Federal Circuit Gets an 'A' on On-Sale Bar

How about a little love for the Federal Circuit? And not just any love, but Supreme Court love.

On Tuesday, the court fully endorsed CAFC's interpretation of patent law's on-sale bar—both pre- and post-America Invents Act. And it did so unanimously!

As I wrote earlier today, the high court ruled that, some new language in the AIA notwithstanding, sales of a new invention will trigger the one-year statutory clock on obtaining a patent, regardless of whether the sales are confidential or public.

Justice Clarence Thomas' opinion was refreshingly deferential. “The Federal Circuit … has made explicit what was implicit in our precedents. It has long held that 'secret sales' can invalidate a patent,” he wrote Tuesday in Helsinn Healthcare v. Teva Pharmaceuticals. “In light of this settled pre-AIA precedent on the meaning of 'on sale,' we presume that when Congress reenacted the same language in the AIA, it adopted the earlier judicial construction of that phrase.”

Yep, that's the same Clarence Thomas who wiped 25 years of Federal Circuit venue precedent off the books as if it never existed in 2017's TC Heartland. (The same Clarence Thomas who has now authored five of the last six opinions for the Supreme Court in patent cases.)

So kudos to Federal Circuit Judge Kathleen O'Malley, who saw all of this coming. I wrote a year ago about the unusual step she took to write a concurrence to the court's denial of en banc review in Helsinn—even though not a single judge had actually dissented from denial. At the time I characterized it as a judicial brief-in-opposition to an anticipated cert petition.

And the court did indeed grant cert. But now, with the benefit of all the briefing and argument, it's come down squarely behind O'Malley and Teva, and against Helsinn, the Justice Department, and the Patent and Trademark Office. (Ropes & Gray partner Matt Rizzolo notes the PTO will have to revise its Manual of Patent Examining Procedure, which says the AIA did not change the on-sale bar, “except that the sale must make the invention available to the public.”)

Credit for the win also goes to Goodwin Procter partner Willy Jay, who represented Teva before the high court, with an assist to Stanford law professor Mark Lemley,whose amicus curiae brief in support of Teva was remarked on by two of the justices during oral argument.

Now the Federal Circuit can bask in the full-throated support of the Supreme Court. Until the inevitable reversal this spring in Return Mail v. United States Postal Service.

Pass the Popcorn: InterDigital Sees FRAND TRO as Unconstitutional Prior Restraint

If I were king, every IP complaint would come with a motion for preliminary injunction. Normally, I have to wait months—if ever—to hear the defendant's side of the story. Not so when there's a motion for PI or TRO.

For example, it was just three three weeks ago that u-blox and Sheppard Mulltin Richter & Hampton filed for a FRAND licensing adjudication against InterDigital. The San Diego federal court suit came with a motion for a TRO to block InterDigital from “disrupting or interfering with u-blox's relationships with its customers and downstream manufacturers.”

We now have a response from InterDigital, and there's a lot to unpack. The IP giant's Wilson Sonsini Goodrich & Rosati lawyers argue that u-blox is seeking to impose an unconstitutional prior restraint on free speech, plus impossibly vague restrictions on InterDigital's communications with some 6,000 companies around the world. InterDigital also says it has offered to arbitrate the FRAND dispute if u-blox's desire for quick resolution is genuine.

“U-blox is simply using this lawsuit as a means to exert leverage in its license negotiations with InterDigital,” the company states in opposition to the TRO signed by Wilson partner David Steuer.

As with u-blox's complaint, InterDigital's filing is heavily redacted. But the nature of the dispute is coming into better focus.

U-blox is a Swiss developer of cellular modules used in automobile navigation systems and other connected devices. U-blox accuses InterDigital of demanding “exorbitant non-FRAND” royalties—more than it charges other licensees to practice 2G, 3G and 4G wireless standards.

U-blox's license expired Dec. 31. That means its customers may no longer be licensed either. InterDigital apparently wants to reserve the right to bypass u-blox and go straight to the customers about taking a license. U-blox appears to be warning that such action could seriously disrupt its business model. Though much of the briefs are redacted on this point, InterDigital cites a CD-Cal opinion which involved “predictions that the 'death of the corporation' is imminent,” and which held that such claims are inadequate to show irreparable harm.

InterDigital says it has a constitutional right to truthfully tell u-blox's customers they may no longer be licensed. “U-blox publicized the expiration of its license in its public filings in this lawsuit … and then immediately issued a press release drawing attention to the lawsuit,” Steuer writes. “There is no basis for u-blox's position that InterDigital cannot inform its own licensees (or anyone else) of the very same facts that u-blox itself has been actively publicizing to the world.”

U-blox claims more than 6,100 customers on its website, InterDigital notes. If a TRO issued, “InterDigital would be at risk of contempt just by approaching any infringer to take a license, because the infringer could coincidentally be one of u-blox's 6,100+ customers,” Steuer contends.

The company shouldn't have to wait the five years or more that a judicial FRAND determination can require to get such licenses, he argues.

Feds: We'd Be Challenging FRAND Theory If We Weren't Shut Down

The DOJ's antitrust division let it be known last week that it takes issue with the antitrust portion of u-blox's suit—or that it would, if the government weren't partly shut down.

“Due to a lapse in funding that took effect at the Antitrust Division at midnight on January 4, 2019,” the government states in a notice of intent to file a statement of interest, “the division is prohibited by the Anti-deficiency Act, 31 U.S.C. Section 1341, from working at this time on such a Statement of Interest.”

It's not too surprising that the government would seek to weigh in. Antitrust chief Makan Delrahim has very publicly criticized the notion that SEP holders violate antitrust law by seeking injunctions against the sale of infringing goods.

The government's three-page filing states that u-blox's antitrust cause of action “does not properly sound in antitrust law.” It asks U.S. District Judge Cathy Ann Bencivengo to delay a hearing on u-blox's motion for a TRO until funding is restored—or that she order the DOJ to file a statement, which would then free it from the Anti-deficiency Act restrictions.

Antitrust is not the centerpiece of u-blox's case. The company moved to withdraw the antitrust cause of action for purposes of the TRO hearing, which is scheduled for Jan. 31. “As such, the issue raised in the notice of intent is moot,” u-blox argues.

EFF Wins Order Unlocking Uniloc Docs

One more update: Last week I wrote about Electronic Frontier Foundation'sattempt to pry open page upon page of redacted court documents in a patent dispute between Apple and Uniloc. EFF has won a resounding albeit conditional win from U.S. District Judge William Alsup. He's given Uniloc 10 days for appellate review before unsealing the documents.

“The scope of plaintiffs' requests is astonishing,” Alsup wrote in a Thursday order. “Plaintiffs seek to seal the majority of exhibits and large swaths of briefing and declarations. Even a cursory review reveals that plaintiffs' requested redactions contain non-sealable material.”

After suing Apple, Uniloc transferred the patents to Uniloc 2017, which RPX has reported is part of a $400 million IP fund run by Fortress Investment Group. Uniloc 2017 then sought to join the suit as co-plaintiff.

Apple moved to dismiss in October, contending the transfer unwound each party's standing. But almost the entire motion is under seal. Uniloc says the documents contain “sensitive, confidential and proprietary information,” which EFF slags as “rote justification.”

Alsup sided with EFF. “Plaintiffs' generalized assertion of potential competitive harm fails to outweigh the public's right to learn of the ownership of the patents-in-suit—which grant said owner the right to publicly exclude others,” Alsup wrote. He granted EFF's motion to intervene for the purpose of litigating any appeal to the Federal Circuit.

Alsup is famously solicitous of the public's right of access to court proceedings. The Federal Circuit's track record is more mixed. The court once held that the public's interest “does not extend to mere curiosity” about confidential information that's not central to a decision on the merits. More recently, it's been cracking down on overly redacted briefs in its own court.

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