2020 Texas IP Practice Overview
By Michael Heim and Allan Bullwinkel
Heim, Payne & Chorush
Patent activity in the United States maintained a healthy pace throughout 2019 and into the first quarter of 2020. Federal court filings held steady from 2018 to 2019, and the number of IPR Petitions filed in 2019 dropped a bit after holding steady for the past several years. These trends are a welcome occurrence for patent owners and new start-up businesses, who faced increased challenges obtaining and enforcing patents during the 2014 through 2017 timeframe. The U.S. patent landscape had been under attack for several years in response to the perception by many that weak patents were being obtained and enforced against businesses at unjustified costs. These attacks included summary invalidity determinations based on the Supreme Court’s new Section 101 test put forth in Mayo and Alice as well as invalidity determinations via the Inter Partes Review process created as part of the 2011 America Invents Act. Recent trends and developments detailed below suggest that policies derived from anti-patent sentiment are becoming more balanced, providing reasonable protections to both patent owners as well as targets of patent enforcement activities. Striking such a balance allows the United States to remain a significant player in the global technology market via strong intellectual property policies while also providing businesses with protections against frivolous lawsuits rooted in weak patents.
At least part of the recent turnaround can be attributed to the fairhanded approach provided by the current administration at the U.S. Patent & Trademark Office, led by Director Andrei Iancu. Under Iancu’s leadership, multiple changes have been made at the PTO to improve the predictability and consistency of both post-grant proceedings as well as the patent application process.
Several changes have been implemented regarding how the Patent Trial and Appeal Board (PTAB) conducts Inter Partes Review. One significant change introduced by Director Iancu was to modify the rules for claim interpretation in post-grant proceedings to eliminate the ability of parties to advance constructions in post-grant challenges that differ from those advanced in patent lawsuits. The Patent Office now requires that issued patent claims be interpreted under the same standard used in patent litigation, i.e., the Phillips standard. This rule change provides more certainty and objectivity in the examination process in post-grant reviews.
Another significant change recently implemented at the PTO regards the creation of a Precedential Opinion Panel (POP) to decide issues of exceptional importance to the PTAB. By default, the POP is a three-judge panel comprised of the Director, the Commissioner for Patents, and the Chief Judge of the PTAB. Via the POP, the PTAB can provide guidance on important issues concerning the policies and procedures for practicing in front of the PTAB, ultimately improving the consistency of PTAB determinations. An open issue regards the amount of deference the Federal Circuit should give to PTAB precedential opinions, which is likely to be addressed this year in Facebook Inc. v. Windy City Innovations LLC. Precedential opinions issued by the PTAB can be found here.
The PTAB has also provided other updates to its procedures. For instance, the PTAB discourages filing multiple petitions per patent. To stem this practice, the PTAB now requests that multiple petitions be accompanied by a ranking of the petitions as well as a justification for the multiple petitions. The PTAB has also clarified its intent to resolve IPRs in a timely manner, stating that on remand from the Federal Circuit, it endeavors to rule within six months. Further, in an effort to encourage Patent Owners to submit testimonial evidence with their preliminary responses, the PTAB has now indicated that such testimony can be withdrawn in the event that the Board decides to institute trial. Finally, the Board has explained that claim construction issues should be raised in the Petition (rather than in a Reply after institution). Presumably, the Board will now address claim construction issues at the institution stage. For additional guidance on practice before the PTAB see the Board’s recently issued Consolidated Trial Practice Guide.
The PTO has also provided additional guidance in the determination of patent eligibility under 35 U.S.C. § 101. While the courts have struggled to apply the U.S. Supreme Court’s rulings in Mayo and Alice, the PTO has worked on providing objective guidelines that have added more certainty to the examination process, especially on patents involving computer software. While it remains to be seen if the federal courts in the United States will adopt these guidelines, the willingness of the Patent Office to take these issues head-on has been generally viewed as a positive development by the technological community in the United States.
The courts continue to wrestle with Section 101 law. The Supreme Court recently denied certiorari of several closely watched cases (Berkheimer, Athena, and Hikma). Notably, the Supreme Court requested that the Solicitor General submit briefs in two of the cases under consideration. There, the Solicitor General stated that review should not be granted because the Mayo/Alice test was so flawed that it could not be fixed by simply tweaking the 2-step analysis. Further, Congress continues to consider legislation to address the Section 101 quagmire. However, such legislation is unlikely to be passed in the near future, and the Federal Circuit and district courts will be left to tweak the existing Mayo/Alice test to bring some degree of predictability to the Section 101 analysis.
Several cases have been decided by the Federal Circuit that impact how courts will determine patent eligibility issues. In particular, the Court’s decisions in Berkheimer, Cellspin, and MyMail have provided a more tempered approach to handling issues that arise under Section 101. Specifically, the Court has confirmed the fundamental proposition that a presumption of validity exists during the course of Section 101 challenges. Further, the Court recognized that questions of fact underlie at least certain aspects of the Section 101 analysis. Finally, the Court held that it is improper to render a Section 101 decision without resolving underlying claim construction disputes. These decisions were long overdue, as courts were routinely throwing out patents on motions to dismiss while ignoring basic and fundamental factual questions. While software patents and inventions in the medical field are still subject to attack under Section 101, the trend has started to move to a more reasoned approach to handling these difficult issues.
Venue issues remain front and center in patent lawsuits as the effect of TC Heartland continues to redistribute new patent infringement cases. Patent infringement lawsuits are now limited to jurisdictions in which an alleged infringer has a physical presence or is incorporated. Based on this change in the law, Delaware has become the top venue for patent cases filed in 2018 and 2019. The Western District of Texas has emerged just this past year as a popular venue, largely due to Judge Alan Albright’s willingness to embrace patent cases and implementation of a standing order governing the proceedings in patent cases (effectively implementing patent local rules). The other top venues for patent case filings in 2019 include the Northern and Central Districts of California as well as the Eastern District of Texas.