Fitch Even News Feed Jan 2019 00:00:00 -0800firmwise Alert: PTAB Can Consider Previously Non-Instituted Ground of Unpatentability<p>On January 9, in <i><a href="">AC Technologies S.A. v., Inc.</a></i>, the Federal Circuit held that the Patent Trial and Appeal Board (PTAB) did not exceed its statutory authority or violate due process when it ordered a rehearing to consider a previously non-instituted ground of unpatentability.</p> <p>In its petition for <i>inter partes </i>review, Amazon raised three grounds for unpatentability. The PTAB instituted review of Grounds 1 and 2, but declined to institute Ground 3. Grounds 1 and 3 relied on alternative constructions of the phrase &ldquo;computer unit.&rdquo; The PTAB adopted a broad construction of that phrase in the institution decision, which favored Ground 1 and rendered Ground 3 moot. The PTAB&rsquo;s final decision, however, construed &ldquo;computer unit&rdquo; differently.</p> <p>Under this revised construction, the PTAB held that Ground 1 did not invalidate the claims, but did not consider Ground 3. Amazon moved for reconsideration, pointing to the omission of Ground 3. On reconsideration, the PTAB addressed Ground 3 and invalidated the remaining claims. The patent owner, AC Techs, appealed to the Federal Circuit, arguing that by reconsidering Ground 3 the PTAB exceeded its statutory authority and fell short of its obligation to provide due process.</p> <p>The Federal Circuit held that precedent mandates that the PTAB consider all grounds of unpatentability raised in an instituted petition, citing <i>SAS Institute Inc. v. Iancu</i>. Notably, each of the PTAB&rsquo;s decisions in this case came before the Supreme Court issued the <i>SAS</i> decision. Applying <i>SAS</i>, the Federal Circuit held that the PTAB did not exceed its statutory authority when it addressed non-instituted Ground 3. To the contrary, the Federal Circuit explained that the PTAB would have violated the statutory scheme if it did not address the non-instituted ground when it reconsidered its final written decision.</p> <p>Furthermore, the Federal Circuit held that the PTAB did not violate due process on the facts of this case. After ordering reconsideration of Ground 3, the PTAB permitted AC Techs to take discovery and to submit additional briefing and evidence on Ground 3. Although AC Techs did not receive a hearing on Ground 3, it had never requested one.</p> <p>As noted above, the circumstances of this case are somewhat unique because each of the PTAB&rsquo;s decisions was issued prior to the Supreme Court&rsquo;s <i>SAS</i> decision. Post-<i>SAS</i>, if the PTAB institutes trial it must include every ground asserted in the petition. This decision reiterates that the PTAB must consider every ground in an instituted IPR and emphasizes that due process concerns are mitigated if the parties have the opportunity to address issues raised after institution. Specifically, if a patent owner wants a hearing on a ground that was not instituted but is later considered, it should request one.</p> <p>For more information on this holding, please contact Fitch Even partner <a href=";A=2585&amp;format=xml&amp;p=5482">David A. Gosse</a>, author of this alert.</p> <p><i>Fitch Even law clerk </i><i>Jacqueline L. Thompson contributed to this alert.</i>&nbsp;</p> <p>&nbsp;</p> <p><b>Fitch Even IP Alert&reg;</b></p>IP Alerts11 Jan 2019 00:00:00 -0800 Alert: USPTO Releases Latest Guidance for Evaluating Subject Matter Eligibility Under 35 U.S.C. § 101<p>Since the 2012 and 2014 landmark Supreme Court decisions <i>Mayo Collaborative Servs. v. Prometheus Labs., Inc.</i> and <i>Alice Corp. Pty. Ltd. v. CLS Bank Int&rsquo;l</i>, inventors, business owners, patent practitioners, courts, and USPTO examiners alike have struggled with how to apply the Supreme Court&rsquo;s framework in <i>Mayo/Alice</i> for evaluating whether an invention is eligible subject matter for patenting. On January 7, in an effort to address the need for accurate and consistent application of the <i>Mayo/Alice</i> test, the USPTO issued <a href="">guidance</a> to be used by examiners in evaluating subject matter eligibility for patent applications.</p> <p>Patent-eligible subject matter is defined in 35 U.S.C. &sect; 101 as &ldquo;any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.&rdquo; However, the Supreme Court has identified laws of nature, natural phenomena, and abstract ideas as &ldquo;judicial exceptions&rdquo; to those statutory categories. In <i>Alice</i>, the Court announced a two-part test for determining patent-eligible subject matter: (1) whether a claim is directed to one of the judicial exceptions, and (2) whether the claim recites additional elements that amount to significantly more than the judicial exception.</p> <p>The USPTO previously issued a series of guidelines intended to advise its Examining Corps in making accurate and consistent decisions regarding patent eligibility. Past efforts have not been wholly successful in either regard. Many of the previous guidelines relied upon an analysis approach that required patent examiners to apply litigation-based precedent on a case-by-case basis. As a general rule, however, the 8,000+ examiners at the USPTO are not lawyers, so are not deeply trained in reading, interpreting, and applying case law in such a manner.</p> <p>This latest guidance, although heavily annotated to demonstrate a direct link between the dictates of guidance and the relevant case law, includes clear statements and examples so that examiners need not individually (and possibly inconsistently) interpret legal decisions. While patent-eligibility analysis may never submit to a simple bright-line test, this new guidance may prove very helpful to both examiners and those seeking patents by at least clarifying the basic rules of the road.</p> <p>The guidance largely addresses only the first step of the <i>Alice/Mayo</i> test&mdash;whether a claim is directed to one of the judicial exceptions. It does this by breaking down this first step into two sequential inquiries.</p> <p>Under the first prong, if the examiner believes that a claim presents abstract subject matter, the examiner must confirm that the identified abstract claim features fall within one of a number of specific subject matter groupings. Those specific groupings are</p> <p style="margin-left: 40px;">(a) Mathematical concepts&mdash;mathematical relationships, mathematical formulas or equations, mathematical calculations;</p> <p style="margin-left: 40px;">(b) Certain methods of organizing human activity&mdash;fundamental economic principles or practices (including hedging, insurance, mitigating risk); commercial or legal interactions (including agreements in the form of contracts; legal obligations; advertising, marketing or sales activities or behaviors; business relations); managing personal behavior or relationships or interactions between people (including social activities, teaching, and following rules or instructions); and</p> <p style="margin-left: 40px;">(c) Mental processes&mdash;concepts performed in the human mind (including an observation, evaluation, judgment, opinion).</p> <p>The guidance specifies that, except in rare circumstances, claims should not be treated as abstract ideas if they do not fall into one of the above groupings. If a claim does pass the first prong, the examiner then proceeds to a new second prong.</p> <p>Under the second prong of the guidance, examiners must evaluate whether the abstract content is integrated into a practical application. If true, the claim is not directed to an abstract concept, notwithstanding the presence of that abstract concept.</p> <p>The guidance provides several examples of when a judicial exception is integrated into a practical application, such as when the claim</p> <ul> <li>reflects an improvement in the functioning of a computer,</li> <li>effects a particular treatment for a disease or medical condition,</li> <li>is applied with or used by a particular machine,</li> <li>transforms or reduces a particular article to a different state or thing, or</li> <li>is applied or used in some other meaningful way beyond generally linking the use to a particular technological environment.</li> </ul> <p>Under the <i>Mayo/Alice</i> two-part test, if a claim is directed to abstract content, the second part of the test then assesses whether there is nevertheless something &ldquo;significantly more&rdquo; in the claim that preserves the patent eligibility of that claim. When assessing that &ldquo;significantly more&rdquo; aspect, examiners often assess whether the additional element or elements at issue represent &ldquo;well-understood, routine, conventional activity.&rdquo; When true, such an element may fail to constitute something that is &ldquo;significantly more.&rdquo;</p> <p>The new guidance clarifies that the inquiry into whether an element is well-understood, routine, and conventional has no part to play when initially deciding whether a claim is directed to abstract subject matter. In particular, when deciding whether the abstract content is integrated into a practical application, the guidance instructs that it is irrelevant whether the details of that practical application are otherwise well-understood, routine, and conventional.</p> <p>In addition to offering clarity, the guidance ideally will mitigate inconsistent examination as well as unduly harsh denials of patent eligibility during patent examination.</p> <p>The Computer-Implemented Functional Claim Limitations Guidance is effective immediately and applies to all pending and newly filed applications as well as to all patents resulting from applications filed before, on, or after January 7, 2019. It also applies to proceedings before the Patent Trial and Appeal Board.</p> <p>For more information, please contact Fitch Even partners <a href=";A=2603&amp;format=xml&amp;p=5482">Joseph F. Marinelli</a> and <a href=";A=2610&amp;format=xml&amp;p=5482">Steven G. Parmelee</a>, authors of this alert.<br /> &nbsp;</p> <p><b>Fitch Even IP Alert</b><sup><b>&reg;</b></sup></p>IP Alerts11 Jan 2019 00:00:00 -0800 Alert: USPTO Releases Guidance for Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. § 112<p>On January 7, contemporaneously with the release of guidance addressing the analysis of patent eligibility under 35 U.S.C. &sect; 101, the USPTO issued <a href="">guidance</a> that addresses requirements presented by 35 U.S.C. &sect; 112 regarding computer-implemented functional claim limitations. Unlike the patent-eligibility guidance, which presents a new examination procedure, the section 112 examination guidance doesn't introduce something new but presents a consolidation of existing practices that are now more clearly bound by common points of concern, inquiry, and vocabulary.</p> <p>Section 112 explicitly permits a claim to include a purely functional claim expression rather than a recitation of structure to accomplish that function. This statutory provision specifies that such a practice is invoked by presenting a &ldquo;means&rdquo; for accomplishing a stated function. In such a case, section 112 then further states that such a claim limitation shall be interpreted as the structure described in the specification as accomplishing the claimed function. The section 112 guidance attempts to clarify not only the foregoing, but also make these points:</p> <ul> <li>A functional claim recitation that includes the word &ldquo;means&rdquo; may nevertheless be interpreted without invoking the functional claim language provisions of section 112 if the claim recitation also includes sufficient structure to accomplish the stated function.</li> <li>A functional claim recitation that does not include the word &ldquo;means&rdquo; but which does not otherwise include sufficient structure to accomplish the stated function may nevertheless be interpreted as though it did include the word &ldquo;means&rdquo; if the function is accomplished by a &ldquo;non-structural generic placeholder&rdquo; (such as a mechanism, module, device, unit, component, element, member, apparatus, system, or machine). (The Manual of Patent Examination Procedure refers to such words as &ldquo;nonce&rdquo; words.)</li> <li>Notwithstanding the foregoing list of suspect words, there is no fixed list of words that always result in treating the claim limitation as a &ldquo;means&rdquo; limitation, and conversely there is no fixed list of words that guarantee exclusion from such treatment (&ldquo;every case will turn on its own unique set of facts&rdquo;).</li> <li>The specification must include an algorithm that fully accomplishes the entire claimed computer-implemented function regardless of whether the claimed function is being interpreted as a &ldquo;means&rdquo; expression or not.</li> <li>One suitable definition of an algorithm is &ldquo;a finite sequence of steps for solving a logical or mathematical problem or performing a task&rdquo; and an algorithm can be satisfactorily expressed in any understandable terms including as a mathematical formula, in prose, as a flow chart, or in any other manner that provides sufficient structure.</li> <li>While things that are well known in the art need not be described in detail, it is still necessary to present structure in the specification to accomplish the claimed function when the function is interpreted as being accomplished by a &ldquo;means&rdquo; or its equivalent.</li> <li>The applicant cannot merely rely upon the knowledge of one skilled in the art to substitute for a description of structure, and the guidance further cautions that an applicant cannot rely on the knowledge of one skilled in the art to supply information that is required to enable the novel aspect of the claimed invention when the enabling knowledge is in fact not known in the art.</li> </ul> <p>While this guidance does not necessarily break any new ground, it may well prove useful (both for patent examiners as well as patent applicants) in prompting more-consistent analysis and treatment of claims that include functional claim expressions.</p> <p>Hazarding a guess, the author suspects that the patent-eligibility guidance mentioned above will lead to a reduction in the number of applications that face serious patent-eligibility problems, but this section 112 guidance will likely lead to an increase in the number of applications that face serious challenges based on the contents of the specification (or, perhaps more accurately, based on the lack of contents in the specification).</p> <p>The guidance is effective immediately and applies to all pending and newly filed applications, and to all patents resulting from applications, filed before, on, or after January 7, 2019.</p> <p>For more information, please contact Fitch Even partner <a href=";A=2610&amp;format=xml&amp;p=5482">Steven G. Parmelee</a>, author of this alert.<br /> &nbsp;</p> <p><b>Fitch Even IP Alert</b><sup><b>&reg;</b></sup></p>IP Alerts11 Jan 2019 00:00:00 -0800 Alert: Supreme Court to Hear Case on "Immoral" or "Scandalous" Trademarks<p>On January 4, the U.S. Supreme Court granted a writ of certiorari in <i>Iancu v. Brunetti, </i>agreeing to consider whether it is unconstitutional for the federal government to refuse trademark registration for a mark deemed &ldquo;immoral&rdquo; or &ldquo;scandalous.&rdquo;</p> <p>The case involves an earlier decision of the U.S. Patent and Trademark Office to deny trademark registration to Erik Brunetti for a vulgar term he had chosen to name his clothing line. Brunetti appealed, and in December 2017 the Federal Circuit held that the &ldquo;scandalous&rdquo; aspect of section 2(a) of the Lanham Act was unconstitutional under the Supreme Court&rsquo;s June 2017 decision in <i>Matal v. Tam. </i>The USPTO subsequently petitioned the Supreme Court to hear the case.</p> <p>The question presented to the Court for consideration is as follows:</p> <p>&ldquo;Whether [the Lanham Act, 15 U.S.C.] 1052(a)&rsquo;s prohibition on the federal registration of &lsquo;immoral&rsquo; or &lsquo;scandalous&rsquo; marks is facially invalid under the Free Speech Clause of the First Amendment.&rdquo;</p> <p>Our alert summarizing the Federal Circuit&rsquo;s December 2017 ruling in this case can be found <a href=";an=72525&amp;anc=180&amp;format=xml&amp;p=5486">here</a>.</p> <p>Fitch Even attorneys will report once the Court has issued its opinion.<br /> &nbsp;</p> <p><b>Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts08 Jan 2019 00:00:00 -0800 Alert: Recently Established PTAB Precedential Opinion Panel Set to Review First Decision<p>On December 3, the Patent Trial and Appeal Board (PTAB) Precedential Opinion Panel issued its first rehearing order. The case is <i><a href="">Proppant Express Investments, LLC v. Oren Technologies, LLC</a></i> and the issue for precedential review is whether the same petitioner should be allowed to join a second petition with an earlier petition on which trial has been instituted.</p> <p>This marks the first precedential review since the Precedential Opinion Panel was established in September 2018 under revised Standard Operating Procedures issued by the USPTO. Under the revised procedures, the Precedential Opinion Panel was created to rehear issues of &ldquo;exceptional importance&rdquo; and to redesignate prior opinions of the PTAB as precedential. Either party to a decision can request precedential review by emailing the PTAB and including a request for rehearing.</p> <p>Upon being sued for patent infringement, petitioner Proppant Express timely filed a first petition for <i>inter partes</i> review. Proppant subsequently filed a second petition, which would have been time-barred under 35 U.S.C. &sect; 315(b), precluding any petition filed more than a year after the petitioner was served with a complaint for patent infringement. Seeking to avoid the time bar, Proppant moved for joinder of the second petition with the instituted first petition, arguing that the time bar should not apply because joinder of parties is permitted.</p> <p>The original PTAB panel to decide the issue disagreed and held that the plain language of the statute prevented Proppant from joining the two petitions. It found &ldquo;no ambiguity in the language of &sect; 315(c) that would permit [them] to conclude that Congress granted the [USPTO] authority to join new issues to an existing <i>inter partes</i> review.&rdquo; Although the Federal Circuit has not directly ruled on this issue, the PTAB noted dicta from a concurring opinion in the Federal Circuit&rsquo;s recent decision in <i>Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co.</i>, where Judges Dyk and Wallach found it &ldquo;unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding.&rdquo;</p> <p>The December rehearing order notes conflicting PTAB decisions relating to same-party joinder under section 315(c). The precedential review will address whether</p> <ol> <li>a petitioner may be joined to a proceeding in which it is already a party,</li> <li>section 315(c) permits joinder of new issues into an existing proceeding, and</li> <li>the existence of a time bar under section 315(b) or other relevant factors have an impact on the first two questions.</li> </ol> <p>The panel for this review will consist of USPTO Director Andrei Iancu, Commissioner for Patents Drew Hirshfeld, and Acting Chief Judge for the PTAB Scott Boalick. The rehearing decision should be released early this year, after briefing is completed on January 14, 2019.</p> <p>This precedential review is relevant to individuals and companies engaged in, or expecting to be engaged in, proceedings at the PTAB. The precedential review will likely establish more uniformity on same-party joinder decisions. Fitch Even attorneys are monitoring both this case and a case with similar issues currently pending at the Federal Circuit and will report back on future developments.</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.&nbsp;</p> <p><i>Fitch Even associate </i><i><a href=";A=16703&amp;format=xml&amp;p=5482">Evan Kline-Wedeen</a></i><i> contributed to this alert.</i>&nbsp;<br /> <b><br /> <br /> Fitch Even IP Alert<sup>&reg;</sup></b>&nbsp;<br /> &nbsp;</p>IP Alerts02 Jan 2019 00:00:00 -0800 Smarter with Patent Counsel: Tips for Inventors and In-House Lawyers<p>Please join Fitch, Even, Tabin &amp; Flannery LLP for a free webinar, &ldquo;<a href="">Working Smarter with Patent Counsel: Tips for Inventors and In-House Lawyers</a>,&rdquo; on Wednesday, January 23, 2019, at 9:00 am PST / 10:00 am MST / 11:00 am CST / 12 noon EST.</p> <p>An efficient, productive first meeting with patent counsel can go a long way toward ensuring the patent application process goes smoothly and successfully. Inventors and corporate counsel alike can benefit from learning key considerations to discuss with their patent attorney initially and at each stage of the process. This webinar will offer guidance on what crucial information should be provided at the onset and what further developments should be shared down the line:</p> <ul> <li>Pre-Drafting Stage <ul> <li>Inventorship</li> <li>Information needed for written description</li> <li>Public disclosure (IDS; bar dates)</li> </ul> </li> <li>Drafting Stage <ul> <li>Legal requirements of a patent application</li> <li>Sections 112, 101, 102, and 103</li> <li>Specifications, claims, drawings</li> </ul> </li> <li>Post-Filing Stage <ul> <li>Post-filing improvements or prototypes</li> <li>Commercialization plans and efforts</li> </ul> </li> <li>Business Drivers <ul> <li>Target market analysis</li> <li>Marketing advantages of invention features</li> <li>Critical timeline markers</li> </ul> </li> </ul> <p>Our speaker will be Fitch Even attorney <a href=";A=12371&amp;format=xml&amp;p=5482">Jennifer V. Suarez</a>. Jennifer focuses her practice on U.S. and international patent preparation and prosecution, assisting clients in the electronics, mechanical, telecommunications, computer technology, and medical arts in the development and protection of their IP rights.</p> <p>CLE credit has been approved for California and Illinois and is pending in Nebraska. Other states may also award CLE credit upon attendee request. There is no fee to attend, but please note registration is required. To reserve your place, please <a href="">REGISTER HERE</a>.<br /> &nbsp;</p>Upcoming Webinars21 Dec 2018 00:00:00 -0800 Alert: Whose Right Is It Anyway?<p>On December 12, in <i><a href="/2E8FB4/assets/files/Documents/Capitol Records LLC et. al. v. ReDigi Inc..pdf">Capitol Records, LLC et al. v. ReDigi Inc.</a>, </i>the U.S. Court of Appeals for the Second Circuit held that the first sale doctrine in copyright law did not permit resale of lawfully purchased digital music files.</p> <p>Sections 106(1) and (3) of the Copyright Act, respectively, grant the owner of a copyright the exclusive right to control the reproduction and the distribution of the copyrighted works. Additionally, the first sale doctrine, which is codified in section 109(a) of the Act, provides that the rights holder&rsquo;s control over the distribution of any particular copy or phonorecord that was lawfully made is terminated when that work is distributed to its first recipient. Put another way, a copyright holder who sells a copyrighted work embodied in physical form, such as a book or music recording, generally cannot use copyright law to prohibit the purchaser from reselling the particular physical copy of the work.</p> <p>ReDigi styles itself as a company that provides a marketplace for the lawful resale of legally purchased digital music files. A number of music publishers sued ReDigi, alleging that ReDigi infringed their copyrights by allowing unauthorized reproduction and distribution of their copyrighted works and by inducing infringement by its customers. The district court granted partial summary judgment in favor of the publishers, holding that the defendants had, in fact, created duplicate files that were distinct from the original digital copies of the works and therefore had committed copyright infringement. The court held that ReDigi&rsquo;s method of transferring the digital files violated the publishers&rsquo; exclusive control of reproduction under section 106(1) and that as unlawful reproductions, the digital files were not subject to the resale right established by section 109(a). The court awarded substantial damages and an injunction, and ReDigi appealed.</p> <p>On appeal, ReDigi argued that its system only transfers a <i>particular</i> digital file that had been lawfully purchased. As such, ReDigi argued, each digital file processed by its system is transferred in the same way as would be a physical item such as a compact disc or record. Accordingly, ReDigi asserted, the transfer should not be categorized as reproduction but instead should be treated as a permitted resale. ReDigi specifically argued that the digital files should be considered &ldquo;material objects&rdquo; that qualify as &ldquo;phonorecords,&rdquo; according to the definition outlined in 17 U.S.C. &sect; 101, which are thus afforded the protection of section 109(a). ReDigi also argued that its particular technological transfer mechanism did not, in fact, result in a reproduction.</p> <p>The Second Circuit dismissed ReDigi&rsquo;s first argument, finding that copying the digital files involved an unlawful reproduction, regardless of whether they did or did not qualify as phonorecords. The court then evaluated ReDigi&rsquo;s second assertion against section 101, which provides that when a purchaser of a digital music file possesses that work embodied &ldquo;for a period of more than transitory duration&rdquo; in a computer or other physical storage device, that device becomes a phonorecord. Analyzing ReDigi&rsquo;s process of transferring a digital music file, the court concluded that at each step in ReDigi&rsquo;s process the digital file is fixed in ReDigi&rsquo;s server &ldquo;for a period of more than transitory duration.&rdquo; Therefore, the court held, ReDigi&rsquo;s process created a new phonorecord, which is a reproduction.</p> <p>ReDigi advanced several additional arguments in support of its theory that it was merely transferring a particular copy of the digital files as opposed to making reproductions. ReDigi first argued that in its process, equivalent &ldquo;packets&rdquo; of data are deleted from the old phonorecord as each one is copied into the new phonorecord, such that no new phonorecord was created. The court rejected this argument, concluding that the receipt and storage of the file in ReDigi&rsquo;s server and in the new purchaser&rsquo;s device still involve the making of new phonorecords irrespective of when or how individual packets were created or deleted.</p> <p>Next ReDigi claimed that the transferred file is not embodied &ldquo;for a period of more than transitory duration&rdquo; because it resides in a buffer &ldquo;for less than a second&rdquo; before it is overwritten. However, the Second Circuit rebutted that each file inevitably becomes fixed in ReDigi&rsquo;s server and the purchaser&rsquo;s device, where they exist for the statutory time period &ldquo;of more than transitory duration.&rdquo;</p> <p>ReDigi also argued that its process ensures that the original purchaser&rsquo;s preexisting duplicates are deleted during the transfer process. The court noted that such an assurance does not guarantee that duplicate phonorecords are not created and retained by the original owner by other means. It further emphasized that the terms of the statute could not be disregarded for such an assertion.</p> <p>ReDigi then asserted that the original purchaser&rsquo;s copies of the digital files did not qualify as &ldquo;phonorecords&rdquo; under the Copyright Act. When the original purchaser downloaded the file, ReDigi argued, the digital file became embedded into her computer hard drive, which necessarily contained other content such as software for operating the computer. ReDigi asserted that because the computer hard drive contains such additional content, it included more than a sound recording and so did not qualify as a phonorecord. ReDigi premised this argument on an earlier Second Circuit case, <i>ABKCO Music, Inc. v. Stellar Records, Inc.</i>, which had distinguished rights in audio discs from rights in discs that contained both audio and visual content. The court rejected the defendants&rsquo; interpretation of <i>ABKCO</i>, holding that &ldquo;it does not follow [from ABKCO] that a device or other &lsquo;material object[] in which sounds . . . are fixed . . . and from which the sounds can be perceived, reproduced, or otherwise communicated,&rsquo; 17 U.S.C. &sect; 101, is not a phonorecord, merely because it contains other matter as well.&rdquo;</p> <p>Lastly, ReDigi advanced certain policy-based arguments. ReDigi argued that the district court&rsquo;s reasoning essentially required a customer to sell her computer in order to effectuate the sale of a digital music file because there would be no other feasible way to own a particular copy of a work or phonorecord as required by the first sale doctrine. The Second Circuit found this argument unpersuasive, stating that there are other cost-effective options for consumers who seek to resell their music. The court noted that it did not need to delve into the question of whether all digital file transfers might constitute copyright infringement, but that it was deciding that the particular method employed by ReDigi was infringing. The court further concluded that any policy-based change to existing copyright law must come from Congress.</p> <p>Turning to ReDigi&rsquo;s fair-use defense, the court determined ReDigi&rsquo;s work was not transformative of the copyrighted works in any way. Rather, ReDigi was, in fact, making identical copies of the publishers&rsquo; copyrighted sound recordings. One of the fair-use factors &ldquo;focuses on whether the copy brings to the marketplace a competing substitute for the original, or its derivative, so as to deprive the rights holder of significant revenues.&rdquo; In <i>Harper &amp; Row Publishers, Inc. v. Nation Enterprises</i>, the Supreme Court described the fourth factor as &ldquo;undoubtedly the single most important element of fair use.&quot; Because ReDigi reproduced the plaintiffs&rsquo; works, resold them to the same customers in the competitive marketplace, and deprived the companies of the opportunity to sell the works themselves to ReDigi&rsquo;s customers, the court determined that this factor was strongly in favor of the publishers.</p> <p>This decision favors copyright owners and provides clarification for issues that may arise concerning the reproduction of digital copyrighted work. It also confirms the Second Circuit&rsquo;s view that any policy-based arguments for modification of existing law will have to come from Congress.</p> <p>For more information, please contact Fitch Even attorney <a href=";A=16851&amp;format=xml&amp;p=5482">Kerianne A. Strachan</a>, author of this alert.</p> <p><b><br /> Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts21 Dec 2018 00:00:00 -0800 Even Participates in Direct Effect Charities' Letters to Santa Program<p>This year, as one of Fitch Even&rsquo;s charitable initiatives, Chicago office attorneys and legal professionals responded to letters written by needy Chicago children attending pre-kindergarten through sixth grade. The letters were collected from a participating school and distributed by Chicago-based nonprofit <a href="">Direct Effect Charities</a> through their <a href="">Letters to Santa program</a>.</p> <p>Fitch Even participants claimed one or more letters, bought the requested toys and other items, and brought them to the office where volunteers spent a few hours packing and wrapping all the gifts, which were subsequently delivered to the designated school. We were touched by the many poignant letters we received, and happy to add to Direct Effect&rsquo;s total of well over 100 thousand letters answered in the past 17 years.</p> <p>For more information on Direct Effect Charities and their programs supporting underprivileged children, please visit their <a href="">website</a>.</p>Community Activities18 Dec 2018 00:00:00 -0800 Alert: Federal Circuit Holds Sending Patent Enforcement Letters May Establish Personal Jurisdiction in Recipient's Forum<div ltr=""> <div ltr=""> <p>On December 7, in <i><a href="">Jack Henry &amp; Associates, Inc. v. Plano Encryption Technologies</a></i>, the Federal Circuit held that a patent owner may be subjected to personal jurisdiction in a forum where it is not present by virtue of sending patent enforcement letters to alleged infringers in that forum.</p> <p>Plano Encryption Technologies (&ldquo;PET&rdquo;) sent patent enforcement letters to 11 banks doing business in the Northern District of Texas. PET asserted that the banks&rsquo; mobile phone applications infringed several of PET&rsquo;s patents directed toward secure authentication and distribution of data. Each bank&rsquo;s application used technology provided by Jack Henry &amp; Associates. Upon receipt of the patent enforcement letters, Jack Henry and the banks filed a declaratory judgment action in the District Court for the Northern District of Texas.&nbsp;</p> <p>PET argued that venue was improper since it did business solely in the Eastern District of Texas and its letters were insufficient to create personal jurisdiction. The district court agreed and dismissed the case, finding that the Federal Circuit had established &ldquo;unique&rdquo; rules for patent cases based on policy considerations such that &ldquo;letters threatening suit for patent infringement sent to the alleged infringer by themselves do not suffice to create personal jurisdiction.&rdquo;&nbsp;</p> <p>On appeal, the Federal Circuit quickly disposed of the view held by both the district court and PET that its precedent created a general rule that letters charging infringement could <i>never</i> provide specific jurisdiction. Instead, the court held that courts must undertake a traditional due process inquiry to comply with the Supreme Court&rsquo;s directive in <i>Bristol-Myers Squibb Co. v. Superior Court of California</i> to &ldquo;consider a variety of interests&rdquo; in assessing whether jurisdiction would be fair. Thus, the court examined whether (1) PET &ldquo;purposefully directed&rdquo; its activities at residents of the forum, (2) the claim &ldquo;arises out of or relates to&rdquo; the defendants&rsquo; activities within the forum, and (3) the assertion of personal jurisdiction is reasonable and fair. The first two factors comprise the &ldquo;minimum contacts&rdquo; requirement of the jurisdictional framework set forth long ago by the Supreme Court.&nbsp;</p> <p>In 2017, in <i>New World International, Inc. v. Ford Global Technologies, LLC</i>, the Federal Circuit held that the sending of an enforcement letter might be sufficient to establish minimum contacts. Here, PET conceded during oral argument that the first two factors were met. As such, PET was left to make a &ldquo;compelling case&rdquo; that the exercise of jurisdiction in the Northern District of Texas would be &ldquo;unreasonable and unfair.&rdquo; The Federal Circuit found that PET did not make any such argument and that the minimum contacts requirement was met without offense to due process. For this reason, the court held that PET was subject to personal jurisdiction in the Northern District of Texas.</p> <p>Judge Stoll (joined by Judge Wallach) wrote additional views to address a statement from <i>Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.</i>, a 1998 case that had held that &ldquo;fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum.&rdquo; She noted that subsequent Federal Circuit decisions have interpreted that statement as creating an exception based upon policy considerations unique to patent law. Disagreeing that there exists such exception, Judge Stoll criticized the <i>Red Wing Shoe</i> decision for not adequately assessing the fairness factors mandated by Supreme Court precedent and called for <i>Red Wing Shoe</i> and its progeny to &ldquo;be reconsidered&nbsp;as directly contrary to established Supreme Court precedent.&rdquo;&nbsp;</p> <p>The <em>Jack Henry</em> case is relevant for anyone sending patent enforcement letters to suspected infringers located in other judicial districts. Even when an enforcement letter is the only contact with a foreign forum, courts may nonetheless find that fairness dictates exercising personal jurisdiction over the sender in that forum. The court did not weigh in on whether the sending of letters would meet the minimum contacts test in light of PET&rsquo;s concession, and it is not certain how the court would have analyzed this question had PET not conceded.&nbsp;</p> <p>For more information on this decision, please contact Fitch Even partner <a href=";A=2598&amp;format=xml&amp;p=5482">Nicole L. Little</a>, author of this alert.&nbsp;&nbsp;</p> <p><i>Fitch Even associate </i><i><a href=";A=16703&amp;format=xml&amp;p=5482">Evan Kline-Wedeen</a></i><i> contributed to this alert.</i>&nbsp;</p> <p>&nbsp;</p> <p><b>Fitch Even IP Alert<sup>&reg;</sup></b>&nbsp;<br /> &nbsp;</p> </div> </div>IP Alerts17 Dec 2018 00:00:00 -0800 Alert: Extended Patent Term Does Not Conflict with Double Patenting<p>Today, in <i><a href="">Novartis AG v. Ezra Ventures LLC</a></i>, the Federal Circuit issued a significant decision on the relationship between obviousness-type double patenting and patent term extension under 35 U.S.C. &sect; 156.</p> <p>Section 156 allows a drug manufacturer to elect a five-year extension for a patent covering one of its drugs. This extension is intended to offset the term of the patent during which the drug was subject to regulatory review by the FDA and thus was not marketable. A patentee may elect only one patent term extension under section 156 for any single drug. Where the assignee has multiple patents covering the same drug, the assignee can select which patent qualifies for the patent term extension.</p> <p>In 1997, Novartis received U.S. Patent No. 5,604,229, which claimed a drug for treating multiple sclerosis. Novartis elected this patent to receive the five-year term extension. The &rsquo;229 patent was a GATT transitional patent filed in 1994, and its normal expiration date was 17 years from its 1997 issue date. With the section 156 extension, the &rsquo;229 term was thus extended from 2014 to 2019.</p> <p>Novartis also owned U.S. Patent No. 6,004,565, which covered the same drug as the &rsquo;229 patent. The &rsquo;565 patent was filed in 1997 and its 20-year term expired in 2017.</p> <p>Novartis sued Ezra alleging infringement of the &rsquo;229 patent. Ezra asserted that the &rsquo;229 and &rsquo;565 patents conflicted for obviousness-type double patenting, arguing that the &rsquo;229 patent was invalid, or else Novartis should have disclaimed the patent term extending past the 1997 expiration date of the &rsquo;565 patent. Specifically, Ezra asserted that the section 156 extension effectively created an improper extension of the term of the &rsquo;565 patent. The district court ruled in favor of Novartis.</p> <p>On appeal, the Federal Circuit affirmed. Reviewing the statutory scheme of allowing the patentee to elect which patent to extend, the court concluded that Congress had expressed a decision to provide &ldquo;a flexible approach which gave the patentee the choice&rdquo; of which patent to extend for an individual drug. The court reasoned that Congress had acknowledged scenarios in which an entity will own multiple patents covering the same drug, only one of which is extended. For this reason, the court concluded, the section 156 extension of one patent cannot be vitiated by obviousness-type double patenting.</p> <p>The Federal Circuit further relied on one of its earlier decisions, <i>Merck &amp; Co. v. Hi-Tech Pharmacal Co.</i>, which found that patent term extension under section 156 extended the life of a patent despite a terminal disclaimer filed during prosecution. In <i>Merck</i>, the court distinguished 35 U.S.C. &sect; 156 from 35 U.S.C. &sect; 154, which governs patent term adjustment. Section 154 &ldquo;expressly excludes patents in which a terminal disclaimer was filed from the benefit of a term adjustment for PTO delays.&rdquo; The court reasoned that the absence of such provision in section 156 supported its position.</p> <p>This decision provides some clarity for the interplay between patent term extension and the doctrine of obviousness-type double patenting. For more information, please contact Fitch Even attorney <a href=";A=9296&amp;format=xml&amp;p=5482">Donald R. Bunton</a>, author of this alert.</p> <p>&nbsp;</p> <p><b>Fitch Even IP Alert<sup>&reg;&nbsp;</sup></b></p>IP Alerts07 Dec 2018 00:00:00 -0800