Welcome to Skilled in the Art. I'm Law.com IP reporter Scott Graham. Today I've got a few observations from this week's CIPSC conference at Santa Clara University. Plus, battle lines are starting to emerge at the Federal Circuit over the proper remedy for the PTAB's Appointments Clause problem. The Supreme Court has a new trademark case on its docket. And Irell & Manella has scored a $200 million verdict in a patent infringement suit against Wells Fargo. As always you, can email me your feedback and follow me on Twitter.

Unified Patents CEO Kevin Jakel.

Runs, Hits and Patents Left on Base

Unified Patents and Santa Clara University's High Tech Law Journal presented their annual CIPSC conference on the university campus Wednesday. IP counsel from Google, Facebook, HP, Microsoft and Twitter were among the presenters. There was surprisingly little mention of the T word. Instead, Unified CEO Kevin Jakel diplomatically framed the theme as "unsubstantiated monetization."

I've played some fantasy baseball in my day, so a highlight of the conference was hearing Bill Harmon, IP director at Uber Technologies, apply Moneyball style sports analytics to patents.

"Just like the A's want to figure out what it is that really wins baseball games," Harmon said, "we need to figure out what is it that really helps a patent win at the negotiating table or in the courtroom."

In baseball, the Oakland A's figured out that what maps to winning wasn't necessarily home runs, but base hits, walks, or any other method of getting the team more at-bats.

Similarly, Uber has worked with an AI company to come up with a mechanism for ranking patent claims based on their breadth. "We figured out a claim breadth that correlates with doing well at trial," he said. While not "the be all and end all," it's one metric for evaluating patent strength.

The company has also looked at what correlates with getting an IPR petition instituted at the Patent Trial and Appeal Board. "The number of office actions didn't correlate. The length of the claim didn't correlate," nor did many other factors. "But the rigor the examiner applied, what their allowance rate was versus their peers in their art unit, actually turned out to be very important."

"And so you can take those two things now as our base hit," Harmon said. "That's one set of filters" the company employs when gauging likely outcomes.

PTAB Judge: Not My First Appointments Rodeo

PTAB lead judge Kevin Turner was a featured guest at CIPSC. Unified's chief IP counsel, Jonathan Stroud, started off a conversation between the two with "the elephant in the room"—the Federal Circuit's recent decision on the constitutionality of PTAB judge appointments.

Unified estimates that some 200 cases could be subject to remand to the PTAB under the Federal Circuit's Arthrex decision, Stroud said, though some parties will likely settle rather than insist on a do-over before a different panel. Turner said he believes the number is closer to 150. By comparison, the Supreme Court's 2018 SAS Institute decision ended up requiring the board to revisit approximately 600 institution decisions.

Either way, "It's been busy" at the board as the judges prepare for a slew of remands, Turner said.

Turner didn't sound phased at all. He's been on the board long enough to remember when law professor John Duffy criticized the board's appointments on different grounds, resulting in a congressional fix in 2008.

"I've been at the board for 12 years, and so I've already been told that I was improvidently appointed before," Turner said. "So this is not necessarily un-tilled ground."

He said whether Arthrex might apply beyond AIA trials to ex parte appeals is "an interesting question. The Arthrex decision was focused on trials, but that's only part of what we do."

Stroud clarified that there are many fewer ex parte appeals pending at the Federal Circuit, so the number of remands would likely be far lower than for AIA trials.

Professor Colleen Chien (Photo by Jason Doiy/ALM).

In Search of Patent Quality

Fresh off her testimony last week before the Senate Judiciary IP Subcommittee, Santa Clara University law professor Colleen Chien shared with the conference some of the ideas she presented there on improving patent quality.

Chien, who advised the Obama White House on IP and innovation, noted that the USPTO has introduced a number of pilot programs aimed at patent quality. She suggested the office could more effectively measure the results of those projects. "This idea of controlled testing and piloting and experimentation and optimizing is now ubiquitous in the private sector," she said, and those same tactics could be used in the public sector.

Drawing upon research on the differences between the European and US Patent offices, Chien also proposed several additional pilots, including a "search first" system in which an applicant receives the office's complete prior art search results before deciding whether to invest in a full examination. The European Patent Office uses such a system, and though it grants patents at a lower rate, "there is a higher level of satisfaction, I think because of the control applicants have," she said.

Chien also suggested that the PTO consider issuing defensive-only patents that could be asserted only as part of a counterattack, and that the office engage more rigorously on the lower success rate for female patent applicants. Finding those "lost Marie Curies" would be another way to improve patent quality, she said.

Unified's Stroud mentioned that Unified Patents has recently launched its own Patent Quality Initiative.

High Court Eyes Genericness of Dot.Com Marks

Now onto non-CIPSC news …

The Supreme Court agreed today to review a Fourth Circuit decision that found BOOKING.COM to be a descriptive mark worthy of trademark registration.

The PTO petitioned to the Supreme Court, arguing that "booking" is a generic term, and that adding a top-level domain cannot convert it to a descriptive term worthy of registration. The Federal Circuit has held repeatedly that marks like HOTELS.COM and LAWYERS.COM are generic, and Judge James Wynn Jr. dissented from the Fourth Circuit's decision, the solicitor general's office pointed out in its cert petition.

Wynn wrote that the decision "conflicts with the determination that every other court has reached" in similar cases, and will discourage competitors from using the generic names of their goods or services in their own domain names.

Booking.com is represented by Foley & Lardner. The company presented evidence that 75% of consumers recognize BOOKING.COM as a brand name. There's no evidence that consumers use "BOOKING.COM" generically, and even the PTO admitted "that it is logically and grammatically impossible to use the name BOOKING.COM as a generic term for anything," Foley's Jonathan Moskin and Eoin Connolly wrote in their opposition in USPTO v. Booking.com.

Fourth Circuit Judges Robert King and Allyson Duncan had agreed. They concluded that because trademarks protect only the relevant service—in this case, hotel reservations—"protection over BOOKING.COM would not necessarily preclude another company from using, for example, carbooking.com or flightbooking.com."

The PTO didn't get any amicus support for its cert petition, but then again the government doesn't need amicus support to get cert granted.

Stormy Weather on PTAB Appointments Remedy

The good ship Arthrex is starting to encounter choppy seas at the Federal Circuit.

The appellate court served up its most consequential patent decision of 2019 last week, ruling in Arthrex v. Smith & Nephew that the 275 judges of the PTAB weren't constitutionally appointed, and ordering new hearings for as many as 200 recent decisions.

But an attorney for a Wi-Lan subsidiary argued Monday that the court should have gone further and put all PTAB proceedings on ice until Congress can fix the problem (i.e. never). And two members of the court are now on record as saying the court went too far—that no new hearings are in order.

Arthrex is "inconsistent with binding Supreme Court precedent and creates a host of problems in identifying the point in time when the appointments became valid," Judge Timothy Dyk wrote in a concurring opinion Thursday in Bedgear v. Fredman Bros. Furniture Co. His opinion, joined by Judge Pauline Newman raises the odds that the Federal Circuit might have to hash out the appointments clause issue—or, more specifically, its remedy—in an en banc proceeding.

Judge Kimberly Moore wrote for a unanimous three-judge panel in Arthrex that PTAB judges are principal constitutional officers who should have been appointed by the president and confirmed by the Senate, rather than hired by the Secretary of Commerce. But the court can begin construing the Patent Act to give the PTO director power to remove PTAB judges without cause, making them inferior officers, Moore wrote. That means they're constitutional going forward, but that previous PTAB decisions that aren't yet final on appeal are subject to remand for a new hearing. As I wrote last week, Moore seemed to be trying to get the PTAB in compliance with a 2018 Supreme Court decision on the Appointments Clause while limiting the damage.

On Monday, Tensegrity Law Group's Matt Powers argued in Polaris Innovations v. Kingston Technologies that the PTO director must also have the authority to reverse PTAB decisions in order to meet Supreme Court precedents. Only Congress can provide that. "We do not agree that the Arthrex cure solves the problem," he told the court.

Judges Evan Wallach and Todd Hughes didn't sound ready to shut down the PTAB indefinitely. Hughes acknowledged that Arthrex is binding on other Federal Circuit panels, but he also had a lot of questions about the potential timing of en banc petitions. He mentioned that the Fifth Circuit ruled earlier this year that the Federal Housing Finance Agency was unconstitutionally structured without requiring the invalidation of prior agency actions.

Dyk pointed to the Fifth Circuit decision in his Thursday concurrence as well. He argued that Arthrex should be applied both prospectively and retroactively. Dyk and Newman signed onto the court's short per curiam decision remanding Bedgear to the PTAB, but they clearly aren't happy about it.

"The difficulty of identifying at what point in time the appointments became effective is evident," Dyk wrote. "Is it when [the] panel issues the decision, when the mandate issues, when en banc review is denied, when certiorari is denied, or (if there is an en banc proceeding) when the en banc court affirms the panel, or (if the Supreme Court grants review) when the Supreme Court affirms the court of appeals decision?"

The third member of the panel, Judge Kara Stoll, did not join the concurring opinion.

Photo by Jason Doiy/ALM.

Judge Gilstrap and the PTAB Tag-Team Wells Fargo

For the second time in 18 months, an Irell & Manella team featuring partner Jason Sheasby has won a nine-figure patent infringement verdict in the Eastern District of Texas.

Last year it was a $400 million jury verdict for KAIST IP (which, it should be noted, remains pending post-trial motions). This week, it was a $200 million jury verdict for United Services Automobile Association (USAA) against Wells Fargo Bank.

USAA's patented technology allows customers to use their mobile devices to photograph and then deposit checks electronically. Having won a Federal Circuit decision a few years back on the eligibility of check-scanning software, Wells Fargo naturally made Section 101 a centerpiece of its defense. The bank and its attorneys at Winston & Strawn argued that taking a photograph is an abstract idea, and that sending photos of checks to banks "was old hat by August 2009."

U.S. District Judge Rodney Gilstrap rejected Wells Fargo's motion last month, and did so with the support of his good friends at the Patent Trial and Appeal Board. The PTAB turned away Wells Fargo's CBM petition in May, ruling that USAA's patent represents a technical solution to a technical problem: capturing an image of sufficiently high quality, consistent with federal banking standards, so that a machine can read the data. A separate PTAB panel also rejected a Wells Fargo IPR petition in August.

Gilstrap quoted several times from the CBM decision, including its conclusion that Wells Fargo "misidentifies the disclosed problem by oversimplifying it."

USAA's vice president of corporate development, Nathan McKinley, put other banks on notice in a written statement. "We hope the industry acknowledges this verdict as further evidence of the enforceability of these patents," he said.

Sheasby and partner Lisa Glasser headed up Irell's team along with associates Tony Rowles, Andrew Strabone and Benjamin Manzin-Monnin. Rowles and of counsel Michael Fleming represented USAA at the PTAB. Parker, Bunt & Ainsworth provided local counsel.

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