Federal Circuit Update (September 2017)

September 26, 2017

This September 2017 edition of Gibson Dunn’s Federal Circuit Update discusses the court’s upcoming sitting in New York, the two pending Federal Circuit cases before the Supreme Court that consider issues regarding inter partes review proceedings, and the Federal Circuit’s changes to two local rules involving certificates of interest and statements of related cases.  This update also provides summaries of the three pending en banc cases involving motions to amend claims during inter partes review proceedings, judicial review of timeliness determinations in inter partes review proceedings, and attorneys’ fees for litigation involving the PTO.  Also included are summaries of three recent decisions relating to the applicability of the Seventh Amendment to requests for attorneys’ fees, patent eligibility, and evidentiary issues in inter partes review proceedings.

Federal Circuit News

Federal Circuit Sitting in New York.  In October, the Federal Circuit will hold oral arguments in New York, NY, at the U.S. Court of International Trade.  Below is a brief description of some interesting cases on the schedule:

  • October 3: Janssen Biotech, Inc. v. Celltrion Healthcare Co., Ltd. (17-1120) and In re Janssen Biotech, Inc. (17-1257) – These appeals involve the application of 35 U.S.C. § 121, which provides safe harbor protection against obviousness-type double patenting rejections for divisional applications filed as the result of a restriction requirement in another application.  The parties dispute whether the application at issue is entitled to safe harbor because it was not formally designated a "divisional application" at filing, but was prosecuted as a divisional and later formally amended to be a divisional during reexamination.  The district court in Janssen v. Celltrion and the PTAB in In re Janssen held that Section 121 did not apply.  Bill Rooklidge, a partner in Gibson Dunn’s Orange County office, will argue on behalf of Janssen in the PTAB appeal.
  • October 4:  Classen Immunotherapies, Inc. v. Elan Pharmaceuticals, Inc. (17-1033) – This appeal presents the question whether, after submitting clinical data to the Food and Drug Administration, a company’s alleged analysis, disclosure, and use of that data for potential patenting and labeling activities are protected by the safe harbor provision of 35 U.S.C. § 271(e)(1).  The appellant, Classen, argues that such activities are commercial and therefore fall outside the Section 271(e)(1) safe harbor.
  • October 5: Travel Sentry, Inc. v. Tropp (16-2386) – This appeal involves the issue of divided infringement and application of the "condition and manner" test of attribution established in Akamai Technologies, Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015).  The patents-in-suit cover a luggage screening method, and the question on appeal is whether sufficient direction and control is exercised over the Travel and Security Administration in carrying out the method to fall within the realm of attribution.

Supreme Court.  The Supreme Court has granted certiorari on two cases from the Federal Circuit for the upcoming October Term 2017:




Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712

Cert. granted, Resp. Br. due Oct. 23, 2017

Constitutionality of inter partes review under Article III and the Seventh Amendment

SAS Institute Inc. v. Matal, No. 16-969

Cert. granted, Pet’r Reply Br. due Oct. 5, 2017

The number of claims that must be addressed by the Patent Trial and Appeal Board in a final written decision during inter partes review

Upcoming En Banc Federal Circuit Cases

In re Aqua Prods., Inc., No. 15-1177 (Fed. Cir.):  Allocations of the burdens of persuasion and production when a patent owner moves to amend in an inter partes review proceeding.

The PTAB instituted an inter partes review proceeding against Aqua’s patent, which relates to automated swimming pool cleaners.  Aqua moved to amend the challenged claims to distinguish the cited prior art.  The PTAB, however, denied Aqua’s motion, determining that Aqua failed to carry its burden of showing patentability of the proposed substitute claims over the prior art of record.  On appeal, the PTO intervened to defend the PTAB’s decision.  The Federal Circuit affirmed (decision available here).  Eight amicus briefs have been filed: three in favor of neither party (American Intellectual Property Law Association, Intellectual Property Owners Association, and Houston Intellectual Property Law Association), three in favor of Aqua Products (Case Western Reserve University School of Law Intellectual Property Venture Clinic and Ohio Venture Association, Pharmaceutical Research and Manufacturers of America, and Biotechnology Innovation Organization), and two in favor of the PTO (Askeladden, L.L.C. and Internet Association et al.).  Oral argument was heard on December 9, 2016.

Questions Presented:

(a)  When the patent owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the patent owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them?  Which burdens are permitted under 35 U.S.C. § 316(e)?

(b)  When the petitioner does not challenge the patentability of a proposed amended claim, or the PTAB thinks the challenge is inadequate, may the PTAB sua sponte raise patentability challenges to such a claim?  If so, where would the burden of persuasion, or a burden of production, lie?

Wi-Fi One, LLC v. Broadcom Corp., No. 15-1944 (Fed. Cir.):  The Federal Circuit’s jurisdiction to review the PTAB’s determination that a petitioner is not time-barred under 35 U.S.C. § 315(b). 

The PTAB instituted an inter partes review proceeding against Wi-Fi One’s patent.  Wi-Fi One argued that Broadcom was time-barred under 35 U.S.C. § 315(b) from seeking review because Broadcom was in privity with time-barred district court litigants.  The PTAB disagreed, determining that Wi-Fi One did not establish that Broadcom had sufficient control over district court litigation to support a privity finding.  On appeal, the Federal Circuit held that it does not have jurisdiction to review the PTAB’s determination that Broadcom was not time-barred, holding that the Supreme Court’s decision in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), did not implicitly overrule prior Federal Circuit precedent on the issue (decision available here).  To date, two amicus briefs have been filed in support of Wi-Fi One (WesternGeco LLC and 3DS Innovations, LLC), eight amicus briefs have been filed in support of neither party (Jeremy Cooper Doerre, New York Intellectual Property Law Association, Federal Circuit Bar Association, Intellectual Property Owners Association, Boston Patent Law Association, Professors of Patent and Administrative Law, American Intellectual Property Law Association, and Biotechnology Innovation Organization), and three amicus briefs have been filed in support of Broadcom (Oracle, Intel, and Apple).  Oral argument was heard on May 4, 2017. 

Question presented:

Should this court overrule Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) and hold that judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review?

Nantkwest, Inc. v. Matal, No. 16-1794 (Fed. Cir.):  Whether the PTO can recover attorneys’ fees in litigation under 35 U.S.C. § 145.

After the PTAB affirmed the examiner’s rejection of Nantkwest’s patent application, Nantkwest appealed to the United States District Court for the Eastern District of Virginia under 35 U.S.C. § 145.  The PTO prevailed on the merits of the appeal and moved to recover both attorneys’ fees and expert fees.  Section 145 provides that "[a]ll the expenses of the proceedings shall be paid by the applicant."  Applying this provision, the district court granted the PTO’s request for expert fees, but rejected the PTO’s request for attorneys’ fees.  A panel of the Federal Circuit reversed the district court’s holding as to attorneys’ fees, holding that "[a]ll expenses of the proceedings," under § 145, authorizes an award of attorneys’ fees.  (Decision available here.)  Following the entry of judgment, however, the Federal Circuit sua sponte ordered the panel decision be vacated and that the case be reheard en banc.  To date, no amicus briefs have been filed.  Amicus briefs in support of the PTO or in support of neither party must be filed by November 22, 2017; amicus briefs in support of Nantkwest must be filed by December 22, 2017.  Oral argument has not yet been scheduled.

Question presented:

Did the panel in NantKwest, Inc. v. Matal, 860 F.3d 1352 (Fed. Cir. 2017) correctly determine that 35 U.S.C. § 145’s "[a]ll the expenses of the proceedings" provision authorizes an award of the United States Patent and Trademark Office’s attorneys’ fees?

Federal Circuit Practice Update

On September 18, 2017, the Federal Circuit posted a notice of final amendments to two local rules, Fed. Cir. L.R. 47.4 and 47.5, which relate to certificates of interest and statements of related cases.  The rules are scheduled to take effect on October 2, 2017.  This followed a formal notice and comment period pursuant to 28 U.S.C. § 2071(b).  The Federal Circuit also posted a revised Form 9, the Certificate of Interest form, which also will become effective on October 2, 2017.

Rule 47.4 sets forth the requirements for the certificate of interest.  The October 2 revision adds a requirement that the party set forth the following information, in addition to the information previously required: "The title and number of any case known to counsel to be pending in this or any other court or agency that will directly affect or be directly affected by this court’s decision in the pending appeal."

Rule 47.5 sets forth the requirements for the statement of related cases.  The October 2 revision makes four changes:

  • It adds the requirement that certificates of interest include a statement of related cases (previously, only principal briefs required a statement of related cases).
  • It clarifies that the certificate of interest must include cases pending before agencies, not just cases pending before courts.
  • It eliminates the exception which had allowed parties to describe numerous related cases in a general fashion, rather than specifically listing each related case.
  • It clarifies that cases merely involving the "same general legal issue," such as the correct construction of a statue, are not "related" within the meaning of the rule.

The new Form 9 is updated to reflect these changes.

Key Case Summaries (August – September 2017)

AIA Am., Inc. v. Avid Radiopharms., No. 16-2647 (Fed. Cir. Aug. 10, 2017):  Seventh Amendment right to a jury trial does not apply to requests for attorneys’ fees under § 285.

AIA sued Avid for infringement of two patents.  Avid argued that AIA lacked standing because AIA’s founder and the alleged sole inventor of the patents conspired to cut out the university where the research was performed.  The district court ordered targeted discovery and held a jury trial on AIA’s standing.  Based on the jury’s verdict, the district court found that AIA lacked standing and entered judgment in favor of Avid.  The Federal Circuit summarily affirmed.  Avid subsequently moved for attorneys’ fees in the district court.  The court allowed the parties to submit extensive briefing, evidence, and declarations on the issue of fees and eventually awarded nearly $4 million in fees to Avid.  AIA appealed the award of fees, but not the amount.

The Federal Circuit (Hughes, J.) affirmed.  On appeal, AIA argued that the district court’s award of attorneys’ fees was improper because, when an award of attorneys’ fees is based in part or in whole on a party’s state of mind, intent, or culpability, and only a jury may decide those issues.  The court rejected AIA’s argument, explaining that attorneys’ fees were traditionally decided in courts of both law and equity.  Because this was an award of fees pursuant to a statutory provision, as opposed to a contractual indemnification provision, the attorneys’ fees are properly characterized as an equitable remedy.  The Federal Circuit also held that the district court was not foreclosed from making additional factual findings about AIA’s state of mind, intent, and culpability in deciding the fees motion.

Visual Memory LLC v. NVIDIA Corp., No. 2016-2254 (Fed. Cir. Aug. 15, 2017):  Improvement to computer memory systems is not abstract under Alice.

Visual Memory accused NVIDIA of infringing a patent related to a programmable memory system.  Believing that the claims were directed to patent-ineligible subject matter, NVIDIA filed a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6).  The district court granted the motion, finding that the claims were directed to the abstract idea of "categorical data storage," which humans have practiced for many years, and that the claims did not contain an inventive concept because they recited components—main memory, cache, bus, and processor—that were generic and conventional.

The Federal Circuit (Stoll, J.) reversed the district court decision.  The majority determined that the claims were patent-eligible because they were directed to an improved computer memory system, not just the abstract idea of categorical data storage.  The majority focused on the alleged improvements provided by the claimed memory system as explained in the specification.  The specification explained that prior art memory systems had to be designed specifically for different types of processors, which was costly, inefficient, and caused performance issued.  In the improved memory system, by contrast, the memory could be easily programmed to be used with any type of processor, thus avoiding the drawbacks of the prior art.  Because the claims were directed to an improvement in computer functionality, the majority found the claims were not abstract under Alice.

Judge Hughes dissented, arguing that the claims did not provide any specificity on how to program memory to interoperate with different processors, and thus were not directed to a specific improvement in computer functionality.

Ultratec, Inc. v. CaptionCall, LLC, Nos. 2016-1706, -1707, -1708, -1709, -1710, -1712, -1713, -1715, -2366 (Fed. Cir. Aug. 28, 2017):  The PTAB must sufficiently explain its reasons for decisions on evidentiary issues to allow meaningful appellate review.

Ultratec sued CaptionCall for infringement of several patents and CaptionCall initiated inter partes review ("IPR") proceedings on all of the asserted patents.  CaptionCall retained the same invalidity expert in both the district court litigation and the IPRs, and the expert testified about the same issues in both proceedings.  Within a week of the expert’s trial testimony before the district court, Ultratec requested permission to supplement the IPR record with what it believed to be testimony inconsistent with the expert’s IPR declarations.  The PTAB held a conference call to discuss Ultratec’s request and denied the request during the call without ever reviewing the testimony.  The PTAB never issued a written order.  The PTAB subsequently issued final written decisions finding all challenged claims invalid.  The PTAB’s decisions relied heavily on the credibility of the expert whose alleged inconsistent testimony was not allowed.  Ultratec appealed the final written decisions, challenging the PTAB’s decision not to supplement the evidentiary record with the allegedly inconsistent testimony.

The Federal Circuit (Moore, J.) vacated and remanded the PTAB’s decisions because the PTAB abused its discretion in refusing to admit and consider the expert’s trial testimony and did not explain its decision to do so.  Under PTAB rules, a request to submit new evidence must show (1) why the information reasonably could not have been obtained earlier, and (2) that consideration of the information would be in the interests of justice.  The Federal Circuit found that Ultratec’s request satisfied both prongs.  Ultratec submitted its request within a week of the trial, and thus could not have proffered the testimony sooner.  The PTAB offered no reasons why it would not be in the interests of justice to consider allegedly inconsistent testimony from the district court litigation on the identical issues it was considering.  According to the Federal Circuit, "[a] reasonable adjudicator would have wanted to review this evidence."

The Federal Circuit also criticized the PTAB’s procedures impedeing meaningful appellate review. The PTAB required Ultratec to file a request to supplement the record that "must not include a discussion of the contents or types of the particular documents to be entered."  Having never reviewed the testimony at issue, the PTAB lacked the information necessary to make a reasoned decision on the admissibility of the evidence.  The Federal Circuit also criticized the fact that the PTAB made a significant evidentiary decision without providing a written explanation or a record of the conference call where the PTAB denied Ultratec’s request.

Upcoming Oral Argument Calendar

For a list of upcoming arguments at the Federal Circuit, please click here.

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding developments at the Federal Circuit.  Please contact the Gibson Dunn lawyer with whom you usually work or the authors of this alert:

Blaine H. Evanson – Los Angeles (213-229-7228, [email protected])
Blair A. Silver – Washington, D.C. (202-955-8690, [email protected])

Please also feel free to contact any of the following practice group co-chairs or any member of the firm’s Appellate and Constitutional Law or Intellectual Property practice groups: 

Appellate and Constitutional Law Group:
Mark A. Perry – Washington, D.C. (202-887-3667, [email protected])
James C. Ho – Dallas (214-698-3264, [email protected])
Caitlin J. Halligan – New York (212-351-4000, [email protected])

Intellectual Property Group:
Josh Krevitt – New York (212-351-4000, [email protected])
Wayne Barsky - Los Angeles (310-552-8500, [email protected])
Mark Reiter – Dallas (214-698-3100, [email protected])

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