Fitch Even News Feed Mar 2020 00:00:00 -0800firmwise Alert: Supreme Court Holds State Sovereign Immunity Extends to Copyright Infringement Suits<p>On March 23, in <a href=""><i>Allen v. Cooper</i></a>, the U.S. Supreme Court unanimously ruled that states are immune from copyright infringement suits. A significant decision affecting copyright law, the case has notable ramifications for both state governments and copyright holders.</p> <p>The circumstances instigating the case began in 1996 when the state of North Carolina hired Intersal, a marine salvage company, to recover <i>Queen Anne&rsquo;s Revenge</i>, the infamous Blackbeard flagship that had run aground off the coast of North Carolina in 1718. Intersal in turn hired petitioner Frederick Allen, a videographer, to document the recovery of the ship. For over a decade, Allen made videos and photographs of the recovery operations and registered copyrights in these works.</p> <p>The suit arose when North Carolina published some of Allen&rsquo;s works online without his consent. At the district court, the state moved to dismiss the suit on the ground of sovereign immunity, invoking the general rule that federal courts cannot hear suits brought by individuals against nonconsenting states. Allen, however, contended that Congress had abrogated the sovereign immunity of the states through the Copyright Remedy Clarification Act of 1990 (CRCA). The CRCA provides that a state &ldquo;shall not be immune, under the Eleventh Amendment . . . or any other doctrine of sovereign immunity from suit in Federal court&rdquo; for copyright infringement. The district court allowed the case to move forward in light of the CRCA, reasoning that congressional intent was clear and abrogation had a proper constitutional basis. The court concluded that precedent precluding Congress from using its Article I powers to abrogate state sovereign immunity left open some possible avenues for imposing liability.</p> <p>On interlocutory appeal, the Fourth Circuit reversed, reasoning that the decision in <i>Florida Prepaid</i> <i>Ed. Expense Bd. v. College Savings Bank</i> applied to Section 5 of the Fourteenth Amendment no less than Article I. In <i>Florida Prepaid</i>, the Supreme Court held that Congress did not have the authority to abrogate state sovereign immunity from patent infringement suits through the Patent Remedy Act because the abrogation was not &ldquo;congruent and proportional&rdquo; to the injury to be remedied. Allen appealed to the Supreme Court, and the Court affirmed.</p> <p>First, the Court explained that the Eleventh Amendment governing state sovereign immunity allows a federal court to entertain a suit against a nonconsenting state on two conditions: (1) &ldquo;Congress must have enacted &lsquo;unequivocal statutory language&rsquo; abrogating the States&rsquo; immunity from the suit,&rdquo; and (2) Congress must have had authority under the Constitution to abrogate immunity.</p> <p>The first prong was settled at the outset. The Court essentially said that the language of the CRCA makes it very clear that Congress intended that state sovereign immunity be abrogated for purposes of copyright infringement suits. Accordingly, the case turned on congressional authority to encroach on state sovereign immunity. Allen argued that Congress possessed such authority under its Article I power to provide copyright protection or under Section 5 of the Fourteenth Amendment.</p> <p>First, Article I, Section 8, Clause 8 of the U.S. Constitution&mdash;the Intellectual Property Clause&mdash;grants Congress power &ldquo;[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.&rdquo; Allen argued that congressional authority to abrogate state sovereign immunity followed naturally from this clause. But the Court pointed to its decision in <i>Florida Prepaid</i> holding that Congress could not use its Article I power to abrogate state sovereign immunity in patent infringement suits. There, the Patent Remedy Act was at issue. In an earlier case, <i>Seminole Tribe v. Florida</i>, the Court had proscribed the use of Article I to circumvent sovereign immunity&rsquo;s limits on federal jurisdiction. Based on that decision, the Court had held that Congress did not have authority to abrogate state sovereign immunity from patent infringement suits.</p> <p>Noting that Article I applies to patents and copyrights alike, the Court extended the reasoning of <i>Florida Prepaid</i> to the CRCA, holding that Congress&rsquo;s Article I powers stop at sovereign immunity. Allen attempted to argue that the Court&rsquo;s decision in <i>Central Va. Community College v. Katz</i> offered relief from <i>Florida Prepaid</i>. In that case, the Court held that the Bankruptcy Clause of Article I allows Congress to subject nonconsenting states to bankruptcy proceedings. The Court disagreed, noting <i>Katz</i> was limited to the Bankruptcy Clause, and holding that even if it were not so limited, <i>Florida Prepaid</i> in combination with <i>stare decisis </i>would sink Allen&rsquo;s argument.</p> <p>Second, Congress can permit suits against states for violations of Section 1 of the Fourteenth Amendment, but it cannot alter what that Amendment proscribes. Thus the Court said a congressional abrogation under Section 5 of the Fourteenth Amendment is valid only if it sufficiently connects to conduct courts have held Section 1 of the Fourteenth Amendment to bar. For Congress to invoke its Section 5 authority, &ldquo;[t]here must be a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end.&rdquo; This involves courts&rsquo; consideration of the constitutional problem Congress faced and the scope of the relief Congress chose to address that problem or injury. In <i>Florida Prepaid</i>, for example, the Court reasoned that Congress had very little evidence of states having infringed patents, and no evidence that any instance of infringement by states had crossed constitutional boundaries. Thus the Court held that the Patent Remedy Act swept too far, given the absence of evidence of states &ldquo;depriving patent owners of property without due process of law.&rdquo;</p> <p>Here, Congress commissioned a report regarding the effects of the Eleventh Amendment on copyright enforcement. The report ultimately concluded that &ldquo;copyright proprietors have demonstrated they will suffer immediate harm if they are unable to sue infringing states in federal court.&rdquo; But the Court determined that nothing in that report or the remainder of the legislative record sufficiently distinguished this case from <i>Florida Prepaid</i>. The report produced very little evidence of state copyright infringement and its author even acknowledged that state copyright infringement was &ldquo;not widespread.&rdquo; Moreover, the Court reasoned that neither the report nor the remainder of the legislative record showed a concern with whether the states&rsquo; copyright infringements violated the Due Process Clause. In order to constitute such a violation, the infringement must be both intentional and there must not be an adequate remedy for the infringement offered by the state. Thus the Court held that in the absence of constitutional harm, the CRCA does not pass muster under the &ldquo;congruence and proportionality&rdquo; test in light of <i>Florida Prepaid</i>.</p> <p>Among other ramifications, the case provides some cautions for entities doing business with state entities where copyrighted materials might be generated in the course of such work. Nothing in the opinion suggests that such entities could not attempt by contract to secure a state&rsquo;s agreement to refrain from copying such works, for example, thereby providing a possible remedy in state court.</p> <p>For more information, please contact Fitch Even attorney <a href=";A=18118&amp;format=xml&amp;p=5482">Vincent R. Meyer</a>, author of this alert.&nbsp;<br /> <b><br /> Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts25 Mar 2020 00:00:00 -0800 Alert: PTAB Patent Judge Appointments Remain Unconstitutional After Federal Circuit Denies En Banc Rehearing<p>On March 23, the Federal Circuit <a href="">denied en banc rehearing</a> of the <i>Arthrex, Inc. v. Smith &amp; Nephew, Inc.</i> case. This denial sets up a likely petition for Supreme Court review of whether the process for appointing Administrative Patent Judges (APJs), defined in the patent statute, was unconstitutional as enacted. After the Federal Circuit&rsquo;s October 2019 <a href=";an=98663&amp;anc=180&amp;format=xml&amp;p=5486">panel decision</a> in <i>Arthrex</i>, all parties in the case filed petitions for rehearing en banc, along with the United States as intervenor.</p> <p>Because the full Federal Circuit will not review the panel decision, the holdings from that decision stand: APJs are &ldquo;principal officers&rdquo; under the statute as written. They therefore were unconstitutionally appointed because they were not nominated by the president and approved by the Senate. The panel&rsquo;s remedy also stands, severing provisions of the patent statute that prevented the USPTO director from removing APJs, and requiring rehearing of final decisions decided before the court&rsquo;s October 2019 panel decision.</p> <p>The order denying rehearing was accompanied by three dissenting and two concurring opinions. Of the 12 judges who heard the petition for en banc rehearing, four judges contributed to the dissenting opinions. A separate four judges contributed to the concurring opinions.</p> <p>The fractures between the concurring and dissenting judges exist on each of the issues up for en banc review, giving ample ammunition to the parties for potential certiorari petitions. First, each of the dissenting opinions contends that APJs are not necessarily principal officers and therefore need not be political appointees. For example, Judge Dyk&rsquo;s dissent reasons that APJs are not principal officers because they have no role in the articulation of agency policy: &ldquo;Their sole function is to determine the facts in individual patent challenges under the AIA&rdquo; and &ldquo;they are obligated to follow the law as articulated by the Supreme Court and [the Federal Circuit].&rdquo; Judges Hughes and Wallach argue further that the USPTO director&rsquo;s power to direct and supervise the Patent Trial and Appeal Board (PTAB) and individual APJs, along with the fact that APJs are already removable under the efficiency of the service standard of the Administrative Procedure Act (APA), provides political accountability such that APJs should be categorized as inferior officers. As examples of the director&rsquo;s supervisory role, Judge Hughes notes that the director may issue binding policy guidance, institute and reconsider institution of an <i>inter partes</i> review, select APJs to preside over an instituted <i>inter partes</i> review, single-handedly designate or de-designate any final written decision as precedential, and convene a panel of three or more members of his choosing to consider rehearing any PTAB decision.</p> <p>On this first issue of how to categorize APJs, Judge Moore notes in her concurring opinion that the director lacks the authority to <i>independently alter a panel&rsquo;s final written decision</i> and lacks sufficient control over the panel&rsquo;s decision before it issues on behalf of the executive branch. This lack of subsequent review for any particular decision, to her and her concurring colleagues, outweighs the director&rsquo;sauthority and direction. The dissenters and the concurring judges came to opposite conclusions on how Supreme Court precedent should apply on this issue.</p> <p>The second fractured issue is whether the panel decision improperly severed removal protections for APJs from the patent statute. Judge Dyk, writing on behalf of all four dissenting judges, argues that the panel decision improperly rewrote the statute in a way that is inconsistent with congressional intent. He notes that APJs and their predecessor &ldquo;examiners-in-chief&rdquo; have enjoyed semi-independent status under the patent statute since 1975, and that administrative law judges similarly have removal protections under the APA. Thus, according to the dissenters, longstanding congressional intent existed to protect the independence of APJs, which therefore should not be eliminated.</p> <p>According to Judge Dyk, the better solution to any unconstitutionality would be to amend the patent statute to provide agency review of APJ decisions. Alternatively, he argues that the agency itself might establish APJs as inferior officers if the director allowed rehearing of APJ decisions by &ldquo;an executive rehearing panel with panel members appointed by the President or essentially removable at will by the Secretary of Commerce&mdash;the Director, the Deputy Director, and the Commissioner of Patents.&rdquo;</p> <p>The concurring judges argued that the proposals offered by the dissenters would not necessarily pass constitutional review&mdash;APJs would not necessarily be categorized as inferior officers under any of Judge Dyk&rsquo;s proposed solutions. Further, Judge Moore and the concurring judges argue that the panel decision properly corrected the statute under Supreme Court precedent.</p> <p>The third and final fractured issue is whether remand and rehearing is required for final decisions entered before the October 31, 2019, <i>Arthrex</i> panel decision. Judge Dyk and two of the other dissenters argued that a new hearing is not required under Supreme Court precedent and that such rehearings impose a large and unnecessary burden on the USPTO. They reason that the panel decision merely interpreted the statute to find the meaning it always should have had. Thus the statute never included protections that would prevent the director from removing APJs, and consequently the APJs were never unconstitutionally appointed.</p> <p>Judge O&rsquo;Malley addresses this third issue in her concurrence, arguing that Supreme Court precedent requires a new hearing before a properly appointed official when a prior adjudication is tainted with an appointments clause violation. Further, all of the concurring judges contend that remand and rehearing is a remedy that minimizes the burden and inconvenience on the patent office.</p> <p>For parties on appeal to the Federal Circuit from a final written decision entered before October 31, 2019, the current remedy is rehearing by a new panel at the PTAB. To get this remedy, parties must raise their appointments clause arguments in their opening Federal Circuit brief or an earlier motion. The Federal Circuit has held that otherwise the Appointments Clause argument is waived.</p> <p>This latest decision, however, is likely not the last word on whether APJs were unconstitutionally appointed. Congress has already held hearings on the issue. Further, as noted above, one or more of the parties or the U.S. government is likely to petition for review by the Supreme Court. The dissenting and concurring judges arrived at conflicting interpretations of the relevant Supreme Court precedent. Given the fractured opinions on the Federal Circuit and the Supreme Court&rsquo;s likely interest in this wide-reaching administrative law issue, the Supreme Court may be inclined to take the case. Until the matter is resolved by Congress or the Supreme Court, some uncertainty will remain. Fitch Even attorneys will continue to monitor developments related to this case.</p> <p>For more information on this decision, please contact Fitch Even partner <a href=";A=2585&amp;format=xml&amp;p=5482">David A. Gosse</a>, author of this alert.<br /> <b><br /> Fitch Even IP Alert&reg;</b></p>IP Alerts25 Mar 2020 00:00:00 -0800 Alert: Federal Circuit Rules ยง 315(c) Does Not Authorize Same-Party Joinder or Joinder of New Issues<p>On March 18, in <i><a href="">Facebook, Inc. v. Windy City Innovations, LLC</a></i>, the Federal Circuit held that the Patent Trial and Appeal Board (PTAB) erred in allowing a petitioner to join itself to an <i>inter partes </i>review (IPR) to which it was already a party and in allowing the petitioner to add new challenged claims through the joinder. In an addendum to its opinion, the Federal Circuit also maintained that decisions by the PTAB&rsquo;s Precedential Opinion Panel (POP) are not entitled to what is known as Chevron deference by reviewing courts.</p> <p>Windy City filed a patent infringement suit against Facebook, asserting four patents. In its complaint, Windy City did not specify which of the patents&rsquo; 830 claims Facebook infringed. On the last day of the one-year window under 35 U.S.C. &sect; 315(b), Facebook filed four IPR petitions challenging some but not all of the claims in Windy City&rsquo;s four asserted patents. The PTAB instituted these IPRs on nearly all grounds. Four months after the one-year window, Windy City identified the claims that it was asserting in the district court case. Of the asserted claims, some were not challenged in Facebook&rsquo;s IPR petitions.</p> <p>In response, Facebook prepared two additional IPR petitions to challenge Windy City&rsquo;s additional asserted claims. Because the petitions were otherwise time-barred, Facebook filed motions to join these new proceedings with the already-instituted IPRs under section 315(c). The PTAB granted Facebook&rsquo;s motions, reasoning that although the claims were not the same as those originally instituted, the substance of the claims was similar, so the addition of the claims would be unlikely to significantly impact the scope of the trial. Further, the PTAB reasoned that Facebook could not have reasonably determined the claims asserted against it within the one-year time bar.</p> <p>In its final written decisions, the PTAB held that some but not all challenged claims were obvious. Facebook appealed, and Windy City cross-appealed. On appeal, Windy City argued that section 315(c) does not authorize same-party joinder and the joinder of new issues material to patentability. The Federal Circuit agreed.</p> <p>The plain text of section 315(c) provides that the Director of the USPTO &ldquo;may <b>join as a party</b> to [an IPR] <b>any person</b> who properly files a petition under section 311 that the Director . . . determines warrants the institution . . .&rdquo; (emphasis added). As an initial matter, the Federal Circuit noted that when the PTAB granted Facebook&rsquo;s joinder motions, it did not join Facebook as a party. Rather, the PTAB joined the later proceedings to the earlier proceedings. The court held that the language of section 315(c) does not provide for the consolidation of proceedings, which is governed by section 315(d).</p> <p>Even assuming that the PTAB had in fact joined Facebook as a party, the Federal Circuit held that the plain text of section 315(c) does not authorize same-party joinder. The court reasoned that it would be an extraordinary usage of the term &ldquo;join as a party&rdquo; in section 315(c) to refer to persons who were already parties. The court acknowledged the PTAB&rsquo;s POP decision in <i>Proppant Express Invs., LLC v. Oren Techs., LLC</i>, which determined that same-party joinder under section 315(c) was permissible. But the court held PTAB&rsquo;s decision in <i>Proppant </i>was incorrect given the unambiguous language of the statute.</p> <p>With respect to the joinder of new issues, the Federal Circuit held that section 315(c) also does not authorize a joined party to bring new issues into a proceeding. Instead, the consolidation of proceedings is covered under section 315(d). Reading section 315(c) to permit the consolidation of proceedings or issues would render section 315(d) superfluous.</p> <p>Further, the court held that the clear and unambiguous language of section 315(c) could not be overridden by Facebook&rsquo;s policy arguments that joinder was appropriate because Windy City did not identify which claims were asserted until after the one-year IPR deadline. The court noted that parties are free to challenge all claims of an asserted patent in an IPR or to challenge the invalidity of asserted claims in district court proceedings. The court also noted that Facebook could have made different strategy choices in federal court to force an earlier identification of asserted claims.</p> <p>Because the plain language of section 315(c) was found to be unambiguous, the court did not reach the issue of what deference should be given to decisions by the POP. Here Facebook argued that the PTAB&rsquo;s POP decision in<i> Proppant</i>, which permitted same-party joinder under section 315(c), should be given deference. Following the opinion, the court provided &ldquo;additional views&rdquo; on this issue.</p> <p>The court explained that Chevron deference is afforded to an agency&rsquo;s implementation of a particular statutory provision only when it appears that Congress delegated the authority to issue rules carrying the force of law. Of note, the court found that Congress did not authorize the Director of the USPTO or the PTAB to undertake statutory interpretation through POP opinions. Accordingly, even if section 315(c) were ambiguous, there would be no deference given to the POP decision in <i>Proppant</i>.</p> <p>This decision is relevant to both parties involved in patent litigation as well as in IPR proceedings. First, a petitioner may no longer file a subsequent petition to join its own instituted IPR proceeding in an attempt to add new issues or claims. Accordingly, there will be more pressure on petitioners to challenge all potentially assertable claims in its IPR petition. As in this case, where a patent owner has not identified which claims it is asserting in litigation, the defendant should make a concerted effort to have the asserted claims identified well ahead of the one-year bar date to file an IPR. Alternatively, if possible, a petitioner should consider challenging each claim of a challenged patent out of an abundance of caution.</p> <p>The case is further notable in that at least three judges of the Federal Circuit have indicated that they would not give Chevron deference to decisions deemed precedential by the PTAB. Thus parties should be wary of citing any such opinions to the courts as precedential authorities.</p> <p>For more information on this holding, please contact Fitch Even partner <a href=";A=2587&amp;format=xml&amp;p=5482">Paul B. Henkelmann</a>, author of this alert.</p> <p><i>Fitch Even attorney <a href=";A=19278&amp;format=xml&amp;p=5482">Jacqueline L. Thompson</a> contributed to this alert.<br /> <br /> </i><b>Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts23 Mar 2020 00:00:00 -0800 COVID-19 Response and Business Continuity Update<p>As the impact of the novel coronavirus disease (COVID-19) continues, we at Fitch Even recognize that you and your loved ones are coping with adjustments necessitated by the pandemic, just as we are. Our thoughts are with all those around the world who are affected by the outbreak now or will be in future days.</p> <p>As we continue to monitor the COVID-19 situation and adhere to CDC and other governmental guidelines, our paramount concern is the well-being of our professionals, families, clients, and the communities in which we live and work. Accordingly, we have put measures in place that help to ensure safety for our people while we continue to seamlessly serve our clients' legal and business needs.</p> <p>Our firm is fully operational with our people working remotely for the time being. Our attorneys and teams have the support, technology, and capacity to serve our clients and continue operations on an uninterrupted basis. All our internal systems and files can be accessed remotely through a secure network. This access includes our paperless file system and all research and filing tools. Our state-of-the-art IT infrastructure is maintained 24/7 by our IT professionals.</p> <p>In short, your calls and emails are being answered, meetings are being held by audio or video conferencing, and we will continue to provide you with the same responsive counsel and exceptional work product you expect and deserve.</p> <p>Thank you for your ongoing trust in Fitch Even. We look forward to working with you to address and overcome these current challenges. Please do not hesitate to reach out to us if we can be of any assistance. As always, we are here for you.</p> <p>Sincerely,<br /> <br /> Mark W. Hetzler<br /> Managing Partner<br /> Fitch, Even, Tabin &amp; Flannery LLP</p> <p>&nbsp;</p>Firm News20 Mar 2020 00:00:00 -0800 Even Partner Tim Maloney to Speak at the Litigation Funding Forum 2020<p>Fitch Even partner <a href=";A=2601&amp;format=xml&amp;p=5482">Timothy P. Maloney</a> will be a featured speaker during the Litigation Funding Forum 2020, taking place on March 26. This will be an online event following the same agenda as the originally scheduled in-person conference in NYC.</p> <p>Tim&rsquo;s presentation will be &ldquo;A Fresh Look at the Patent Assignment Agreement: <i>Lone Star v. United Microelectronics</i>.&rdquo; In addition to detailing the impact of the <i>Lone Star</i> case on the patent privateering monetization model, Tim will provide recommendations on how to transfer ownership in a way that protects a patent assertion entity&rsquo;s rights to pursue infringement lawsuits.</p> <p>To learn more about the conference, please visit the <a href="">Litigation Funding Forum website</a>.</p>Professional Activities12 Mar 2020 00:00:00 -0800 Alert: Federal Circuit Provides Further Guidance Regarding Subject Matter Eligibility<p>On March 6, in <a href=""><i>Customedia Technologies, LLC v. Dish Network Corporation et al.</i></a>, the Federal Circuit affirmed Patent Trial and Appeal Board (PTAB) decisions finding two patents generally relating to &ldquo;comprehensive data management and processing systems&rdquo; patent-ineligible under 35 U.S.C. &sect; 101. Importantly, the case provides further guidance on the &ldquo;abstractness&rdquo; doctrine and the Federal Circuit&rsquo;s analysis under this doctrine.</p> <p>Customedia&rsquo;s two patents, U.S. Patent Nos. 8,719,090 and 9,053,494, share the same specification. Each patent discloses systems whose essential purpose is for targeted advertising to consumers watching television. The disclosed systems comprise a &ldquo;remote Account-Transaction Server (ATS) and a local host Data Management System and Audio/Video Processor Recorder-player (VPR/DMS),&rdquo; such as a cable set-top box. Data is transmitted via the ATS to the VPR/DMS and then &ldquo;selectively recorded in programmable storage sections in the VPR/DMS&rdquo; based on user preferences. The storage sections can be &ldquo;reserved, rented, leased or purchased from end user[s], content providers, broadcasters, cable/satellite distributor, or other data communications companies administering the data products and services.&rdquo;</p> <p>DISH petitioned the PTAB for review of certain claims of each patent pursuant to CBM review, and the PTAB instituted CBM review on claims for both patents. In addition to the section 101 rejections, the PTAB found some claims ineligible under sections 102 and 112, but the court did not reach those rejections on appeal.</p> <p>In analyzing the subject matter eligibility, the court looked to the two-step analysis set out in the Supreme Court&rsquo;s decision in <i>Alice Corp. v. CLS Bank Int&rsquo;l</i>. This framework requires that courts first determine whether the claims are directed to a judicial exception (i.e., an abstract idea, law of nature, or natural phenomena), and then determine whether the claim recites additional elements that supply an inventive concept sufficient to transform the nature of the claim into a patent-eligible application of the exception such that the patent is directed to something significantly more than the ineligible subject matter itself.</p> <p>For the first step, the court determined the subject matter of the claims to be directed to an abstract idea. Customedia argued that the claims of the patent are directed to an improvement in the functioning of a computer, pointing to language in <i>Alice</i>. The court disagreed, however, reasoning that the claims at issue, rather than being directed to improvements to operations and functionality of a system, are directed to the abstract idea of using a computer to deliver targeted advertising to a user.</p> <p>Further, the court rejected Customedia&rsquo;s argument that by reserving memory for advertising data, the system was improved, noting that the &ldquo;functionality of <i>the computer itself</i>&rdquo; (emphasis added) is not improved. Rather, the court said the concept of delivering targeted advertising <i>using a computer as a tool</i> is improved. The court found support for this important key difference in a number of previous decisions, including <i>Ancora Techs. Inc. v. HTC America, Inc.</i>, where the court held claims non-abstract and patent-eligible because they were directed to storing a verification structure in computer memory, which improved computer security. Thus, here the court found that the claims were directed to an abstract concept, emphasizing the distinction between improving the system itself and improving the abstract concept through use of a system or computer. &nbsp;&nbsp;&nbsp;</p> <p>Turning to the second step, the court determined that additional elements of the claims &ldquo;considered individually and as an ordered combination&rdquo; did not &ldquo;recite an inventive concept.&rdquo; The court reasoned that besides the concept of delivering targeted advertising, the claims did not provide more than generic computer components. The court further rejected Customedia&rsquo;s argument that the programmable receiver to dedicate a section of memory specifically for identified advertising data was an improvement over the prior art. Specifically, the court cited a prior case and said, &ldquo;the invocation of &lsquo;already-available computers that are not themselves plausibly asserted to be an advance . . . amounts to a recitation of what is well-understood, routine, and conventional.&rsquo;&rdquo;</p> <p>Thus, because the claims did not disclose an improvement in the computer itself, the additional elements of the claims did not make the abstract concepts claimed patent-eligible, and the court affirmed the decision of the PTAB holding claims of the patents ineligible under section 101. &nbsp;</p> <p>&nbsp;For more information on this case, please contact Fitch Even attorney <a href=";A=18118&amp;format=xml&amp;p=5482">Vincent R. Meyer</a>, author of this alert.<br /> <b><br /> Fitch Even IP Alert<sup>&reg; </sup>&nbsp;</b></p>IP Alerts10 Mar 2020 00:00:00 -0800 Alert: Federal Circuit Clarifies Meaning of "Articles That Infringe" and "Importer" In 337 Actions<p>On March 2, in an appeal of an action brought under section 337 of the Tariff Act of 1930 in the International Trade Commission (ITC) and captioned <i><a href="">Comcast Corp. v. U.S. Int&rsquo;l Trade Comm&rsquo;n,</a> </i>the Federal Circuit held that products are &ldquo;articles that infringe&rdquo; under section 337 if they are designed to be, and are, used with other products after importation as part of a system that infringes a U.S. patent. The court also held that an entity that is involved in the design, manufacture, and importation of articles that infringe is an &ldquo;importer,&rdquo; even if it does not physically import the infringing articles. Finally, the court held that foreign manufacturers, even if they do not themselves infringe or violate section 337, can be subject to a limited exclusion order for product imported &ldquo;on behalf of&rdquo; an entity found to infringe and violate section 337.</p> <p>The ITC and complainants Rovi Corporation and Rovi Guides, Inc. (collectively &ldquo;Rovi&rdquo;) brought a section 337 action against several Comcast, ARRIS, and Technicolor entities for infringement of Rovi&rsquo;s U.S. Patent Nos. 8,006,263 (&ldquo;the &rsquo;263 patent&rdquo;) and 8,578,413 (&ldquo;the &rsquo;413 patent&rdquo;). The &rsquo;263 and &rsquo;413 patents are directed to systems for selecting and recording television programs using a local interactive television program guide and a remote mobile device for accessing a program guide over the internet and selecting programs to be recorded by the local interactive television program guide. The Comcast entities (collectively &ldquo;Comcast&rdquo;) designed accused set-top boxes (&ldquo;STBs&rdquo;) and set up manufacture of the STBs by overseas vendors ARRIS and Technicolor, who imported the STBs into the U.S. The STBs were designed so that users in the U.S. would undisputedly infringe the patents-in-suit when the STBs were used with Comcast servers and remote mobile devices so that users could remotely select television programs for recording.</p> <p>The ITC found that Comcast violated section 337 and issued a limited exclusion order preventing importation of the accused STBs by Comcast and also by ARRIS and Technicolor, &ldquo;to the extent they import such products on behalf of [Comcast].&rdquo; The ITC also issued cease and desist orders directed to Comcast. &nbsp;</p> <p>On appeal, the Federal Circuit rejected Comcast&rsquo;s argument that its accused products are not &ldquo;articles that infringe&rdquo; under section 337 because they do not infringe at the time of importation but infringe later when used by consumers with the Comcast servers and mobile devices. Following its earlier en banc decision in <i>Suprema v. U.S. Int&rsquo;l Trade Comm&rsquo;n</i>, the court held that section 337 applies to articles that infringe after importation when they are used in an infringing system. The court quoted this passage from <i>Suprema</i>: &ldquo;the Commission&rsquo;s interpretation that the phrase &lsquo;articles that infringe&rsquo; covers goods that were used by an importer to directly infringe post-importation as a result of the seller&rsquo;s inducement is reasonable.&rdquo;&nbsp;</p> <p>Further, the court agreed with the ITC&rsquo;s final decision that Comcast designed the accused STBs to be &ldquo;used in an infringing manner&rdquo; and &ldquo;directed their manufacture overseas,&rdquo; as well as that &ldquo;&sect; 271(b) applies to extraterritorial conduct,&rdquo; and therefore &ldquo;Comcast&rsquo;s inducing activity took place overseas, prior to importation; it took place at importation; and it took place in the United States, after importation.&rdquo;</p> <p>The court noted that it is &ldquo;undisputed that direct infringement of the &rsquo;263 and &rsquo;413 patents occurs when the imported X1 set-top boxes are fitted by or on behalf of Comcast and used with Comcast&rsquo;s customers&rsquo; mobile devices,&rdquo; and therefore &ldquo;the X1 set-top boxes imported by and for Comcast for use by Comcast&rsquo;s customers are &lsquo;articles that infringe&rsquo; in terms of Section 337.&rdquo; Thus, the court interestingly found the imported STBs alone to be &ldquo;articles that infringe&rdquo; under section 337. This was so even though the patents-in-suit claimed a system that required more than an STB, i.e., a remote mobile device. The court did not explain this apparent inconsistency between its infringement finding under section 337 and the claim language that specifies more than an STB.</p> <p>The Federal Circuit rejected Comcast&rsquo;s arguments that it is not an &ldquo;importer&rdquo; under section 337 because it does not physically import the infringing product, it does not exercise control over the process of importation, and it only takes title to the products after they are imported into the U.S. by the ARRIS and Technicolor entities (collectively &ldquo;ARRIS&rdquo; and &ldquo;Technicolor&rdquo;). The court held that Comcast is an importer because of its involvement in design, manufacture, and importation of the accused products, including requiring adherence to Comcast&rsquo;s specifications and acceptability standards, restricting ARRIS&rsquo;s ability to sell the products without Comcast&rsquo;s permission, providing technical documents to ARRIS and Technicolor so that the STBs will operate in Comcast&rsquo;s network, requiring delivery to Comcast delivery sites in the U.S., controlling the volume of accused products that enter the U.S., and requiring ARRIS and Technicolor to handle importation formalities. The court found that the ITC&rsquo;s findings of importation &ldquo;by or for Comcast&rdquo; of articles &ldquo;for infringing uses&rdquo; was supported by substantial evidence and therefore affirmed the determination that Comcast was an importer that violated section 337.</p> <p>Regarding ARRIS and Technicolor, the court held that including products imported by ARRIS and Technicolor in the limited exclusion order was proper even though they were found not to infringe, because the ITC &ldquo;has discretion in selecting a remedy that has a reasonable relation to the unlawful trade practice&rdquo; and &ldquo;the exclusion order is limited to articles imported on behalf of Comcast.&rdquo; The court rejected the argument that products imported by ARRIS and Technicolor should not be included in the exclusion order because section 337 limits exclusion orders to articles imported by parties violating section 337.</p> <p>An interesting nuance in the case relates to the fact that the patents-in-suit expired after issuance of the final exclusion order by the ITC and during the course of the appeal to the Federal Circuit. In denying a motion to dismiss the appeal as being moot due to the expiration of the patents, the Federal Circuit held that the appeal was not moot because the court&rsquo;s decision would have &ldquo;collateral consequences&rdquo; in ongoing actions for infringement of other Rovi patents involving the same accused products. &nbsp;</p> <p>This Federal Circuit decision is significant for parties in the ITC who are dealing with importation into the U.S. of non-infringing component parts that are designed to be used in a system that induces direct infringement in the U.S. A designer of an infringing system who orchestrates the manufacture and importation of a component part of the system may be considered an &ldquo;importer&rdquo; of an &ldquo;article that infringes&rdquo; under section 337. It is no defense to argue that direct infringement does not occur until the component parts enter the U.S. and are put into the infringing system. The decision also confirms the propriety of including importers of the component parts as respondents even though the respondents themselves do not infringe the patents involved or violate section 337.&nbsp;</p> <p>For more information on this ruling, please contact Fitch Even partner <a href=";A=2581&amp;format=xml&amp;p=5482">Karl R. Fink</a>, author of this alert.<br /> <b><br /> Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts09 Mar 2020 00:00:00 -0800 an Invention to the Evidence: Strategic Considerations from Prosecution to Litigation<p><strong>This webinar, </strong><strong>originally scheduled for March 19, 2020, has been postponed to a later date. We will post the new date once it has been rescheduled. Thank you.<br /> </strong></p> <p><em>COMING SOON:</em><br /> Evidence that others value an invention can be used by a patent owner for many purposes, including demonstrating that the invention was not obvious, or that infringement has damaged and will continue to damage the patent owner. Yet that evidence may be of little value without the ability to tie it to the specific inventions set forth in the claims of a patent. When there are numerous reasons that customers might purchase or desire a product sold by a patent owner or infringer, establishing a nexus between the claims of the patent and real-world evidence becomes complicated.</p> <p>During this webinar, our presenters will discuss the following:</p> <ul> <li>Establishing a nexus between evidence of commercial success of real-world products and the patented invention</li> <li>Demonstrating a connection between patented features and lost profits</li> <li>Proving there is a causal nexus between irreparable harm and the patented invention that justifies an injunction</li> <li>Drafting claims with forethought to future evidentiary requirements</li> </ul> <p>Our speakers will be Fitch Even attorneys <a href=";A=2567&amp;format=xml&amp;p=5482">Mark A. Borsos</a> and <a href=";A=16703&amp;format=xml&amp;p=5482">Evan Kline-Wedeen</a>.</p> <p>Mark has comprehensive experience in patent preparation, prosecution, and litigation. He also assists clients with product clearance and licensing issues, as well as strategic patent portfolio creation, acquisition, and management.</p> <p>Evan&rsquo;s practice encompasses patent preparation and prosecution, IP litigation, patent post-issuance proceedings, and product clearance and legal opinions. He works with clients in fields including biomedical engineering, mechanical engineering, and material science.</p> <p>&nbsp;</p> <p>&nbsp;</p>Upcoming Webinars02 Mar 2020 00:00:00 -0800 Even Partner Paul Henkelmann to Copresent AIPLA Webinar on Post-Grant Procedures<p>Fitch Even partner <a href=";A=2587&amp;format=xml&amp;p=5482">Paul B. Henkelmann</a> will copresent the AIPLA CLE webinar &ldquo;Post-Grant Strategies for Correcting and Challenging Patent Claims&rdquo; on March 4 from 11:30 a.m. to 1:00 p.m. CST.</p> <p>The webinar will cover the various post-grant procedures, including <i>inter partes</i> review (IPR), post-grant review (PGR), covered business method review (CBM), supplemental examination, <i>ex parte</i> reexamination, and reissue applications. In particular, the presenters will explain when, why, and how each procedure is useful (or not) to patent owners and third parties and provide tips for petitioners and patent owners in USPTO trial proceedings.</p> <p>Paul has substantial experience in patent post-grant proceedings, IP litigation, U.S. and international patent prosecution, and IP portfolio management. Nationally recognized for his active practice before the Patent Trial and Appeal Board, Paul has represented clients in dozens of IPR proceedings.</p> <p>For more information and to register, please visit the <a href="">AIPLA website.</a></p>Professional Activities28 Feb 2020 00:00:00 -0800 Alert: Federal Circuit Issues Significant Decision on Patent Marking<p>Under the patent damages statute, 35 U.S.C. &sect; 287, a patentee that sells or authorizes the sale of a patented article should ensure that the patented article is marked with the patent number. Such marking will provide what is known as &ldquo;constructive notice&rdquo; of the patent to any potential infringer. If the patentee does not mark the patent number, then it cannot recover infringement damages until it provides actual notice of the patent to the accused infringer. Prior case law has established that if a patentee has not made any products covered by the patent, there is no marking requirement, and consequently the infringer is liable for damages for pre-suit sales irrespective of notice.</p> <p>But what happens if the patentee has previously sold unmarked products? Can this failure to mark be cured, and under what circumstances? And will a failure to provide notice of infringement be excused if the infringer knew it was infringing the patent anyway?</p> <p>On February 19, the Federal Circuit answered these questions, holding (1) ceasing sale of unmarked patented articles does not excuse noncompliance with the marking statute thereafter; (2) following the sale of unmarked patented articles, a patentee or licensee cannot satisfy the marking statute until it begins selling marked products; and (3) a finding of willful infringement does not establish actual notice for purposes of the marking statute. The case, <a href=""><i>Arctic Cat Inc. v. Bombardier Recreational Products Inc.</i></a>, is the second Federal Circuit decision on marking in the same dispute; the first was reported <a href=";an=72248&amp;anc=180&amp;format=xml&amp;p=5486">here</a>.</p> <p>Arctic Cat licensed the patent at issue to Honda. The license agreement did not contain a marking obligation. Honda made and sold unmarked products (personal watercraft) until September 2013, while Arctic Cat refrained from making and selling such products. In October 2014, Arctic Cat sued Bombardier for patent infringement. The district court granted Bombardier&rsquo;s motion for summary judgment of no damages prior to suit, reasoning that the failure to mark excused pre-suit damage. Ultimately, Bombardier was found to have committed willful infringement, meaning that, according to the jury, Bombardier knew of the patent and disregarded a known risk of infringement.</p> <p>On appeal, Arctic Cat argued that because Honda had ceased selling unmarked products well before suit was filed, noncompliance with the marking statute thereafter should be excused. Arctic Cat also argued that the jury&rsquo;s finding of willful infringement should be sufficient to establish actual notice. The Federal Circuit rejected both arguments, holding instead that once a patentee or licensee has placed unmarked articles on the market, it cannot correct the potential confusion until it acts affirmatively to place marked articles on the market. This comports with the policy of the marking statute, which is to encourage marking rather than discourage the sale of unmarked products.</p> <p>The court further reasoned that the marking statute is directed to the conduct of the patentee in providing notice, whereas willfulness concerns the knowledge and conduct of an infringer. Accordingly, any jury finding regarding the knowledge and conduct of an infringer should not discharge the duty of a patentee to provide constructive or actual notice.</p> <p>One other point worth noting is the Federal Circuit&rsquo;s acknowledgement that courts may consider whether a patentee made reasonable efforts to ensure third parties&rsquo; compliance with the marking statute. Here the court noted that the lack of a marking requirement in Arctic Cat/Honda&rsquo;s license agreement was unfavorable for Arctic Cat.</p> <p>This decision is advantageous for accused infringers with a potential marking defense because it definitively broadens the defense in instances where a patentee or licensee previously sold an unmarked article. It also removes any argument that a finding of willful infringement can establish actual notice for purposes of the marking statute. Patent owners can learn from this ruling by ensuring that all current and future licenses for patented articles include a marking requirement. Patent owners should otherwise make every reasonable effort to ensure marking of patented articles.</p> <p>Please contact Fitch Even attorney <a href=";A=13120&amp;format=xml&amp;p=5482">Andrew C. Wood</a>, author of this alert, with any questions concerning this case.</p> <p>&nbsp;</p> <p><b>Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts21 Feb 2020 00:00:00 -0800