Patent Law Practice Center

Does the USPTO paying for shared services violate the AIA?

During the August 20, 2015, Patent Public Advisory Committee (PPAC) meeting, USPTO Director Michelle Lee first announced what was known as the shared services initiative. Today, “shared services” has been re-branded “enterprise services,” but the initiative remains the same.

In 2015, Lee explained the shared services initiative by saying that agencies falling under the Department of Commerce would utilize shared services for human resources, information technology and procurement functions. The fear then, however, was that the USPTO’s user fees would be used to pay for the IT and other needs of other Commerce agencies when those funds are supposed to be used only for the operation of the USPTO. See AIPLA letter to Secretary Pritzker and Under Secretary Lee. That is precisely what is happening now, only worse.

The new reality today is that the USPTO is paying for shared services that are simply not shared. According to Frank Murphy, Acting Chief Financial Officer, who recently spoke at a PPAC public meeting, the USPTO will not be using the services because the USPTO systems are superior to the shared services being created. The USPTO is still, nonetheless, paying for the creation of these services.

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SCOTUS asks Director Lee to respond to SCOTUS cert petition

At the end of February, the United States Supreme Court requested a response from Michelle K. Lee, Director of the United States Patent and Trademark Office (USPTO), related to the petition for writ of certiorari filed by Oil States Energy Services, LLC, Petitioner, against Greene’s Energy Group, LLC, et. al. The dispute is between the parties to an inter partes review (IPR) proceeding conducted by the Patent Trial and Appeal Board (PTAB).

There are three questions presented by Oil States in the petition for writ of certiorari:

1. Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.
2. Whether the amendment process implemented by the PTO in inter partes review conflicts with the Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S.Ct. 2131 (2016), and congressional direction.
3. Whether the “broadest reasonable interpretation” of patent claims – upheld in Cuozzo for use in inter partes review – requires the application of traditional claim construction principles, including disclaimer by disparagement of prior art and reading claims in light of the patent’s specification.

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SCOTUS take patent venue case

Several weeks ago, the United States Supreme Court granted certiorari in TC Heartland LLC v. Kraft Food Brands Group LLC. This case will force the Supreme Court to decide whether 28 U.S.C. § 1400(b) is the exclusive provision governing venue in patent infringement actions. This resolution of this question could have important ramifications, both for the future of patent litigation and for the future of patent reform.

Ultimately, the question that the petitioner really wants the Supreme Court to decide is if the Eastern District of Texas, home up to one-quarter of all patent infringement litigations, is a proper venue for patent owners to be choosing. The Eastern District of Texas is a popular choice among patent owners because of the perception that the district court has developed a articular specialty in handling patent matters, and because the judges have a reputation of giving patent owners a fair chance…maybe more than a fair chance, depending upon who you listen to.

If the Supreme Court issues a ruling that strikes down current patent venue rules, there would be no need for patent venue reform efforts to continue in Congress. On the other hand, if the Supreme Court were to affirm the Federal Circuit, calls for legislative venue reform would likely become deafening. On yet a third hand, patent reform might look very different than most people expect, even if the Supreme Court were to overrule the Federal Circuit, because a venue ruling that would make it difficult or impossible to bring cases in the Eastern District of Texas would also make it much more difficult for all patent owners to bring infringement cases in courts other than the home court of the defendant. That could be a bridge too far for many, if not most, patent owners, who otherwise might be in favor of at least some venue reform. Thus, there is a chance that whatever the outcome of this case, it will lead to patent reform. See The Politics of Patent Venue Reform.

The statutes in question will be 28 U.S.C. § 1400(b) and 28 U.S.C. § 1391(c). Pursuant to § 1400(b), a “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.” Pursuant to § 1391(c), a corporation is deemed to be a resident of “any judicial district in which such defendant is subject to the court’s personal jurisdiction…”

In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that § 1400(b) is not to be supplemented by § 1391(c) and that “§ 1400(b) is the sole and exclusive provision controlling venue in patent infringement actions….” While that might seem to end the inquiry on its face, the Federal Circuit has for 25 years ignored the Supreme Court ruling in Fourco Glass, based on the belief that 1988 amendments by Congress “rendered the statutory definition of corporate residence found in § 1391 applicable to patent cases.” Thus, it is the belief of the Federal Circuit that Congress overruled the Supreme Court’s ruling in Fourco Glass, which Congress obviously has the authority to do. See Supreme Court agrees to hear patent venue case with patent reform implications.

The irony is that everyone knows this case is about the Eastern District of Texas, yet the case between TC Heartland and Kraft Food Brands Group was litigated in the District of Delaware. Thus, Kraft is unfortunately caught up in this proxy patent battle to which it really ought not be a party. It is truly unfortunate that the Supreme Court would use a case from Delaware and party that is most certainly not a patent troll to opine about patent trolls running to the Eastern District of Texas. But that is the bizarro world of patent litigation in which we live, some might say.

Deciphering TLI Communications and FairWarning IP

Beginning in May 2016 with the Federal Court’s decision in Enfish, carrying over into the July decision in BASCOM, and then into the Court’s Fall decision in McRO (sometimes referred to as “the Blue Planet case”), the patent stakeholder community finally started receiving some much-needed guidance with respect to patent eligibility of computer-implemented inventions.

While decisions where claims have been ruled patent eligible have been helpful, decisions finding claims patent ineligible have been at least as informative, at least from a patent drafting standpoint. Indeed, as important as the aforementioned pro-patent-eligible decisions are two decisions where the Federal Circuit found the claims to be patent ineligible. In TLI Communications and then more recently in FairWarning IP, LLC v. Iatric Systems, Inc., the Federal Circuit distinguished the claims at hand from those that have been held patent eligible, which help identifies brighter lines and nuances of software practice.

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Obama Administration Releases 3-Year IP Enforcement Plan

The Obama Administration released a joint strategic plan on intellectual property enforcement for fiscal years 2017 through 2019. The title of the report is Supporting Innovation, Creativity & Enterprise.

The section on patents, which begins on page 134, begins by saying:

Patent-intensive industries are a driving force in the U.S. economy. According to a recent Department of Commerce report, the value added by patent-intensive industries in 2014 was $881 billion, which was 5.1 percent of U.S. gross domestic product. Supporting efficient and predictable patent protection policies that promote investments in research and development is key to the continued growth of innovative economies.

Without effective mechanisms to protect intellectual property rights, including patents and trade secrets, competitors could simply sit back and copy, rather than invest the time and resources required to invent and innovate. Research and development would be even riskier investments, with little to no assurance that such investments would or could be commercially put into use. Simply put, facilitating efficient and predictable patent protection policies harnesses the drive and ingenuity of our innovators and helps ensure that our economy remains innovative and competitive.

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