Federal Circuit finds credit reporting patent ineligible; calls it the “height of abstraction”

A recent Federal Circuit decision illustrates the high eligibility hurdles that fintech software patents continue to face in view of the Supreme Court’s 2014 Alice v CLS Bank decision.

In Clarilogic, Inc. v. FormFree Holdings Corp. (Fed. Cir. Mar. 15, 2017), the court addressed the eligibility of U.S. Patent 8,762,243, which was directed to methods for electronic account certification and  credit reporting. The representative claim of the patent was: Continue reading

SCOTUS: No laches in patent infringement cases; six-year limit on damages is the rule

A recent Supreme Court decision may make it easier for patent holders to assert older patents, as the decision significantly restricts the availability of laches (i.e., unreasonable delay) as a defense to a patent infringement claim.

The doctrine of laches allows a court to deny a claim if the plaintiff delayed filing the suit and the delay was unreasonable and prejudicial. The Patent Act also includes a six-year limit on the recovery of damages for patent infringement activities.

Until now, most courts interpreted these two legal doctrines as requiring a patent holder to promptly bring suit upon learning of infringing activity, and in any event no longer than six years from the date that the patent holder places the infringer on notice of the claim. The reason for this is to prevent a patent holder from lying in wait by sending a cease and desist letter but never seeking to resolve the dispute in court.

A recent Supreme Court decision has changed this long-standing interpretation. In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC (Mar. 21, 2017), the patent holder (SCA) sent a letter accusing First Quality of infringement in 2003. In 2010 — seven years after sending the letter — SCA filed suit against First Quality. First Quality argued that SCA’s claim was time-barred under the doctrine of laches. The district court agreed and dismissed the case. The Federal Circuit affirmed, stating that laches prevents recovery of all damages, including those incurred during the 6-year period prior to filing the suit.

The Supreme Court disagreed, noting that “[l]aches is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.” Because Section 286 of the Patent Act imposes a six-year statute of limitations, the Court found that the Patent Act had no gap to fill:  “Laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.”

[Image copyright: Lightwise]

Supreme Court: useful articles such as clothing can include copyrightable elements

A new Supreme Court decision helps to clarify the extent to which copyright law can protect design elements of a useful article, such as an article of clothing.

The Copyright Act states that “useful articles” are generally not eligible for copyright protection. Because an article of clothing is useful, many courts have limited copyright protection for clothing to elements such as fabric prints. However, in Star Athletica, L.L.C. v. Varsity Brands, Inc., the Court ruled that a design element incorporated into clothing (or another useful article) is eligible for copyright protection if:

  • the element can be perceived as a work of art separate from the useful article; and
  • the element would qualify as a protectable pictorial, graphic or sculptural work if imagined separately from the article of clothing (or other useful article).

The Star Athletica case involved certain design elements of cheerleader uniforms, such as arrangements of lines, chevrons and colorful shapes. The designs shown above are two examples that the Court considered in the case.

The Court noted that for an element to qualify as a copyrightable work on its own, the element “cannot itself be a useful article.” Looking at the designs shown above, the Court characterized the arrangement of colors, shapes, stripes and chevrons as “surface decorations” that could be applied to another medium such as a painter’s canvas. The Court also discussed the example of “a design etched or painted into the surface of a guitar,” which could be replicated on an album cover and even replicate the shape of a guitar. The Court explained that such a design is eligible for copyright because the album cover would not replicate the guitar as a useful article.

Thus, the Court distinguished the work of art from the medium to which it is applied. With respect to uniforms, the Court noted that “the only feature of the cheerleading uniform eligible for a copyright in this case is the two-dimensional work of art fixed in the tangible medium of the uniform fabric.” In contrast, the Court explained that copyright does not “prohibit any person from manufacturing a cheerleading uniform of identical shape, cut and dimensions.” In other words, copyright protects a “surface design” but may not protect the surface on which the design is placed.

Can a patent expire before it issues?

 

In certain situations, yes.  Ordinarily, the term of a patent begins on the grant date and ends twenty years after the filing date of the patent. If the patent claims priority to an earlier-filed nonprovisional patent application, then the twenty-year term is calculated from the filing date of the earlier-filed application.

However, an unusual situation can arise if a patent claims priority to a patent application that was filed more than twenty years ago. A recent court decision from the Eastern District of Texas found such a situation in U.S. Patent 9,094,694. The application for the ‘694 patent was filed in July 2014, and the patent issued in July 2015. However, the ‘694 patent was a continuation of three previous patent applications, the first of which was filed in July 1995. Because of this, the effective filing date of the ‘694 patent was July 8, 1995 and its grant date was July 28, 2015 — more than twenty years after the effective filing date.

There are circumstances in which a patent’s term can be extended beyond the twenty-year term. For example, if a patent application’s processing is held up due to Patent Office delay, the term of the patent can be extended to account for that delay. However, this opportunity for patent term adjustment is lost if the applicant also causes certain delays during prosecution, such as by taking an extension of time or filing a supplemental amendment after filing an additional amendment.

In the case of the ‘694 patent, the USPTO determined that no patent term adjustment applied.  Thus, the term of the patent was not extended beyond the standard twenty-year term. The ‘694 patent also included a terminal disclaimer with respect to patent 8,769,561, which did have a patent term adjustment but which still expired in 2016. Thus, the court determined that the ‘694 patent expired before it granted.

The case discussed above is Bartonfalls LLC v. Turner Broadcasting System, Inc. (E.D. Tex. March 15, 2017).

[Image copyright:  W. Scott McGill]]

Are you using your trademark with ALL of the goods and services listed in your trademark application?

USPTO sealOn January 19, 2017, the USPTO published a final rule that would allow the USPTO to verify whether trademark holders are using a trademark with all of the goods and services listed in the trademark application or registration. However, the White House’s recent regulatory freeze calls into question whether and when the USPTO will implement the new rule.

Before the USPTO will issue a trademark registration, trademark applicants are required to submit proof that they using the mark in commerce. In addition, in order to maintain a trademark registration, trademark owners must periodically submit affidavits of continued use to the USPTO.

Under the new rule, when a trademark holder or applicant submits evidence of use in commerce, the USPTO “may require the owner to furnish such information, exhibits, affidavits or declarations, and such additional specimens as may be reasonably necessary to the proper examination of the affidavit or declaration under section 8 of the Act or for the Office to assess and promote the accuracy and integrity of the register.” The USPTO explained the reasoning for the new rule as: “A register that does not accurately reflect marks in use in commerce in the United States for the goods/services identified in registrations imposes costs and burdens on the public.”

On February 10, 2017 the USPTO issued a notice stating that implementation of the new rule would be delayed to March 21, 2017 in accordance with the White House’s January 20, 2017 “Regulatory Freeze Pending Review” memorandum, which placed a 60-day freeze on implementation of all new regulations.

DOJ and FTC release new Antitrust Guidelines for Licensing of Intellectual Property

Updating policies that had been on the books for more than two decades, the U.S. Department of Justice and the Federal Trade Commission recently issued new Antitrust Guidelines for the Licensing of Intellectual Property.

The new Guidelines include several updates that reflect changes in the law since the 1995 guidelines were issued. For example, the new Guidelines now permit intellectual property license agreements to explicitly include provisions on resale price without being per se illegal. (Instead, price restraints in licensing agreements will now be analyzed under the rule of reason). The new Guidelines also contain changes relating to situations where an intellectual property license or transfer will be treated as a merger.

For more details and analysis of the new Antitrust Guidelines, my partner Ted Jobes recently published a summary that is available via this link on the Fox Rothschild website.

Federal Circuit: obviousness requires a clear and explicit explanation

The Federal Circuit recently vacated a Patent Trial and Appeals Board (PTAB) decision that found obvious several claims of a patent application relating to methods for re-configuring icons on a touch-sensitive display. In In re Van Os (Fed. Cir. Jan. 3, 2017), the court’s decision focused on the PTAB’s failure to provide sufficient reasoning for the rejection, rather than the question of whether or not the claims were in fact obvious.reconfiguration

The claims related to a user interface for a touch-sensitive display that would enter a “reconfiguration mode” after it detected a sequence of two touches that had different durations in particular locations of the display. The Examiner and the Board both found the claims to be obvious in view of two prior art patents.

The court found both the Examiner’s and the PTAB’s explanations to be lacking, stating:

Here, neither the Board nor the examiner provided any reasoning or analysis to support finding a motivation to add Gillespie’s disclosure to Hawkins beyond stating it would have been an “intuitive way” to initiate Hawkins’ editing mode. The Board did not explain why modifying Hawkins with the specific disclosure in Gillespie would have been “intuitive” or otherwise identify a motivation to combine.

The court explained that it had a long history of requiring Examiners and the Board to sufficiently explain the reasoning for an obviousness rejection:

Since KSR, we have repeatedly explained that obviousness findings “grounded in ‘common sense’ must contain explicit and clear reasoning providing some rational underpinning why common sense compels a finding of obviousness…. Absent some articulated rationale, a finding that a combination of prior art would have been “common sense” or “intuitive” is no different than merely stating the combination “would have been obvious.”

Because the Board and the Examiner failed to meet their burden, the court directed the USPTO to allow the claims and grant the patent.