New USPTO fee schedule increases fees for challenging granted patents, adds streamlined reexamination option

The USPTO recently published an adjusted fee schedule for certain patent fees. The new schedule significantly increases the fees for challenging the validity of a patent in inter partes review (IPR), post-grant review (PGR) and covered business method (CBM) proceedings. (A comparison of these three types of proceedings is available from the USPTO at this link.)

The new fees for an IPR proceeding (request fee + post-institution fee) total $30,500 — an increase of $7,500. Additional fees apply if the IPR proceeding involves more than 15 claims.

The new fees for a PGR or CBM proceeding (request fee + post-institution fee) total $38,000 — an increase of $8,000. Additional fees also apply if the PGR or CBM petition involves more than 15 claims.

The office also established a new “streamlined reexamination” option for ex parte reexamination requests that do not exceed 40 pages. Line spacing (double-spaced or 1-1/2 spaced), font size (12-pt non-script), and margin requirements apply. The fee for a streamlined reexamination is $6,000, compared to the standard $12,000 ex parte reexamination fee.

The fee hikes also include:

  • a $100 increase (to $1300) in the fee for filing a first request for continued examination (RCE);
  • a $200 increase (to $1900) in the fee for filing a 2nd or subsequent RCE;
  • a $180 increase (to $760) for the search and examination fees required for new design patent applications;
  • a $240 increase (to $2,240) in the cost of moving an appeal of a final rejection from the briefing stage to the Patent Trial and Appeals Board for review; and
  • other fee increases for various petitions, such as petitions to revive an abandoned patent application and petitions to accept a delayed maintenance fee payment.

The costs listed above are the standard fees. Small entities and micro-entities may qualify for 50% or 75% reductions of certain USPTO fees.

The new fee schedule will take effect on January 16, 2018.

One step forward, two steps back for software patents at the Federal Circuit

In the past year, several Federal Circuit decisions defined situations in which software inventions could be eligible for patenting in the United States. However, two recent Federal Circuit decisions show that the path for patent-eligibility is not yet clear, especially for patents that claim methods of processing or presenting data.

In Secured Mail Solutions LLC v. Universal Wilde, Inc. (Fed. Cir. Oct. 16, 2017), the court considered seven patents covering the use of intelligent mail barcodes, QR codes, and personalized URLs on a package to communicate information about the package. The court considered a representative claim of U.S. patent 8,429,093 that read:

1. A method for providing electronic data to a recipient of a mail object, comprising:

   Generating, by a processor, a barcode for a mail object, said barcode including at least a first set of mail data, said first set of mail data including data corresponding to said recipient of said mail object;
affixing said barcode to said mail object;
   submitting said mail object to a mail carrier for delivery to said recipient of said mail object;
receiving said first set of mail data, including data corresponding to said recipient of said mail object, from a reception device of said recipient via a network;
   providing said electronic data to said reception device via said network in response to receiving said first set of mail data, said electronic data including a content of said mail object;
   wherein said reception device displays said electronic data to a recipient of said mail object by displaying said electronic data on a screen of said reception device.

The district court found all of the patents’ claims to be directed to the abstract idea of “communicating information about [a mail object] by use of a marking.” The Federal Circuit agreed and explained that the claims “are not directed to specific details of the barcode or the equipment for generating and processing it.” The Federal Circuit also noted that in the claims there “is no description of how the unique identifier … is different from a personal name, or return address.”

After agreeing that the claims were directed to an abstract idea, the court noted that the claims did not include sufficiently more than the idea because they were “‘replete’ with routine steps, including ‘affixing mail identification data,’ such as a barcode, to a mail object.” The patent holder argued that the generation of the unique identifier is inventive, but the court noted that “the use of barcodes was commonplace and conventional” when the patent applications were first filed, and “sending a personalized URL to a recipient was not an unconventional use of the Internet” at that time.

In Smart Systems Innovations, LLC v. Chicago Transit Authority (Fed. Cir. Oct. 18, 2017), the court considered four patents relating to open-payment fare systems in mass transit networks. A representative claim from U.S. patent 7,568,617 read:

13. A method for validating entry into a first transit system using a bankcard terminal, the method comprising:
downloading, from a processing system associated with a set of transit systems including the first transit system, a list of bankcards comprising, for each bankcard in the list, a hash identifier of a bankcard previously presented, by a respective holder of the bankcard, to the processing system, wherein the bankcard comprises one of a credit card and a debit card;
receiving, from a bankcard reader, bankcard data comprising data from a bankcard currently presented by a holder of the bankcard;
generating a hash identifier based on the bankcard data from the currently presented bankcard, wherein the hash identifier comprises a hash of at least part of the bankcard data;
determining whether the currently presented bankcard is contained in the list of bankcards;
verifying the currently presented bankcard with a bankcard verification system, if the bankcard was not contained in the list of bankcards; and
denying access, if the act of verifying the currently presented bankcard with the bankcard verification system results in a determination of an invalid bankcard.

The court found the claims to be directed to the formation of financial transactions in the field of mass transit. The court stated: “[t]he Asserted Claims are not directed to a new type of bankcard, turnstile, or database, nor do the claims provide a method for processing data that improves existing technological processes. Rather, the claims are directed to the collection, storage, and recognition of data.” The court also stated that the claims’ improvement on the operation of existing fare collection systems, and their limitation to the field of mass transit, did not save them from being considered an abstract idea.

Notably, in Smart Systems Innovations the court stated: “[o]ur mandate from the Supreme Court under Alice step one is to ascertain what the claims are ‘directed to,’ not the ‘thrust,’ ‘heart,’ or ‘focus’ of the invention.” The court also appeared to limit the applicability of its previous decisions in Enfish Corporation v. Microsoft LLC and DDR Holdings, LLC v. Hotels.com, L.P. to the specific “claims [that the patentee shows] are directed to an improvement in computer technology.” The court also suggested that its McRO v. Bandai NAMCO Games America, Inc. decision was limited to a particular “claimed process us[ing] a combined order of specific rules [that] improved upon existing technological processes.”

While the Federal Circuit may have reached the correct conclusions regarding the claims at issue in these two new cases, certain aspects of the court’s decisions create confusion for patent applicants and litigants who seek clarity in the Section 101 analysis. In Secured Mail Solutions, rather than asking whether the claims offered a technical solution that was significantly more than the abstract idea, the court’s analysis focused on whether the claimed steps have been done before. Thus, the court appeared to merge Section 101 with a Section 102(a) novelty analysis. In Smart Systems Innovations, the court suggested that its earlier Enfish, Microsoft and McRO decisions are limited to the specific claim terminology at issue in those cases and may not provide a general roadmap to be followed in the future.

The Federal Circuit’s case-specific, and sometimes inconsistent, interpretations of Alice leave software patent applicants, patent litigants, and USPTO Examiners with even less definitive guidance as to the patent-eligibility of software inventions than they had a few weeks ago. And with the Supreme Court’s recent decision to deny certiorari in a case that asked “Whether [a] technological breakthrough is not an inventive concept under the second step of Alice merely because the court believed the breakthrough could theoretically be implemented without a computer,” clarification from a higher authority is not likely on the horizon.

UPDATE:  In the first few days of November 2017, the Federal Circuit issued two more decisions that seem to be at odds with the earlier Enfish, Microsoft and McRO decisions.

In Two-Way Media Ltd. v. Comcast Cable Communications, LLC (Fed. Cir. Nov. 1, 2017) the court considered representative claims such as the following:

1. A method for transmitting message packets over a communications network comprising the steps of:

converting a plurality of streams of audio and/or visual information into a plurality of streams of addressed digital packets complying with the specifications of a network communication protocol,

for each stream, routing such stream to one or more users,

controlling the routing of the stream of packets in response to selection signals received from the users, and

monitoring the reception of packets by the users and accumulating records that indicate which streams of packets were received by which users,

wherein at least one stream of packets comprises an audio and/or visual selection and the records that are accumulated indicate the time that a user starts receiving the audio and/or visual selection and the time that the user stops receiving the audio and/or visual selection.

The court found that this claim “recites a method for routing information using result-based functional language…but does not sufficiently describe how to achieve these results in a non-abstract way.” The court also noted that the “claim uses a conventional ordering of steps—first processing the data, then  routing it, controlling it, and monitoring its reception—with conventional technology to achieve its desired result.”

In Intellectual Ventures i LLC v. Erie Indemnity Co. (Fed. Cir. Nov. 3, 2017), the court considered the following representative claim of U.S. Patent 7,757,298:

1. A computer-implemented method for identifying and characterizing stored electronic files, said method comprising:
under control of one or more configured computer systems:
selecting a file from a plurality of files stored in a computer storage medium, wherein selecting the file is performed according to at least one of:
selecting the file based on the size of the file by determining whether an aggregate size of plural identically-sized files exceeds a predetermined threshold;
selecting the file based on whether content of the file matches a file type indicated by a name of the file; or
selecting the file based on whether the file comprises data beyond an end of data marker for the file;
generating an identification value associated with the selected file, wherein the identification value is representative of at least a portion of the content of the selected file;
comparing the generated identification value to one or more identification values associated with one or more of a plurality of unauthorized files; and
characterizing the file as an unauthorized file if the identification value matches one of the plurality of identification values associated with the unauthorized files.

The court found that the claim was directed to the abstract idea of identification of unwanted files. Despite the patent application’s explanation that the claims were directed to solving problem of “abuse of Web server space in which users upload files that are offensive, illegal, unauthorized, or otherwise undesirable and thus wasteful of storage resource,” the court noted that the specification explained that the selection of errant files could be done by humans, although with less efficiency. The court also noted that “‘claiming the improved speed or efficient inherent with applying the abstract idea on a computer’ does not ‘provide a sufficient inventive concept.'”

Patent lawsuit map may shift as Supreme Court restricts venue in patent infringement cases

A much-anticipated decision from the U.S. Supreme Court has scaled back the ability of patent plaintiffs to choose the forum in which they file suit. By limiting a practice that many defendants consider to be forum shopping by patent plaintiffs, the Court’s decision may shift the geography of patent infringement lawsuits from the East Texas heartland to the coasts.  

In TC Heartland LLC v. Kraft Foods Group Brands LLC, the Court considered the patent venue statute, 28 U.S.C. § 1400(b), which states: “Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” The Court held that a patent infringement defendant “resides” only in its state of incorporation, and that “residence” does not include states where the defendant merely conducts business.

In the case, the defendant was organized under Indiana law and headquartered in Indiana. The plaintiff filed suit in Delaware, into which the defendant shipped product but otherwise had no physical or legal presence. The defendant argued that venue in Delaware was improper under the patent venue statute.

The Court agreed with the defendant. Focusing on the meaning of the phrase “where the defendant resides,” the Court held that the term “residence” means only an entity’s state of incorporation, and the term does not include states where an entity merely does business.

The case may deal a blow to the Eastern District of Texas, which has served as the epicenter of patent patent infringement litigation in recent years. However, the Court did not negate the second half of the patent venue clause, which also supports venue “where the defendant has committed acts of infringement and has a regular and established place of business.” Texas ranks second in a list of states where the most Fortune 500 companies are headquartered. Thus, at least some new cases that previously would have gone to the Eastern District of Texas may now shift to other Texas district courts such as the Northern District of Texas (in which Dallas is located) or the Western District of Texas (in which Austin is located).

It is even more likely that new patent filings will spread out to other venues such as the District of Delaware (where more than 2/3 of the Fortune 500, and more than 1 million companies in total, are incorporated) ; the Northern District of California (home to the tech giants of Silicon Valley); or the Southern District of New York (where more Fortune 500 companies are headquartered than in any other state).

The new decision also will make it harder for patent plaintiffs to sue multiple defendants in a single case. If the accused infringers are organized in different states and have different corporate office locations, the patent holder may need to file multiple suits in multiple states.

[Image credit:  Bram Janssens]

Tips for non-disclosure agreements with Chinese companies

In a previous post on IP Spotlight, I provided a few tips for negotiating non-disclosure agreements. In the post, I noted that a “form” NDA should only be considered a starting point. The parties should modify it as appropriate to fit the business situation and the type of information that is being disclosed.

Here’s an additional tip if the other party to the NDA is not a U.S. company:  if the other party breaches the agreement, you may be able sue that party in the U.S. and win, but the U.S. court’s judgment may be difficult to enforce in the other country.

This is a particular issue in China. Chinese courts typically will not enforce judgments of U.S. courts, and they may not enforce an NDA written in English and subject to U.S. law.

So how can U.S. companies obtain an enforceable NDA with a Chinese company?

One way is to make it in Chinese (or bilingual, in English and Chinese, with the Chines version controlling), and make it governed by Chinese law and subject to jurisdiction of the Chinese courts, or perhaps Hong Kong law and courts. Although this can be inconvenient for the U.S. company, the inconvenience may be a worthwhile.

Another option is to consider arbitration. While arbitration is not typically an ideal option for an NDA because only a court can grant a quick injunction to stop further disclosure of the information, foreign arbitration awards are generally enforceable in China. Most countries (including the U.S. and China) have signed the New York Convention for the Recognition and Enforcement of Arbitral Awards (http://www.newyorkconvention.org/).

So, consider a binding arbitration clause, and if the agreement will include an option for an injunction, that should be governed by Chinese law and issued by a Chinese court. Also, make it a bilingual agreement, with versions in English and Chinese.

Beware trademark renewal notice scams

At some point in time, most trademark registrants will receive an official-looking invoice from a so-called “trademark registration service” that purports to require payment of a fee to maintain the trademark registration.

My colleague Erika Koster recently published an alert about scams like this.  For Erika’s article on the Fox Rothschild “Above the Fold” blog, click here.

In the meantime, if you receive a trademark renewal notice and it is not from the law firm that is helping you apply for or maintain the registration, you can be fairly certain that it’s a fraud. If you are unsure, simply send it to your trademark attorney for a quick review and confirmation.

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]