Disclaimer Tactic Averts Facebook’s Patent Challenge

By Robert Asher. Co-Chair of our Patent Practice Group

PTAB Alert   Skky, LLC avoided an attack on an important patent by using a creative defensive maneuver.  Facebook and Instagram had challenged all of eleven claims of Skky’s US Patent No. 9,037,502 in a petition for a covered business method patent review.

A covered business method (“CBM”) review is an America Invents Act (“AIA”) proceeding before the Patent Trial and Appeal Board. Thus, it is much like an inter partes review (IPR). But CBM’s have procedural advantages making it the preferred patent attack when available.

A CBM may be instituted only against “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration or management of a financial product or service, except that the term does not include patents for technological inventions.” AIA §18(d)(1). Eligibility for a CBM requires that at least one of the claims be directed to a covered business method.

Facebook argued in its petition that claims 1, 6 and 8-11 were directed to covered business methods. Claim 6 added to claim 1, the only independent claim, a limitation including “charging a fee.” Claim 8 “pushed advertising content.” Claims 9-11 include “reporting for royalty determination.”

To reduce the risk of having the CBM proceeding instituted because of these claim limitations, Skky cleverly dropped claims 6 and 8-11 from the patent by filing a statutory disclaimer. The PTAB then treated those claims as if they had never existed.

This tactic left only claim 1 to be considered for whether it qualified as a covered business method. The claim was directed to using orthogonal frequency-division multiplex modulation to encode bits of audio and video files for wireless transmission. The final limitation in claim 1 required “tracking the selection of the requested compressed digital audio and/or visual files.”

Facebook argued that the patent specification made explicit that tracking was for the purpose of determining royalty payments and therefore qualified the claim as being directed to a financial product or service. Skky undermined the argument, pointing out that the specification made clear the invention could be used with noncopyrighted recordings, in which case royalties would not be involved.

More significantly, the claims contained no financial product–related language. It is not enough that the invention could be used in a financial service; a CBM is applicable only to patents with language relating to a financial product or service in at least one of the claims. The CBM was not instituted. Facebook, Inc. et al. v. Skky, LLC, CBM2016-00091, Paper No. 7. More...

Smoothing the Way for Appellate Success in the PTAB

PTAB Alert By Robert Asher. Co-Chair of our Patent Practice Group

While the Patent Trial and Appeal Board would prefer that its final written decision mark the last  it sees of an inter partes review or other AIA (America Invents Act) proceeding, the Federal Circuit Court of Appeals occasionally reverses and remands a case back to the PTAB for further consideration.  In the absence of rules and, in particular, without a statutory deadline for issuing a final decision following remand, confusion has reigned over cases returning to the PTAB from the Federal Circuit.

The PTAB recently announced Standard Operating Procedure (“SOP”) 9, which lays out procedures for handling remanded cases. The PTAB set a goal to issue a final written decision on remanded cases within six months of the Federal Circuit’s mandate.

To speed remanded cases, the chief judge of the PTAB and/or the deputy chief judge and/or a delegated judge will discuss issues raised in each remanded case with the panel that issued the original decision between the date of the appellate decision and the date the mandate issues.  (Mandate is the document by which an appellate court formally closes an appeal and transfers jurisdiction, in this case back to the PTAB.)

The focus of the judges’ meeting will be on the process to be applied and on the issues raised by the Federal Circuit, not on the substantive outcome of the case. For example, the PTAB must determine early on whether additional briefing or oral hearing will be required and whether new evidence may be introduced.

Since the panel will be primed to proceed, the parties must likewise be prepared to move quickly when a case has been remanded. They need to try negotiating agreement on procedures such as briefing, scheduling and additional evidence.

Then the parties must consult with the panel, no later than one month after the mandate, to have the PTAB finalize these procedures in light of its earlier discussions with the chief judge or his designee and the proposal of the parties.  SOP 9 provides the panel with guidance, based on previous panel decisions, as to the procedures to be followed.

A successful appeal of an adverse decision normally leads to a remand. A reversal that finally determines a case in favor of the appellant, as we were able to secure for our client in Arendi S.A.R.L. v. Apple Inc., 832 F.3d 1355 (Fed.Cir. 2016), is quite rare. More...

Corporations Cannot Be Sued for Patent Infringement in a Judicial District Simply Because Their Employees Happen to Work from Home There

By Brandon Scruggs. A member of our Litigation Practice Group

In its May 2017 decision in TC Heartland v. Kraft Foods, the Supreme Court dramatically restricted where patent lawsuits can be brought.  As we discussed at the time, patent owners had long been able to sue a corporation wherever  it was subject to personal jurisdiction, which often meant anywhere that products accused of infringement were sold.  In a shift, the court ruled that patent owners can file such suits only in a state: 1) where the defendant is incorporated; or 2) where the defendant has committed acts of infringement and has a regular and established place of business.

A study published by RPX Corporation, which offers protection against certain patent infringement suits, shows that patent litigation has undergone a sea change in the few months since TC Heartland was decided.  Before that decision, the Eastern District of Texas was the court in which by far most patent plaintiffs, particularly non-practicing entities (NPEs), chose to bring suit.

For example, in the 20 weeks before TC Heartland, the Eastern District of Texas accounted for 57% of new NPE litigation versus just 28% in the nine weeks after that decision.  By contrast, the District of Delaware, the Northern District of Illinois, and the Northern District of California have all seen a significant increase in patent case filings.

Shortly after TC Heartland, a judge in the Eastern District of Texas denied a corporate defendant’s motion to transfer the case to the Western District of Wisconsin where it maintains facilities related to its supercomputer business.  In that case, Raytheon Company v. Cray, Inc., Judge Gilstrap ruled that the presence in the Eastern District of Texas of two Cray employees who worked remotely from their homes was enough to establish venue.

The judge relied on the substantial amount of business attributable to those employees – over $345 million – to conclude that Cray maintained a place of business in his district. The judge suggested that, notwithstanding the Supreme Court’s TC Heartland decision despite, he would still allow many patent suits to be filed in his court.

The Federal Circuit hastened to set Judge Gilstrap straight. In In re Cray, it reversed Judge Gilstrap’s ruling and clarified that two working-from-home employees did not meet the “regular and established place of business” standard.  The case ultimately was transferred to the Western District of Wisconsin. More...