Post-Alice Evolution of 35 U.S.C. § 101 Law Warrants Reconsideration of Attorney Fees Award​

The court granted plaintiff's motion to reconsider its award of attorney fees under 35 U.S.C. § 285 and reversed its order awarding fees after the PTO allowed a continuation patent with claims that were nearly identical to the patent-in-suit because it found that plaintiff's litigation positions were no longer baseless. "[T]he Court overlooked the substantive strength of Plaintiff’s litigation position because of the uncertainty of the state of the law regarding 35 U.S.C. § 101. . . . Plaintiff argues that the PTO’s allowance of nearly identical claims in this [continuation] application belies the Court’s determination it 'should have been obvious' to Plaintiff that there was no inventive concept in the [patent-in-suit]. The Court agrees. . . . while this Court had stated that it should have been obvious to Plaintiff that it did not have a § 101 case in a post-Alice environment, the law has since sufficiently evolved so that Plaintiff may have had an arguable or plausible inventive concept under § 101. That, combined with the PTO’s approval of the [continuation] application after considering this case’s § 101 materials, leads the Court to reconsider its granting of fees to Defendant under § 285."

Garfum.com Corp. v. Reflections by Ruth, 1-14-cv-05919 (NJD December 16, 2016, Order) (Simandle, USDJ)

Technical Expert Not Qualified to Offer Opinion Concerning Secondary Considerations​

The court granted plaintiffs' motion to exclude the testimony of defendants' invalidity expert regarding secondary considerations of nonobviousness as unqualified because he had no experience in the toy industry. "The fact that [the expert] qualifies as a person of ordinary skill in the art for purposes of rendering his non-infringement and invalidity opinions bears little relevance to whether he is also qualified to testify regarding secondary considerations related to the toy industry such as commercial success, long-felt need, failure by others in the industry, or copying. . . . Defendants do not point to any expertise that would qualify [their expert] to testify regarding the commercial aspects of these inquiries. Indeed, according to his CV, it appears that upon the completion of his Ph.D. in 2008, [he] went directly to lecturing in applied mathematics at Harvard University, and from there to his current position as an Assistant Professor of Mechanical Engineering at MIT. [His] resume does not reflect any industry experience. During his deposition, [the expert] confirmed that he has no trained knowledge on what makes a toy successful, that his expertise in this regard was based on his experience as a consumer, and that he has never worked in the industry."

Tinnus Enterprises, LLC et al v. Telebrands Corporation et al, 6-15-cv-00551 (TXED December 15, 2016, Order) (Love, MJ)

Plaintiff's Conduct in IPR Does Not Warrant Award of Attorney Fees in Related Lawsuit​

The court denied defendant's motion for attorney fees under 35 U.S.C. § 285 after finding plaintiff's patent was invalid as obvious because plaintiff's litigation tactics were not unreasonable. "[Defendant argues] this case is exceptional because [plaintiff] unreasonably increased [defendant's] defense costs [in that plaintiff]] . . . (1) increased inter partes review costs resulting from [plaintiff's] use of three experts and a fact witness, filing a motion to amend its patent, and appealing the PTAB’s inter partes review decision to the Federal Circuit . . . [Defendant] does not demonstrate, as it must, that such conduct was unreasonable under the circumstances. [Defendant's] presentation is further unclear why (other than [plaintiff's] lack of success) it was unreasonable for [plaintiff] to seek to amend its patent -- as permitted by 35 U.S.C. § 316(d) -- or appeal the PTAB’s decision -- as permitted by 35 U.S.C. § 141(c). . . . Further, while the court denied [plaintiff's] motion for reconsideration, the tactic was not unreasonable given the unsettled state of inter partes review estoppel law. [Defendant's] arguments regarding [plaintiff's] rejection of a good-faith settlement offer is bizarre and misleading, given that both parties’ subsequent briefing indicates that the 'good-faith' settlement offer rejected by [plaintiff] was for zero dollars."

Clearlamp, LLC v. LKQ Corporation, 1-12-cv-02533 (ILND December 14, 2016, Order) (Lefkow, USDJ)

In Determining 35 U.S.C. § 101 Eligibility, Court May Consider Specification of Parent Patent Incorporated by Reference​

The court denied defendant's motion for judgment on the pleadings on the ground that plaintiff’s malicious code monitoring patent encompassed unpatentable subject matter and found that it could look to a parent patent incorporated by reference to determine eligibility. "This case presents an interesting scenario where the claims themselves are basic and broad, but significant clarifying detail is provided in a specification that belongs not to the [patent-in-suit] itself, but to a parent patent . . . which the [patent-in-suit] identifies and declares to be 'hereby incorporated by reference.'. . . As with any matter involving the scope of the patent grant, '[t]he § 101 inquiry must focus on the language of the Asserted Claims themselves.'. . . Nevertheless, the specification, as a helpful tool in understanding claim scope, is not to be ignored entirely. . . . Because the Court must construe the pleadings in favor of [plaintiff], the Court must err on the side of incorporating more -- not less -- particularities from the specification into its understanding of the claims, while still refraining from importing limitations from the specification into the claim. . . . Here, the [patent-in-suit] identifies the material it is incorporating with sufficient particularly: it indicates that it is incorporating the entire [parent] patent, and provides enough information for the reader to locate this information. . . . Accordingly, the Court is persuaded that the [patent-in-suit] successfully incorporates the entirety of the [parent] patent’s disclosure by reference."

Finjan, Inc. v. Blue Coat Systems, Inc., 5-15-cv-03295 (CAND December 13, 2016, Order) (Freeman, USDJ)

Digital Archiving Patent Ineligible Under 35 U.S.C. § 101​

The court granted defendant's motion for summary judgment that plaintiff's digital archiving patent was invalid because the asserted claims encompassed unpatentable subject matter and found that the claims were directed toward an abstract idea. "At their core, these four steps describe instructions for using a generic computer to collect, organize, compare, and present data for reconciliation prior to archiving. . . . [Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016)] did not go so far as to hold that any method purporting to improve computer functionality is patent-eligible. . . . Moreover, the decision did nothing to unsettle past Federal Circuit case law holding that claims calling for the addition of 'conventional computer components to well-known business practices' are drawn to an abstract idea, even when those claims purport to improve computer functionality through increased speed or efficiency. Here, the claims in the [patent] purport to improve digital archiving by 'promot[ing] efficiency,' 'achiev[ing] object integrity,' and 'reduc[ing] turnaround time and costs.' These types of generic technological improvements can result from virtually any computer implementation of conventional business methods. The Court therefore disagrees with [plaintiff] that its claims are directed to the kinds of specific, concrete, nonconventional improvements that made the claims in Enfish patent-eligible."

Berkheimer v. Hewlett-Packard Company, 1-12-cv-09023 (ILND December 12, 2016, Order) (Lee, USDJ)

Petitioner’s Failure to Identify Real Party-In-Interest Warrants Sanction of Attorney Fees and Costs​

The Board granted the patent owner's motion for sanctions. "In the related IPR, the Board specifically found that AGLR is a real party in interest, and it follows that the merged entity is also a real party in interest. . . . Petitioner’s failure to file timely the updated mandatory notice is especially significant in light of the central nature that the issue of AGLR's status as a real party in interest played in the related IPR. . . . With respect to [the parent company of the petitioner], we do not credit Petitioner’s argument that [the parent company] is not a real party in interest in light of Petitioner’s explicit notification to the contrary. Petitioner cannot have it both ways, identifying [the parent company] as a real party in interest to ensure compliance with 35 U.S.C. § 312(b), while simultaneously maintaining that it is not a real party in interest to evade the obligations of 37 C.F.R. § 42.8(a)(3). In light of these various considerations, we conclude that Petitioner has performed conduct that warrants a sanction. . . . We determine that an appropriate sanction, proportionate to the harm suffered by Patent Owner, is to award costs and fees incurred in association with this proceeding from the time after issuance of the Final Written Decision until the date of this Decision."

Petition for Inter Partes Review by Atlanta Gas Light Company, IPR2015-00826 (PTAB December 6, 2016, Order) (Boucher, APJ)

Assertion of Frivolous Claims in Light of Alice Warrants 28 U.S.C. § 1927 Sanctions Against Counsel Despite Covenant Not to Sue​

Following dismissal of defendant's patent claims after defendant provided a covenant not to sue, the court granted plaintiff's motion for sanctions against counsel under 28 U.S.C. § 1927 because the asserted infringement claims were frivolous in light of Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014). "As experienced patent counsel, [defendant's] attorneys were well aware of Alice and its implications for [defendant's] Patents. Realizing that they could not defend [defendant's] Patents against a § 101 validity challenge, they chose nonetheless to file this contingency-fee lawsuit, as one of ten in the Eastern District of Texas, in the expectation that they could obtain quick settlements of relatively modest amounts from every major firm in the internet crowdfunding arena. When [plaintiff] resisted, counsel immediately acknowledged that [defendant's] claims were 'not worth litigating' and offered to dismiss the Texas Action with prejudice. . . . They resisted a motion to change venue, twice demanded documents from [plaintiff], and engaged in the prosecution of the Texas Action. Only . . . after the Texas Action was consolidated with the New York Action and as [plaintiff] prepared its § 101 motion, did [defendant] serve the Covenant. . . . [Defense] counsel’s decision to proceed with the litigation for as long as it did, and to make it expensive for [plaintiff] to defend against the litigation, reflects counsel’s tactical and bad faith motivation."

Gust, Inc. v. AlphaCap Ventures, LLC, 1-15-cv-06192 (NYSD December 8, 2016, Order) (Cote, USDJ)