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Here Comes Section 101 Again

OK, it's time to have that talk again. You know, the one about patent eligibility. Tomorrow, leaders of the tech and pharma industries will sit down for a private chatwith Sens. Thom Tillis and Chris Coons (pictured above) and leaders of major bar associations that have been promoting a legislative fix for Section 101.

Everyone I've spoken with sees this as an early stage, consensus-building effort in a process that has many months if not years—or ever—to play out. But supporters of Section 101 reform see some important stars coming into alignment: a PTO director who's advocating hard for change; new technologies such as AI and blockchain that could benefit; and the passage of the Success Act and the Music Modernization Act as confirmation that Congress can find common ground on IP.

“We're definitely not at the finish line,” said Polsinelli partner and NYIPLA president Pete Thurlow, who'll be at Wednesday's meeting. “But the fact that it's a race or a discussion is very exciting.”

There are plenty of reasons to be skeptical. The ABA, IPO and AIPLA have been promoting various fixes for a couple of years now, and haven't yet found unity on a single proposal. Coons hasn't gotten far with his STRONG Patents and STRONGER Patents legislation the last few years (a running joke in DC patent circles is his next bill will be called STRONGEST Patents.) And the incoming House Judiciary chairman seems focused on other things.

But bar association support is starting to coalesce around a joint proposal earlier this year from the Intellectual Property Owners Association (IPO) and the American Intellectual Property Law Association (AIPLA). NYIPLA is on board, and in recent weeks Polisinelli's Thurlow has helped win support from the Boston Patent Law Association, New Jersey IPLA and other groups.

Thurlow says no version is going to please everyone, but the IPO-AIPLA proposal is an excellent starting point. Section 101 as applied currently by the Supreme Court and Federal Circuit leads to too much uncertainty, he says, and has convinced entrepreneurs in the AI, blockchain and quantum computing fields that the only protection for their intellectual property is through trade secrets. Software “is such a major part of our economy, [patenting] has to be part of that,” Thurlow says.

Patent owners can count on support from PTO director Andrei Iancu, who's spoken frequently about the need for more clarity and predicability on Section 101. Iancu is widely expected in coming months to roll out long-awaited new guidance for patent examiners on step one of the Alice test.

Iancu is “doing as much as he can internally at the Patent Office, “ Thurlow said. “But what he's doing at the Patent Office isn't going to change what's going on at the courts.”

Blasting Berkheimer at the Supreme Court

Perhaps you're wondering: How will the tech industry react to a proposal that would soften up or neuter Section 101 as a defense to patent infringement? Look no further than the amicus curiae briefs filed in support of HP's bid to get HP v. Berkheimer in front of the U.S. Supreme Court.

As you'll recall, the Federal Circuit ruled in Berkheimer that patent eligibility is a question of law that sometimes may include underlying facts that can't be resolved on the pleadings. Absent Supreme Court review, “innovators like amici will have to spend enormous sums on jury trials in lawsuits asserting patents that should have been held ineligible early on,” states Matthew Fitzgerald of McGuireWoodson behalf of T-Mobile USA and Sprint Spectrum.

“There is an urgent need for this court's review,” writes Alexandra Moss, staff attorney at the Electronic Frontier Foundation, for EFF and the R Street Institute. Under Berkheimer, “district courts have consistently delayed patent eligibility rulings, reversing the trend toward early resolution” that began after the Supreme Court's decision in Alice v. CLS Bank. It's also led to new PTO guidance “that precludes patent examiners from rejecting ineligible applications based on this court's guidance in Alice.”

For its part, HP, represented by Morgan Lewis & Bockius and Gibson, Dunn & Crutcher, says Alice made clear that judges should decide eligibility as a matter of law by stating that “we determine whether the claims are directed to” a patent-ineligible concept.

My takeaway: Does the tech industry really want to have this debate, at this time, before this Supreme Court? Are the justices of 2019 going to be animated by the need to protect and nurture Silicon Valley the way they seemed to be during the Bilski-Alice era? Are Justices Gorsuch and Kavanaugh going to be as reliably hostile to patent “trolling” as Justices Scalia and Kennedy were? And even if Team Tech wins Berkheimer at the Supreme Court, might thrusting Section 101 back into the headlines add some momentum to the legislative push?

Inventor Steven Berkheimer is represented by Jenner & Block and Skiermont Derby. “The selection of a pronoun is not a holding,” Jenner's Adam Unikowsky writes in opposing cert. The use of “we” likely reflected that there were no disputed facts in the court's previous Section 101 cases. That might have been “the very reason they may have been good vehicles for Supreme Court review,” Unikowsky adds. “Here, however, the facts are disputed.”

In case you missed it, Dennis Crouch does a much deeper dive into the Berkheimer briefs here.

Who Needs an Opinion to Affirm a Measly $254 Million Judgment?

Last week I wrote about the showdown at the Federal Circuit over a $254 million judgment for willful patent infringement.

I didn't think Zimmer Inc. and Seth Waxman were going to win their argument that U.S. District Judge Robert Joncker misapplied the Supreme Court's new rules on willful patent infringement.

HWANG

But I thought they'd at least get an opinion. Instead, the Federal Circuit summarily affirmed the award. Absent en banc or Supreme Court review, the ruling cements a massive win for Stryker Corp. and McAndrews Held & Malloy partner Sharon Hwang, who argued the appeal and has been part of Stryker's litigation team since the suit was filed in 2010.

During the Dec. 3 argument, Judge Kathleen O'Malley had asked Hwang, “Do you agree that district courts are sort of all over the board in how they apply the Read factors and there needs to be some guidance, regardless of how we come out?”

I guess the court's answer to that was “no.”

BIC Throws Cold Water on Allegedly Unsafe Lighters

Much has been written lately about Juul Labs' International Trade Commission and federal court actions against e-cigarette rivals. Not to be outdone, BIC Corp. has brought its own ITC action against Arrow Lighter and other competitors in the old-fashioned cigarette lighter space, my ALM colleague Phillip Bantz reports.

BIC alleges trademark infringement, trademark dilution, unfair competition, deceptive practices and false advertising. GC Steve Burkhart told Bantz that the alleged knock-offs don't meet U.S. safety standards, from the amount of fuel in the lighters to flame height to crack-proofing.

Everybody's familiar with the $25 Rolex watch,” Burkhart said. “But this is different. This could hurt somebody.”

That's all from Skilled in the Art today. I'll see you all again on Tuesday.