Digitech – In this first patentable subject matter case decided by the Circuit since CLS, the panel affirms a decision by the district court and rules that claims defining a device profile and a method for creating a device profile within a digital image processing system are not patent eligible under 35 U.S.C. § 101.
Troy – The Circuit vacates and remands a district court decision in an interference action because the district court erred in refusing to consider evidence that was not presented in the PTO but was pertinent to the determination of priority.
Align Technology – The Circuit reverses and remands the ITC's review of an ALJ's "order," since that order was not either a "decision" or an "initial determination," both of which are reviewable by the ITC.
Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., et al., Fed. Cir. Case 2013-1600-18, (July 11, 2014)
Digitech owns a patent directed to the generation and use of an "improved device profile" that describes spatial and color properties of a device within a digital image processing system. Digitech filed infringement suits against 32 defendants, asserting claims directed to a "device profile," and claims directed to methods for generating a "device profile." The district court granted the defendants' motions for summary judgment of invalidity, finding all of the asserted claims were subject matter ineligible.
Device Profile Claims
Digitech argues on appeal that its device profile claims recite eligible subject matter under section 101 because the claims define a tangible object that is an "integral part of the design and calibration of a processor device within a digital image processing system."
Independent claims 1 and 26 describe a device profile as a collection of information; specifically, a description of a device dependent transformation of spatial and color information:
1. A device profile for describing properties of a device in a digital image reproduction system to capture, transform or render an image, said device profile comprising:
first data for describing a device dependent transformation of color information content of the image to a device independent color space; and
second data for describing a device dependent transformation of spatial information content of the image in said device independent color space.
26. A device profile for describing properties of a de- vice in a digital image reproduction system to capture, transform or render an image, said device profile comprising data for describing a device dependent transformation of spatial information content of the image to a device independent color space, wherein through use of spatial stimuli and device response for said device, said data is represented by spatial characteristic functions.
In an opinion written by Judge Reyna, the Circuit first set forth the patentable subject matter tests it must follow. Pursuant to section 101, an inventor may obtain a patent for "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." For all categories except process claims, the eligible subject matter must exist in some physical or tangible form. To qualify as a machine under section 101, the claimed invention must be a "concrete thing, consisting of parts, or of certain devices and combination of devices." Burr v. Duryee, 68 U.S. 531 (1863). To qualify as a manufacture, the invention must be a tangible article that is given a new form, quality, property, or combination through man-made or artificial means. Diamond v. Chakrabarty, 447 U.S. 303 (1980).
Digitech argues that a device profile is subject matter eligible because it is "hardware or software within a digital image processing system" and exists as a tag file appended to a digital image. The panel rejects this argument, ruling that Digitech's position is not supported by the claim language, which does not describe the device profile as a tag or any other embodiment of hardware or software. The claims' only description of the device profile is that it comprises "first data for describing" color information and "second data for describing" spatial information. The panel notes that data in its ethereal, non-physical form is simply information that does not fall under any of the categories of eligible subject matter under section 101. The panel therefore holds, in its de novo review of these claims, that the device profile claims do not encompass patent-eligible subject matter.
Digitech also argues that the asserted method claims are patent eligible because they describe a process for generating a device profile that is specifically tied to a digital image processing system and is integral to the transformation of a digital image.
The panel first notes that the Supreme Court recently reaffirmed that fundamental concepts, by themselves, are ineligible abstract ideas, Alice Corp. Pty. Ltd. v. CLS Bank Int'l., 134 S. Ct. 2347 (2014), but, in determining whether a process claim recites an abstract idea, "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection." Diamond v. Diehr, 450 U.S. 175 (1981). A claim may be eligible if it includes additional inventive features such that the claim scope does not solely capture the abstract idea. Alice Corp. But a claim reciting an abstract idea does not become eligible "merely by adding the words ‘apply it.'" Bancorp Servs., LLC v. Sun Life Assurance Co. of Can., 687 F.3d 1266 (Fed. Cir. 2012).
Method claim 10 is exemplary and claims a process of organizing information through mathematical correlations and is not tied to a specific structure or machine.
10. A method of generating a device profile that describes properties of a device in a digital image reproduction system for capturing, transforming or rendering an image, said method comprising:
generating first data for describing a device dependent transformation of color information content of the image to a device independent color space through use of measured chromatic stimuli and device response characteristic functions;
generating second data for describing a device dependent transformation of spatial information content of the image in said device independent color space
through use of spatial stimuli and device response characteristic functions; and
combining said first and second data into the device profile.
The claim recites a process of taking two data sets and combining them into a single data set, the device profile. The two data sets are generated by taking existing information—i.e., measured chromatic stimuli, spatial stimuli, and device response characteristic functions—and organizing this information into a new form. According to the panel, claim 10 thus recites an ineligible abstract process of gathering and combining data that does not require input from a physical device. Without additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent eligible. "If a claim is directed essentially to a method of calculating, using a mathematical formula, even if the solution is for a specific purpose, the claimed method is nonstatutory." Parker v. Flook, 437 U.S. 584, 595 (1978).
Troy v. Samson Manufacturing Corp., Fed. Cir. Case 2013-1565 (July 11, 2014)
In an interference between Troy's '451 patent and Samson's '665 application in which Samson was the senior party, the Patent Trial and Appeal Board awarded priority to Samson because Troy failed to prove actual reduction to practice prior to Samson's earliest date and rejected Troy's claims of inurement and derivation because he did not establish prior conception. The Board entered judgment against Troy and ordered all claims of the '451 patent cancelled. Troy challenged the Board's decision in district court under § 146, where he proffered new evidence of prior conception at the various conception dates he asserted at the Board, and new evidence of actual reduction to practice in February 2004. He also introduced new evidence of actual reduction to practice in July 2004—the Chin affidavit and the Conley deposition testimony. Additionally, Troy argued that Samson engaged in "inequitable conduct" by including in its provisional application confidential drawings that Samson misappropriated from Troy. Troy contended that he proved in state court that Samson misappropriated his company's trade secrets, which included the subject matter of the count. He argued that this state court finding of misappropriation established that Samson derived its alleged invention from Troy.
The district court affirmed the Board's order canceling all claims of Troy's patent, ruling that the Chin affidavit or the Conley deposition were barred because "a party is generally precluded from raising issues or theories of law in a section 146 proceeding that were not previously raised before the board." The court also rejected as a new issue Troy's argument that Samson used Troy's confidential proprietary drawings in its provisional application, which Troy alleged demonstrated Samson's inequitable conduct.
The district court acknowledged that Troy proved in state court (1) that Samson improperly submitted to the PTO as its own at least one drawing of Troy's and (2) that Samson violated a confidentiality agreement with Troy Industries in the course of developing its patented inventions, and noted that these actions may constitute inequitable conduct by Samson. But the district court concluded that "neither action proves Troy conceived of all the elements of the Count and timely reduced them to practice," so the district court entered judgment against Troy.
Troy challenges the district court's refusal to consider evidence pertaining to issues not raised before the Board. He contends that the Supreme Court rejected the rule against new issues when it held that "there are no limitations on a patent applicant's ability to introduce new evidence in a § 145 proceeding beyond those already present in the Federal Rules of Evidence and the Federal Rules of Civil Procedure." Kappos v. Hyatt, 132 S. Ct. 1690, 1700–01 (2012).
In its amicus brief, the PTO argues that the Circuit's opinion in Hyatt "expressly endorsed the district court's ability to prohibit parties from raising new issues during its review of Board decisions." (citing Hyatt v. Kappos, 625 F.3d 1320, 1335 (Fed. Cir. 2010) (en banc), aff'd, 132 S. Ct. 1690). The PTO argues that the Supreme Court's affirmance of Hyatt did not overrule the Circuit's holding regarding new issues because the Hyatt case concerned only the presentation of new evidence on issues that were raised before the Board.
The panel concludes that the Supreme Court's decision in Hyatt permits new evidence to be admitted without regard to whether the issue was raised before the Board. Analyzing the language of § 145, the Supreme Court concluded: "By its terms, § 145 neither imposes unique evidentiary limits in district court proceedings nor establishes a heightened standard of review for factual findings by the PTO." The Court expressly rejected the notion that administrative law principles could form the basis for limiting the evidence admissible in a § 145 proceeding: The Supreme Court continued: "We reject the Director's contention that background principles of administrative law govern the admissibility of new evidence. Consequently, the district court must make its own findings de novo and does not act as the ‘reviewing court' envisioned by the APA. We also conclude that the principles of administrative exhaustion do not apply in a § 145 proceeding."
Samson also argues that even if Hyatt requires that the district court admit such new evidence, this holding is applicable to § 145 actions only. Samson argues that the proceeding at issue in this case, an interference arising under § 146, ought not be governed by the same rules. Troy responds that there is no meaningful difference between § 145 and § 146 and that both types of proceedings ought to be subject to the same evidentiary rules. The PTO argues that, in its view, our ruling on new issues will apply to both § 145 and § 146; it contends that any distinction on admissible evidence between the two sections would be "difficult" to make.
However, the panel noted that, exactly like § 145, § 146 provides for a "remedy by civil action." Section 145 further states that the district court "may adjudge that such applicant is entitled to receive a patent for his invention as the facts in the case may appear." It is true that § 146 does not contain this "adjudge" language. Nonetheless, the panel concludes that the language of § 146 is stronger in its indication that new evidence be admissible. Section 146 explains: "In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party . . . [and] when admitted shall have the same effect if originally taken and produced in the suit." By its express terms, the PTO record is not required to be part of the § 146 civil action at the district court. The panel interprets this language as contemplating a fresh start in the district court. Moreover, § 146 expressly states that the parties have the right to take further testimony. Section 145 has no explicit mention of the permissibility of additional evidence. Based upon the language of the statute, the panel sees no basis for concluding that new evidence is permitted in § 145, but not in § 146, and therefore concludes that the Supreme Court's decision in Hyatt applies with equal force to both § 145 and § 146 actions.
Turning to the case before it, the panel vacates the district court's decision and remands with instructions to consider the new evidence and arguments raised by Troy in his district court filings.
While the AIA eliminated interferences for patent applications filed after March 16, 2013, it is still possible to have interferences declared as to applications and patents filed prior to that date, as long as the interference claim is submitted within one year of issuance of a patent or within one year of the publication of an application. Interferences in which priority of invention is determined will therefore be with us for at least the next several years, so this decision remains pertinent.
Align Technology, Inc. v. International Trade Commission, et al., Fed. Cir. Case 2013-1240, -1363 (July 18, 2014)
This case arises out of a proceeding before the Commission to enforce a Consent Order entered into by the complainant Align and respondent OrthoClear.
Align develops, manufactures, and markets clear aligners to treat malocclusion—i.e., teeth misalignment. Align conceived of and developed its clear aligners, which use a series of clear dental aligners—"incremental positioning adjustment appliances"— that are worn sequentially over a fixed time period to adjust the position of a patient's teeth. To design these aligners, dental professionals generate complex three-dimensional digital models of each incremental configuration for each aligner in order to create a "digital data set," which is used to manufacture a series of successive aligners to be worn by a patient. Align's asserted patents are directed to various methods and orthodontic treatment plans using these digital data sets.
In 2005, Align's founder and former Chief Executive Officer, Muhammad Chisti, founded OrthoClear and used former Align employees in Pakistan and the United States to manufacture and sell dental aligners. Believing OrthoClear to be infringing its patents and using its trade secrets, Align filed a complaint with the ITC.
In August 2006, OrthoClear negotiated a global settlement with Align that required OrthoClear to assign its entire intellectual property portfolio to Align, to agree to entry of the Consent Order, and to file a joint motion to terminate the investigation. The ALJ granted the joint motion, and the Commission entered the Consent Order and terminated the underlying investigation. The Consent Order prohibited from importation into the U.S. the incremental dental positioning adjustment appliances manufactured by or for OrthoClear referenced in the complaint and any other articles manufactured in violation of the patents or trade secrets described therein. The Consent Order also included successor and aiding-and-abetting provisions that extended the importation prohibition beyond OrthoClear to its officers, directors, agents, servants, employees, successors and assigns, and all persons, firms, or corporations acting on its behalf.
After suspecting that OrthoClear and others were violating the Consent Order, Align filed a new complaint, this time for an enforcement proceeding, and the Commission instituted an investigation against various ClearCorrect companies that were formed by one of OrthoClear's customers shortly after OrthoClear ceased its operations and transferred its intellectual property and customers' patients to Align. The new complaint alleged that ClearCorrect Pakistan creates the digital data sets used to create the molds on which the aligners are formed, and then imports the digital data sets by electronic transmission to ClearCorrect USA, who manufactures and sells aligners in the U.S.
The Commission instituted the investigation and recommended that the ALJ consider whether the accused digital datasets identified are within the scope of the articles covered by the Consent Order, noting that the ALJ's decision should be issued in the form of an "initial determination." Rather than issuing an initial determination, the ALJ issued Order No. 57, finding that "the accused digital datasets identified in the enforcement complaint are within the scope of the term ‘articles manufactured' as that term appears in the Consent Order. The ALJ therefore denied ClearCorrect's motion to terminate, and scheduled the trial.
ClearCorrect sought the Commission's review of Order No. 57, and Align opposed the petition for review, arguing that the ALJ correctly interpreted the Consent Order, and that the Commission should deny review because Order No. 57 was a non-final order, not subject to review by the Commission unless ClearCorrect moved for interlocutory appeal, which they did not. The Commission ultimately concluded that Order No. 57 constituted an "initial determination," and thus was subject to its review. In January 2013, the Commission reversed Order No. 57 and terminated the enforcement proceeding, concluding that the accused digital data sets were not covered by the scope of the Consent Order "because the subject consent order did not contain an express provision prohibiting the electronic transmission of data."
The panel first described the standard of review as requiring it to set aside any findings or conclusions of the Commission that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." According to the panel, the Commission has broad authority to issue rules and regulations governing administration of its cases, but an agency must abide by its own regulations. At the time of the orders in question, the Commission's Rules of Practice and Procedure, 19 C.F.R. § 210.1, et seq., explicitly distinguished between rulings by the ALJ that must be issued as "initial determinations" and those that must be issued as "orders." The rules stated that the ALJ's rulings on motions "may not be appealed to the Commission prior to the administrative law judge's issuance of an initial determination," unless the requirements for interlocutory review are satisfied. Rule 210.42(c) requires that the ALJ "shall grant the following types of motions by issuing an initial determination or shall deny them by issuing an order."
One of the types of motions covered by Rule 210.42(c) is a motion for termination. Because ClearCorrect filed a motion for termination under 19 C.F.R. § 210.21, which the ALJ denied, the ALJ properly denied that motion via an order required by Rule 210.42(c), not as an initial determination.
According to the panel, whether an ALJ's ruling issues as an initial determination or an order is important because it determines whether the Commission may review the ALJ's decision. The ITC's regulatory regime contemplates that an ALJ's grant of certain kinds of relief, such as to terminate a proceeding or permit a party to intervene, justifies immediate Commission review. But, at the same time, the regulations treat the denial of such requests for relief as not warranting immediate review. Moreover, the regulations provide a mechanism for interlocutory review of Order No. 57 that ClearCorrect could have used, but did not. Therefore, the rules clearly prohibited the Commission from reviewing orders like this one. The Commission exceeded its authority by reviewing the order below. The ALJ issued an order (not an initial determination) denying (not granting) ClearCorrect's motion to terminate the investigation. This order was not subject to Commission review under Rule 210.24.
The Circuit therefore vacates the Commission's decision and remands for further proceedings.