IP Law Bulletin

On the same day in early June, the United States Supreme Court issued two opinions addressing patent law issues related to inducement and indefiniteness —Limelight Networks, Inc. v. Akamai Technologies, Inc. and Nautilus, Inc. v. Biosig Instruments, Inc., respectively. In both cases, the nation’s highest court unanimously reversed the Federal Circuit. In doing so, the Court simultaneously raised the bar for patentees with respect to patent infringement and lowered the bar for alleged infringers with respect to invalidity. The decision provides a salient reminder of some important claim drafting strategies for current and future patent applicants.

Active Inducement of Infringement

The Patent Act provides that “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” In Limelight, the accused infringer Limelight Networks, Inc., was alleged to have actively induced infringement of a method patent by carrying out some steps of the claimed method and encouraging its customers to carry out the remaining steps. For purposes of this case, the Supreme Court assumed that infringement of all the method steps could not be attributable to a single party, either because Limelight had not actually performed the steps or because it did not direct or control others who performed them. Accordingly, the Supreme Court reversed the Federal Circuit’s decision and found that Limelight could not be liable for active inducement of infringement. In doing so, it reinstated the principle that liability for induced infringement must be predicated on direct infringement. The Court, however, made specific note that the Federal Circuit on remand will have the opportunity to revisit the question of direct infringement by Limelight under 35 U.S.C. § 271(a). For the time being, however, Limelight has escaped a finding of liability by dividing the performance of method steps between more than one party.

Indefiniteness

In addition to reversing the Federal Circuit’s holding concerning active inducement of infringement, the Court in Nautilus set forth a new test for patent definiteness when considering validity of a patent claim in view of 35 U.S.C. § 112. In particular, the Court held 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.” This new standard replaces the Federal Circuit’s long-standing “insolubly ambiguous” test, which directed lower courts to invalidate claims only if they are not “amenable to construction,” meaning that claims should survive so long as a court could “ascribe some meaning” to them. In overturning that standard, the Supreme Court found that it “can leave courts and the patent bar at sea without a reliable compass.”

Because the Court remanded the case back to the Federal Circuit with the instruction to apply the new standard to the claims at issue, the application and breadth of the newly pronounced indefiniteness standard are uncertain. While the Court found that the old standard was too lenient toward ambiguous claims, it cautioned that “[s]ection 112…entails a ‘delicate balance’” that “must take into account the inherent limitations of language,” and allow for “[s]ome modicum of uncertainty,” while also requiring claims to “be precise enough to afford clear notion of what is claimed.” The Court also pointed out the importance of viewing the claims from the point of view of a person skilled in the art, and that such an investigation “may turn on evaluations of expert testimony.” Thus, the new standard appeals to a rule of reason, and its application likely will involve an intense factual investigation. In addition, the Court restricted its holding to the 2006 version of the Patent Act, which was in effect prior to enactment of the Leahy-Smith America Invents Act in 2012. It will thus be left to future cases to determine whether the Supreme Court’s new standard will be applied to patents filed after September 16, 2012.

Claim Drafting

Even with the uncertainty surrounding indefiniteness, patent applicants can employ certain claim drafting strategies to protect their interests in view of Limelight and Nautilus. For example, to circumvent the divided infringement issue in view of Limelight, method claim language can be drafted from the perspective of a single actor that practices all of the steps of the claimed process. While this can in some cases be more difficult and awkward, claims that focus on the behavior of one actor are more likely to hold up in infringement litigation and afford patentees the greatest likelihood of protection.

Further, while the exact meaning of the new “reasonable certainty” standard for claim definiteness is unknown, it seems evident that a greater level of clarity in describing the scope of an invention will be required going forward. For example, certain claim limitations based on inherent characteristics and functional language may not be sufficient to satisfy definiteness under 35 U.S.C. § 112 after Nautilus. To guard against this possibility while retaining the broadest coverage, applicants should ensure that their specification includes broad disclosure along with more specific examples of the embodiments of the invention. Applicants should also be sure to draft claims in the same manner, e.g., by including broader functional language in an independent claim and more specific limitations in dependent claims. Under such a strategy, the invention can remain protected under the new standard by the narrower claims even if the broader claims are deemed indefinite.

While these strategies themselves are not novel, their importance is highlighted by the Supreme Court’s recent decisions.

This update was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

Despite being dismissed by the Federal Circuit before reaching its highly anticipated substantive issues regarding patent eligibility, the ruling in Consumer Watchdog v. Wisconsin Alumni Research Foundation nonetheless significantly alters the patent litigation landscape. Consumer Watchdog (CW), a nonprofit waging a seven-year campaign to invalidate the Wisconsin Alumni Research Foundation (WARF) stem cell patent, saw its battle come to an abrupt end when the Federal Circuit held that it did not have an injury in fact sufficient to confer Article III standing to appeal a United States Patent and Trademark Office (USPTO) decision in federal court. The ruling limits the reach of the statute permitting appeals of USPTO rulings to the constitutional boundaries set by Article III, leaving some third-party challengers stuck with the USPTO as their only available forum.

In late June, the United States Supreme Court issued a long-awaited decision in Alice Corporation Pty. Ltd. v. CLS Bank International that may have broad-reaching implications on patenting software. At issue in the case was whether claims to a computer-implemented system and method for mitigating “settlement risk” in financial transactions are eligible for patenting under 35 U.S.C. § 101. In a unanimous decision, the Court held that the claims were directed to an abstract idea and, although implemented on a computer, were not patentable.

Following closely on the heels of the United States Supreme Court decision in Alice Corporation Pty. Ltd. v. CLS Bank International, 573 U.S. ___ (2014) (CLS Bank), the United States Patent and Trademark Office (USPTO) has issued guidelines for the examination of patent applications claiming abstract ideas, particularly, as those implemented on computers. The guidelines went into effect yesterday, but are preliminary: the USPTO indicates that it will issue additional guidance after further consideration of the Court's decision and public feedback. ¹

Today’s long-awaited decision by the United States Supreme Court in Alice Corporation Pty. Ltd. v. CLS Bank International, 573 U.S. ___ (2014) may have broad-reaching implications on patenting software. At issue in the case was whether claims to a computer-implemented system and method for mitigating “settlement risk” in financial transactions are eligible for patenting under 35 U.S.C. § 101. In a unanimous decision, the Court held that the claims were directed to an abstract idea and, although implemented on a computer, were not patentable.

Today the United States Supreme Court issued two opinions addressing patent law issues—Limelight Networks, Inc. v. Akamai Technologies, Inc. and Nautilus, Inc. v. Biosig Instruments, Inc. In both cases, the nation’s highest court unanimously reversed the Federal Circuit. In doing so, the Court simultaneously raised the bar for patentees with respect to patent infringement and lowered the bar for alleged infringers with respect to invalidity.

As patent practitioners are well aware, U.S. patent examiners will issue a first action on the merits of a patent application as non-final and typically issue a second action on the merits as final. The finality of second actions is so universal that the finality of an action may be accepted as proper by a patent applicant when, in fact, the action was improperly deemed final. It therefore behooves applicants to always evaluate whether a final action on the merits was properly made final to have improper final actions withdrawn before the applicant incurs unnecessary costs and/or delays in prosecution.

On May 15, 2014, the U.S. Patent and Trademark Office (USPTO) published rules to implement the patent term adjustment (PTA) provisions of the Leahy-Smith America Invents Act (AIA) and the AIA Technical Corrections Act, the latter of which was summarized in the January 2013 issue of the Nutter IP Bulletin. Under the new rules, the fourteen (14) month PTA period and the three (3) year PTA period are measured from the same date: the date on which an application was filed under 35 U.S.C. § 111(a) in an application under 35 U.S.C. § 111; or the date of commencement of the national stage under 35 U.S.C. § 371 in an international application. The rules also revised the provisions for notifying applicants of PTA determinations and the time period for requesting reconsideration (now by the date of issuance of the patent, and by seven months from the date of notification, respectively) and judicial review of the USPTO’s PTA determinations and decisions (now 180 days from the date of the USPTO’s decision on the patentee’s request for reconsideration). The new rules do not come as a surprise—rather, they adopt the interim rule published April 1, 2013, which are discussed in greater detail in an article from the May 2013 issue of the Nutter IP Bulletin.

New draft guidance released by the FDA on May 13, 2014 will assist drug companies in determining whether a proposed therapeutic biological product is “biosimilar” to its reference product. “Biosimilarity” under Section 351(k) of the Public Health Service Act is defined as “highly similar to the reference product notwithstanding minor differences in clinically inactive components” with ”no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.” A biosimilar’s applicant must demonstrate to the FDA that the biological product is biosimilar based on analytical studies, animal studies, and clinical studies, including the assessment of immunogenicity and pharmacokinetics (PK)/pharmacodynamics (PD).

The U.S. Supreme Court issued two landmark decisions reversing existing Federal Circuit precedent on the fees that can be awarded to the prevailing party in exceptional patent infringement cases. Both cases involved the interpretation 35 U.S.C. § 285, which is the patent statute for awarding attorney fees to the prevailing party “in exceptional cases.” In Octane Fitness, LLC v. Icon Health & Fitness, the Supreme Court was asked to review the substantive standard for awarding attorney fees pursuant to Section 285. In Highmark Inc. v. Allcare Health Management System, Inc., the litigants asked the Supreme Court to review the standard of review of Section 285 on appeal. Both cases were argued in February.