Spiderman Toy Not Granted Patent Royalties Beyond the Life of the Patent

On 22 June 2015, the Supreme Court of the United States (SCOTUS), in a 6-3 decision, left undisturbed the 51-year-old decision in Brulotte v. Thys Co. (1964). The rule has been and continues to be that patent royalty agreements cannot require payments after the expiration of a patent. Kimble v. Marvel Entertainment, LLC, Case No. 13-720.

In this case, Marvel agreed to purchase Kimble’s patent for a lump sum plus a 3% royalty on future sales. The contract gave no expiration on the royalty. Toward the end of the life of the patent, Marvel asked a trial court to confirm that Marvel was not obligated to pay the royalty beyond the expiration of U.S. Patent No. 5,072,856. The court agreed. According to long-standing public policy, any invention as claimed in a patent falls into the public domain and thus grants the public free use of the invention after the patent expires. SCOTUS confirmed this understanding. According to SCOTUS, there are many other ways ways to structure contracts that include payments and other benefits to avoid this rule.

Defendant’s Beliefs about Patent’s Validity Does Not Free Him from Induced Infringement

Two days ago, on 26 May 2015, the U.S. Supreme Court (SCOTUS) decided another patent dispute — Commil USA, LLC v. Cisco Systems, Inc., 575 U.S. ___, (2015). At trial, the plaintiff, Commil, showed that Cisco was guilty of inducing its customers to infringe Commil’s patent under 35 U.S.C. § 271(b). This statute states, “Whoever actively induces infringement of a patent shall be liable as an infringer.” In practice, induced liability requires that a defendant has knowledge of the patent and knows that “the induced acts constitute patent infringement.” Slip op. at 3. See also Global-Tech Appliances, Inc. v. SEB S. A., 563 U. S. ___ (2011). For the first time, SCOTUS addresses whether knowledge of, or belief in, a patent’s validity is required for induced infringement under 35 U.S.C. § 271(b). The answer is no.

The reasoning may be subtle to the casual reader. Patent infringement and validity are distinct concepts in the Patent Act. Slip op. at 9. If belief in the invalidity of a patent were a defense to induced infringement, the force of that presumption would be lessened to a drastic degree, asserts the SCOTUS majority. A defendant could prevail if he proved he reasonably believed the patent was invalid. That would “circumvent the high bar Congress is presumed to have chosen,” which is the clear and convincing standard that a patent is valid unless shown otherwise. See Microsoft Corp. v. i4i Ltd. Partnership, 564 U. S. ___, ___– ___ (2011) (slip op., at 8–10). Invalidity of a patent is not a defense to infringement, it is a defense to liability. According to the SCOTUS majority, a belief as to invalidity cannot negate the scienter required for induced infringement. Slip op. at 11.

In its opinion, SCOTUS provides a few suggestions for defendants consistent with its decision. For example, accused inducers who believe a patent is invalid can file a declaratory judgment action asking a federal court to declare the patent invalid. See MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118, 137 (2007). They also can seek inter partes review at the Patent Trial and Appeal Board (PTAB) and receive a decision as to validity within 12 to 18 months. See 35 U.S.C. § 316. Or they can, as Cisco did here, seek ex parte reexamination of the patent by the Patent and Trademark Office (USPTO) under 35 U.S.C. § 302. And, any accused infringer who believes the patent in suit is invalid may raise the affirmative defense of invalidity at trial under 35 U.S.C § 282(b)(2).

Notably absent from this opinion is any mention of the role of non-infringement opinions provided by outside or inside counsel. Also, according to my memory, this is the first time that I see an opinion use the term “patent trolls.” See p. 3 of the dissent by Justice Scalia.

Merely Scaling Up of a Known Process is Not Patentable

Sometimes it is hard to know what the U.S. Patent Office will decide when allowing some patent claims over others. How much novelty is needed? The Manual of Patent Examining Procedure gives some guidance, and mere changes in size or dimension over a known solution is not enough. MPEP (MPEP) 2144.04(IV)(A) references two cases:

  • In re Rose, 220 F.2d 459, 105 USPQ 237 (CCPA 1955) — Claims directed to a lumber package “of appreciable size and weight requiring handling by a lift truck” where held unpatentable over prior art lumber packages which could be lifted by hand because limitations relating to the size of the package were not sufficient to patentably distinguish over the prior art.
  • In re Rinehart, 531 F.2d 1048, 1053, 189 USPQ 143, 148 (CCPA 1976) — “mere scaling up of a prior art process capable of being scaled up, if such were the case, would not establish patentability in a claim to an old process so scaled.”

Some lessons from these cases are self-evident. Patent application drafters need to include enough detail in the technical description of the invention. While a lot of research money may be spent on scaling up a design, if there are no details as to how scaling up presented additional problems, and no details about how these problems were overcome, a set of patent claims will not be allowed just because there is claim to a large-scale facility. A patent will not be granted even though no one has previously developed a device or system on a massive scale. My recommendation is to include an item in your pre-filing checklist for this aspect of your patent application. If in doubt, have a patent professional look over your application before submitting it.

U.S. Supreme Court Requires Definiteness in Patent Claims

This post updates and supersedes my earlier post where the Federal Circuit ruled that it is allowable to have a certain amount of ambiguity in patent claims. The standard articulated was that a claim was indefinite “only when it is not amenable to construction . . . [or] insolubly ambiguous.” Slip Op. at *7. SPOILER ALERT: the Supreme Court of the United States (SCOTUS) corrects the Federal Circuit by vacating the decision and remands the case with new instructions to comply with the “reasonable certainty” standard. Slip Op. at *11. After some context, I present some highlights of the SCOTUS decision.

On 4 June 2014, SCOTUS decided, Nautilus, Inc. v. Biosig Instruments, Inc. (PDF). The Nautlius litigation involves U.S. Patent No. 5,337,753 protecting a heart rate monitoring device. The device operates by measuring electrocardiograph (“ECG”) signals related to a user’s heartbeat. The inventors observed that electromyogram (“EMG”) signals can cause inaccuracies in measuring ECG signals. EMG signals are generated by skeletal muscles and can interfere with detection at an exercise monitor grip. The patent claim called for a heart rate monitor having an “elongate member” (such as a cylindrical bar) and “a first live electrode and a first common electrode mounted on said first half in spaced relationship with each other [electrodes],” (emphasis added). See my earlier post for a complete copy of the claim in dispute.

At trial, the dispute centered on the term “spaced relationship”—how far apart the electrodes must be before they would be deemed to be in a “spaced relationship.” In the Markman hearing, the district court ruled that “there is a defined relationship between the live electrode and the common electrode on one side of the cylindrical bar and the same or a different defined relationship between the live electrode and the common electrode on the other side of the cylindrical bar.” Nautilus then moved for summary judgment, arguing that the term “spaced relationship” was indefinite. The district or trial court agreed and granted the motion reasoning that the claim language “did not tell . . . anyone what precisely the space should be.”

Before reaching the SCOTUS, the Federal Circuit reasoned that the disputed claim term “spaced relationship” did not suffer from indefiniteness and reversed the trial court’s interpretation. Because the term was amenable to construction, “indefiniteness . . . would require a showing that a person of ordinary skill would find ‘spaced relationship’ to be insolubly ambiguous—that it fails to provide sufficient clarity delineating the bounds of the claim to one skilled in the art,” and held that “a skilled artisan would find such boundaries provided in the intrinsic evidence,” that is, from an reading and understanding of the patent.

Note, the “insolubly ambiguous” standard is no longer the law because Nautilus appealed to the SCOTUS, which unanimously reverses the Federal Circuit’s decision.

In place of the “insolubly ambiguous” standard, SCOTUS states that “a patent is invalid for indefiniteness if its claims, read in light of the specification, delineating the patent, and the prosecution history, fail to inform with reasonable certainty, those skilled in the art about the scope of the invention.” Slip. Op. at *1. In supporting this conclusion, SCOTUS provides some guidance when it states, “[i]t cannot be sufficient that a court can ascribe some meaning to a patent’s claim” and the “definitiveness inquiry trains on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post-hoc.” SCOTUS further states, “[t]o tolerate imprecision that is just short of . . . ‘insolubly ambiguous’ would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging ‘zone of uncertainty.’” Slip. Op. at *12. The SCOTUS further states, the “Federal Circuit invoked a standard more amorphous than the statutory definiteness requirement [of 35 U.S.C. 112(2)] allows.” Slip Op. at *14.

That language seems pretty serious. The SCOTUS was concerned with “lower court confusion.” Slip Op. at *11. The function of the claims is to give certainty to what is protected and what is not protected by a patent. The SCOTUS reminded the Federal Circuit that “the definiteness inquiry trains on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post hoc.” Slip Op. at *12. Further, the SCOTUS reminds us that, “patents are not addressed to lawyers, or even to the public generally, but rather to those skilled in the relevant art.” Slip Op. at *9 (internal quotes omitted).

I do not look forward to the opinion from the Federal Circuit on remand. Given its history, I suspect we will see a very short discussion of the new standard in the second opinion from the Federal Circuit in this case. Also, the SCOTUS “leaves for another day,” two issues: (1) whether the ultimate issue of definiteness triggers the clear-and-convincing-evidence standard, and (2) whether deference is due to the USPTO’s resolution of disputed issues of fact. See. footnote 5, Slip Op. at *13.

There are several lessons from this opinion. Inventors need to clearly articulate and record what is their invention. Inventors need to communicate the necessary details to whomever drafts the patent application. Further, patent attorneys need to take the time and effort to clearly draft patent applications so that there is no ambiguity. Patent attorneys need to carefully draft claims and not make fuzzy claims to try to ensnare all possible future infringements.

Another lesson from this SCOTUS opinion is that patent applications should be written with future possible litigation in mind. I imagine that the U.S. patent judges in post-issuance proceedings will be aware of this decision and will not hesitate to strike claims that are indefinite.