “Residence” in the Patent Venue Statute Refers to Only a Domestic Corporation’s State of Incorporation (May 24, 2017). The Supreme Court resurrected § 1400(b), however, in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 614 (overruling VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990)), by holding that § 1400(b) is the exclusive provision for determining venue in patent infringement suits. Consequently, alleged infringers sued in what they regard as unfavorable districts, such as, in this case, the Eastern District of Texas, or districts where the plaintiff/patent-owner maintains its principal place of business, are now moving under § 1400(b) to dismiss or to transfer venue. In In re Cray, the Eastern District of Texas denied the defendant’s motion to dismiss or transfer, and the defendant’s petition for a writ of mandamus provided the Federal Circuit an opportunity to expound on the requirements of § 1400(b) in a discussion that goes far beyond the facts of the case.
Before explaining why the district court erred in determining that venue was proper in the Eastern District of Texas, the court addressed at length the meaning of § 1400(b). Slip op. at 7-14. It quoted and then parsed the language of the statute: “Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” Now that TC Heartland has decided that under § 1400(b) a corporation “resides” only where it is incorporated despite the broader definition of residence under the general venue statute, the second prong of § 1400(b) provides the only other possibilities for proper venue. Although the Federal Circuit considered the statute’s legislative history and a number of 20th-century appellate decisions, including the Supreme Court’s admonition that because of the specificity of the patent venue requirement, it should not be given a liberal construction, slip op. at 9 (citing Schnell v. Peter Eckrich & Sons, Inc., 365 U.S. 260, 264 (1961)), the Federal Circuit parsed § 1400(b) to proclaim four requirements for venue: “§ 1400(b) requires that ‘a defendant has’ a ‘place of business’ that is ‘regular’ and ‘established.’ All of these requirements must be present.” Id. at 10. While acknowledging that “each case depends on its own facts,” id., the court then discussed in considerable detail each of the four requirements.
It addressed first the requirement for a “place of business.” That requires “a physical place in the district,” not just “a virtual space or . . . electronic communications from one person to another.” Id. at 11. But the “place” “need not be a ‘fixed physical presence in the sense of a formal office or store.’” Id. (citing In re Cordis Corp., 769 F.2d 733, 737 (Fed. Cir. 1985)). Nevertheless, “there must still be a physical, geographical location in the district from which the business of the defendant is carried out.” Id. The court pointed out that in Cordis, the defendant stored its literature and products in employees’ homes in the district and engaged a secretarial service in the district, factors that supported venue despite the absence of a formal office or store. Id.
The court next addressed the requirements for “a regular and established” place of business. The court exemplified “regular” as operating a business in a “steady, uniform, orderly, and methodical” manner, which excludes merely “sporadic activity.” Id. at 11-12. Thus, a single act will not suffice, but a series of acts might. Id. at 12. The court similarly described “established.” Referring to Black’s Law Dictionary’s 1891 definition, the statute’s legislative history and 20th-century appellate cases, the court observed that this third requirement meant “not transient” but rather “fixed permanently.” Id. at 12. Thus, displaying products semiannually at a trade show in a district was insufficient, while a five-year continuous presence in the district did suffice. Id. But “if an employee can move his or her home out of the district at his or her own instigation, without the approval of the defendant, that would cut against the employee’s home being considered a place of business of the defendant.” Id. at 12-13.
That leads to (or perhaps belongs to) the final requirement, the only one that really mattered in the case before the Federal Circuit: that the regular and established place of business be that of the defendant. “Thus, the defendant must establish or ratify the place of business. It is not enough that the employee does so on his or her own.” Id. at 13. Numerous considerations apply to this key requirement: does the defendant own or lease the place, or exercise other attributes of possession or control; “a small business might operate from a home” if that is the defendant’s place of business; does the defendant condition employment on residence in the district or on storing materials at a place in the district for distribution or sale; does the defendant represent that it has a place for its business in the district such as by marketing, advertising, or listing the place in the district on a website or telephone or other directory or placing its name on a sign on a building in the district. Id. at 13-14. But those factors may not suffice unless the defendant actually engages in business from the place in the district.
A final, somewhat ambiguous, consideration for the fourth requirement “might be the nature and activity of the alleged place of business of the defendant in the district in comparison with that of other places of business of the defendant in other venues. Such a comparison might reveal that the alleged place of business is not really a place of business at all.” Id. at 14. The court further explained in a footnote that “a relative comparison of the nature and activity may reveal, for example, that a defendant has a business model whereby many employees’ homes are used by the business as a place of business of the defendant.” Id. at 14 n.*.
After that lengthy tutorial on the patent venue statute, the court then explained why in the case before it the home of a Cray employee was not Cray’s place of business and therefore did not satisfy the fourth requirement of § 1400(b). The employee’s home was not listed anywhere publicly as Cray’s business, the employee did not maintain product literature or products in his home, Cray stored nothing there, and Cray paid for no part of the employee’s home or rent. The Federal Circuit concluded that the fourth requirement described above remained unsatisfied. “The statute clearly requires that venue be laid where ‘the defendant has a regular and established place of business,’ not where the defendant’s employee owns a home in which he carries on some of the work that he does for the defendant.” Id. at 16 (quoting American Cyanamid Co. v. Nopco Chem. Co., 388 F.2d 818, 820 (4th Cir. 1968)). Moreover, the patent owner pointed to no evidence that Cray considered the employee’s location in the district material or required the employee to live there. Furthermore, the employee was reimbursed for expenses and received administrative support solely from outside the district, and the employee’s social media profiles indicated at most that he, not Cray, conducted business from the district. Id. at 15-17.
The Federal Circuit found support for its decision in a number of 20th-century appellate court decisions addressing the issue of venue based on employees’ homes within a district. Id. at 18. The court concluded, “Similarly, the facts here do not show that Cray maintains a regular and established place of business in the Eastern District of Texas; they merely show that there exists within the district a physical location where an employee of the defendant carries on certain work for his employer.” Id. at 19.
Needless to say, this case reinforces the significant impact of TC Heartland. The shift of patent infringement cases away from districts such as the Eastern District of Texas to Delaware and other districts has already begun. Part of a patent owner’s prelitigation investigation should now include research to determine the district where the alleged infringer is incorporated, the districts where the alleged infringer has a regular and established place of business, and which of those districts appears most favorable to the patent owner. Potential defendants, on the other hand, should take steps to limit the number of districts where they might be sued, such as by not holding themselves out as doing business in a district simply because an employee works out of his home in the district, by not requiring the employee to live in the district, and by not requiring or even permitting the employee to store the potential defendant’s literature or products in his or her home. Finally, both parties in patent litigation should prepare for early discovery on venue whenever the question of whether the alleged infringer has a regular and established place of business appears to be close.
On Sept. 13, 2017, the United States District Court for the Federal Circuit clarified the meaning of the term “use” as it applies to system claims in patent infringement actions. In doing so, the court held that an infringer must benefit from all elements of a system claim in order to infringe, reversing and remanding a finding of infringement.
Intellectual Ventures sued Motorola in the United States District Court for the District of Delaware for infringement of various claims of U.S. Patent Nos. 7,810,144 and 7,120,462. The ’144 patent (“File Transfer System for Direct Transfer Between Computers”) relates to the process of transferring computer files electronically from one computer to another, with claim limitations directed to a “communications device” capable of transmitting to an “authenticating device” and with the said authenticating device “configured to generate a delivery report that indicates a delivery event and a time of the delivery event.”
Motorola allegedly directly infringed this claim through customers’ use of the accused system to send text-plus-photo messages using multimedia messaging service centers (MMSCs). However, Motorola argued that Intellectual Ventures could not show Motorola’s directly infringing “use” of the “authenticating device configured to … generate a delivery report.”
Motorola defended the suit on the grounds of noninfringement and invalidity. Three separate jury trials took place on the issue of infringement, but ultimately a jury returned a verdict that Motorola directly and indirectly infringed both patents and that Motorola failed to prove the asserted claims invalid. Motorola subsequently filed a motion for judgment as a matter of law, asking the court to overturn the jury’s verdict regarding the validity of the claims of the patents on the basis that the decisions were not supported by substantial evidence. Motorola also moved for judgment as a matter of law that the jury’s verdict of direct infringement of the ’144 patent was not supported by substantial evidence. Although the court rejected Motorola’s argument as to the validity of the ’144 and ’462 patents, it reversed and remanded on the issue of direct infringement of the ’144 patent.
The court’s analysis hinged on the use element of Intellectual Ventures’ claim and ultimately held that an infringer must benefit from each and every element of a claim in order to actually “use” it. A patent is infringed when a person “without authority makes, uses or sells any patented invention, within the United States … during the term of the patent.” 35 U.S.C. § 271(a). The court acknowledged that previous precedent set in Centillion Data Systems, LLC v. Qwest Communications International, Inc., 631 F.2d 1279 (Fed. Cir. 2011) and NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005) established the meaning of use as putting the invention into service on behalf of an infringer. Service, in turn, requires both control of the system and the receipt of a benefit through exerting such control. The court argued that its logic was supported by the specific facts of Centillion and NTP.
Since Centillion held that each element of the claim must be in service to constitute use, the court extended this logic to reason that an infringer must control and benefit from each claim element, not generally from the system as a whole. In doing so, it found support from the specific factual instances in Centillion and NTP. In Centillion, customers directly infringed a patent because they controlled and benefited from back-end processing equipment by requesting service and particular reports, and caused to be produced a response from the back-end equipment. In NTP, customers of an accused infringer similarly controlled and benefited from the claimed relay equipment by exchanging messages, since the relay feature was part of what made the exchange of messages possible.
The court applied this logic and determined that although Motorola used a “communications device” and a “second device,” there was no evidence that Motorola’s customers were using an “authenticating device configured to … generate a delivery report.” As an initial matter, Intellectual Ventures failed to establish that Motorola customers actually generated a delivery report themselves. It skirted this issue by arguing that delivery reports were generated by customers’ wireless service carriers when the customers used the accused phones through MMSCs. However, Intellectual Ventures did not demonstrate that Motorola customers themselves benefited from the reports, since the delivery reports were entirely generated and stored by he MMSCs themselves and not passed on to users. This was in spite of expert testimony claiming that these reports could be used to bill customers and could be used as an antifraud measure; the ’144 patent’s specification did not support that the delivery reports were used for such purposes. Therefore, absent a showing that Motorola’s customers knew about the reports, let alone affirmatively took steps to alter the configuration of their phones to actually receive the reports, Intellectual Ventures’ argument necessarily failed. The court applied the same reasoning to Motorola (although Intellectual Ventures did not raise this argument), since Motorola tested the accused phones on various carrier networks but did not receive the reports either.
A dissent issued by Judge Pauline Newman sided with the majority’s noninfringement holding; however, Newman disagreed that an infringer must benefit from each and every individual claim element to infringe, and could instead benefit from the system as a whole to use a system claim under 35 U.S.C. § 271(a). Newman interpreted Centillion to read that use is simply causing a system as a whole to perform processing through which the infringer obtains a benefit. The commonsense holdings of Centillion and NTP established that one cannot infringe a claimed system when the last element of the claim does not accomplish a primary purpose of the invention, but Judge Newman found no support in extending this logic to the determination of use as the majority did. Since Centillion defines use as “but for the customer’s actions, the entire system would never been put into service [on the infringer’s behalf],” Judge Newman argued that the proper analysis is whether the system acted at the behest of Motorola when a delivery report was generated. Applying this analysis would not have changed the outcome of the matter, since there was no evidence that Motorola or its customers intended the generation of the delivery report to occur.
This decision underscores the importance of diligence during the claim-drafting process. A competitor may now take advantage of patented technology as a whole so long as it can show that it does not “benefit” from just a single system claim limitation. It may be worth eliminating a claim element during the drafting process if it will be difficult to show use in a clear, easy-to-prove fashion.
In Cultec, Inc. v. StormTech LLC, IPR2017-00777, Paper 7 (Aug. 22, 2017), the Patent Trial and Appeal Board (Board) denied an inter partes review because the same or substantially the same prior art or arguments were said to have been previously presented to the Patent Office during ex parte prosecution of the challenged patent by way of a third-party submission under 37 C.F.R. § 1.290. In addition to other disadvantages associated with third-party submissions, such as providing the patent applicant an opportunity to address the submitted art in an ex parte context, would-be petitioners also need to consider that such a submission could foreclose a future inter partes review. The Cultec decision (Decision) also highlights the unpredictability of any particular panel in exercising its discretion under 35 U.S.C. § 325(d) to deny a petition.
In this case, the petitioner challenged claims 1-20 of U.S. Patent No. 9,255,394 (the ’394 patent) as obvious over primary reference Cobb in view of secondary references Fouss and/or Ellis (Decision at 7). The third-party submission was filed in the application that matured into the ’394 patent and presented Cobb for consideration by the examiner. The submission stated that Cobb was cited in related U.S. patent application No. 14/175,477 (the ’477 application) in an office action dated Sept. 17, 2015, and that the statement of relevance presented in the office action “is adopted for this submission” (id. at 8-9, citing the third-party submission). The ’477 application matured into U.S. Patent No. 9,556,576 (the ’576 patent), and the ’576 patent and the ’394 patent and their underlying applications were said to disclose the same subject matter, as both applications were continuations of the same parent application and claimed priority to the same provisional application (id. at 9). Because the examiner of the ’477 application was also the examiner of the ’394 patent, the Board concluded that “the Examiner was well-aware of the Cobb reference and its specific disclosure” (id. at 9-10).
Despite the third-party submission and/or Cobb not being addressed in an office action during prosecution of the ’394 patent, the Board found that the examiner considered the third-party submission because “[t]he Submission was signed by the Examiner” (id. at 10). Although the third-party submission relied on a chart with a detailed identification of the relevant portions of Cobb, it did not address Cobb in combination with Fouss and Ellis, the secondary references relied on in the petition. In any event, the Board found that “[t]he claim charts submitted with the Petition are an expanded version of the claim chart submitted with the Third Party Submission” (id.).
With respect to Fouss, the Board stated that “the Examiner cited and applied Fouss throughout the examination proceedings” of the ’394 patent” (id. at 11). Although this was true, Fouss was cited as a primary reference in combination with another secondary reference, Moore. With respect to Ellis, the Board found that a different secondary reference cited in the Sept. 17, 2015, office action of the ’477 application disclosed the same subject matter that was being relied on in Ellis, such that Ellis’s disclosure was said to be previously presented in the third-party submission (id. at 12).
Accordingly, the Board found the entry of the third-party submission sufficient to exercise its discretion under § 325(d) to deny the petition, even though the examiner never applied the primary Cobb reference in an office action, let alone addressed Cobb in combination with the secondary references cited in the petition during prosecution of the ’394 patent. This result would appear to contrast with many instances where the Board has opted not to exercise its discretion when the prior art references cited in the petition were of record (i.e., initialed by the examiner and listed on the face of the challenged patent) but were not specifically applied to the challenged claims. See TRW Automotive US LLC v. Magna Electronics Inc., IPR2014-00261, Paper 19, page 12 (June 26, 2014); Vizio, Inc. v. Nichia Corporation, IPR2017-00551, Paper 9, page 8 (July 7, 2017). Not only does this Decision serve as a cautionary tale regarding third-party submissions, but it also serves as an example of the discretionary nature of § 325(d), giving wide latitude to the Board and a degree of unpredictability to the parties.
 37 C.F.R. §1.290(a) provides that “[a] third party may submit, for consideration and entry in the record of a patent application, any patents, published patent applications, or other printed publications of potential relevance to the examination of the application if the submission is made in accordance with 35 U.S.C. § 122(e) and this section.”
 35 U.S.C. § 325(d) states in relevant part, “In determining whether to institute or order a proceeding under this chapter, chapter 30, or chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the [Patent and Trademark] Office.”
 The Board noted that the lead counsel for the petitioner was the same attorney who filed the third-party submission (id. at 8).
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