Fitch Even News Feed Jun 2020 00:00:00 -0800firmwise Alert UPDATE: Supreme Court Clarifies Issue Preclusion Principles in Nearly 20-Year Trademark Dispute<p>On May 14, in <a href="" target="_blank"><i>Lucky Brand Dungarees, Inc., et al. v. Marcel Fashion Group, Inc</i>.,</a> the U.S. Supreme Court held the principles of claim preclusion did not prevent Lucky Brand from asserting defenses that could have been raised in an earlier action. The Court&rsquo;s holding resolves the differences among the circuit courts concerning the applicability of preclusion principles to defenses asserted in litigation.</p> <p>Since 2001, Lucky Brand and Marcel have filed three rounds of lawsuits against each other, claiming infringement of their respective marks. In 2003, the parties reached a settlement agreement in which Lucky Brand agreed to stop using the phrase &ldquo;Get Lucky&rdquo; and Marcel agreed to release any claims pertaining to Lucky Brand&rsquo;s use of its own trademarks. Soon thereafter, though, Lucky Brand filed a lawsuit in 2005, accusing Marcel and its licensee of copying its designs and logos, thus violating its trademarks.</p> <p>In response, Marcel filed several countersuits complaining of Lucky Brand&rsquo;s continued use of the &ldquo;Get Lucky&rdquo; mark. Lucky Brand filed a motion to dismiss the counterclaims, alleging they were barred due to the release provision outlined in the 2003 settlement agreement. After the district court denied the motion to dismiss, it concluded that Lucky Brand violated the 2003 settlement agreement and permanently enjoined the apparel company from using Marcel&rsquo;s &ldquo;Get Lucky&rdquo; mark. The jury also found against Lucky Brand on Marcel&rsquo;s remaining counterclaims.</p> <p>In 2011, Marcel sued Lucky Brand and asserted that Lucky Brand&rsquo;s continued use of its own marks, some of which implemented the term &ldquo;Lucky,&rdquo; infringed Marcel&rsquo;s &ldquo;Get Lucky&rdquo; mark in a manner that was previously found infringing. The district court granted Lucky Brand summary judgment, determining that Marcel&rsquo;s claims in the 2011 action were substantially similar to its counterclaims in the 2005 lawsuit. However, the Court of Appeals for the Second Circuit disagreed with the district court&rsquo;s decision and concluded that Marcel&rsquo;s claims in the 2011 action were distinguishable from those it had alleged in the 2005 lawsuit. The Second Circuit also denied Marcel&rsquo;s request to hold Lucky Brand in contempt for violating the injunction issued in the 2005 action. </p> <p>On remand to the district court, Lucky Brand moved to dismiss the action, arguing that according to the 2003 settlement agreement, Marcel had released its claims. Marcel contended that Lucky Brand was barred from raising this defense because it did not invoke it in the 2005 action. The district court granted Lucky Brand&rsquo;s motion to dismiss. As previously <a href="/?t=40&amp;an=95320&amp;format=xml&amp;p=5486">reported</a>, the Second Circuit then vacated and remanded the case, concluding that the doctrine of &ldquo;defense preclusion&rdquo; barred Lucky Brand from raising the release defense in the 2011 action.</p> <p>After granting certiorari in 2019, the Supreme Court considered whether Lucky Brand&rsquo;s failure to litigate its defense in the 2005 suit barred the apparel company from invoking its argument in the 2011 action. The Court concluded that because Marcel&rsquo;s 2011 lawsuit involved different conduct and raised different claims than did the 2005 action, Marcel could not preclude Lucky Brand from raising new defenses. In its analysis of the Second Circuit&rsquo;s &ldquo;defense preclusion&rdquo; doctrine, the Court reasoned that a defense can only be barred if the &ldquo;causes of action are the same&rdquo; in the two suits, or where they share &ldquo;a common nucleus of operative fact[s].&rdquo; Here, the Court found the two suits were grounded on different conduct, involved different marks, and occurred at different times. Specifically, in 2005, Marcel alleged that Lucky Brand infringed its &ldquo;Get Lucky&rdquo; mark. However, the 2011 lawsuit only involved allegations of Lucky Brand&rsquo;s use of its own marks containing the word &ldquo;Lucky&rdquo; and not the &ldquo;Get Lucky&rdquo; mark. Furthermore, the conduct alleged in the 2011 action occurred after the conclusion of the 2005 lawsuit. Thus, the Court asserted that events that take place after the plaintiff files suit &ldquo;often give rise to new &lsquo;[m]aterial operative facts&rsquo; that &ldquo;in themselves, or taken in conjunction with the antecedent facts,&rsquo; create a new claim to relief.&rdquo;</p> <p>Additionally, the Court provided that causes of action may be the same if &ldquo;a different judgment in the second action would impair or destroy rights or interests established by the judgment entered in the first action.&rdquo; In the case at hand, the 2011 lawsuit did not threaten the judgment of the 2005 action because both suits involved different conduct and different trademarks. Therefore, the Court held that the 2005 and 2011 actions did not share &ldquo;a common nucleus of operative facts.&rdquo; Thus, Lucky Brand was not precluded from asserting its defense in the 2011 lawsuit. The Supreme Court ruled unanimously in favor of Lucky Brand and reversed the judgment of the Second Circuit.</p> <p>The Court&rsquo;s analysis of the &ldquo;defense preclusion&rdquo; doctrine will help guide other courts in determining the applicability of res judicata in future trademark litigation.</p> <p>For more information on this case, please contact Fitch Even attorney <a href="/?t=3&amp;A=16851&amp;format=xml&amp;p=5482">Kerianne A. Strachan</a>, author of this alert.<br /> <b><br /> Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts26 May 2020 00:00:00 -0800 Even Attorney Tom James Profiled in <i>Chicago Lawyer</i> Article<p>Fitch Even attorney <a href=";A=12841&amp;format=xml&amp;p=5482">Thomas A. James</a> is one of four associates profiled in the cover story of the May 2020 issue of <i>Chicago Lawyer</i> magazine. In the article, &quot;<a href="">On Their Journeys</a>,&quot; Tom briefly recounts his path from his undergrad days to his current position with Fitch Even, with stops along the way that included several years as a patent examiner at the USPTO.</p> <p>Tom initially joined Fitch Even as a patent agent, working full time while simultaneously carrying a full course load at DePaul University College of Law. After passing the bar, he accepted a promotion to associate. As Tom explains in the article, &ldquo;I stayed (at Fitch Even) for the work. They care about their associates. . . .&rdquo;</p>Professional Activities22 May 2020 00:00:00 -0800 Alert: PTAB Cannot Invalidate Original Patent Claims Under 35 U.S.C. 112 in an IPR<p>On May 15, in <a href=""><i>Cochlear Bone Anchored Solutions AB v. Oticon Medical AB</i></a>, the Federal Circuit identified a second circumstance where the Patent Trial and Appeal Board (PTAB) must consider invalidity arguments even if the challenged claim might otherwise be held to be indefinite. The America Invents Act (AIA) limits the scope of a petition for <i>inter partes</i> review (IPR) to grounds that &ldquo;could be raised under section 102 or 103.&rdquo; As noted in our summary of <a href=";an=104250&amp;format=xml&amp;p=5486"><i>Samsung Electronics America, Inc. v. Prisua Engineering Corp.</i></a>, during IPR proceedings the PTAB cannot invalidate existing claims for indefiniteness under 35 U.S.C. &sect; 112. Further, because presumptively indefinite claims lack a clear scope, the PTAB also cannot evaluate invalidity of an indefinite claim over the asserted prior art grounds. But circumstances exist where the PTAB must evaluate the validity of presumptively indefinite claims. The <i>Samsung</i> case identified a first such circumstance for claims that are uncertain because they include both method and apparatus limitations. The <i>Cochlear</i> case has now identified a second such circumstance for claims with optional limitations.</p> <p>Oticon Medical filed a petition for IPR, challenging multiple claims in U.S. Patent No. 7,043,040 owned by Cochlear. Claim 10 of the &rsquo;040 patent recites a &ldquo;directivity means comprising at least one directivity dependent microphone and/or signal processing means.&rdquo; The PTAB held this claim was likely to be indefinite because &ldquo;signal processing means&rdquo; constituted a means-plus-function term under section 112 and the &rsquo;040 patent failed to disclose corresponding structure. Claim 10 is likely indefinite in this context because the scope of the structure corresponding to the signal processing function is not identified. When the PTAB cannot ascertain the scope of a claim with reasonable certainty for purposes of assessing patentability, it must decline to institute the IPR or, if the indefiniteness issue affects only certain claims, it must conclude that it could not reach a decision on the merits with respect to whether petitioner had established the unpatentability of those claims under sections 102 or 103. Here, the PTAB concluded that it could not assess the validity of claim 10 relative to the prior art.</p> <p>The Federal Circuit, however, reversed and remanded, holding that claim 10 includes alternative limitations&mdash;because the term &ldquo;signal processing means&rdquo; is not a required element. The &rdquo;and/or&rdquo; language in the claim means that a device with &ldquo;at least one directivity dependent microphone&rdquo; would fully satisfy the claimed directivity means. The Federal Circuit noted the earlier <i>Samsung</i> case, which establishes that indefiniteness of a claim does not always imply inability to conduct a prior-art analysis needed for an IPR. In <i>Samsung</i>, the claims were indefinite because they included both method and apparatus limitations, leaving uncertainty concerning the scope of the claim. As a consequence, though, invalidity could likewise be shown by art disclosing either a method or apparatus. In <i>Cochlear</i>, the Federal Circuit extended this reasoning to the alternative limitations in claim 10. The court directed the PTAB to consider on remand whether the &ldquo;directivity dependent microphone&rdquo; alternative is a means-plus-function term, and whether any of the asserted prior art discloses this alternative.</p> <p>Because indefinite claims may still be amenable to invalidation in an IPR proceeding, parties to such proceedings should pay close attention to the nature of the alleged indefiniteness. For more information on this case, 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</b><sup><b>&reg;</b></sup></p>IP Alerts20 May 2020 00:00:00 -0800 from the IPR Counsel's Table<p>Please join Fitch Even for a free webinar, &ldquo;<a href="">Tales from the IPR Counsel&rsquo;s Table</a>,&rdquo; on June 4, 2020, at 9:00 am PDT / 10:00 am MDT / 11:00 am CDT / 12 noon EDT.</p> <p>As is often the case with new legal proceedings, <i>inter partes</i> review (IPR) has evolved over the nearly eight years since being established. Primarily intended to a be a lower-cost, faster path to determining a validity challenge to a patent, this proceeding and its CBM and PGR cousins have morphed into highly contested, high-stakes affairs. Motion practice, additional evidentiary filings and briefing, and complex cost-benefit analysis for each step in the process have turned IPRs from a relatively straightforward procedure into more of a litigation-like experience.</p> <p>During this webinar, we will explore the evolution of the IPR and the tactical decisions practitioners and their clients face while navigating the process, covering these topics and more:</p> <ul> <li>A comparison of the current IPR process to its original form</li> <li>Strategic concerns at each stage of the proceeding</li> <li>The importance of &ldquo;evidence&rdquo; beyond the prior art grounds and the challenge to the patent</li> <li>How IPR counsel must weigh the effect of the IPR on co-pending litigation</li> </ul> Our speakers will be Fitch Even partners <a href=";A=2611&amp;format=xml&amp;p=5482">Nicholas T. Peters</a> and <a href=";A=2587&amp;format=xml&amp;p=5482">Paul B. Henkelmann</a>.<br /> <p>Nick focuses his practice on patent licensing, patent post-issuance proceedings, sophisticated patent portfolio management, and the prosecution of complex patents. He uses his litigation experience to advise clients on managing patent risk and leverages his extensive USPTO experience into successful representation in post-issuance proceedings work. Nick was ranked among the top 10 most-active attorneys representing patent owners in IPR proceedings based on data collected from 2013 through 2019.</p> <p>Paul focuses his practice on patent post-issuance proceedings, patent procurement, patent litigation, and IP portfolio management. Nationally recognized for his active practice before the Patent Trial and Appeal Board, he has represented clients in dozens of IPR proceedings.</p> <p>CLE credit has been approved for California, Illinois, and 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>.</p>Upcoming Webinars14 May 2020 00:00:00 -0800 Even Partners Tim Maloney and Dave Gosse Published in <i>IP Watchdog</i><p>An opinion piece written by Fitch Even partners <a href=";A=2601&amp;format=xml&amp;p=5482">Timothy P. Maloney</a> and <a href=";A=2585&amp;format=xml&amp;p=5482">David A. Gosse</a> was published today in the legal e-newsletter <i>IP Watchdog</i> and on its website.</p> <p>In the article, <a href="">&ldquo;PTAB Judges Should Call Balls and Strikes, Not Throw Curve Balls,&rdquo;</a>&nbsp;Tim and Dave advocate for limits on the authority of the Patent Trial and Appeal Board, pointing out, &ldquo;By pursuing separate invalidity theories of its own making, the PTAB becomes inherently and improperly vested in a negative outcome for patent owners. This is simple human nature, no matter how rational or reasoned PTAB judges attempt to be.&rdquo;</p> <p>Tim and Dave have advocated on behalf of clients in numerous patent post-issuance proceedings as members of the Fitch Even PTAB Practice group.</p> <p>&nbsp;</p>Professional Activities06 May 2020 00:00:00 -0800 Alert: USPTO Says AI Can't Be Named an "Inventor" Under Current Law<p>On April 27, the USPTO published a <a href=";utm_content=&amp;utm_medium=email&amp;utm_name=&amp;utm_source=govdelivery&amp;utm_term=">petition decision</a> explaining that only a natural person may be named as an inventor in a U.S. patent application. During prosecution of the application at issue, the application data sheet (ADS) had listed the only named inventor as an artificial intelligence &ldquo;creativity machine&rdquo; referred to as &ldquo;DABUS,&rdquo; which the applicant, Stephen Thaler, described as a programmed series of neural networks. However, the USPTO subsequently issued a notice to file missing parts explaining that the ADS had failed to properly identify an inventor. Thaler had filed an initial petition requesting that the notice to file missing parts be withdrawn, but the petition was denied. Thaler then filed a second petition requesting reconsideration to determine whether an artificial intelligence machine such as DABUS could qualify as a named inventor.</p> <p>In its decision, the USPTO found that &ldquo;U.S. patent law does not permit a machine to be named as the inventor in a patent application.&rdquo; In reaching this conclusion, the decision examined various provisions of 35 U.S.C. that it found &ldquo;consistently refer[red] to inventors as natural persons.&rdquo; For example, section 101 states, &ldquo;<i>Whoever</i> invents . . .&rdquo; and section 115 specifically refers to individuals and uses the pronouns &ldquo;himself&rdquo; and &ldquo;herself&rdquo; when referring to inventors. Based on these passages, the USPTO reasoned that &ldquo;interpreting &lsquo;inventor&rsquo; broadly to encompass machines would contradict the plain reading of the patent statutes that refer to persons and individuals.&rdquo; Additionally, the decision found further support in Federal Circuit case law concerning inventorship, including the <i>Univ. of Utah v. Max-Planck Gesellschaft </i>decision, which found that a state could not be named an inventor in a patent application.</p> <p>This decision likewise comports with two recent European Patent Office (EPO) <a href="">decisions</a> also addressing whether DABUS could be named as an inventor. Similarly, the EPO found that the legal framework of the European patent system would only permit a natural person to qualify as the inventor designated in a European patent application&mdash;not a machine.</p> <p>If you have questions regarding this decision, please contact Fitch Even attorney <a href=";A=16703&amp;format=xml&amp;p=5482">Evan Kline-Wedeen</a>, author of this alert.<br /> <b><br /> Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts29 Apr 2020 00:00:00 -0800 Alert: Supreme Court Agrees No Copyright in Official State Code Annotations<p>Today, in <a href=""><i>Georgia v. Public, Inc.</i></a>, the U.S. Supreme Court held that the annotations contained in Georgia&rsquo;s official annotated code cannot be the subject of copyright protection. In a 5-4 decision, the Court held that the &ldquo;government edicts&rdquo; doctrine bars copyright protection for works that are created by judges or legislators in the course of their judicial or legislative duties. The Court determined that the code annotations, thought to be prepared by a third party under a work-for-hire agreement, were in fact authored by the Georgia Code Revision Commission. This commission, an arm of the Georgia legislature, prepared the code annotations in accordance with its duties as a legislative entity. For these reasons, a majority of the justices determined that the annotations were &ldquo;government edicts,&rdquo; which cannot be covered by copyright protection. Today&rsquo;s decision affirms a prior decision of the Eleventh Circuit Court of Appeals, discussed in Fitch Even&rsquo;s earlier <a href=";an=83667&amp;format=xml&amp;p=5486">alert</a> on this case.</p> <p>Georgia advanced a number of arguments for why, in its view, the annotations were protectable. First, section 101 of the Copyright Act specifically lists &ldquo;annotations&rdquo; among the types of works that are eligible for copyright protection. The Court held that while annotations might be copyrightable when prepared by a private party or a non-lawmaking entity, the statute does not speak to whether those same materials are copyrightable when prepared by a judge or legislator, or otherwise vitiate the government edicts doctrine.</p> <p>Second, Georgia pointed out that although the Copyright Act excludes from copyright protection any works that are prepared by federal government employees, it contains no such exclusion for works prepared by state government employees. Dismissing this argument, the Court noted that the bar of copyright protection for federal employees &ldquo;sweeps much more broadly&rdquo; than the government edicts doctrine does. In other words, the bar of copyright protection for federal employees applies to all federal officials without regard for the nature of their position or the scope of their authority. The &ldquo;government edicts&rdquo; doctrine, though, is limited to lawmaking officials of the states.</p> <p>Finally, the Court rejected Georgia&rsquo;s policy-based argument that without copyright protection, Georgia and other states would be unable to induce private parties to assist in preparing annotated codes. The Court held that such a policy question was addressable by Congress, not rectifiable by the courts.</p> <p>Georgia next argued that the government edicts doctrine did not encompass the annotations because the annotations did not themselves have the force or effect of law. The Court rejected this doctrine because annotations &ldquo;come from an official with authority to make and interpret the law.&rdquo; Under Georgia&rsquo;s logic, the Court observed, states could own any legislative materials helpful in interpreting statutes, such as floor statements, proposed bills, or committee reports: &ldquo;If everything short of statutes and opinions were copyrightable, than States would be free to offer a whole range of premium legal works for those who can afford the extra benefit.&rdquo; Further, if this were the law, &ldquo;[a] State could monetize its entire suite of legislative history.&rdquo;</p> <p>Four justices dissented. Justice Thomas would have held that while statutes and regulations could not be copyrighted, accompanying notes that themselves lack legal force could be. Justice Ginsberg offered a separate dissenting opinion asserting that the annotations were not made &ldquo;in a legislative capacity,&rdquo; and thus were subject to copyright protection.</p> <p>Today&rsquo;s decision definitively resolves a long-simmering debate between entities on both sides of the issue, at least under the current version of the Copyright Act. It appears that any change in the result of this case will need to come from Congress.</p> <p>For more information on this decision, 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 /> Fitch Even IP Alert<sup>&reg;</sup></b></p>IP Alerts27 Apr 2020 00:00:00 -0800 Alert: Supreme Court Holds Willfulness Not Required to Award Trademark Profits<p>Is a defendant&rsquo;s mental state an important consideration in determining an award of profits in a trademark infringement action? The U.S. Supreme Court, in <a href=""><i>Romag Fasteners, Inc. v. Fossil, Inc.</i></a>, answered that question and rectified a split in the federal circuits, unanimously holding that willfulness is not a requirement for an award of defendant&rsquo;s profits. The case is expected to lead to more-frequent claims for a defendant&rsquo;s profits in trademark litigation.</p> <p>Romag and Fossil had an agreement for Fossil to manufacture some of its fashion accessory products with magnetic fasteners of Romag. As time went on, a third-party manufacturer of the Fossil accessories began to use counterfeit fasteners, and Romag sued Fossil for trademark infringement and false designation of origin under the Lanham Act. After finding Romag liable for infringement, the jury in that underlying suit found that Fossil had acted in &ldquo;callous disregard&rdquo; of the rights of Romag, but simultaneously found that Fossil had not acted willfully in its infringement of the rights of Romag. The district court held that Romag was not entitled to an award of Fossil&rsquo;s profits because the controlling Second Circuit precedent required a finding of willfulness to award profits.</p> <p><a href=";an=95343&amp;format=xml&amp;p=5486">Not all circuits</a> followed the rule of the Second Circuit on this issue, and the Supreme Court agreed to hear the case to resolve the dispute. In its opinion, the Court found that the Lanham Act statute section 1125(a) does not require a finding of willfulness to award profits. Fossil argued that while the statute might not specify a finding of willfulness for granting an award of profits, such an award is subject to &ldquo;principles of equity.&rdquo; As such, it argued, the Second Circuit rule is appropriate to require a finding of willfulness for an award of profits. The Court rejected that argument, finding that the language of the statute itself is clear and holding that while the issue of willfulness is appropriate in other enquiries, it is not an appropriate requirement under section 1125(a). As a result, the Court remanded the case for further proceedings consistent with this ruling.</p> <p>For further information on this case, please contact Fitch Even partner <a href=";A=2609&amp;format=xml&amp;p=5482">Joseph T. Nabor</a>, author of this alert.<br /> <b><br /> Fitch Even IP Alert</b><b>&reg;</b></p>IP Alerts27 Apr 2020 00:00:00 -0800 USA 2020 Recognizes Fitch Even and Partner Tim Maloney<p>Fitch, Even, Tabin and Flannery has once again been ranked as a leading intellectual property law firm in Illinois in the 2020 edition of<i> Chambers USA: America&rsquo;s Leading Lawyers for Business</i>, a prestigious research-based directory and one of the most widely cited referral sources for legal services in the U.S.</p> <p>In this year&rsquo;s listing, <i>Chambers</i> notes in part that the Fitch Even team is known for its &ldquo;strong reputation for work in the contentious and noncontentious spheres of patent, trademark and copyright law&rdquo; and the firm&rsquo;s &ldquo;substantial experience handling post-grant, reexamination and <i>inter partes</i> reviews at the USPTO.&rdquo; One client is quoted as saying the firm &ldquo;<i>provides excellent counsel on a wide range of patent issues,&quot; </i>adding that<i> &quot;its accessibility, knowledge and eagerness to help solve problems makes it a go-to patent counsel.&quot;</i></p> <p>In addition, partner <a href=";A=2601&amp;format=xml&amp;p=5482">Timothy P. Maloney</a> was once again singled out by <i>Chambers</i> as a notable practitioner in the field of intellectual property law in Illinois. <i>Chambers</i> reports that clients observed that Tim is<i> &ldquo;a fantastic litigator&rdquo; </i>who<i> &quot;has a good perspective and lays out well thought-out opinions and options.&rdquo; </i>Tim&rsquo;s practice entails all aspects of IP enforcement and defense, with an emphasis on representing plaintiffs in patent litigation, often multi-party complex litigation. He is an established trial lawyer with a strong track record in numerous jury and bench trials. Tim has handled over 100 litigation-related patent post-issuance proceedings in the USPTO, consistently achieving favorable outcomes.</p> <p>Published annually by London-based Chambers &amp; Partners, <a href=""><i>Chambers USA</i></a> determines its rankings through confidential, in-depth interviews with clients and outside attorneys as well as through independent research and assessment of recent work done. Inclusion in the guide is based solely on the findings of the Chambers research team. Criteria used includes technical legal ability and experience, capability and effectiveness, client service, commercial vision and business understanding, diligence, value for money, strength and depth of the firm at every level, standards of professional conduct, and other qualities most valued by clients.&nbsp;<br /> &nbsp;</p>Firm News24 Apr 2020 00:00:00 -0800 Alert: Federal Circuit Continues to Grapple with Admissibility of Prior Art in Deciding ยง 101 Cases<p>On April 17, in <a href=""><i>CardioNet, LLC v. InfoBionic, Inc.</i></a><i>, </i>the Federal Circuit held that a patent directed to an improvement in cardiac monitoring technology is directed to patentable subject matter, and there was no need to remand for consideration of the prior art. In a partial dissent, Judge Dyk, while concurring in the result, disagreed with statements in the majority opinion that were, in his opinion, dicta, and were likely to &ldquo;sow confusion&rdquo; regarding admissibility of prior art in a section 101 analysis. This case is yet another in a string of decisions on whether patents claim patentable subject matter under 35 U.S.C. &sect; 101.</p> <p>Plaintiffs CardioNet and Braemar Manufacturing (collectively &ldquo;CardioNet&rdquo;) brought a patent infringement action in the District of Massachusetts against InfoBionic for infringement of CardioNet&rsquo;s U.S. Patent No. 7,941,207. The &rsquo;207 patent is directed to cardiac monitoring systems for detecting and distinguishing atrial fibrillation and atrial flutter from other forms of cardiac arrythmia. InfoBionic moved to dismiss for failure to state a claim pursuant to Rule 12(b)(6), arguing that the asserted claims of the &rsquo;207 patent were directed to patent-ineligible subject matter under section 101. The district court granted this motion pursuant to the Supreme Court decision in <a href=";an=31047&amp;anc=180&amp;format=xml&amp;p=5486"><i>Alice Corp. v. CLS Bank Int&rsquo;l</i></a> and its progeny, finding that the patent claims were not directed to patentable subject matter under section 101 because they were directed to an abstract idea.</p> <p>On appeal, the Federal Circuit reversed. After noting that patent eligibility under section 101 is a question of law that may contain underlying issues of fact, the court held that the claims were directed to an improved cardiac monitoring device and not to an abstract idea. &ldquo;In our view,&rdquo; held the court, &ldquo;the claims &lsquo;focus on a specific means or method that improves&rsquo; cardiac monitoring technology; they are not &lsquo;directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery.&rsquo;&rdquo;</p> <p>In reaching its decision, the court discussed the claim language and specification and found that the claims are &ldquo;akin&rdquo; to claims that the court has previously determined in other cases to be directed to technological improvements and not to abstract ideas. The court emphasized that it accepted as true the statements in the &rsquo;207 specification describing the advantages of the claimed technology and noted that nothing in the specification suggests that doctors were previously employing the techniques performed by the claimed device. The court stated that the district court&rsquo;s error resulted from its incorrect assumption that the claims were directed to automating known techniques and assigned error to the district court&rsquo;s &ldquo;fact finding&rdquo; to the contrary. The Federal Circuit emphasized the requirement to construe all facts and draw all inferences in favor of the non-moving party (CardioNet) in deciding a motion to dismiss under Rule 12(b)(6).</p> <p>In a second part of the opinion, the court addressed the question of whether it was capable of resolving the issue of section 101 eligibility at the 12(b)(6) stage without remanding to assess the state of the art to determine whether the claims are directed to automating a practice long used by doctors. It concluded that no remand was necessary because the &ldquo;<i>Alice </i>step one&rdquo; question of whether the claims are directed to an abstract idea presents a legal question that should be answered &ldquo;based on the intrinsic evidence,&rdquo; i.e., without examination of the prior art. &ldquo;Accordingly,&rdquo; the court held, &ldquo;our analysis at <i>Alice</i> step one involves examining the patent claims in view of the plain claim language, statements in the written description, and the prosecution history, if relevant.&rdquo; In this case, the court determined that the patentee&rsquo;s assertions in the specification that the claimed invention constituted an improvement of a computer or network should be credited, and it concluded that no remand was necessary to consider evidence of prior art. The court further stated that the trial court has discretion to take judicial notice of a longstanding practice where the extrinsic evidence is &ldquo;overwhelming to the point of being indisputable,&rdquo; even though the court is not required to consider evidence of prior art or extrinsic evidence regarding the state of the art. The majority noted that comparison of the prior art and the patents claims is reserved &ldquo;for &sect;&sect; 102 and 103 purposes.&rdquo;</p> <p>Judge Dyk agreed with the result of reversing the dismissal of the complaint on the ground that the claims &ldquo;have not been shown&rdquo; to be patent ineligible under section 101, but dissented to express disagreement with the majority&rsquo;s statements, which were dicta in his opinion, regarding limits on the admissibility of extrinsic evidence of the prior art and a longstanding practice regarding the asserted claims. In his opinion, binding authority does <i>not</i> limit the use of extrinsic evidence of prior art to determine the state of the art or a longstanding practice in a &ldquo;step one&rdquo; inquiry under section 101. Regarding the issue of admissibility of extrinsic evidence, Judge Dyk stated that the &ldquo;language in the panel opinion is likely to sow confusion&rdquo; for &ldquo;the district court and the bar.&rdquo;</p> <p>This Federal Circuit decision is significant because it highlights the unresolved questions surrounding whether prior art is relevant and admissible in a section 101 analysis. The decision was made in the context of a motion to dismiss under Rule 12(b)(6) where the matters outside the pleadings are not normally considered and the pleadings are construed in favor of the non-movant. Thus, the decision did not have occasion to address the question of relevance and admissibility of evidence in the context of a decision on the merits (i.e., summary judgment or trial). In any case, as in other Federal Circuit decisions, the majority and dissenting opinions demonstrate that the Federal Circuit is struggling with what the rules are and should be regarding the relevance and admissibility of prior art, the state of art, and &ldquo;longstanding&rdquo; practices in the course of deciding whether a patent is directed to statutory subject matter under section 101, rather than deciding novelty or obviousness under sections 102 and 103.</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 Alerts22 Apr 2020 00:00:00 -0800