While the pace has slowed, the past decade of U.S. Supreme Court decisions has reshaped patent law in important ways. The matters taken up included review of U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB) decisions, secret sales as prior art, damage awards for infringement of design patents, and venue in patent lawsuits. This article reviews the Court’s opinions in these areas and considers what the rulings mean for patent stakeholders.
REVIEW OF PTAB DECISIONS
After the enactment of the America Invents Act in 2011, patents issued by the U.S. Patent and Trademark Office (USPTO) can have their validity challenged at the PTAB, a tribunal within the USPTO. Whether a patented invention is new and nonobvious — requirements for patent issuance1 — can be questioned at the PTAB. In effect, the PTAB offers a second look at patents issued by the USPTO.2
Many aspects of a PTAB proceeding resemble a civil lawsuit. Administrative patent judges (APJs) typically oversee PTAB proceedings and issue decisions.3 While the secretary of commerce appoints APJs,4 a director appointed by the president with the advice and consent of the Senate oversees the USPTO.5 Before United States v. Arthrex, Inc.,6 the PTAB was the last stop within the executive branch; a director’s review could not take place. Parties could only seek review via the Court of Appeals for the Federal Circuit.7
In Arthrex, the Court held that unreviewable decision-making exercised by APJs within the executive branch was inconsistent with their appointment by the secretary of commerce as inferior officers.8 Rather, the authority wielded by APJs is more akin to that of principal officers, an appointment that is constitutional under the appointments clause only when made by the president and confirmed by the Senate.9 The nature of their responsibilities, in essence, is inconsistent with their method of appointment.10
Arthrex obtained a patent on a surgical device and sued fellow medical manufacturer Smith & Nephew for infringement.11 The dispute made its way to the PTAB in the form of an inter partes review proceeding.12 An APJ panel concluded that the patent was invalid, freeing Smith & Nephew from infringement.13 Arthrex appealed to the Federal Circuit, and argued that APJs were principal officers and their appointment by the secretary of commerce was unconstitutional.14 The Federal Circuit largely agreed.
In its ruling, the Supreme Court found that the APJs’ power to render decisions without review by a superior officer was incompatible with their status as inferior officers.15 The constitutional issue can be resolved, the Court explained, by subjecting APJ decisions to review by the USPTO director, a properly appointed principal officer.16
Indeed, the Arthrex decision ushered in a new process that provided directorial review of PTAB decisions. Dissatisfied parties can now request review of APJ decisions by the USPTO director.
SECRET SALES ARE STILL PRIOR ART
The America Invents Act (AIA) precludes patenting an invention “on sale, or otherwise available to the public” more than one year before the filing date.17 This is known as the on-sale bar, and every patent statute since 1836 has included a version of the on-sale bar.18 Prior to the AIA, it was established law that selling an invention to a third party could trigger the on-sale bar even if the on-sale activity was not made public.19 These types of activities are referred to as secret sales.20 The AIA’s addition of the phrase “or otherwise available to the public” raised doubts about whether secret sales still qualified as prior art.
In 2019, the Supreme Court probed this issue in Helsinn v. Teva.21 Helsinn, which had developed a drug for treating chemotherapy-induced sickness,22 signed agreements in 2001 with a third party to market and sell the drug.23 The agreements were public, but details regarding the drug were confidential.24 In 2003, Helsinn filed a provisional patent application covering its drug.25 Over the next decade, Helsinn filed several patent applications that claimed priority to the 2003 date of the provisional application.26 Helsinn later sued Teva for patent infringement.27 In its defense, Teva argued Helsinn’s drug was on sale for more than a year before filing its provisional application.28
In its review, the Supreme Court presumed Congress adopted the pre-AIA judicial interpretation of on-sale when it retained the same language in the AIA,29 emphasizing that the addition of “or otherwise available to the public” was not enough to alter the meaning of a reenacted term and “would be a fairly oblique way” for Congress to overturn an established body of law.30 The Court held that “an inventor’s sale of an invention to a third party who is obligated to keep the invention confidential can qualify as prior art” under the AIA.31
The Helsinn decision is a reminder that the timing for filing patent applications is crucial. When developing a product, it is important to file patent applications early — and before any activity that may constitute a sale or offer for sale.
TOTAL PROFITS FOR DESIGN PATENT INFRINGEMENT
Design patents protect ornamental aspects of an invention rather than functional aspects, which are protected by the more widely known utility patents.32 Distinctive to design patent infringement, the Patent Act makes it unlawful to make or sell an “article of manufacture” to which a patented design is applied and makes an infringer liable “to the extent of his total profit”33 — long an attractive trait of their procurement and viewed as a meaningful deterrence to infringers.
Prior to 2016, infringers would have to disgorge all profits on the sale of a product even when the design patent protected a mere portion of the product and, hence, only that portion of the product infringed.34 But in Samsung v. Apple, the Supreme Court read the relevant section of the Patent Act differently by finding that an “article of manufacture” for a multicomponent product could be the product sold to consumers as well as a component of that product.35 Under the reading, an infringer’s “total profit” need not be assessed based on the end product embodying a protected component, and could be assessed based on only the protected component.36
The dispute involved several design patents covering certain aspects of Apple’s iPhone.37 One of the patents (reproduced in the image below) protected the front face of the device while leaving the rear portion outside of the protected design.
A lower court found Samsung’s smartphones infringed, and Apple was awarded $399 million in damages, the total profit made from sales of the infringing smartphones.38 An appeals court affirmed the award, but the Supreme Court granted certiorari and reversed.39
The Court ruled that “reading ‘article of manufacture’ in § 289 [i.e., the relevant section of the Patent Act] to cover only an end product sold to a consumer gives too narrow a meaning to the phrase.”40
The holding in Samsung v. Apple meant that design patent infringers will not always have to give up all profits from their end products when the design patent only protects a component of those end products. For multicomponent products, the case serves as a reminder to consider design patent protection of varied scope — for the overall product and components of the product.
PATENT VENUE AFTER TC HEARTLAND
A patent owner must consider many factors when determining possible venues in which to file suit after the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC.41 TC Heartland, which was headquartered in Indiana and operated under Indiana law,42 was sued by Kraft for patent infringement in the District of Delaware.43 TC Heartland argued that the venue was improper because it neither resided in Delaware nor did business there44 and its only connection was allegedly shipping the infringing products there.45
The patent venue statute, 28 USC 1400(b), provides that venue is proper “where the defendant resides” or “where the defendant has committed acts of infringement and has a regular and established place of business.” In 1957, the Supreme Court held that a domestic corporation resides only in its state of incorporation for purposes of the patent venue statute.46 Later in VE Holding Corp. v. Johnson Gas Appliance Co., the Federal Circuit broadened this definition, holding that “resides” in the patent venue statute carried the same meaning as in the general venue statute, 28 USC 1391(c) (2), which defines “resides” as any place “defendant is subject to the court’s personal jurisdiction.”47
In TC Heartland, the Supreme Court once again considered the question of where a domestic corporation resides for venue purposes in patent lawsuits.48 The Court reviewed the legislative history of patent and general venue statutes; Congress amended the general venue statute in 2011 to read that “[e]xcept as otherwise provided by law ... this section shall govern the venue of all civil actions.”49 This language shows that Congress contemplated that other venue statutes may retain a different definition of “resides.”50 The Supreme Court reversed the Federal Circuit, ruling that a domestic corporation “resides” only in its state of incorporation for purposes of the patent venue statute.51
The holding in TC Heartland highlights the importance of investigating the location and extent of a defendant’s business activities to determine where venue may be proper under the tightened venue restrictions.
CONCLUSION
The U.S. Supreme Court remains a significant arbiter of patent law jurisprudence, continuing to take on important matters that have reordered this area of law. Review of PTAB decisions, prior art in the form of secret sales, design patent infringement remedies, and venue in patent lawsuits are among the topics affected. Whether the pace of change continues is uncertain. Still, patent stakeholders — already accustomed to change — are wise to ready themselves for more to come.