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Cisco loses at CAFC — 2020-12-02

The outcome: Cisco Systems, Inc. appeals the Patent Trial and Appeal Board’s final written decision holding Cisco had not proven that claims 1–9 and 12 of U.S. Patent No. 6,611,231 would have been obvious. For the reasons discussed below, we affirm. Background Cisco challenges the Board’s construction of “cross-correlated signal information that is received by” the claimed adaptive antenna. We review the Board’s ultimate claim construction de novo and any underlying factual determinations involving extrinsic evidence for substantial evidence. Paice LLC v. Ford Motor Co., 881 F.3d 894, 902 (Fed. Cir. 2018). Because Cisco’s petition was filed before November 13, 2018, we give claims in the unexpired ’231 patent their “broadest reasonable interpretation” consistent with the specification. See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2142 (2016). Cisco contends the Board erred in construing the phrase “cross-correlated signal information that is received by said receiver using said adaptive antenna” as requiring that the signal information be cross-correlated before the signal information is received. It argues the claim language is ambiguous and, as properly interpreted, includes signal information that is cross-correlated after it is received. We do not agree Boilerplate language of non-limitation can be harmful: There is no requirement that “each and every claim ought to be interpreted to cover each and every embodiment.” PPC Broadband, Inc. v. Corning Optical Commc’ns RF, LLC, 815 F.3d 747, 755 (Fed. Cir. 2016). Regardless, nothing in the written description shows the patentee intended to deviate from the plain meaning of claim 1; there is no language in the written description suggesting that cross-correlating the signal information after it is received is important, essential, or necessary to the claimed invention. See Hill-Rom Servs., Inc. v. Stryker Corp., 755 F.3d 1367, 1373 (Fed. Cir. 2014) (“[T]o deviate from the plain and ordinary meaning of a claim term . . . the patentee must, with some language, indicate a clear intent to do so in the patent.”). In fact, the written description expressly states that “the invention defined in the [] claims is not necessarily limited to the specific features or steps described.” ’231 patent at 28:66–29:2. The issue of waiver appears: Cisco further contends dependent claim 2 makes clear that claim 1 must encompass “cross-correlated signal information” that is cross-correlated after it is received. We will not reach the merits of this argument, that claim 2 causes us to deviate from the plain meaning of claim 1, because Cisco never raised this argument with the Board. Accordingly, we decline to consider Cisco’s argument made in the first instance on appeal. MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1294 n.3 (Fed. Cir. 2015).

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Some New Articles, Posts on FRAND, Part 2 — 2020-12-01

1. Binxin Li and Chuanshu Chu published a post on the Kluwer Patent Blog titled Recent development on SEP disputes in China — anti-suit injunction. The authors discuss the Xiaomi v. IDC and Huawei v. Conversant decisions, previously discussed on this blog here, and offer their comments on the potential for global SEP cases to cause problems with regard to international comity.

2. Deputy Assistant Attorney General Alexander Okuliar delivered a talk in Washington, D.C. on October 28, titledFrom Edison to ‘New Madison’: Division Activity at the Intersection of Innovation, Competition Law, and Technology. Nothing new here regarding the division’s views on FRAND and SEPs, though there are some interesting comments on China’s antimonopoly enforcement and its standards development initiatives.

3. Pier Luigi Parcu and David Silei have posted a paper on ssrn titled An Algorithm Approach to FRAND Contracts. Hereis a link, and here is the abstract:

In the context of standards development, the current mechanism of negotiation of FRAND royalties frequently brings to undesirable litigation. This is mainly due to the fact that a relevant part of the information concerning the standard, required to stipulate complete license contracts, is revealed only after the standard itself has spread in the market. In this respect, we propose a litigation-reducing algorithm to determine the FRAND level of the licensing royalty. Unlike the current negotiation mechanism, this algorithm can be defined ex-ante, so to increase contract completeness, because it includes a Bayesian-updating rule, able to address the presence of ex-ante uncertainty. We derive the algorithm from a generic oligopolistic-competition model, so to deliver characteristics of applicability to both price and quantity competition. Simulations in a linear-Cournot framework suggest the algorithm calculates FRAND royalties and may be usefully applied to real-life cases.

4. David Teece has posted a paper on ssrn titled Patent Counting and the ‘Top Down’ Approach to Patent Valuations: An Economic and Public Policy Appraisal of Reasonable Royalties. Here is a link, and here is the abstract:

In many circumstances it is helpful, and sometimes necessary, to assess (possibly even to quantify) the technological prowess of a business enterprise, either overall or with respect to particular fields of application, or possibly with respect to the firm’s relative position in an industry. In such circumstances, it is tempting to use as a measure the number of patents that has been granted to a firm. However, patent counts are an imperfect and unreliable metric. Using them may create an aura of accuracy, but it is false (scientific) accuracy for the reasons discussed in this article. In particular, the “top-down” approach to the valuation of standard-essential patents (SEPs), which relies heavily on patent counting, is a poor surrogate for the determination of the value of patented technologies.

I will start with some basics. In scientific inquiry, precision refers to how close the measurement of a variable is to what is being measured. Precision is, however, independent of accuracy. Indeed, it is possible to be precise but highly inaccurate. Accuracy is, of course, more important than precision. In this paper, I will show that patent counting, while having the possibility of being precise, does not always meet that criterion in part because of ambiguities as to scope. For instance, sometimes standards are at issue with patents “reading on” or being “essential” to one or more technical standards. However, there may be ambiguities around how many patents in a given portfolio are in fact essential, versus simply declared essential by the owner or some third party.

In this article, I make two suggestions. First, patent-count metrics are at best poor proxies of technological strength or value. This is not just because of inaccurate patent counts in the numerator or denominator of some index. It is also because there is at best only a weak connection between even well-specified patent indices and underlying economic value of a patent or patent portfolio. It is often the case that one will have to look downstream to the user to figure out the incremental value that the technology yields to the consumer.

Second, when it comes to valuing intellectual property that “reads on” a standard, the numerical proportionality of standard-essential patents (SEPs) is a bogus measure. It is unlikely to measure the relative value of patents, let alone the value of technology. The problem is compounded because numerical proportionality requires the determination of a “total value” associated with all patents that “read on” a standard, which has typically been arrived at arbitrarily.

My initial response to the paper is that, while Teece may be correct in theory, (1) are the methodologies for estimating SEP value at a more granular level reliable?, and (2) even if so, are they worth it? In other words, do the benefits from marginally increasing accuracy outweigh the additional administrative and adjudicative cost? I’m a bit skeptical, given the lack of evidence regarding the materiality of the patent incentive in this space.

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What administrative actions might we expect on COVID-19 in President-elect Biden’s administration? — 2020-12-01

By Rachel Sachs, Jacob S. Sherkow, Lisa Larrimore Ouellette, and Nicholson Price

When President-elect Joe Biden is inaugurated in January, his administration will face the ongoing public health and economic challenges created by COVID-19. Even if Biden takes office without control of Congress, we can expect his administration to take important actions regarding COVID-19 innovation in response to the pandemic. In this post, we consider three main pillars of his administration’s likely response (as articulated by the Biden-Harris transition website) and explain the legal foundations behind them.

What innovation incentive and access goals has the administration put forth?

The transition website describes plans to encourage both innovation incentives for and access to COVID-19 diagnostics and treatments. Given that substantial progress has been made in developing new healthcare technologies to combat COVID-19—including, to date, at least two vaccine candidates that seem likely to be marketed in the US—the new administration’s efforts focus mainly on furthering the development of rapid diagnostics, improving access to them, and ensuring the broad and equitable distribution of personal protective equipment (PPE) and vaccines; these are laudable goals.

The administration plans to further the development of diagnostics, such as “next-generation testing, including at home tests and instant tests, so we can scale up our testing capacity by orders of magnitude.” This includes “[d]oubl[ing] the number of drive-through testing sites” and centralized production of at least some test kits, which the incoming administration likens to the War Production Board during World War II. This is good; as we’ve written about previously, at-home testing is a core strategy to controlling the pandemic. The current administration’s efforts focused on encouraging their development through NIH, and has had some success. The incoming administration rightly is focused on widely deploying such tests.

By contrast, the large-scale manufacture of PPE continues to be a persistent problem in the US, despite now being nearly a year since the current administration was warned of a new respiratory virus that would likely put millions of Americans at risk of illness or death. A national shortage of N95 respirators, for example, emerged as a key policy problem early in the pandemic that has not improved. The new administration recognizes that it needs to “[f]ix personal protective equipment (PPE) problems for good.” To do so, it plans to use the Defense Production Act “to ramp up production of masks, face shields, and other PPE so that the national supply of personal protective equipment exceeds demand and our stores and stockpiles.” The government indeed has supply chain power and expertise that it can lean on to coordinate the production and distribution of similar resources.

And with respect to vaccines—arguably the current administration’s most significant success—the new administration states it will use “$25 billion in a vaccine manufacturing and distribution plan that will guarantee [a successful vaccine] gets to every American, cost-free.” Whether these are new funds or money already committed to the effort remains unclear; the current administration’s vaccine’s plan intended for “most patients [to receive the vaccine] for no out-of-pocket costs.”

One noteworthy departure from the current administration’s priorities is explicit recognition of racial disparities in who has been most severely impacted by COVID-19. This includes “[e]stablish[ing] a COVID-19 Racial and Ethnic Disparities Task Force, as proposed by Vice President-elect Harris, to provide recommendations and oversight on disparities in the public health and economic response.” It even goes so far as to apply such efforts to “culturally competent approaches to contact tracing and protecting at-risk populations.” And, to the extent that personnel is policy, the new administration’s COVID Task Force is made up of members who have done top flight research on issues pertaining to COVID and equity, including Drs. Marcella Nunez-Smith and Celine Gounder. Nor do these changes appear to be temporary; the new administration plans that the Task Force will “transition to a permanent Infectious Disease Racial Disparities Task Force” at the pandemic’s completion.

What legal tools might the incoming administration use to accomplish these goals?

Any of these policy goals could be accomplished through new legislation, including appropriation of additional funds for combatting the pandemic. Congress is under pressure to pass a new COVID-19 stimulus package, although negotiations have been stalled for months, and it is unclear whether or when a compromise might be reached. The results of the January 5 Georgia Senate runoff elections will decide whether Democrats control both houses of Congress—making new legislation a more viable priority—or whether any new laws must navigate an even more challenging political landscape. But even without new congressional action, the Biden administration has numerous legal tools for accomplishing its goals concerning COVID-19. Here, we highlight three key options.

First, the Defense Production Act—passed at the start of the Korean War and reauthorized through 2025—can be used to control domestic industries through, for example government purchasing, requiring firms to prioritize government orders, and restricting exports. A report by the nonpartisan Congressional Research Service noted that the Trump administration’s use of the Defense Production Act has been “sporadic and relatively narrow,” and President-elect Biden has called for much more aggressive use of this authority to address PPE shortages. The Defense Production Act could also be used to increase supplies of diagnostics or products necessary for the vaccine supply chain like glass vials and freezers.

Second, the incoming administration can set priorities for the numerous agencies with discretion over innovation-related grantmaking budgets. The NIH—the world’s largest biomedical research funder—has a budget of over $40 billion. And direct public funding for health-related R&D is also provided by other agencies within the Department of Health and Human Services, including the CDC, FDA, and Biomedical Advanced Research and Development Authority (BARDA), as well as the Department of Defense, the Department of Veterans Affairs, and the Department of Energy. For example, we have previously written about the investments by the NIH and BARDA in Moderna’s SARS-CoV-2 vaccine and the NIH’s Rapid Acceleration of Diagnostics (RADx) initiative in collaboration with the FDA, CDC, and BARDA. These agencies can use both traditional ex ante grants as well as ex post or “pull” policies like prizes to support the Biden administration’s R&D goals.

Third, modulating government reimbursement amounts through insurers can also be used as an ex post innovation incentive. Some coverage decisions are out of the administration’s hands, such as whether to expand Medicaid eligibility under the Affordable Care Act in the 12 states that have failed to do so. But the Centers for Medicare and Medicaid Services (CMS) and the Department of Veterans Affairs have substantial authority over reimbursement decisions, such as for the more than 100 million Americans covered by Medicare and Medicaid. We have previously described steps taken by Congress and the Trump administration to expand coverage of COVID-19-related healthcare costs. HHS has repeatedly stated that it plans for COVID-19 vaccines to have no out-of-pocket costs for patients. And in October, CMS reimbursement rules were changed to cover with no cost-sharing even vaccines that receive emergency use authorization (EUA) rather than a full approval. In addition, CMS recently aggressively expanded access without cost-sharing to a monoclonal antibody therapy that had just received an EUA.

The incoming administration can play a crucial role not only in directing actions at individual agencies, but also in coordinating the wide array of innovation-related agencies into an integrated response. In prior posts, we have described how the early Trump administration responses to N95 respirator shortages and diagnostics represented interagency coordination problems. The Trump administration’s Operation Warp Speed, in contrast, seems to reflect a successful collaboration among agencies including the NIH, CDC, BARDA, and the Department of Defense. Coordinating the federal government’s COVID-19 response seems like one of the most important roles the incoming administration can play, whether or not it has support from Congress.

How does the Biden administration plan to communicate with the public?

In addition to more foundational innovation policy issues, communication is central to ongoing efforts to combat the pandemic. The pandemic has been greatly exacerbated by communications failures by the federal government, which has sent profoundly mixed messages on masks, the severity of the pandemic, and social distancing. The Biden administration aims to communicate better with the public in three related ways.

First, the administration plans to put doctors and scientists front and center in the pandemic response. Biden’s already-announced COVID task force shows this commitment. It is replete with scientists and physicians, particularly those with governmental expertise (like former FDA Commissioner David Kessler and Surgeon General Vivek Murthy)—though some have noted a lack of other experts, including social scientists. Biden also plans to return the CDC to the front line, including resuming regular daily briefings led by respected public health experts and scientists—and hopefully restoring some of the CDC’s lost luster and public authority.

Second, the Biden administration plans to provide evidence-based guidance for dealing with the pandemic dynamically. The transition guide suggests a more nuanced version of the policy prescriptions that have become familiar over the last several months. Social distancing, for instance, “is not a light switch. It is a dial. President-elect Biden will direct the CDC to provide specific evidence-based guidance for how to turn the dial up or down…” (Those of you who follow public-health-law-focused Professor Lindsay Wiley on Twitter will be familiar with this theme.)

Third and finally, the administration plans to be substantially more transparent than the Trump administration has been and to promote that transparency throughout the various agencies involved. For instance, the Biden administration plans to “publicly release clinical data for any vaccine the FDA approves, and authorize career staff to write a written report for public review and permit them to appear before Congress.” The FDA is now planning to do this—but the GAO is concerned that the FDA has been insufficiently transparent in its COVID-19 decisions to date, especially emergency use authorizations for therapeutics. Presumably, greater transparency about CDC guidance on public health matters is also likely to follow in a Biden administration. Particularly as scientists discover more about COVID-19 and recommendations change over time, transparency about those recommendations is especially important to maintain public trust. For therapeutics, non-pharmaceutical interventions, and vaccine distribution alike, public trust is key, and effective and transparent communication are essential to restoring and maintaining that trust.

This post is part of a series on COVID-19 innovation law and policy. Author order is rotated with each post.

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VidStream loses at CAFC: matters of “what is” prior art. In re Hall revisited. — 2020-11-29

The outcome On two inter partes review (“IPR”) petitions filed by Twitter, Inc., the Patent Trial and Appeal Board (“PTAB” or “Board”) held that claims 1–35 of U.S. Patent No. 9,083,997 (“the ’997 patent”), assigned to VidStream LLC, are unpatentable on the ground of obviousness.1 VidStream appeals, arguing that the Board erred in finding that a book authored by Anselm Bradford and Paul Haine2 (“Bradford”) is prior art against the ’997 patent. We affirm the Board’s holding that Bradford is prior art. With Bradford as the primary reference, VidStream does not appeal the Board’s decision of unpatentability of claims 1–35. That decision is affirmed. Of standards for evaluating prior art: Whether a document is prior art under 35 U.S.C. § 102(a) is a legal determination, based on the specific facts. Medtronic, Inc. v. Barry, 891 F.3d 1368, 1380 (Fed. Cir. 2018). We review the Board’s legal determinations de novo, and its factual findings for support by substantial evidence. In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1280 (Fed. Cir. 2015). Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. v. Nat’l Labor Relations Bd., 305 U.S. 197, 229 (1938). Substantial evidence may be “something less than the weight of the evidence but more than a mere scintilla of evidence.” In re Mouttet, 686 F.3d 1322, 1331 (Fed. Cir. 2012). The PTAB’s evidentiary rulings are reviewed on the standard of abuse of discretion. Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1078 (Fed. Cir. 2015). Abuse of discretion arises if the ruling: “(1) is clearly unreasonable, arbitrary, or fanciful; (2) is based on an erroneous conclusion of law; (3) rests on clearly erroneous fact findings; or (4) follows from a record that contains no evidence on which the Board could rationally base its decision.” Shu-Hui Chen v. Bouchard, 347 F.3d 1299, 1307 (Fed. Cir. 2003). (…) “‘[P]ublic accessibility’ has been called the touchstone in determining whether a reference constitutes a ‘printed publication . . . .’” In re Hall, 781 F.2d 897, 899 (Fed. Cir. 1986). “A reference will be considered publicly accessible if it was disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence[] can locate it.” Medtronic, 891 F.3d at 1380 (alteration in original) (internal quotation marks omitted). “Whether a reference is publicly accessible is determined on a case-by-case basis based on the ‘facts and circumstances surrounding the reference’s disclosure to members of the public.’” In re Lister, 583 F.3d 1307, 1311 (Fed. Cir. 2009) (quoting In re Klopfenstein, 380 F.3d 1345, 1350 (Fed. Cir. 2004). (…) When the status of a reference is reasonably challenged, the provider of the reference has the burden of establishing that the requirements of “printed publication” are met. See Jazz Pharm., Inc. v. Amneal Pharm., LLC, 895 F.3d 1347, 1356 (Fed. Cir. 2018) (“[W]hether a reference is a ‘printed publication’ is a ‘case-by-case inquiry into the facts and circumstances surrounding the reference’s disclosure to members of the public.’” (quoting Klopfenstein, 380 F.3d at 1350)). The Board found that the November 8, 2011 date of first publication, stated in the Copyright Office’s Registration Certificate, supports the 2011 copyright date of the copy of Bradford obtained from the Library of Congress and “is consistent with Bradford being for sale on Amazon in December 2011,” and “indicates it was published by an established publisher.” Board Op. at *5. See Kyocera Wireless Corp. v. Int’l Trade Comm’n, 545 F.3d 1340, 1351 (Fed. Cir. 2008) (finding public accessibility when the reference was contained in a book sold to the public). When there is an established publisher there is a presumption of public accessibility as of the publication date. See Giora George Angres, Ltd. v. Tinny Beauty & Figure, Inc., 116 F.3d 1497, No. 96-1507, 1997 WL 355479 at *7 (Fed. Cir. 1997) (“[A]s Memoirs was published (in England) by an established publisher, there is no reason to suspect that it was not publicly available, including to one skilled in the art, and no evidence was presented that it was not.” (citing Hall, 781 F.2d at 899)). The Board found that the Amazon webpage from the Internet Archive, www.amazon.com/HTML5-MasterySemantics-Standards-Styling/dp/1430238615, “supports that Bradford was publicly accessible in 2011, and, in particular, that interested persons could order the book from Amazon either in hard copy or electronically.” Board Op. at *6. The Board discussed all the materials that were submitted, and found: Although no one piece of evidence definitively establishes Bradford’s public accessibility prior to May 9, 2012, we find that the evidence, viewed as a whole, sufficiently does so. In particular, we find the following evidence supports this finding: (1) Bradford’s front matter, including its copyright date and indicia that it was published by an established publisher (Exs. 1010, 1042, 2004); (2) the copyright registration for Bradford (Exs. 1015, 1041); (3) the archived Amazon webpage showing Bradford could be purchased on that website in December 2011 (Ex. 1016); and (4) Dr. Hsieh-Yee’s testimony showing creation and modification of MARC records for Bradford in 2011. Id. at *9. VidStream argues that the Board erred, and that even if Twitter’s evidence submitted in reply were considered, Twitter did not establish that the pages of Bradford that were provided with the petitions were published before VidStream’s May 9, 2012 priority date. VidStream states that “the Board not only considered, but indeed based its public accessibility findings on evidence relating to a version (or versions) of Bradford other than the version . . . in Twitter’s IPR petition,” VidStream Br. 9 (emphasis removed). VidStream states that the Board “departed from the specific grounds of unpatentability set forth in the petitions and thus exceeded its statutory authority.” Id. The CAFC noted of the exclusion issue: The Board denied VidStream’s Motion to Exclude, holding that it was appropriate to permit Twitter to respond to VidStream’s challenge by providing additional evidence to establish the Bradford publication date. We conclude that the Board acted appropriately, for the Board permitted both sides to provide evidence concerning the reference date of the Bradford book, in pursuit of the correct answer.

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