As 2024 draws to a close, several crucial developments — some aimed at modernizing long-standing legal practices, others addressing emerging challenges — have reached patent law.
Perhaps most notably — and by no means patent law-specific — a major U.S. Supreme Court ruling in Loper Bright Enterprises v. Raimondo eliminating Chevron deference gives courts more authority over statutory interpretation traditionally handled by agencies like the Patent Trial and Appeal Board and the U.S. International Trade Commission.
While full ramifications are yet unknown, the ruling is expected to shift dynamics in how patent disputes are resolved and increase the predictability of litigation outcomes. On top of all of this, it is fair to expect changes in how the new administration will view the role of the PTAB, further adding to near-term uncertainty.
Meanwhile, emerging technologies like artificial intelligence continue to influence patent doctrine, as questions around how AI can be protected under patent-eligibility guidelines, and the utilization of AI in the inventing process, continue to challenge traditional frameworks domestically and worldwide.
On the design patent side, a May U.S. Court of Appeals for the Federal Circuit decision in LKQ Corp. v. GM Global Technology Operations LLC harmonized the obviousness test for design and utility patents, providing a more consistent rubric for evaluating patent claims, while upping the ante for design protection.
Each of these developments — some of the many highlights from a busy year in the intellectual property world — is discussed below.
The End of Chevron Deference
One of the most impactful Supreme Court rulings of the year — and one which may make significant waves moving forward — came down in Loper Bright Enterprises v. Raimondo.
Briefly, the court in Loper overruled the long-standing Chevron doctrine that, under the Administrative Procedure Act, reviewing courts must generally defer to an agency's reasonable resolution of ambiguity or gap in its governing statute, the so-called Chevron deference, rather than interrogate the question directly. Under the new standard, a reviewing court must determine for itself — using independent judgment — the single best resolution of any question of law, subject to specific caveats, including congressional delegation and, crucially, stare decisis.
Approximately six months later, it's yet unclear clear what, if any, major changes Loper will have on patent practice.
Litigants before the ITC challenged the commission's interpretation of when it can and cannot exclude products from U.S. markets under Section 337 of the 1930 Tariff Act. The litigants, in so doing, hoped to overturn the 2015 Federal Circuit decision in Suprema v. ITC, which affirmed the ITC's authority to find a Section 337 violation based on postimportation activity, but were stymied by stare decisis and the Federal Circuit's denial of a litigant's petition of rehearing en banc.
In refusing the rehearing in Sonos Inc. v. ITC in September, the court effectively ended what could have quickly thrust Loper into the patent spotlight.
There has been a similar presence of smoke but absence of fire at the U.S. Patent and Trademark Office. One reason for the tepid pace may be that all USPTO (including PTAB) decisions — as well as nearly all patent rulings — are reviewable only by the Federal Circuit. Thus, existing Federal Circuit rulings, including those applying Chevron principles that are not upended due to Loper's stare decisis carveout, remain in force.
Moreover, the Federal Circuit's existing jurisdiction over patent questions may help meter the rampant forum shopping and other litigation practices that have arisen post-Loper across other fields of administrative law.
Nonetheless, new challenges for the USPTO exist in a post-Loper world; the PTAB's discretionary denial framework from NHK Spring Co. Ltd. v. Intri-Plex Technologies Inc. in 2018 and Apple Inc. v. Fintiv Inc. in 2020 faces intensified scrutiny following the end of Chevron deference.
In October, a group of IP advocates filed an amicus brief in Apple Inc. v. Vidal, urging the Federal Circuit to uphold the district court's ruling and chastising the USPTO for evading statutory rulemaking procedures, including a failure to use notice-and-comment rulemaking, extending its authority beyond that permitted under the Administrative Procedure Act. Especially given the PTAB's NHK/Fintiv framework's prominence in fast-moving jurisdictions like Texas, and its effect on expedited Hatch-Waxman litigation, it's distinctly possible that NHK/Fintiv could be an early test case for how courts approach agency overreach post-Chevron.
All the while, an 11-10 vote in November from the Senate Judiciary Committee advanced the Promoting and Respecting Economically Vital American Innovation Leadership, or PREVAIL, Act — which seeks to substantially reshape the U.S. patent system by modifying the protocol of the PTAB — for full Senate consideration.
The reforms proposed under the PREVAIL Act are substantial, and include in part a requirement of standing for PTAB challengers — that is, requiring that would-be PTAB parties have been sued or threatened with a patent infringement lawsuit before filing a PTAB challenge.
Additional proposed changes include harmonizing the PTAB claim construction and burden of proof with federal district courts, precluding multiple petitions against the same patent by "prohibiting any entity financially contributing to a PTAB challenge from bringing its own challenge," and allegedly increasing transparency by prohibiting the USPTO director from influencing PTAB panel decisions.
With a new Congress set to be sworn in shortly, however, and the unlikelihood of eleventh-hour passage, the future of the PREVAIL Act is uncertain.
Increasing Complexities of AI
On the AI front, the USPTO's July guidance reaffirmed existing laws that only natural persons can be inventors, silencing the concerns of critics.
The Inventorship Guidance for AI-Assisted Inventions further reiterated that "the use of an AI system by a natural person(s) does not preclude a natural person(s) from qualifying as an inventor (or joint inventors) if the natural person(s) significantly contributed to the claimed invention."
Accordingly, it has been USPTO practice that while AI cannot be an inventor, AI systems are not precluded from assisting in the invention of a technology, provided significant contribution from the natural person inventors. Recognizing the immense interest in — and influx of — AI-related technologies, the USPTO further provided clarity on patent eligibility for AI-related inventions.
The USPTO elaborated on the Alice/Mayo framework — stemming from two important Supreme Court decisions in Mayo Collaborative Services Inc. v. Prometheus Laboratories Inc. in 2012 and Alice Corp. v. CLS Bank International in 2014 — for determining patent eligibility and introduced three examples illustrating how AI innovations, such as neural networks or speech analysis methods, may qualify if they integrate abstract ideas into practical applications.[1]
In response to the USPTO's updated subject matter eligibility guidance, the USPTO received 24 total submissions — many from major IP organizations including the American Intellectual Property Law Association, the Council for Innovation Promotion, the Intellectual Property Owners Association, the Pharmaceutical Research and Manufacturers of America, and the Association of University Technology Managers Inc. — which overwhelmingly called for more guidance on AI-linked inventions.[2]
With USPTO Director Kathi Vidal's resignation in December, it's clear that AI patent eligibility will be at the forefront for whoever takes her place.
Globally, while most jurisdictions, including the U.S. and the U.K., prohibit AI as sole inventors, Germany has allowed inventorship designations that acknowledge AI's contribution under human guidance, signaling an evolving global debate.
Design Patent Pulls Square With Utility
While design patents are less frequently sought — and litigated — than their utility patent brethren, a May Federal Circuit decision brought the two obviousness standards in line, overturning previous jurisprudence held to be "too rigid," and devising a new framework having a flexible, fact-based approach used primarily for utility patents.
The court in LKQ Corp. v. GM Global Technology Operations LLC focused on the standards for assessing the nonobviousness of design patents under Title 35 of the U.S. Code, Section 103, the same statute that governs utility patent nonobviousness. The design patent at issue was General Motors' U.S. Design Patent No. D797,625, which covers the design for a front fender of the 2018-2020 Chevrolet Equinox.
Previously, design patent obviousness was assessed under what was called the Rosen-Durling test, wherein a finding of obviousness required (1) a primary reference that was "basically the same" as the patent in question, and (2) prior art that was "so related" to the primary reference that the appearance of certain ornamental features in one would suggest the application of those features to the other.
In LKQ, the appellant successfully argued that the Rosen-Durling test needs to be updated to more closely align with the Supreme Court's 2007 ruling in KSR International v. Teleflex Inc. and 1893 ruling in Smith v. Whitman Saddle.
In KSR, the Supreme Court had rejected the previous rigid test for obviousness of utility patents, and instead implemented an "expansive and flexible approach," wherein "[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results."
In Whitman Saddle, the Supreme Court found a claimed design for a saddle obvious based upon a combination of two prior art saddle designs, neither of which would have qualified as a Rosen-Durling reference without consideration of the "so related" standard.
In so ruling, the court held that obviousness references could come from fields beyond those of the problem sought to be solved by the invention in question. In applying KSR to LKQ, the Federal Circuit found that the rigidity of the Rosen-Durling test mirrored the rigid application of the old "teaching, suggestion, or motivation" test that the Supreme Court rejected in KSR.
Thus, the Federal Circuit ruled in favor of LKQ, finding the Rosen-Durling test "improperly rigid" and reasoning that, because Section 103 does not differentiate between utility and design patents, the obviousness standard for design patents should be one and the same. That is, the Federal Circuit confirmed that design patents' obviousness, like utility patents, is "determined ... on application of the Graham factors" under the Federal Circuit's 1997 decision in Hupp v. Siroflex of America Inc.
Under the Graham factor test, a fact-finder must consider:
- The scope and content of analogous prior art: This factor implores a fact finder to consider whether the art is from the same field of endeavor as the claimed invention, and if not, whether the reference is reasonably pertinent to the particular problem with which the inventor is involved. In implementing this factor, the Federal Circuit explicitly removed the Rosen-Durling requirement that a primary reference be "basically the same" as the claimed design.
- Any differences between the claimed design and prior art: This factor instructs a fact finder to compare and contrast the visual appearance of the claimed design with those of the prior art.
- The level of skill of an ordinary designer in the field in which the claimed design pertains: Specifically, the ordinary designer is to be a designer of ordinary capability, designing articles of the same type presented in the application.
- If a motivation exists to modify the prior art design to create a design with the same overall visual appearance as the claimed design, taking into account any secondary references: The Federal Circuit removed the Rosen-Durling requirement that the primary and secondary references be "so related," and "focuse[d] on the visual impression of the claimed design as a whole and not on selected individual features."
While this heightened standard is likely to increase the difficulty of protecting design patents, its allure remains. Design patents offer a unique additional remedy in district court litigation inaccessible to parties in the utility patent context — profit disgorgement — which provides a significant incentive to file on and protect design innovations.
Indeed, while design patent owners may still pursue the traditional remedies available to utility patent owners — namely, injunctive relief (Section 283) and compensatory damages (Section 284) — the ability of a design patent owner to recover the total profits earned by the infringer from their prohibited conduct (Section 289) remains an exclusive right of a design patent rights holder.
Conclusions
Significant rulings and policies occurred in 2024 that will serve to affect patent law on a going-forward basis.
The Supreme Court's decision in Loper marked a pivotal shift, removing Chevron deference and granting courts greater authority over agencies — including the USPTO — with effects not yet fully known.
Meanwhile, questions surrounding AI continue to push the boundaries of patent eligibility and inventorship. On the design patent front, the Federal Circuit's ruling in LKQ unified the obviousness tests for design and utility patents, creating a more predictable — and potentially more difficult — framework.
Together, these developments highlight a transformative year for IP law with far-reaching implications.
This article was originally published in Law360's Expert Analysis section on December 20, 2024. Read more at: https://www.law360.com/articles/2275661/reviewing-2024-s-crucial-patent-law-developments.
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[1] For more on these new Examples, see https://www.rfemerge.com/2024/07/22/this-summer-in-artificial-intelligencenewly-released-uspto-guidance-and-exemplary-worldwide-inventorship-updates/.
