Section 112 Does Not Contain Conciseness Requirement Independent of Enablement

The court denied defendant's motion for summary judgment that plaintiff's internet gateway patents were invalid for lack of conciseness. "It is basic hornbook law that Section 112 contains three requirements for an inventor seeking a patent: (1) written description; (2) enablement; and (3) best mode. The word 'concise' is included in the statutory section as part of the second requirement of enablement. . . . [Defendant] would have a fourth requirement be made out of the inclusion of the word 'concise' in the statute. However, [defendant] acknowledges that there are no controlling cases — or any cases — finding this 'concise' language in the statute to be a formal requirement, much less a requirement that can lead to the invalidation of a patent. Therefore, this Court declines the opportunity to create an additional requirement in Section 112."

Nomadix, Inc. v. Hospitality Core Services LLC d/b/a Blueprint RF, 2-14-cv-08256 (CACD January 27, 2016, Order) (Pregerson, J.)

Financing Package Generation Patent Unpatentable Under 35 U.S.C. § 101

In a final written decision, the Board found claims of a financing package generation patent unpatentable under 35 U.S.C. § 101. "The underlying concept of claim 1, when viewed as a whole, simply is to receive information from a customer’s credit application, process that information, and present the processed information as potential financing packages to the dealer. Rephrased, this is the abstract idea of 'processing an application for financing a purchase.' . . . We note that processing an application for financing a purchase is a mere building block of human ingenuity, similar to the building blocks identified by the Supreme Court and the Federal Circuit. . . . [W]e read the Court to say that fundamental economic concepts, by themselves, are examples of the basic tools, or building blocks, of innovation that Section 101 is not intended to protect. They are considered to be available to the public, absent a showing of the incorporation of the fundamental economic concept into a machine or method that amounts to something 'significantly more.'"

Petition for Covered Business Method Patent Review by Westlake Services, LLC d/b/a Westlake Financial Services, CBM2014-00176 (PTAB January 25, 2016, Order) (McKone, APJ)

Plaintiff’s Selective Licensing Activities Preclude Permanent Injunction

Following a bench trial and plaintiff's withdrawal of its claim for monetary damages, the court did not impose a permanent injunction because plaintiff failed to establish irreparable harm due to its licensing activities. "Plaintiff’s licensing of the patents-in-suit to the suppliers of 41% of the global LED market also precludes a finding of irreparable harm. Several of these licensees are significant competitors and considered 'major threats' to [plaintiff's] flagship 757 LED product. Plaintiff claims it has been selective in licensing the patents-in-suit, yet the mere existence of such licenses indicates that the harm for any infringement of the patents-in-suit is not irreparable, but rather can be addressed through other compensatory means."

Nichia Corporation v. Everlight Electronics Co., Ltd. et al, 2-13-cv-00702 (TXED January 25, 2016, Order) (Gilstrap, J.)

ATM Patent Not Invalid Under 35 U.S.C. § 101

The Board denied institution of covered business method review of an ATM patent under 35 U.S.C. § 101. "Petitioner does not identify directly 'the abstract ideas' to which the claims are purportedly directed. . . . [but] implicitly identifies them as: 'providing money to an account holder' and 'trial-and-error.' . . . As Patent Owner points out, Petitioner has oversimplified the challenged claims. The challenged claims are not directed simply to the idea of providing money to an account holder or using trial-and-error until success is achieved. Rather, the claims are directed to particular methods of providing money to an account holder using an ATM via a POS transaction after an ATM transaction has failed. Further, Petitioner’s analysis omits any consideration of the elements of the claims as ordered combinations to determine whether the additional elements transform the nature of the claims into a patent-eligible application. It was Petitioner’s burden to do so. Petitioner has not shown that the claims are more likely than not patent-ineligible."

Petition for Covered Business Method Patent Review by NRT Technology Corp., CBM2015-00167 (PTAB January 22, 2016, Order) (Fitzpatrick, APJ)

Plaintiff’s Statements in IPR “Akin to a Prosecution Disclaimer” and Support Finding of Noninfringement

The court granted defendant's motion for summary judgment that it did not infringe plaintiff's media streaming patent in light of plaintiff's statements during inter partes review. "During the claim construction process, the Court was not asked to construe the term 'The [Control Point Proxy] is invoked.' However, the Court agrees with [defendant] that based on the language of the patent and [plaintiff's] statements during the inter partes review process, dependent claims 2 and 21 require that only the CPP logic is invoked to negotiate media content delivery. . . . [T]his distinction is confirmed by [plaintiff's] preliminary responses to [defendant's] inter partes review petitions of the [patent-in-suit] and the PTAB’s adjudication of the petition. In this regard, [plaintiff's] statements are akin to a prosecution disclaimer. . . . Based on this distinction, the PTAB denied [defendant's] petition for inter partes review of claims 2 and 21. . . . [T]he PTAB’s conclusion was not based on the application of the [broadest reasonable interpretation ] standard of review, but rested on the distinction that [plaintiff] itself articulated in its response to [defendant's] petition."

Aylus Networks, Inc. v. Apple Inc., 3-13-cv-04700 (CAND January 21, 2016, Order) (Chen, J.)

Customizable Merchandise Preview Patent Invalid Under 35 U.S.C. § 101

The court granted defendant's motion to dismiss because the asserted claims of plaintiff’s customizable merchandise preview patent encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "Plaintiff describes the patent as solving 'a problem particular to e-commerce by allowing consumers to design their own products as a way to drive on-line sales.'. . . Plaintiff claims that the [patent-in-suit] is not abstract because it is necessarily rooted in computer technology; rather, it is a method of facilitating sale to a potential customer over a computer network. . . . Presenting various iterations of products with different design elements in order to entice business is not computer or network specific. Furthermore, adding design elements to merchandise and displaying the merchandise is a method that can be performed by human thought alone, and previewing merchandise to potential customers is a longstanding economic practice. The [patent] is an abstract idea."

American Needle, Inc. v. Zazzle Inc., 1-15-cv-03971 (ILND January 19, 2016, Order) (Darrah, J.)

Jury Instructions and Verdict Form Tying Infringement and Validity Did Not Motivate Jury to Find Patents Invalid

The court denied defendant's motion for a new trial and rejected defendant's argument that the verdict form inappropriately tied invalidity and infringement together and motivated the jury to find the asserted patents invalid. "[Defendant] alternatively moves the Court to grant a new trial on invalidity because the Verdict Form was prejudicial against [defendant] for two reasons: (a) invalidity and infringement were tied together on the Verdict Form, and (b) the Verdict Form inappropriately motivated the jury to find invalidity to avoid having to make infringement findings on approximately 3,100 items. . . . [P]rior to the Court reading the jury instructions and giving the jury the Verdict Form, the Court addressed and rejected [defendant's] contention that the Verdict Form inappropriately motivated the jury to find invalidity to avoid having to make infringement findings on approximately 3,100 items. . . . [Defendant's] contention that it was improper to preclude the jury from making a finding on infringement once the jury concluded the patents were invalid is not supported by applicable law. Therefore, the Court rejects [defendant's] argument that it was prejudiced by invalidity and infringement being tied together on the Verdict Form."

Everlight Electronics Co., Ltd., et al v. Nichia Corporation, et al, 4-12-cv-11758 (MIED January 19, 2016, Order) (Drain, J.)

Pending Reexamination No Basis for Staying Confirmation of $450 Million Arbitration Award

The court denied defendants' motion to stay the court's ruling on plaintiff's motion to confirm an arbitration award pending final office actions in a pending reexamination because of the undue prejudice to plaintiff. "[T]his very issue was placed before and decided by the Arbitration Panel. . . . [T]he Panel ruled, '[t]he parties have clearly agreed to submit to arbitration all infringement, validity and enforceability issues arising from their dispute over the patents-at-issue.'. . . [Under 35 U.S.C. § 294] [t]he parties to an arbitration 'may agree that in the event a patent which is the subject matter of an award is subsequently determined to be invalid or unenforceable in a judgment rendered by a court of competent jurisdiction from which no appeal can or has been taken, such award may be modified. . . .' No such agreement exists in this case. . . . [W]hile a stay would certainly provide a strategic advantage to Defendants, it is not warranted on this record."

Bayer Cropscience AG, et al v. Dow Agrosciences LLC, et al, 2-12-cv-00047 (VAED January 15, 2016, Order) (Jackson, J.)

Inequitable Conduct Renders Fracking Patent Unenforceable

Following a bench trial, the court determined that defendant's hydraulic fracturing patent was unenforceable for inequitable conduct and found that defendant and its founder had the specific intent to deceive the PTO by withholding information regarding $1.8 million in sales before the critical date. "[Defendant and/or its founder] knew of the significance of the 'critical date' and the one-year grace period for filing a patent application. [Defendant's founder] testified at trial that his business partner . . . had discussed with him the requirement that the patent process required filing the application within one year after the invention was first offered for sale or used publicly. . . . [Defendant's founder] declared to the Patent Office, under penalty of perjury, that he understood the contents of the application and acknowledged his duty to disclose material information. . . . The single most reasonable inference to be drawn from the evidence requires a finding of deceitful intent in light of all of the circumstances."

Energy Heating, LLC et al v. Heat On-The-Fly, LLC et al, 4-13-cv-00010 (NDD January 14, 2016, Order) (Erickson, J.)

Data Distribution Patent Invalid Under 35 U.S.C. § 101

In a final written decision, the Board found claims of a data distribution patent unpatentable under 35 U.S.C. § 101. "Patent Owner contends using an access mechanism that enforces rules to limit each and every access to unprotected forms of the data is: (1) an inventive concept, (2) recites a specific way of achieving a desired result, and (3) improves the functioning of the computer itself. . . . Patent Owner further asserts claim 1 requires a computer or other devices having the specific claimed technology, including the claimed access mechanism that enforces the access rules. . . . Patent Owner’s arguments are not persuasive because claim 1 does not recite a computer, electronic data, encrypted data, or a computer network. We agree with Petitioner that claim 1 as written may or may not involve a computer at all. We also are not persuaded by Patent Owner’s arguments that claim 1 survives the machine or transformation test because claim 1 requires a specific network architecture and a particular machine. . . . Patent Owner does not explain sufficiently how the access mechanism recited in claim 1, construed as 'hardware and/or software for controlling access to data,' requires any more than the generic hardware and computer components disclosed in the ’409 Patent."

Petition for Covered Business Method Patent Review by J.P. Morgan Chase & Co., CBM2014-00157 (PTAB January 12, 2016, Order) (Droesch, APJ)

Discount Redemption Patent Invalid Under 35 U.S.C. § 101

The court granted defendant's motion for judgment on the pleadings that plaintiff's discount redemption patent was invalid for lack of patentable subject matter and found that the claims lacked an inventive concept. "[E]ven though most of the patent claims now being challenged under§ 101 would have survived such challenges if mounted at the time of issuance, these claims are now in jeopardy under the heightened specificity required by the Federal Circuit post-Alice. Moreover, it is less than clear how a § 101 inquiry that is focused through the lens of specificity can be harmonized with the roles given to other aspects of the patent law (such as enablement under § 112 and non-obviousness under § 103), especially in light of the Federal Circuit's past characterization of § 101 eligibility as a 'coarse' gauge of the suitability of broad subject matter categories for patent protection. . . . Plaintiff argues that the invention is 'a specific method and system for discount offer redemptions [containing] specific limitations;' such invention is 'novel and inventive because ... it had not been [previously] known to use a single coupon with one 'indicia' to redeem offers on multiple products, or to create and use a database of individual customer's purchasing history while doing so.' The inventive concept of using a 'machine readable identification code' to take discount offers and track customer purchasing habits, however, is not an internet (or computer) centric problem. Nor do the method steps lend sufficient specificity to negate pre-emption."

Motivation Innovations, LLC v. PetSmart, Inc., 1-13-cv-00957 (DED January 12, 2016, Order) (Robinson, J.)

Work Product Doctrine Covers Use of Attorney’s Non-Legal Knowledge in Furtherance of Litigation Goals

The court denied plaintiff's motion to compel defendant to produce a scientific protocol prepared by an attorney-scientist at defendant's subsidiary because the information was protected work product. "[Plaintiff] argues that it seeks discovery 'only into the scientific facts surrounding the development of the protocol,' and not [the attorney-scientist's] legal opinions, thought processes or legal explanations. . . . But the protocol was communicated to [an outside researcher] expressly for the purpose of disproving [plaintiff's] assertion in [related foreign] litigation. . . . Any adjustments [the attorney-scientist] made to the protocol would necessarily have been done in consideration of its purpose in countering [plaintiff's] litigation position. . . . [W]hile a scientist might not ordinarily start with fresh bottles, a lawyer would do so in order to 'eliminate questions that would arise . . . about how do you know that the reagents were what they purported to be.' In other words, the scientific instruction necessarily reflects the attorney’s strategic thinking about issues likely to arise down the road in litigation. When an attorney with experience in other fields wields that non-legal knowledge in furtherance of litigation goals, the attorney’s mental impressions, conclusions or opinions remain protected opinion work product because the non-legal and legal thinking are inextricably intertwined in service of the litigation."

Gilead Sciences, Inc. v. Merck & Co., Inc. et al, 5-13-cv-04057 (CAND January 11, 2016, Order) (Grewal, M.J.)

Expert Analysis and Conclusions Concerning 35 U.S.C. § 101 Eligibility Inadmissible

The court granted defendants' motion to strike the report of plaintiff's validity expert regarding patentable subject matter because the testimony was unhelpful. "[T]he issue of subject matter eligibility under § 101 will not be tried to the jury in this case. No expert will be permitted to testify to the jury about whether the asserted patents claim eligible subject matter under § 101. The Court is responsible for deciding disputed questions of law, and the Federal Circuit has consistently disfavored reliance on expert testimony as the basis for legal conclusions. [The expert's] analysis of the law and his ultimate legal conclusions are not helpful expert testimony and are therefore inadmissible."

Genband US LLC v. Metaswitch Networks Corp. et al, 2-14-cv-00033 (TXED January 8, 2016, Order) (Payne, M.J.)

Law of Nature May Serve as the Basis for Customer Demand Supporting Use of Entire Market Value Rule

The court denied defendant's motion in limine to exclude plaintiff's damages theories as violating the entire market value rule. "The main thrust of [defendant's] motion to exclude [plaintiff's] damages analysis under the entire market value rule is that the primary driving factor in the sales of [plaintiff's] temporal thermometers is the location for taking the temperature. [Defendant] contends that because that location merely reflects an unpatentable law of nature, the use of the EMVR is improper. This argument impermissibly borrows a partial analysis under section 101. . . . [U]ltimately all inventions utilize a law of nature (or abstract concept) on some level, and useful and novel applications of laws of nature are patentable. . . .To the extent that an application of a law of nature is patentable, there is no reason why that application cannot also be the primary driving factor in the sales of products embodying the claims. If it were otherwise, there could no patent protection for an important invention such as the solar panel because the driving factor in its success is that it relies on a law of nature - that is, the sun's energy."

Exergen Corporation v. Kaz USA, Inc., 1-13-cv-10628 (MAD January 7, 2016, Order) (Stearns, J.)

Network Firewall Patent Not Invalid Under 35 U.S.C. § 101

The magistrate judge recommended denying defendant's motion for summary judgment that plaintiff's network firewall patent was invalid for lack of patentable subject matter because the claims were not directed toward an abstract idea. "This is not a case in which an abstract idea or mathematical principle is carried out on a computer — the recited operations are meaningless outside the context of a computer network using specific types of data packets and specific channels defined by particular protocols. [Defendant] is likewise wrong to characterize 'an application proxy' and 'a packet filter' as inherently abstract components because they refer to 'broad "types" or "classes" of firewall components and do not require or connote any specific structure.'. . . The 'application proxy' and 'packet filter' terms refer to specific components that have been construed to perform specific functions within a network. The fact that these components can be implemented in the form of 'hardware and/or software' does not change their concrete, network-specific nature."

Genband US LLC v. Metaswitch Networks Corp. et al, 2-14-cv-00033 (TXED January 6, 2016, Order)

PTO Fees for CBM Review Not Recoverable as Costs

The court denied defendants' motion for over $70,000 in PTO filing costs after plaintiff voluntarily dismissed its infringement action following CBM review. "[Defendants] argue in their Response that they 'are entitled to recover [their] CBM filing fees because they were proximately caused by [plaintiff's] improper assertion of the [patent-in-suit] against Defendants,' and '[u]nder 35 U.S.C. § 285, USPTO and PTAB proceeding related fees and costs are wholly recoverable when incurred as a result of the 'exceptional' conduct of the losing party.' No other explanation or legal authority as to why such costs should be taxed was provided to the Clerk. . . . The Court adopts the plain language of the Local Rules and finds that filing fees paid to the USPTO as part of CBM proceedings are not recoverable in this case, particularly where the instant action was not found to be 'exceptional' within the meaning of 35 U.S.C. section 285."

Credit Acceptance Corporation v. Westlake Services, LLC et al, 2-13-cv-01523 (CACD January 5, 2016, Order) (Otero, J.)

Automatic Version Control Patent Not Invalid Under 35 U.S.C. § 101

The court denied defendant's motion for summary judgment that plaintiff's patent for providing an automatic version control to a business intelligence system was invalid for lack of patentable subject matter because the claims contained an inventive concept. "Defendants contend that taking actions 'automatically' is purely conventional and does not save the [patent-in-suit], citing numerous cases of courts invalidating claims that merely 'automated' otherwise abstract ideas or conventional computer functions. The claims at issue, however, do not merely automate a purely conventional technique or abstract idea, but rather provide an 'automated agent.'. . . It is the provision of this automated agent to solve the problem of a business intelligence system lacking native version control that amounts to significantly more than a patent on the idea of maintaining versions of electronic documents itself. . . . The claims describe an invention that serves as an addition to a business intelligence system rather than claiming a monopoly on all version control systems, particularly version control native to a business intelligence system. . . . Moreover, the [patent] does not claim version control generally, but rather a specific method, using an 'automated agent' distinct from a business intelligence system to improve the functionality of a business intelligence system."

Motio, Inc. v. BSP Software LLC et al, 4-12-cv-00647 (TXED January 4, 2016, Order) (Mazzant, J.)

Network Messaging Patent Invalid Under 35 U.S.C. § 101

The magistrate judge recommended granting defendants' motion to dismiss because the asserted claims of plaintiff’s network messaging patent encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "[T]he purpose of the [patent-in-suit] -- i.e., what the [patent] is trying to achieve -- is to incentivize an end user to acknowledge the receipt of a message. . . . This finding is not changed by the fact that the claims of the [patent] recite limiting network access until a recipient acknowledges a message. . . . Limiting access of end users is merely the manner by which the claims achieve their purpose. . . . The commercial practice of incentivizing an end user to acknowledge the receipt of a message is both well-known and historically longstanding. . . . One such example is the practice of sending mail as U.S. Certified Mail Return Receipt Requested. . . . [T]he host of a website can incentivize a visitor to accept a 'Terms of Use' agreement, thus acknowledging the receipt of that message, by restricting access to the website until the visitor accepts the agreement."

Network Apparel Group, LP v. Airwave Networks Incorporated, 6-15-cv-00134 (TXWD December 30, 2015, Order) (Manske, M.J.)

Expert’s Apportionment Based on Marketing Material Word Count Excluded as Unreliable

The court granted plaintiff's motion to exclude the testimony of defendant's damages expert concerning apportionment because his "relative marketing emphasis theory" based on word counts of market materials was unreliable. "[Plaintiff] asserts that [defendant's expert] has employed a novel and untestable approach to further reduce the royalty rate to which [plaintiff] might be entitled. . . . [The expert] counted the total words in certain sections of the marketing brochures and then selected certain words which related to the asserted patents. He then counted the number of chosen words and calculated the proportion of these words to all words to assign a value to solely the patented features in the Accused Devices. . . . [I]t is unclear whether the sophisticated buyers of the Accused Devices rely on these marketing brochures in deciding whether to purchase the products. [Defendant] has not presented any evidence to tie the specific portions of the marketing brochures to the asserted patents. Neither [the expert] nor [defendant] has been able to point the Court to this type of methodology being accepted by or even utilized by other courts or experts in this field. [The expert] himself acknowledged that there was no way to calculate an error rate using this methodology.. . . [The expert's] methodology cannot be tested, has not been subjected to peer review, has no known error rate, and, as far as the Court is aware, has not been generally accepted in the relevant scientific community. These are deficits that cannot be cured on cross-examination."

Omega Patents, LLC v. Calamp Corp., 6-13-cv-01950 (FLMD December 23, 2015, Order) (Byron, J.)