Fitch Even News Feed Sep 2019 00:00:00 -0800firmwise Trade Secret Practices: What You and Your Employees Need to Know<p>Please join Fitch Even for a free webinar, &ldquo;<a href="">Effective Trade Secret Practices: What You and Your Employees Need to Know</a>,&rdquo; on September 26, at 9:00 am PDT / 10:00 am MDT / 11:00 am CDT / 12 noon EDT.</p> <p>With the passage of the America Invents Act and the Defend Trade Secrets Act, as well as recent case law creating uncertainty in some areas of patent law, many intellectual property owners have expressed a renewed interest in trade secret protection for innovations and information. However, very few of these IP owners have a well-developed program for identifying, classifying, and intentionally protecting these trade secrets. And even for those owners with such a program, establishing a record of training leaders and employees in trade secret protection can be important to show that the owner has engaged in &ldquo;reasonable efforts&rdquo; to protect its trade secrets.</p> <p>During this webinar, our presenters will discuss the following:</p> <ul> <li>Best practices for identifying and classifying trade secrets</li> <li>Key features of a trade secret program</li> <li>Ongoing internal education on trade secret protection needed to support a showing of &ldquo;reasonable efforts&rdquo;&nbsp;</li> </ul> <p>Our speakers will be Fitch Even attorneys <a href=";A=2596&amp;format=xml&amp;p=5482">Thomas F. Lebens</a> and <a href=";A=9296&amp;format=xml&amp;p=5482">Donald &ldquo;Bob&rdquo; Bunton</a>.</p> <p>Tom has served clients in preparing and prosecuting patent and trademark applications, including appeals, post-grant review, and interferences, since 1991. He also counsels clients in IP and business strategy, licensing issues, infringement and validity analysis and opinions, and copyright matters.</p> <p>Bob&rsquo;s practice encompasses patent litigation, patent preparation and prosecution, IP transactions, product clearance and legal opinions, IP due diligence and competitive assessments, international IP protection, and post-issuance proceedings. He leverages his aerospace engineering and programming background to assist clients in a wide range of technical fields.</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 registration is required. To reserve your place, please <a href="">REGISTER HERE.</a></p>Upcoming Webinars11 Sep 2019 00:00:00 -0800 Alert: Supreme Court Rules Licensor's Rejection of Trademark License Agreement in Bankruptcy Proceedings Doesn't Deprive Licensee of Its Rights<p>On May 20, 2019, in <a href=""><i>Mission Product Holdings, Inc. v. Tempnology, LLC</i></a>, the U.S. Supreme Court held that a debtor-licensor&rsquo;s rejection of a trademark license agreement under section 365 of the Bankruptcy Code does not rescind the licensee rights that the contract previously granted.</p> <p>In 2012, Tempnology entered into an agreement with Mission granting licenses to distribute clothing under the &ldquo;Coolcore&rdquo; brand name. Before the agreement expired in July 2016, Tempnology filed a petition for Chapter 11 bankruptcy. In its petition, Tempnology asked the Bankruptcy Court to allow it to reject the license agreement, and the court approved. Tempnology then requested a declaratory judgment ordering that its rejection of the license agreement also terminated Mission&rsquo;s rights to use the &ldquo;Coolcore&rdquo; trademark. Tempnology argued that although certain provisions of section 365 of the Bankruptcy Code enable a counterparty to continue exercising various contractual rights after a rejection&mdash;including section 365(n), which applies to some types of intellectual property licenses&mdash;these terms do not cover trademark licenses. Thus, Tempnology asserted that its rejection of the agreement terminated the rights granted to Mission under the agreement. The Bankruptcy Court agreed.</p> <p>The Bankruptcy Appellate Panel reversed, relying primarily on the Seventh Circuit&rsquo;s decision in <i>Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC,</i> regarding the effects of rejection of trademark licensing agreements. The panel focused on section 365(g)&rsquo;s statement that rejection of a contract &ldquo;constitutes a breach.&rdquo; The court held that such a breach does not extinguish contractual rights previously conferred on the nonbreaching party. On this basis, the panel held that Mission could continue to use the &ldquo;Coolcore&rdquo; trademark.</p> <p>Subsequently, the Court of Appeals for the First Circuit rejected the panel&rsquo;s holding and reinstated the Bankruptcy Court&rsquo;s termination of Mission&rsquo;s license. The First Circuit endorsed the court&rsquo;s interpretation of section 365(n) and further relied on the principles of trademark law. Under these principles, the First Circuit reasoned that because Congress intended for rejection to &ldquo;release the debtor&rsquo;s estate from burdensome obligations,&rdquo; and because allowing the licensee to retain rights to the trademark would burden the licensor with monitoring the licensee&rsquo;s use of the trademark, the debtor-licensor should be released from its obligations. To resolve the split between the First and Seventh Circuits, the Supreme Court granted certiorari.</p> <p>The Supreme Court considered the circuits&rsquo; differing interpretations of Section 365. Contrary to the view that rejection terminates the entire agreement along with all the rights it conferred, the Court held that rejection of a contract in bankruptcy is not a rescission, but a breach.</p> <p>In its analysis, the Court first examined section 365(g) of the Code, which defines rejection as a breach. The Court concluded that the definition of &ldquo;breach&rdquo; under contract law must be applied in the case at hand. And, the Court concluded, principles of contract law provide that a breach does not terminate the contract. Thus, the licensor cannot revoke the license and the counterparty still retains its rights under the agreement so long as the licensee performs its obligations under the license agreement.</p> <p>The Court held that this &ldquo;rejection-as-breach rule&rdquo; also preserves the general bankruptcy tenet that &ldquo;the estate cannot possess anything more than the debtor itself did outside bankruptcy.&rdquo; The Court clarified that if a rejection effectuated a rescission, the Code&rsquo;s limitations on &ldquo;avoidance&rdquo; actions, which involve unwinding pre-bankruptcy transfers, would be frustrated.</p> <p>The Court then responded to Tempnology&rsquo;s arguments. First, Tempnology stated that the Code delineates several categories of contracts under which a counterparty retains its rights despite rejection. As a result, the debtor-licensor asserted its &ldquo;negative inference&rdquo; that contractual rights under all other categories, including trademarks, are not preserved. However, based on the legislative history of the Code, the Court observed that Congress enacted the exclusionary exceptions to reinforce and elaborate the general rule that contractual rights continue after rejection. As such, the Court rejected Tempnology&rsquo;s argument for a &ldquo;negative inference.&rdquo;</p> <p>Tempnology also contended that allowing a licensee to exercise its contractual rights after rejection would prevent a debtor-licensor&rsquo;s ability to reorganize because it would have to either incur the costs of quality control over licensee&rsquo;s goods or risk losing its trademark. The Court also rejected this argument reasoning that section 365 is not intended to relieve the debtor-licensor of all burdens applicable under the law.</p> <p>Based on the considerations above, the Court reversed the judgment of the Court of Appeals. This ruling establishes that the rejection of a trademark license agreement during a bankruptcy proceeding is a breach, not a rescission, and that debtor-licensor&rsquo;s rejection cannot terminate the licensee&rsquo;s rights under the license.</p> <p>For more information on this case, please contact Fitch Even partner <a href=";A=2596&amp;format=xml&amp;p=5482">Thomas F. Lebens</a>, author of this alert.</p> <p><i>Fitch Even associate </i><a href=";A=16851&amp;format=xml&amp;p=5482"><i>Kerianne A. Strachan</i></a><i> contributed to this alert.<br /> </i></p> <p><b>Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts10 Sep 2019 00:00:00 -0800 Even Partner Nikki Little Named Chair of ChiWIP Board of Directors<p>Fitch Even partner <a href=";A=2598&amp;format=xml&amp;p=5482">Nikki Little</a> was recently appointed Chair of the Chicago Women in IP (&ldquo;ChiWIP&rdquo;) Board of Directors. Nikki is a cofounder of the organization and also serves as Co-Chair of the Annual Dinner and Special Events Committees.</p> <p>Fitch Even partner <a href=";A=2607&amp;format=xml&amp;p=5482">Calista J. Mitchell</a> is an appointed member of the ChiWIP Board and is Co-Chair of the Mentoring Circles Committee. Fitch Even partner <a href=";A=2599&amp;format=xml&amp;p=5482">Amanda Lowerre O&rsquo;Donnell</a> also serves on the Mentoring Circles Committee.</p> <p><a href="">Chicago Women in IP</a> is a vibrant networking and mentoring organization committed to the connection, promotion, and success of Chicagoland-area women working in the field of intellectual property law. ChiWIP offers a variety of educational seminars, career resources, leadership opportunities, and community outreach initiatives.&nbsp;</p>Professional Activities06 Sep 2019 00:00:00 -0800 Even Partner David Gosse to Teach Oral Advocacy at Chicago-Kent<p>Fitch Even partner <a href=";A=2585&amp;format=xml&amp;p=5482">David A. Gosse</a> will be joining the Chicago-Kent College of Law faculty as adjunct professor for the Fall 2019 semester. He will be teaching &ldquo;Oral Advocacy for the IP Lawyer,&rdquo; a course on trademark and patent advocacy in a variety of contexts, including patent examination, TTAB and PTAB, district court motion argument, and appellate advocacy. Dave will share teaching duties with attorney Randy Micheletti from Incubate IP.</p> <p>Dave has a diverse IP law practice encompassing both the acquisition and the enforcement of patent rights in the electronic, software, and mechanical fields, beginning with patent drafting and prosecution and extending to post-issuance proceedings before the PTAB as appropriate. Dave has substantial pre-trial and trial experience in district court litigation, including multiple jury trials relating to patent infringement, validity, and breach of license. <br /> &nbsp;</p>Professional Activities22 Aug 2019 00:00:00 -0800 Late Is Too Late? Setting the Timeline for Patent Protection<p>Please join Fitch, Even, Tabin &amp; Flannery for a free webinar, &ldquo;<a href="">How Late Is Too Late? Setting the Timeline for Patent Protection</a>,&rdquo; on August 29, at 9:00 am PDT / 10:00 am MDT / 11:00 am CDT / 12 noon EDT.</p> <p>Patent considerations do not always align with commercial realities. Although pursuing patent protection as early as possible is generally preferred, at times product development, financial issues, and other factors get in the way.&nbsp;In some circumstances, inventors do not even think about patenting an invention until they are sure that their idea is practical and there is sufficient commercial interest to warrant investing the necessary time and resources into reducing the invention to practice.&nbsp;This webinar will explore considerations affecting the timing of patent filings and what to do if an inventor&rsquo;s prior actions have potentially put their patent rights in jeopardy.&nbsp;</p> <p>During this webinar, our presenters will discuss the following:</p> <ul type="disc"> <li>Supreme Court and Federal Circuit decisions regarding statutory bars</li> <li>When an invention is &ldquo;ready for patenting&rdquo;</li> <li>Potential scenarios that could endanger patent rights</li> <li>Factors that may weigh for and against patentability once an invention has been disclosed or offered for sale</li> <li>Strategies for coordinating patent filings with development efforts&nbsp;</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=18118&amp;format=xml&amp;p=5482">Vincent R. Meyer</a>.&nbsp;</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.&nbsp;</p> <p>Vince assists clients with patent preparation and prosecution, product clearance and legal opinions, and IP litigation in areas that include food science, mechanical engineering, electrical and medical devices, and biotechnology.</p> <p>A recording of this webinar is avaliable through August 28, 2020.</p>Past Webinars08 Aug 2019 00:00:00 -0800 Even Welcomes Partner Maureen Smith to Chicago Office<p>Fitch, Even, Tabin &amp; Flannery is pleased to announce that <a href=";A=18527&amp;format=xml&amp;p=5482">Maureen R. Smith</a> recently joined the firm&rsquo;s Chicago office as partner. Maureen has over 20 years of experience in all aspects of trademark law, helping clients in myriad industries to choose, protect, build, and enforce brands in the U.S. and abroad.</p> <p>Maureen has managed many high-profile global brand portfolios, overseeing the development, leverage, and enforcement of those brands in nearly every jurisdiction in the world in furtherance of her clients&rsquo; business goals. She has practiced extensively in the U.S. Patent and Trademark Office, including before the Trademark Trial and Appeal Board, successfully representing clients in trademark, unfair competition, and domain name disputes.</p> <p>Prior to her years in private practice, Maureen held in-house positions as trademark counsel at two Fortune 100 companies, gaining experience and insight she leverages in her current work with in-house counsel.</p> <p>Maureen&rsquo;s rich experience and strong record of client service make her a welcome addition to the Fitch Even team.&nbsp;&nbsp;<br /> &nbsp;</p>Firm News02 Aug 2019 00:00:00 -0800 Alert: Important Federal Circuit Decision on Functionality and Exhaustion of Design Patents<p>Today, in <a href=""><i>Automotive Body Parts Association v. Ford Global Technologies, LLC</i></a>, the Federal Circuit issued an opinion regarding two aspects of design patent law, specifically the doctrines of functionality and exhaustion. The court&rsquo;s holding has implications for companies that procure design patents, as discussed below.</p> <p>Ford Global Technologies, LLC, owns certain design patents related to the Ford F-150 series of pickup trucks. These patents include one design patent drawn to a vehicle hood and one toward a vehicle head-lamp. The patented designs are depicted below.&nbsp;<br /> &nbsp;</p> <p style="text-align: center;"><img src="" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="308" height="300" /><br /> &nbsp;</p> <p style="text-align: center;">&nbsp;&nbsp;<img src="" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="308" height="300" /><br /> <br /> <img src="" hspace="0" vspace="0" align="absmiddle" alt="" border="0" width="350" height="222" /><br /> &nbsp;</p> <p>Automotive Body Parts Association (ABPA) is an association of companies that distribute automotive body parts. ABPA sued Ford, seeking a declaratory judgment of invalidity or unenforceability of Ford&rsquo;s design patents for the the vehicle hood and headlamp shown above. The district court entered judgment in favor of Ford, and ABPA appealed.</p> <p>ABPA contended on appeal that the design patents were invalid for functionality. Under long-standing Federal Circuit law, a design patent may not claim a &ldquo;primarily functional&rdquo; design; specifically, if a particular design is &ldquo;essential to the use of the article, it can not be the subject of a design patent.&rdquo; ABPA contended that consumers seeking replacement parts prefer hoods and headlamps that restore the original appearance of their vehicles, and, therefore, this preference resulted in a &ldquo;functional benefit to designs that are aesthetically compatible with those vehicles.&rdquo;</p> <p>The court disagreed, holding that &ldquo;even in this context of a consumer preference for a particular design to match other parts of a whole, the aesthetic appeal of a design to consumers is inadequate to render that design functional.&quot; In fact, the court determined that ABPA&rsquo;s argument runs contrary to the basic purpose of a design patent, which is to protect the aesthetic appearance to begin with.</p> <p>Next, ABPA attempted to analogize from the &ldquo;aesthetic functionality&rdquo; principle of trademark law, but the court rejected this effort. Under that principle, a trademark owner may not inhibit competition by trademarking features that are not associated with a particular producer or that are independent of the source of the product (for example, attempting to claim a hook shape as a trademark for a fishing hook). The court observed that in contrast to trademark law, design patents are expressly intended to grant exclusive rights to a particular aesthetic design. For this reason, the court held, &ldquo;the considerations that drive the aesthetic functionality doctrine of trademark law simply do not apply to design patents.&rdquo;</p> <p>ABPA also attempted to draw an analogy to the Federal Circuit&rsquo;s earlier decision in <i>Best Lock Corp. v. Ilco Unican Corp.</i>, where the court invalidated a design patent for a key &ldquo;blade&rdquo; that was required to be designed as shown in order to perform the intended function of fitting into the corresponding lock&rsquo;s keyway. The court observed that that prior decision had &ldquo;turned on the admitted fact that no alternatively designed blade would mechanically operate the lock&mdash;not that the blade and lock were aesthetically compatible.&rdquo; Additionally, Ford introduced evidence of alternative headlamp and hood designs that physically fit its trucks, which are sold to consumers who want their vehicles to look different from factory-supplied vehicles.</p> <p>Finally, ABPA asked the court to rule as a matter of public policy that Ford should be able to enforce its design patents only in the initial market for sale of the F-150 truck, not in the market for replacement components. Noting that a bill seeking to limit the scope of design patents for auto-body designs had been introduced to Congress, but failed, the court observed that current law did not support ABPA&rsquo;s argument.</p> <p>Turning next to ABPA&rsquo;s contention that the patents were unenforceable under the doctrine of exhaustion and the related repair doctrine, the court again disagreed with ABPA and held in favor of Ford. Patent exhaustion occurs when a patent owner sells a product covered by one of its patents. Under that doctrine, the patent owner cannot assert the patent against the particular device purchased by the customer. Relatedly, the repair doctrine in patent law generally allows a purchaser of a patented product to repair it. The court found neither doctrine applied in this case.</p> <p>Ford conceded that when it sells an F-150 truck, its patents are exhausted as to the components <i>actually</i> <i>sold </i>as part of that truck. ABPA sought to extend the exhaustion doctrine further, such that the sale of the truck would totally exhaust any design patents embodied in the truck. As the Federal Circuit observed, this is not how the law of exhaustion works. Exhaustion would preclude Ford from bringing a design patent case against someone who resold the specific headlamp that Ford previously sold, for example, but is not applicable to someone manufacturing a new replacement headlamp.</p> <p>In its &ldquo;right of repair&rdquo; argument, ABPA maintained that purchasers of F-150 trucks are licensed to repair those trucks using replacement parts, even if those replacement parts were covered by design patents. The court disagreed, holding that &ldquo;such new hoods and headlamps are subject to Ford&rsquo;s design patents, and manufacturing new copies of those designs constitutes infringement.&rdquo;</p> <p>The court rebuffed ABPA&rsquo;s argument that the term &ldquo;article of manufacture&rdquo; in the design patent statute is a term broad enough to include both a product component and the product itself. The court observed that Ford could have claimed its designs as applied to the entire F-150 truck or as applied to the hood and headlamp individually. Accordingly, to determine what repair rights apply, the court must look to what Ford actually claimed in its design patents. Here, because Ford chose to claim designs as applied to portions of particular components, as permitted by law, ABPA&rsquo;s argument had no merit.</p> <p>Although certain aspects of the court&rsquo;s decision are specific to auto-body design patents, the court&rsquo;s general comments concerning the absence of special rules for exhaustion under design patents and the absence of the rigid functionality test appear more broadly applicable. Holders of design patents will welcome today&rsquo;s opinion.</p> <p>Additionally, companies that procure design patents should take note of this decision because it counsels toward obtaining individual design patents on replaceable components of a device in addition to the device as a whole. The court found it significant that &ldquo;the designs for Ford&rsquo;s hood and headlamp are covered by distinct patents&rdquo; and not covered by a single design patent covering the entire truck.</p> <p>For more information, please contact Fitch Even partner <a href=";A=2589&amp;format=xml&amp;p=5482">Allen E. Hoover</a>, author of this alert.<br /> <b><br /> <br /> Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts23 Jul 2019 00:00:00 -0800 Alert: Seventh Circuit Affirms Finding of Summary Judgment for Defendant Despite Improper Disclosure of Consumer Survey<p>Consumer survey evidence is often introduced in trademark cases, and, when used, such evidence almost always requires expert testimony. The expert generally must be disclosed to the opposing party in accordance with Rule 26 of the Federal Rules of Civil Procedure. A recent case from the Seventh Circuit, <a href=";Path=Y2019/D06-11/C:18-1917:J:St__Eve:aut:T:fnOp:N:2353347:S:0"><i>Uncommon, LLC v. Spigen, Inc</i></a><i>.</i>, exemplifies a circumstance where the court excused the defendant&rsquo;s failure to disclose its expert. On the somewhat unusual facts of this case, the appellate court affirmed the district court&rsquo;s judgment that the failure to submit a Rule 26 expert report for the expert who conducted the consumer survey was harmless under Rule 37(c)(1).</p> <p>Plaintiff Uncommon, a manufacturer and retailer of cellphone cases, registered the trademark CAPSULE for goods specifically adapted for the protection and storage of consumer electronics. Spigen, a competitor, sold cellphone cases under various marks each including the word &ldquo;Capsule.&rdquo; Uncommon sued Spigen for trademark infringement and unfair competition. Spigen countersued, seeking cancellation of Uncommon&rsquo;s registration and claiming that consumers did not associate the term &ldquo;capsule&rdquo; with Uncommon&rsquo;s goods.</p> <p>In support of its countersuit, Spigen disclosed two experts&mdash;Doug Bania and Kirk Martensen. Bania was slated to testify on the lack of confusion, the descriptiveness of Uncommon's mark, secondary meaning, and damages. Martensen was, according to Spigen, a &ldquo;non-testifying expert&rdquo; who was to conduct a consumer survey that could be used by Bania. Martensen might also &ldquo;be called to testify on the methodology of the survey if needed.&rdquo; Uncommon elected not to depose Martensen.</p> <p>The parties filed cross-motions for summary judgment. Spigen relied on the consumer survey in its opening motion, and Uncommon responded that such use of the survey was improper because no expert could testify to its methodology. Spigen then submitted a declaration from the expert explaining the methodology used. In response, Uncommon asserted that the declaration was untimely and inadequate.</p> <p>The district court held that although Spigen failed to disclose its expert as a testifying witness, such error was harmless. The court also held that the survey was sufficient to establish that consumers did not, in fact, associate the term &ldquo;capsule&rdquo; with Uncommon&rsquo;s products. Relying in part on the survey, the court canceled Uncommon&rsquo;s registration and entered summary judgment in Spigen&rsquo;s favor on all of Uncommon&rsquo;s claims.</p> <p>On appeal, Uncommon argued in part that the district court had erred in considering the Martensen declaration. The Seventh Circuit observed that Rule 37(c)(1) allows admission of evidence if the failure to disclose was &ldquo;harmless.&rdquo; Spigen had timely disclosed its survey and related materials as required in Rule 26(a). Uncommon did not inquire into the survey&rsquo;s methodology and Bania&rsquo;s reliance on it, but instead waited to argue at summary judgment. For these reasons, Spigen&rsquo;s failure to follow Rule 26 in disclosing its survey expert was harmless. Thus, the Seventh Circuit affirmed the district court.</p> <p>The Seventh Circuit considered several factors in its analysis that were important to this case. First, because Spigen timely disclosed Martensen's survey with its underlying data&mdash;a two-page document summarizing the expert&rsquo;s credentials and Bania&rsquo;s report, which relied heavily on the survey&mdash;the court found that Spigen&rsquo;s failure to disclose was not a surprise tactic. It also did not cause any disruption to the proceeding and was not done in bad faith. Additionally, the court determined that Uncommon had the ability to cure any potential prejudice as provided in Rule 37: &ldquo;Rule 37 . . . provides recourse for parties actually harmed by a litigant's noncompliance with disclosure obligations. It does not safeguard a party's decision to sense an error, seize on it, and then, when it is resolved, claim incurable harm in the face of apparent remedies.&rdquo; Uncommon could have deposed the expert, but chose not to. Thus, Spigen&rsquo;s failure to disclose was determined to be harmless. Because the survey was admissible, the Seventh Circuit proceeded to consider whether the term &ldquo;capsule&rdquo; was descriptive.</p> <p>In its analysis of the distinctiveness of &ldquo;capsule,&rdquo; the court considered how and how often the relevant market uses the term, third-party registrations, as well as the &ldquo;degree-of-imagination&rdquo; and the dictionary tests. The court concluded that each test demonstrated that &ldquo;capsule&rdquo; was directly descriptive of some function of the goods and, thus, not inherently distinctive. In the absence of secondary meaning, which is required for a descriptive trademark to be valid, the Seventh Circuit affirmed the district court&rsquo;s invalidation of Uncommon&rsquo;s registration.</p> <p>The Seventh Circuit&rsquo;s decision illustrates the flexibility of Rule 26. Although the facts of this case are unusual, litigants should disclose all related materials required in litigation to avoid the possibility of courts barring substantive evidence. Moreover, parties who may be harmed by one&rsquo;s noncompliance with Rule 26 must cure any prejudice that occurs as a result. As the Seventh Circuit stated, &ldquo;Litigation is adversarial, not a game of gotcha.&rdquo; Both plaintiffs and defendants have responsibilities to proactively assert and oppose arguments throughout the legal process.</p> <p>For more information on this decision, please contact Fitch Even attorney <a href=";A=16851&amp;format=xml&amp;p=5482">Kerianne A. Strachan</a>, author of this alert.<br /> &nbsp;</p> <p><b>Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts12 Jul 2019 00:00:00 -0800 Even Attorneys Named to 2019–20 IPLAC Leadership Posts<p>Several Fitch Even attorneys were recently appointed to <a href="">Intellectual Property Law Association of Chicago</a> (IPLAC) leadership roles for 2019&ndash;20.</p> <p><a href=";A=2617&amp;format=xml&amp;p=5482">Alisa C. Simmons</a> was reappointed President of the IPLAC Educational Foundation, which has been awarding scholarships since 1991 to Chicago Public School students who plan to study engineering, science, or pre-law in college. Alisa was also reappointed Vice Chair of the Historical Records Committee and Vice Chair of the Dinner Planning Committee. &nbsp;&nbsp;</p> <p><a href=";A=2609&amp;format=xml&amp;p=5482">Joseph T. Nabor</a> will continue as Chair of the Historical Records Committee. Joe has been active in IPLAC since 1994 in a variety of leadership roles.</p> <p><a href=";A=2587&amp;format=xml&amp;p=5482">Paul B. Henkelmann</a> was reappointed IPLAC&rsquo;s delegate to the U.S. Bar&ndash;EPO Liaison Council.</p> <p><a href=";A=16703&amp;format=xml&amp;p=5482">Evan Kline-Wedeen</a> was reappointed Co-Chair of the Field Day Committee.</p> <p><a href=";A=13120&amp;format=xml&amp;p=5482">Andrew C. Wood</a> was appointed Co-Chair of the Young Members Committee.</p> <p>Founded in 1884, IPLAC is the oldest intellectual property law association in the United States. Fitch Even attorneys have served as leaders and members of the organization since its inaugural meeting.&nbsp;<br /> &nbsp;</p>Professional Activities12 Jul 2019 00:00:00 -0800 Alert: Federal Circuit Denies En Banc Review in Athena Patent Eligibility Suit<p>On July 3, in <a href=""><i>Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC</i></a>, the Federal Circuit denied the en banc rehearing petition filed by Athena. Significantly, although the Federal Circuit will not hear this decision en banc, it appears that most if not all of the Federal Circuit judges are hoping to see this case advance to the Supreme Court. The state of the law on patent eligibility of diagnostic methods has been in flux over the last several years, and the Federal Circuit has signaled strongly that the Supreme Court should review this decision and clarify the law in this area.</p> <p>Notably, while the order for denial was a 7&ndash;5 decision, it included eight separate opinions by the 12 Federal Circuit judges, four concurring and four dissenting. In particular, the concurring opinions were written by combinations of Judges Lourie, Reyna, Chen, Hughes, Prost, Taranto, and Dyk. The dissenting opinions were written by combinations of Judges Moore, O&rsquo;Malley, Wallach, Stoll, and Newman.</p> <p>In his concurrence, Judge Lourie states that he agrees with the court&rsquo;s decision not to rehear this case en banc, pointing out that &ldquo;we can accomplish little in doing so, as we are bound by the Supreme Court&rsquo;s decision in <i>Mayo.</i>&rdquo;Judge Lourie continues, &ldquo;If I could write on a clean slate, I would write as an exception to patent eligibility, as respects natural laws, only claims directed to the natural law itself, <i>e.g.</i>, E=mc<span style="font-size: smaller;"><sup>2</sup></span>, F=ma, Boyle&rsquo;s Law, Maxwell&rsquo;s Equations, etc. I would not exclude uses or detection of natural laws,&rdquo; again noting that &ldquo;we do not write here on a clean slate; we are bound by Supreme Court precedent.&rdquo;</p> <p>Judge Lourie argues that while &ldquo;[a]mici and others have complained that our eligibility precedent is confused . . . our cases are consistent,&rdquo; pointing out that they &ldquo;have distinguished between new method of treatment claims and unconventional laboratory techniques, on the one hand, and, on the other hand, diagnostic methods that consist of routine steps to observe the operation of a natural law, a clear line. Beyond that, I do not see a way clear to distinguish <i>Mayo </i>in a useful, principled, fashion.&rdquo;</p> <p>In his concurrence, Judge Hughes summarizes the overall sentiments of the Federal Circuit judges by stating that the &ldquo;multiple concurring and dissenting opinions regarding the denial of en banc rehearing in this case are illustrative of how fraught the issue of &sect; 101 eligibility, especially as applied to medical diagnostics patents, is,&rdquo; noting that &ldquo;this is not a problem that we can solve&rdquo; and that &ldquo;[a]s an inferior appellate court, we are bound by the Supreme Court.&rdquo; Along the same theme, he concludes by saying, &ldquo;I, for one, would welcome further explication of eligibility standards in the area of diagnostics patents,&rdquo; asserting that such standards &ldquo;could permit patenting of essential life-saving inventions based on natural laws while providing a reasonable and measured way to differentiate between overly broad patents claiming natural laws and truly worthy specific applications,&rdquo; and noting that such an explication might come from the Supreme Court or Congress.</p> <p>In Judge Dyk&rsquo;s concurrence, he states that the Mayo/Alice framework has &ldquo;proven to be both valuable and effective at invalidating overly broad, non-inventive claims that would effectively &lsquo;grant a monopoly over an abstract idea.&rsquo;&rdquo; However, he asserts, &ldquo;The problem with &sect; 101 arises not in implementing the abstract idea approach of <i>Alice</i> but rather in implementing the natural law approach of <i>Mayo</i>.&rdquo;</p> <p>Judge Dyk shares the concern voiced by the dissenting judges that &ldquo;the <i>Mayo </i>test for patent eligibility should leave room for sufficiently specific diagnostic patents,&rdquo; pointing out that &ldquo;<i>Mayo</i> left no room for us to find typical diagnostic claims patent eligible, absent some inventive concept at <i>Mayo</i> step two.&rdquo; He notes, &ldquo;it is the Supreme Court, not this court, that must reconsider the breadth of <i>Mayo</i>.&rdquo;</p> <p>Judge Dyk also observes the tension between <em>Mayo</em>&nbsp;and the Supreme Court&rsquo;s 2013 holding in <i>Association for Molecular Pathology v. Myriad Genetics</i>, stating that &ldquo;<i>Myriad </i>thus recognized that an inventive concept can sometimes come from the discovery of an unknown natural phenomenon and its application for a diagnostic purpose,&rdquo; while under <i>Mayo</i>, &ldquo;a natural phenomenon itself, no matter how narrow and specific, cannot supply the requisite &lsquo;inventive concept.&rsquo;&rdquo; He suggests that &ldquo;it would be desirable for the Supreme Court to refine the <i>Mayo</i> framework to allow for sufficiently specific diagnostic patent claims with proven utility.&rdquo;</p> <p>Under the refinement proposed by Judge Dyk, the claiming of natural laws should be prevented by tying those laws to a specific and useful application at&nbsp;<em>Mayo</em>&nbsp;step one, which would lead to a determination of the &ldquo;inventive concept&rdquo; at&nbsp;<em>Mayo</em>&nbsp;step two. Also under this refined analysis, Athena&rsquo;s claims would likely be patent-eligible because they don&rsquo;t claim a natural law itself, but claim specific methods of diagnosing a neurological disorder by detecting specific antibodies.</p> <p>In his consenting opinion, Judge Chen discusses various major precedent cases, including <i>Mayo</i> and the Supreme Court decisions in <i>Parker v. Flook</i> (1978) and <i>Diamond v. Diehr</i> (1981), pointing out that <i>Mayo</i> in fact reversed <i>Diehr</i>, but also that &ldquo;[w]hen it comes to applying the judicial exceptions, it bears noting that the <i>Mayo </i>analytical approach is considerably harder to apply consistently than the <i>Diehr </i>framework, and more aggressive in its reach.&rdquo; He goes on to assert that the &ldquo;notion that adding claim language can convert an otherwise patent-eligible claim into a patent-ineligible claim is counterintuitive and a very difficult thing to explain to 8,000 patent examiners.&rdquo;</p> <p>Judge Chen also observes &ldquo;there is a serious question today in patent law as to what extent <i>Diehr </i>remains good law in light of <i>Mayo</i>,&rdquo; and he echoes his fellow judges in saying that &ldquo;[w]e are not in a position to resolve that question, but the Supreme Court can.&rdquo;</p> <p>Judge Moore begins her dissenting opinion by stating, &ldquo;This is not a case in which the judges of this court disagree over whether diagnostic claims, like those at issue in <i>Athena</i>, should be eligible for patent protection. They should.&rdquo; She goes on to explain that &ldquo;[n]one of my colleagues defend the conclusion that claims to diagnostic kits and diagnostic techniques, like those at issue, should be ineligible.&rdquo; She frames the difference between the consenting and dissenting judges as being &ldquo;whether the Supreme Court&rsquo;s <i>Mayo </i>decision requires this outcome,&rdquo; stating that while &ldquo;[t]he majority of my colleagues believe that our hands are tied and that <i>Mayo </i>requires this outcome,&rdquo; she believes <i>Mayo </i>does not. In other words, Judge Moore believes that <i>Mayo</i> is distinguishable<i>.</i></p> <p>Notably, Judge Moore states that the Federal Circuit&rsquo;s precedent has &ldquo;ignored the truth that claims to specific, narrow processes, even if those processes involve natural laws, are not directed to the natural laws themselves.&rdquo; She asserts that &ldquo;[w]e have misread <i>Mayo</i> and how it fits within the framework of the judicially-created exceptions to &sect; 101 for laws of natures, natural phenomena, and abstract ideas.&rdquo; In addition, she makes a policy-based point, stating that &ldquo;[t]he math is simple, you need not be an economist to get it: Without patent protection to recoup the enormous R&amp;D cost, investment in diagnostic medicine will decline.&rdquo; She continues, &ldquo;To put it simply, this is bad. It is bad for the health of the American people and the health of the American economy. And it is avoidable depending on our interpretation of the Supreme Court&rsquo;s holding in <i>Mayo</i>.&rdquo;</p> <p>Judge Moore further explains, &ldquo;I do not understand <i>Mayo</i> to render ineligible a claim which covers a specific concrete application of a natural law simply because such a claim is diagnostic as opposed to therapeutic,&rdquo; asserting that &ldquo;[b]oth should be eligible.&rdquo; In conclusion, she states that &ldquo;[i]n the wake of <i>Mayo</i>, we have painted with a broad brush, suggesting that improved diagnostic techniques are not patent eligible.&rdquo; She advises patentees whose diagnostic method claims are invalidated that there is &ldquo;[n]o need to waste resources with additional en banc requests. Your only hope lies with the Supreme Court or Congress.&rdquo;</p> <p>Judge Newman dissented on the original <i>Athena</i> decision and dissented here again, stating that &ldquo;I write again in dissent because of the importance of medical diagnosis and the critical role of the patent system in achieving new diagnostic methods.&rdquo; Similarly to Judge Moore, Judge Newman observes that the Supreme Court in <i>Mayo</i> &ldquo;did not hold that methods of diagnosis are subject to unique patent-eligibility rules,&rdquo; and she believes &ldquo;[w]e have mistakenly enlarged the Court&rsquo;s holding, in substance and in application.&rdquo; In particular, she argues that &ldquo;Athena&rsquo;s diagnostic method is not a law of nature; it is a novel man-made method of diagnosis of a neurological disorder. The Athena diagnostic method, a multi-step method performed by a combination of specific chemical and biological steps, was unknown in the prior art.&rdquo; She concludes that the &ldquo;Court in <i>Mayo </i>did not exclude such methods from eligibility for patenting.&rdquo;</p> <p>Judge Newman then appears to adopt the premise raised at a recent Senate subcommittee hearing that &ldquo;courts have clouded the line to exclude critical medical advances like life-saving precision medicine and diagnostics.&rdquo; She concludes that the case &ldquo;presents an opportunity for judicial review and judicial remedy,&rdquo; and that &ldquo;[a]lthough diagnostic methods are not the only area in which section 101 jurisprudence warrants attention, Federal Circuit precedent is ripe for reconsideration specific to diagnostic methods, to correct our application of the <i>Mayo </i>decision and to restore the necessary economic incentive.&rdquo;</p> <p>In Judge Stoll&rsquo;s dissent, she states that &ldquo;Federal Rule of Appellate Procedure 35 directs us to order rehearing en banc when &lsquo;the proceeding involves a question of exceptional importance.&rsquo;&rdquo; She chose to dissent separately from the decision of the majority to deny en banc review &ldquo;because the question of the eligibility of diagnostic inventions is exactly the type of exceptionally important issue that warrants full consideration by this court.&rdquo; Judge Stoll agrees with Judges Newman and Moore that &ldquo;a wholesale bar on patent eligibility for diagnostic claims has far-reaching and long-ranging implications for the development of life-saving diagnostic methods.&rdquo; She continues, &ldquo;The eligibility of life-saving inventions is not only one of the most important issues of patent law, but of human health,&rdquo; and concludes, &ldquo;the importance of the issue here mandates that we consider it en banc.&rdquo;</p> <p>Judge O&rsquo;Malley states in her dissent that although she agrees with all her dissenting colleagues, she writes separately because &ldquo;confusion and disagreements over patent eligibility have been engendered by the fact that the Supreme Court has ignored Congress&rsquo;s direction to the courts to apply 35 U.S.C. sections 101, <i>et seq </i>(&lsquo;Patent Act&rsquo;) as written.&rdquo; In particular, Judge O&rsquo;Malley asserts that &ldquo;the Supreme Court has instructed federal courts to read into Section 101 an &lsquo;inventive concept&rsquo; requirement&mdash;a baffling standard that Congress removed when it amended the Patent Act in 1952.&rdquo; She then urges Congress &ldquo;to amend the Patent Act once more to clarify that it meant what it said in 1952.&rdquo;</p> <p>Judge O&rsquo;Malley laments that &ldquo;although Congress so amended the Act decades ago, we continue to apply the invention requirement today under a new name&mdash;the &lsquo;inventive concept&rsquo; requirement.&rsquo;&rdquo; She closes her opinion by stating that &ldquo;claims directed to uses of natural laws rather than the natural laws themselves would be eligible under &sect; 101 as written.&rdquo; She continues, &ldquo;Because the Supreme Court judicially revived the invention requirement and continues to apply it despite express abrogation, I dissent to encourage Congress to clarify that there should be no such requirement read into &sect; 101; to clarify that concepts of novelty and &lsquo;invention&rsquo; are to be assessed via application of other provisions of the Patent Act Congress designed for that purpose.&rsquo;&rdquo;</p> <p>At this point, the only remedy for Athena is to file a petition for a writ of certiorari by the Supreme Court. The Supreme Court has not granted any such petitions on patentable subject matter eligibility in about five years. However, the present <i>Athena</i> decision presents eight well-reasoned Federal Circuit judicial opinions, most of which urge the Supreme Court to revisit and/or refine the <i>Mayo</i> decision. It would not be surprising to see the Supreme Court agree to hear this case. Fitch Even attorneys will report on any decision from the Court in a subsequent alert.</p> <p>For more information on this case, please contact Fitch Even partner <a href=";A=4141&amp;format=xml&amp;p=5482">David M. Kogan</a>, author of this alert.</p> <p>&nbsp;</p> <p><b>Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts11 Jul 2019 00:00:00 -0800