by Dennis Crouch

In a tight 11-10 vote, the Senate Judiciary Committee approved the PREVAIL Act (Promoting and Respecting Economically Vital American Innovation Leadership Act) that would make substantial changes to Patent Trial and Appeal Board (PTAB) proceedings. The bill addresses perceived anti-patentee imbalances in the current inter partes review (IPR) system. However, a number of Senators raised concerns and were seeking assurances about a negative impact on generic drug prices. The Bill as adopted by the Judiciary Committee included a friendly amendment by the Bill's co-sponsor Sen. Coons that attempted to address some of the drug-pricing concerns by expanding the scope of who can file IPR/PGR petitions. In particular, the original bill allowed only those sued or accused of infringement to challenge patents. As discussed below, the new approach is designed to enable petitions by generic-drug makers and non-profit patient groups. The major changes in the bill include raising the burden of proof to "clear and convincing evidence," implementing strict timing requirements for PTAB decisions, requiring greater independence of PTAB judges, establishing a "single forum" rule preventing parallel validity challenges, and strengthening estoppel provisions against repeat challenges.

by Dennis Crouch

The USPTO has issued the final rules that include significant fee increases for patent applicants (and patent challengers), all set to take effect January 19, 2025 -- the final day of the Biden Administration. While some changes appear purely driven by inflation and cost recovery, others seem designed also to modify applicant behavior in controversial ways.

Because of the timing, I believe there is some chance that parties will challenge aspects of the fee increase in court -- particularly the increased fees for late-filed continuation applications.  In my opinion, the key purpose of such an action would be to postpone implementation of the fees in order to allow a Trump appointed director to reconsider their application.

A key aspect of the America Invents Act of 2011 (AIA) provided the USPTO with fee setting authority.  Section 10 of the AIA. Every USPTO patent fee change since then has stated that the AIA fee setting authority "includes flexibility to set individual fees in a way that furthers key policy considerations."  (Citing Section 10).  If it exists, that flexibility is purely implicit.  The law itself states: "Fees may be set or adjusted . . . only to recover the aggregate estimated costs to the Office for processing, activities, services, and materials relating to patents."

Barring delayed implementation, applicants (and patent challengers) will save some dollars by ensuring that their filings beat the January 19, 2025 deadline.

by Dennis Crouch

The Federal Circuit is poised to address a significant administrative law question in Apple v. Vidal regarding whether the USPTO's NHK-Fintiv framework for discretionary IPR denials required notice-and-comment rulemaking under the APA. The case comes after the Federal Circuit's 2023 decision finding the procedural challenge reviewable while affirming dismissal of substantive challenges to the framework. Apple Inc. v. Vidal, 63 F.4th 1 (Fed. Cir. 2023).  The case takes on added significance given Director Vidal's recent resignation announcement. Her likely Trump appointee replacement may return to former Director Iancu's more aggressive approach to discretionary denials.

Under the AIA, the USPTO director has discretion to deny IPR petitions, even in cases where the case otherwise meets the statutory requirements for an inter partes review.  The Director has delegated authority to the PTAB to decide these issues, including discretionary denials. The NHK-Fintiv framework emerged through two precedential PTAB decisions that guide discretionary denials of IPR petitions when parallel district court litigation is pending. In NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752, Paper 8 (P.T.A.B. Sept. 12, 2018), the Board first articulated that the advanced state of parallel district court proceedings could justify denying institution. Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (P.T.A.B. Mar. 20, 2020) then established six factors for evaluating such situations: (1) whether a court stay is likely; (2) proximity of the court's trial date to the Board's projected statutory deadline; (3) investment in the parallel proceeding; (4) overlap between issues raised in the petition and in the parallel proceeding; (5) whether the petitioner and the defendant in the parallel proceeding are the same party; and (6) other circumstances and merits. Director Vidal later modified (and somewhat weakened) this framework through guidance emphasizing merits-based considerations and limiting denials based solely on trial scheduling. See Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation (June 21, 2022).  However, this guidance was issued without notice-and-comment rulemaking.

Apple v. Vidal: APA Compliance in IPR Discretionary Denial Rules

by Dennis Crouch

The Federal Circuit's divided ruling in Edwards Lifesciences Corp. v. Meril Life Sciences is now before the U.S. Supreme Court -- focusing on the scope of the Hatch-Waxman Act's safe harbor provision. At issue is whether 35 U.S.C. § 271(e)(1)'s regulatory development shield extends to activities conducted for both regulatory and commercial purposes. The statutory text excuses certain acts that would otherwise be considered patent infringement if conducted "solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products." While Congress intended to ensure competitors could efficiently prepare for post-patent market entry through necessary regulatory compliance work, an expansive reading arguably erodes patent rights by immunizing activities far beyond pure regulatory preparation. The safe harbor thus sits with the uncomfortable tension of promoting timely competition and protecting innovation incentives.

The case is currently proceeding through the Supreme Court's certiorari process, with Edwards having filed its petition in October 2024.  As is common in Supreme Court practice, respondent Meril waived its right to respond to the petition, and the case has been distributed for the Justices' conference on December 6, 2024, where they will consider whether to grant review.  This is a case where I expect

by Dennis Crouch

Sitting by designation in Delaware District Court, Federal Circuit Senior Judge William Bryson found claims 1-10 of GeoComply's U.S. Patent No. 9,413,805 ineligible under 35 U.S.C. § 101.  On appeal, the Federal Circuit has now affirmed that judgment -- albeit in a Rule 36 summary affirmance. GeoComply Sols. Inc. v. Xpoint Servs. LLC, No. 23-1578 (Fed. Cir. Nov. 13, 2024). The inventor, Anna Sainsbury, co-founded GeoComply in 2011 and has served as CEO for most of the past 13 years.  GeoComply processes billions of transactions annually - mostly for the online gaming (casino) industry.  The successful defendant in this case - Xpoint - is a key competitor.

by Dennis Crouch

The Federal Circuit's pending en banc review in EcoFactor v. Google is heating up, to address fundamental questions about the reliability standards for expert damages testimony in patent cases. The case highlights growing tensions between robust judicial gatekeeping under Federal Rule of Evidence 702 and the Constitutional right to a jury determination of all facts at issue.  At base, Google is seeking to create additional  procedural hurdles and appeal off-ramps that help them avoid large damage awards.

In its en banc order, the court directed the parties to brief whether the district court properly applied Rule 702 and Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579 (1993) in admitting testimony from EcoFactor's damages expert deriving a per-unit royalty rate from portfolio license agreements. The case presents a critical opportunity for the Federal Circuit to clarify when damages theories "cross the line" from permissible approximation to unreliable speculation.

Google has now filed its opening brief, arguing that EcoFactor's damages testimony failed to meet Rule 702's reliability standards in two key respects: its use of portfolio license "whereas" clauses that contradicted the operative terms of the agreements and its unsupported assumption that various "pressures" on the royalty rate would offset each other. The brief emphasizes that these methodological flaws rendered Kennedy's opinions purely speculative and therefore inadmissible under both Daubert and the recently amended FRE Rule 702.

by Dennis Crouch

Patent law cases continue to be brought to the Supreme Court's attention, even though the court has not granted certiorari in any patent case for some time.  Twelve potential cases have documents on file with the court. Currently, eight certiorari petitions are briefed and pending before the Court, while four additional petitions are anticipated in the coming months based on recently-filed extension requests.

As has been true in recent years, patent eligibility petitions occupy a substantial portion of the docket, mostly focusing on software patents. Two Hatch-Waxman cases are pending as is a case focusing on the on sale bar post-AIA and post-Helsinn.  In addition, two cases focus on the Federal Circuit's ongoing and unjustified use of summary affirmances for a large portion of its docket.

by Dennis Crouch

Today at 2pm Eastern, the Federal Circuit will hear arguments in a case that could significantly shape pharmaceutical patent listing practices under the Hatch-Waxman Act. In Teva v. Amneal (No. 24-1936), the court will consider whether device patents that don't explicitly recite active drug ingredients can be properly listed in FDA's Orange Book. William Jay of Goodwin Procter will argue for Teva; Steven Maddox of Procopio will represent Amneal.  The judges are not yet listed for the case, but I expect it will be three judges picked from these six: Chief Judge Moore, Judge Dyk, Judge Prost, Judge Chen, Judge Hughes, or Judge Stark.  (Update: It is judges: Prost, Taranto, and Hughes).

• Listen on YouTube at 2:00 PM on 11/8. 
• Dennis Crouch, Orange Book Listing Requirements Under Scrutiny, Patently-O (Sept. 17, 2024).
• David Taylor, Argument Preview - Teva Branded Pharmaceutical Products R&D, Inc. v. Amneal Pharmaceuticals of New York, LLC, Fed. Cir. Blog (Nov 1, 2024).

The case centers on several Teva patents related to its ProAir HFA inhaler device and dose counter. After Amneal filed an ANDA for a generic version, it counterclaimed--seeking delisting of these patents from the Orange Book. The N.J. district court granted Amneal's motion, ordering Teva to delist the patents. The key question on appeal is whether device patents must explicitly claim the active drug ingredient to qualify for Orange Book listing under 21 U.S.C. § 355(b)(1)(A)(viii).  The key benefit to patentees is an automatic 30-month stay of FDA approval that kicks in if the patentee sues a generic ANDA filer. This effectively blocks generic entry during litigation without requiring the patentee to show likelihood of success or irreparable harm as would be needed for a preliminary injunction.

by Dennis Crouch

The Supreme Court has before it another important petition highlighting the Federal Circuit's approach to statutory interpretation and administrative authority. Soto v. US stems from a Federal Circuit appellate decision focusing on the statute of limitations for awarding back pay associated with Combat-Related Special Compensation. The Supreme Court also recently heard oral arguments in Bufkin v. McDonough, which presents another important question about veterans' benefits - specifically whether the Court of Appeals for Veterans Claims must independently review the VA's application of the "benefit-of-the-doubt" rule in veterans' cases. The University of Missouri Veterans Clinic has played an active role in both of these pending cases as amicus counsel.

• Soto Petition
• Soto Mizzou Amicus
• Soto Appx

The pending Soto v. US petition highlights a recurring philosophical divide between Federal Circuit Judges Hughes and Reyna, with Hughes taking a formalist approach requiring specific statutory language while Reyna advocates for a more functional analysis that favors the underdog (disabled veterans). This post first walks through the Soto case and pending petition and then delves a bit deeper into the contrast between these two leading jurists at the Federal Circuit.

by Dennis Crouch

The Supreme Court is set to hear arguments in Dewberry Group v. Dewberry Engineers (No. 23-900) in December 2024, addressing the trademark-specific question of whether courts can disgorge profits earned not by the defendant itself, but also by legally separate non-party corporate affiliates.  In many ways, I see this case largely as a corporate "structure of the firm" case.  Does trademark law permit business owners to formally structure their set of closely related businesses to avoid spillover liability?  Most notably, corporate attorneys are regularly looking at ways to divide companies to limit spillover liability. The golden target is to create low-profit (or non-profit) entities that hold all the potential liability; and then shift profits to other corporate affiliates that do not have any liability.  In the trademark sense, you may have a media holding company that does all the infringing advertising; and then a set of franchisees that don't do any advertising themselves, but do reap the profits.

Background: The Dewberry dispute involves two real estate-related companies: Dewberry Group (defendant/petitioner) and Dewberry Engineers (mark-holder/respondent). After finding that Dewberry Group had infringed Dewberry Engineers' trademarks, the district court ordered Dewberry Group to disgorge nearly $43 million in profits. But here's the twist - those profits were earned not by Dewberry Group itself (which actually showed losses), but by its affiliated companies that were never parties to the litigation.