from the the-loophole-lives… dept
It’s been many, many years since we were regularly covering what we referred to as the ITC loophole in patent enforcement. The issue was that patent holders could get two totally separate at bats to try to force a company that was actually innovating to pay up over dubious patents. They could go to court, of course, by filing a patent lawsuit. But they could also go to the International Trade Commission, claiming infringement, and if the ITC agreed, it could ban the import of products it claimed was covered by that patent. While the ITC couldn’t force a company to pay fees for infringement like a federal court could, it was effectively just as bad, because once an import ban was in place (since most products are manufactured outside the US), the companies would be forced to negotiate a huge settlement just to keep their business going.
Thankfully, the worst parts of this “loophole” were at least somewhat limited a decade ago with the America Invents Act patent reform, which introduced the concept of the Inter Partes Review (IPR), in which anyone could petition the Patent Trial and Appeals Board (PTAB) to review a patent to determine if a mistake was made in the original granting. While that didn’t stop the use of the ITC, it created a more rapid path to invalidating a patent, which in theory was supposed to stop proceedings under the ITC. From the law:
The petitioner
in an inter partes review of a claim in a patent under this
chapter that results in a final written decision under section
318(a), or the real party in interest or privy of the
petitioner, may not assert either in a civil action arising in
whole or in part under section 1338 of title 28 or in a
proceeding before the International Trade Commission under
section 337 of the Tariff Act of 1930 that the claim is invalid
on any ground that the petitioner raised or reasonably could have
raised during that inter partes review.
Patent holders (mostly trolls, but practicing entities as well) have tried to kill the IPR process, but their efforts to get the Supreme Court to throw it out failed. Twice.
Anyway, the ITC loophole still exists, but is (thankfully) less potent.
However, it appears to have bitten Apple, and in the process demonstrated the serious problems with the system. A company named AliveCor claimed that Apple was infringing on three of its patents with certain Apple Watch features related to tracking heart rates. AliveCor filed its complaint with the ITC directly, seeking an injunction blocking the import of Apple Watches into the US. The patents in question are US Patents 10,638,941, 10,595,731, and 9,572,499.
In response, Apple initiated an IPR process, claiming that all three patents were invalid and should never have been granted. At the beginning of December, the PTAB ruled in Apple’s favor, finding all three patents to be invalid. For all three patents, Apple pointed to two earlier patents, referred to in the proceedings as the Shmueli invention and the Osorio invention. And with all three patents, the PTAB found that combining the ideas of Shmueli and Osorio would be an obvious thing for someone skilled in the art to do, rendering AliveCor’s patents invalid as obvious. Here’s part of one of the invalidations (though they’re all pretty similar):
For the reasons set forth above, we find that the combination of
Shmueli and Osorio discloses or renders obvious the arrhythmia detection
and confirmation recited in the challenged claims. We also find that one of
ordinary skill in the art would have been motivated to combine the cited
references with a reasonable expectation of success in arriving at the
challenged claims. Patent Owner does not specifically challenge any other
aspect of Petitioner’s showing with respect to Ground 1. Having reviewed
the argument and evidence of record, we find that Petitioner has shown by a
preponderance of the evidence that claims 1, 5, 7–9, 11, 12, 16, 18–20, 22,
and 23 are unpatentable as obvious in view of Shmueli and Osorio.
So… the patents are invalid. In theory, that should kill the ITC process, but nope. As AliveCor noted in a press statement after the USPTO invalidated these patents, it apparently didn’t matter, as the ITC could still issue an injunction:
AliveCor is deeply disappointed and strongly disagrees with the decision by the PTAB and will appeal. The PTAB and ITC are two, separate independent bodies and will make their own separate independent decisions. We look forward to the separate Final Determination from the ITC expected December 12 and are cautiously optimistic based on the Initial Determination for AliveCor in June of this year.
And, indeed, last week (a few weeks later than expected) the ITC issued a final determination in favor of AliveCor, and issued an injunction that would block Apple from importing Apple Watches, though it has suspended the enforcement of the injunction while President Biden gets to review the ruling and while waiting for a “final resolution” from the PTAB on the validity of the patents.
Notice is hereby given that the U.S. International Trade Commission (“Commission”) has determined that there is a violation of section 337 in the above-captioned investigation. The Commission has further determined to issue a limited exclusion order and a cease and desist order and to set a bond in the amount of $2 per unit of covered articles imported or sold during the period of Presidential review. The enforcement of these orders, including the bond provision, is suspended pending final resolution of the U.S. Patent and Trademark Office, Patent Trial and Appeal Board’s (“PTAB”) Final Written Decisions finding the asserted patent claims unpatentable.
The Presidential review bit is important here, because when the ITC issues one of these injunctions, the President is actually allowed to step in and overturn the ruling. In fact, President Obama did exactly that in a similar scenario a decade ago after the ITC issued an injunction on iPhones and iPads over some Samsung patents.
One hopes that Biden will do the right thing and knock out this attempt at hindering basic innovation. Especially given that the USPTO has already found the patents invalid, even if AliveCor is appealing.
Filed Under: apple watches, heart tracking, injunctions, ipr, itc loophole, joe biden, patents, ptab
Companies: alivecor, apple
