August 2015

Subsidiary of CRH Group Acquires C.R. Laurence for $1.3 Billion

 Congratulations to our client, C.R. Laurence (“CRL”) for being acquired for $1.3 billion in cash, subject to regulatory approval, by Oldcastle BuildingEnvelope, a subsidiary of CRH Group, a giant Irish corporation for building products!

 C.R. Laurence is United States’ largest supplier of custom hardware and products for the glass and glazing industry.  Los Angeles Business Journal has recognized CRL as one of the top 100 Fastest Growing Private Companies.

Commenting on the acquisition, Ted Hathaway, CEO, Oldcastle BuildingEnvelope said: “CRL is a true American success story.  CEO Don Friese has built an extraordinary organization that has enjoyed exceptional growth. I have been impressed with CRL’s leadership and unwavering commitment to the customer. We extend a warm welcome to their talented employees and management team and look forward to capturing unique and compelling synergies together.”

Cislo & Thomas LLP congratulates C.R. Laurence on its home run!

 

 United States Patent and Trademark Office (USPTO) Issues Proposed Changes to Patent Trial and Appeal Board (PTAB) Trial Rules

 On August 19, 2015, the United States Patent and Trademark Office (“USPTO”) issued newly-proposed rule changes in response to input acquired through the public America Invents Act (“AIA”) Trial Round Tables earlier this year.  These proposed rules are a more comprehensive package of rule changes and have been published in the Federal Register.

The proposed rules relate primarily to three areas.

First, patent owners are allowed to provide new testimonial evidence in his or her preliminary response to a petition for Inter Partes Review (“IPR”) or Post-Grant Review (“PGR”).  In order to meet the mandated three-month timeline for a decision, the petitioner will not have a right to cross-examine. Thus, the Board will resolve any material factual disputes in favor of the petitioner for the purposes of making a determination. However, a petitioner may request permission to file a reply brief to address a patent owner’s new testimonial evidence.

Second, there is a new requirement similar to Rule 11 for all papers filed with the PTAB.  This now means that when signing any paper presented to the Board, the person signing is acknowledging that the signed documents is not being presented for an improper purpose and that it is not frivolous; otherwise the Board can impose sanctions.

Last, there will be a different claim construction standard for patents set to expire during a PTAB proceeding.  For most proceedings, the “broadest reasonable interpretation” standard will be used.

However, for those patents that will expire during a PTAB proceeding, the proposed rules use the Phillips-type claim construction standard, such that the words of the claims are given their ordinary meaning in the context of the patent documents.   Therefore, for expiring patents, the use of a Phillips-type claim construction standard may make such patents more difficult to invalidate in a PTAB proceeding.

Michelle K. Lee, Director of the USPTO, also stated that as of July 31, 2015, the PTAB has received a total of 3,655 petitions, of which 3,277 are IPRs, 368 are transitional post-grant reviews for covered business method patents (“CBMs”), and 10 are PGRs. Trials have been instituted in 1,389 IPRs, 185 CBMs, and 2 PGRs.

 Facebook’s New Patent Allows Lenders to Determine Credit Approval Through Average Credit Rating of Facebook Friends

 The United States Patent and Trademark Office (“USPTO”) recently granted Patent No. 9,100,400 titled “Authorization and Authentication Based on an Individual’s Social Network” to Facebook.  The patent claims a system and method for helping filter spam emails and offensive content, as well as allowing lenders to use one’s social media acquaintances and habits to determine a credit approval.

The patent uses degrees of separation between individuals in a social network as well as white, grey, and black lists to authorize activities and authenticate individuals.  The patent illustrates the scope of the invention by providing four examples which demonstrate the purpose of the technology and one of which specifically relates to credit approval.

In the specification, the patent stated:

“In a fourth embodiment of the invention, the service provider is a lender. When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.”

However, the Equal Credit Opportunity Act imposes strict guidelines in terms of what information creditors can use to determine loan approval so Facebook will need to show that its patented technological method adheres to federal law.

It is uncertain how Facebook intends on implementing the technology protected under this patent.

 

Space Elevator Patent Granted

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Thoth Technology Inc., a Canadian space company, has received a U.S. patent for a free-standing space elevator that could one day take space planes into Earth’s orbit 12 miles above sea level which will make the space flight more like taking a passenger jet.

Thoth engineers began working on the design in 2007 with their next goal to build a one-mile high tower within three to five years to demonstrate the potential capabilities of their space elevator concept.

The 12-mile-high tower is estimated to cost about five billion dollars and would take about eight to ten years to build according to the president and CEO of Thoth Technology Inc., Caroline Roberts.

“We are planning to license the technology to partners around the world,” Roberts wrote. “We may hold a competition to determine where to install the demonstrator or this may be determined by construction partners.”

 Yet, there are still many hurdles to overcome. For example, Thoth must find feasible materials that can be both tensile and lightweight enough for the tether cable, as well as perfect the design of how to control and stabilize such a tall, slender structure in reality.

However, many experts are excited and optimistic about the space elevator becoming a reality and witness the impossible become possible.

  

Step Performed by Defendant’s Customers Attributable to Defendant Results in Method Claim Infringement

On August 13, 2015, the en banc Federal Circuit unanimously set forth the law of divided infringement under 35 U.S.C. § 271(a), and held that there is direct infringement of a method claim when some of the steps are performed by actors other than the defendant so long as the other actors are subject to the defendant’s direction or control.  Akamai Technologies, Inc. v. Limelight Networks, Inc., en banc, Fed. Cir. No. 2009-1372, 8/13/2015.

The plaintiff, Akamai Technologies, Inc. (“Akamai”), owned a patent directed toward a method of delivering website content more efficiently by sending graphic material to a wide network of servers. One of the steps in the method patent required content providers to tag the graphic elements.  Both direct and indirect infringement required finding that direct infringement occurs when all the method steps are performed by or [are] attributable to a single entity.

In the en banc opinion, the Federal Circuit held that when more than one actor practices the method steps, one entity is responsible for another’s performance of method steps when the entity directs or controls the performance of the other.

Consequently, divided infringement under Section 271(a) is no longer defined solely to principal-agent relationships, contractual arrangement, and joint enterprise but now also includes an additional category regarding “control and direction.”  However, the scope of directing or controlling the acts of one or more third parties constituting direct infringement is a question of fact.

Therefore, the court explained that due to Akamai , in which the contract between Limelight and its customers required the customer to perform the “tagging step” covered by the Akamai method claim, the acts of Limelight’s customers were attributable to Limelight.

Cheerleading Uniforms Are Copyrightable Under Sixth Circuit Court of Appeals Ruling

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Under a divided court, the Sixth Circuit U.S. Court of Appeals reversed the lower district court ruling that “a cheerleading uniform is not a cheerleading uniform without stripes, chevrons, zigzags, and color blocks” and therefore serves a function and disqualifies it as copyrightable.Varsity Brands, Inc. v. Star Athletica, LLC, No. 14-5237, (6th Cir. Aug. 19, 2015).

Judge Moore likened the uniforms to fabric patterns which can be protected by copyright.  Further, in light of the Copyright Office’s experience, the court applied a presumption in favor of copyright validity for published manuals and consistent treatment of Varsity’s cheerleader uniform designs.

In determining whether the designs were protectable, the court deemed that it must incorporate pictorial, graphic, or sculptural features that can be separated from and exist independently of the article’s function.

The questions were then: Is the design objectively necessary to the article’s useful function?   Can the design be separately imagined as an independent artistic work?

The majority concluded that the function was “to cover the body, wick away moisture, and withstand the rigors of athletic movements,” rather than to identify a cheerleader as a cheerleader.  Judge Moore further opined that neither a “decorative” function nor an “identifying” function is properly considered part of what makes an article “useful.”

Given that the dissenting judge, Judge McKeague, closed with a call to Congress or the Supreme Court to clarify the tangled law in this area and that some other circuit courts have concluded with the opposite ruling, this issue will most definitely be revisited.

Johnson & Johnson’s Subsidiary Gets Second Chance Against Rival Surgical Instrument Maker

 On August 7, 2015, the Federal Circuit held that the Ohio district court incorrectly ruled patent infringement, as well as patent invalidity, in the case of Ethicon Endo-Surgery, Inc. v. Covidien, Inc. The original decision by the lower court was based on indefiniteness and the element of design patent invalidity was based on being primarily functional. In its ruling, the Federal Circuit did, however, agree with the Ohio District court’s holding that there was no design patent infringement. Ethicon Endo-Surgery, Inc. v. Covidien, Inc., No. 2014-1370, (Fed. Cir. Aug. 7, 2015)

Johnson & Johnson’s subsidiary, Ethicon Endo-Surgery Inc., sued Covidien in the Ohio district court for infringement of utility and design patents directed to ultrasonic surgical shear devices. The court ruled against Ethicon, and consequently, Ethicon appealed the judgment to the Federal Circuit and received a much more favorable holding.

First, the Federal Circuit reversed the judgment of invalidity for indefiniteness based on Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120, 2129 (2014). The district court had held that the patent was invalid because the patent did not identify a particular method for calculating pressure, and there were various known methods that would have yielded different results.

The Federal Circuit stated that Section 112 mandates that only “one skilled in the art must be able to understand which pressures are relevant to the claims and how those pressures can be measured, so to discern the scope of the claimed average pressure range with reasonable certainty…. [T]here is no requirement for the specification to identify a particular measurement technique.”  Therefore, the Federal Circuit opined that the patent was not indefinite by not identifying a particular method for calculating pressure.

Second, the Federal Circuit vacated the summary judgment of non-infringement holding that there were disputed facts, requiring adjudication, in conflicting expert testimony. Tests also indicated that the claim requirement of a “damping member configured to loosely contact the transmission rod” may have occurred regardless of the intention behind the designs.

Third, the Federal Circuit held that the district court erred in determining that Ethicon’s design patents were invalid as primarily functional.  The district court found and factored out functional elements in the design and held that there was no remaining scope of design patent protection.

The Federal Circuit stated that the district court confused the underlying function of an article with functionality of the design of an article. The district court failed to consider whether alternative ornamental designs could provide the same functionality and focused too much on the unclaimed utilitarian aspects of the underlying article instead of the claimed ornamental features.

Last, despite finding the design patents valid, the Federal Circuit affirmed the district court’s grant of summary judgment of non-infringement of the design patents, stating that the claimed designs were plainly dissimilar from the ornamental design of Covidien’s accused products.

Automakers Acquire HERE, Google Maps’ Primary Competitor

 Several automakers, including BMW, Audi and Daimler, agreed to acquire HERE Global (Nokia’s map business) for $2.8 billion, outbidding Uber and Baidu. According to Reuters, HERE’s primary competitor is Google Maps, and automakers are making it known that they want a part in the IP realm of map-related technologies.

Currently, HERE has 43 recently issued patents and 49 pending, published patent applications. Many of these patent applications describe and claim technology relating to map features as well as self-driving cars.

Part of the rationale for the acquisition may be to keep the patents out of the hands of rivals. Reuters reported that the CEO of Daimler stated, “With the joint acquisition of HERE, we want to secure the independence of this central service for all vehicle manufacturers, suppliers, and customers in other industries.”

The automakers in the case will likely avoid many of the added costs and obstacles of bringing self-driving car technology to market with this acquisition. Such a transaction exemplifies how IP investment can be utilized to boost a company’s worth and may help it expand into different technological markets.

Customplay v. Clearplay: Board Finds All Challenged Claims Unpatentable as Obvious

In an Inter Partes Review (“IPR”), the Patent Trial and Appeal Board (“PTAB”) found that the challenged claims (1-25) of ClearPlay’s patent, U.S. Patent Number 8,117,282 (“‘282 Patent”) were unpatentable as obvious. The ‘282 Patent relates to the field of modifying playback of a multimedia presentation, such as a video, from a storage medium. Customplay v. Clearplay, IPR2014-00430 (Aug. 14, 2015).

ClearPlay contended that the challenged claims required three elements that collectively created a so-called “navigation object.” Under that notion, Clearplay states that none of the prior art discloses or suggests a “navigation object.”

The Board found that all of the elements collected constituted the “navigation object” as well as the other elements in the challenged claims were taught in either the prior art Abecassis or Malkin.

In terms of the rationale or motivation to combine the prior art, ClearPlay only argued that neither Malkin nor Abecassis discloses a “navigation object,” which the Board already concluded was an unsuccessful contention.  Therefore, the Board agreed with the Petitioner that because the prior art references deal with the same subject matter as the  challenged patent, there was a rationale to combine.

This IPR in front of the PTAB was one of five IPR’s that CustomPlay has filed against ClearPlay’s patents.

The USPTO Announces Additional Guidelines for Determining Subject Matter Eligibility Under 35 U.S.C. § 101

 On July 30, 2015, the United States Patent and Trademark Office (“USPTO”) issued additional guidelines for use by USPTO personnel in determining subject matter eligibility under 35 U.S.C. § 101. These additional guidelines follow the public comments provided in response to the 2014 Interim Patent Eligibility Guidance that was issued by the USPTO in December 2014 (the 2014 Interim Guidance).

The July 2015 Update includes seven examples of what is patentable in terms of business methods, graphic user interfaces, and software.  Each of the seven examples included in Appendix 1, provide sample claim language and corresponding explanations for determining whether a claim recites significantly more than a judicial exception.

The examples, numbered 21–27, include claims directed to: a transmission of stock quote data, a graphic user interface for meal planning, a graphic user interface for relocating obscured textual information, updating alarm limits, rubber manufacturing, and an internal combustion engine.

The USPTO also confirmed that the requirement to consider claim elements, both individually and in combination, is a vital part of determining whether a claim, as a whole, amounts to significantly more than a judicial exception.

The USPTO is interested in receiving public feedback on the July 2015 Update:  Subject Matter Eligibility, including the claim examples.  Any member of the public may submit written comments by electronic mail message over the Internet addressed to [email protected].  Comments will be accepted until October 28, 2015.