Recent Patent Developments at the Supreme Court and the Federal

Recent Patent
Developments at the
Supreme Court and the Federal Circuit
Brief Discussion of all Supreme Court and precedential Federal Circuit
Patent Cases between January 1, 2014 and January 21, 2015
Peter E. Heuser and Laura A. Zager, Ph.D.
Schwabe, Williamson & Wyatt
February 13, 2015
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Table of Contents
PTO matters ...................................................................................................................................................... 4
Inter Partes Review ....................................................................................................................................... 4
Interferences................................................................................................................................................. 4
Terminal Disclaimer ...................................................................................................................................... 4
Validity .............................................................................................................................................................. 5
Section 101 (Patentable Subject Matter) ...................................................................................................... 5
Obviousness ................................................................................................................................................ 11
Prior Art....................................................................................................................................................... 17
Prior Invention by Another ......................................................................................................................... 18
Claim Indefiniteness Under Section 112 ..................................................................................................... 19
Naming Proper Inventor(s) ......................................................................................................................... 22
Claim of Priority .......................................................................................................................................... 22
Inequitable Conduct .................................................................................................................................... 22
Double Patenting ........................................................................................................................................ 24
Public Use ................................................................................................................................................... 24
Defenses ......................................................................................................................................................... 25
Laches and Estoppel ................................................................................................................................... 25
Infringement ................................................................................................................................................... 26
Based on the Actions Outside of the US ..................................................................................................... 27
Claim Construction...................................................................................................................................... 28
Means-Plus-Function Claims....................................................................................................................... 34
“For the US” ................................................................................................................................................ 37
Indirect Infringement .................................................................................................................................. 38
Doctrine of Equivalents ............................................................................................................................... 39
Prosecution History Estoppel...................................................................................................................... 40
Willful Infringement .................................................................................................................................... 41
Design Patents ................................................................................................................................................. 42
Remedies ......................................................................................................................................................... 43
Damages ..................................................................................................................................................... 43
Enhanced Damages..................................................................................................................................... 46
Injunctive Relief and Damages .................................................................................................................... 49
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Prevailing Party/Costs ................................................................................................................................. 49
Patent Reissue ................................................................................................................................................. 50
“Original Patent” Requirement................................................................................................................... 50
Licensing .......................................................................................................................................................... 51
ITC ................................................................................................................................................................... 51
Civil Procedure ................................................................................................................................................ 52
Collateral Estoppel ...................................................................................................................................... 54
Necessary Parties ........................................................................................................................................ 55
Noerr Pennington Immunity ....................................................................................................................... 56
Transfer of Cases......................................................................................................................................... 58
Sanctions under Rule 11 ............................................................................................................................. 58
Standing ...................................................................................................................................................... 58
Subject Matter Jurisdiction in DJ Actions .................................................................................................... 60
Subject Matter Jurisdiction on Removal and Remand ............................................................................... 62
Stay Pending PTO Proceedings ................................................................................................................... 62
Waiver of Arguments .................................................................................................................................. 65
Claim and Issue Preclusion, and Collateral Estoppel ................................................................................... 66
Burden of Proof........................................................................................................................................... 66
JMOL Motions ............................................................................................................................................. 67
Ownership of Patent and Assignment ........................................................................................................ 67
Proper Appeal ............................................................................................................................................. 68
Summary Judgments................................................................................................................................... 69
Discovery Sanctions .................................................................................................................................... 69
Contempt .................................................................................................................................................... 69
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PTO matters
Inter Partes Review
St. Jude Medical Cardiology Division, Inc., v Volcano Corporation, 749 F.3d 1373 (Fed. Cir. 2014);
In re Dominion Dealer Solutions, LLC, 749 F.3d 13793 (Fed. Cir. 2014); In re the Proctor &
Gamble Company, 749 F.3d 1376 (Fed. Cir. 2014)
Denials of petitions for inter partes review are deemed not to be appealable to the Circuit.
Vaillancourt v. Becton Dickinson & Co., 749 F.3d 1368 (Fed. Cir. 2014)
In another dismissal of an inter partes appeal, the Circuit ruled that one who assigned his patent during
an inter partes reexamination had no right to appeal the inter partes decision.
Interferences
Tobinick v. Olmarker and Rydevik, 753 F.3d 1220 (Fed. Cir. 2014)
The Circuit reverses an interference determination that there was inadequate disclosure in the specification
to support copied claims directed to the treatment of herniated discs.
Troy v. Samson Manufacturing Corp., 758 F.3d 1322 (Fed. Cir. 2014)
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.
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 these interference decisions remain pertinent.
Terminal Disclaimer
Japanese Foundation for Cancer Research v. Michelle K. Lee,
2014 U.S. App. LEXIS 23109 (Fed. Cir. Dec. 9, 2014)
The panel reverses the district court, finding that the PTO did not act arbitrarily or capriciously, or abuse its
discretion in declining to use its inherent authority to withdraw a terminal disclaimer that the Foundation's
attorney filed in accordance with the PTO's regulations.
Use of a Certificate of Correction to Withdraw the Terminal Disclaimer
On appeal, the Foundation argues that the PTO has the authority to issue a certificate of correction for the
'187 patent to withdraw the terminal disclaimer. But this reading of the statute is, according to the panel,
strained and lacks support in case law. Therefore, the panel concludes that there is no basis for withdrawing
the terminal disclaimer by means of a certificate of correction.
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Exercising the PTO’s Inherent Authority to Withdraw the Terminal Disclaimer
The PTO has clearly articulated in its regulations that, other than the patentee, only the attorney of record is
authorized to file a terminal disclaimer on the patentee's behalf. And here, the patentee provided specific
authority to its attorney to file a disclaimer by filing a power of attorney to prosecute the underlying
application. Even if we disagreed with the PTO's position, we must not substitute our own judgment for that
of the agency because "unless these vital differentiations between the functions of judicial and administrative
tribunals are observed, courts will stray outside their province and read the laws of Congress through the
distorting lenses of inapplicable legal doctrine. Here, the PTO determined that miscommunications between
the Foundation and its attorney did not excuse the actions of the attorney, and we will not substitute our
judgment for that of the agency.
Validity
Section 101 (Patentable Subject Matter)
Smartgene, Inc. v. Advanced Biological Laboratories, SA,
555 Fed. Appx. 950 (D.C. Cir. 2014)
In a decision rendered months prior to Alice, a panel of Judges Lourie, Dyk and Taranto affirmed the district
court's summary judgment of invalidity of computer-related medical diagnosis claims under 35 USC 101 as
being directed to unpatentable subject matter. The panel found that the district court's ruling properly
followed CyberSource, where the court held that section 101 did not embrace a process defined simply as
using a computer to perform a series of mental steps. CyberSource and earlier precedents rest on the
Supreme Court's decisions indicating that section 101 covers neither "mental processes" associated with or
as part of a category of "abstract ideas," nor processes that merely invoke a computer and its basic
functionality for implementing such mental processes without specifying new physical components or
specifying processes defined other that by the mentally performable steps. The opinion neatly anticipated
what the Supreme Court was going to be saying in Alice, instead of following Judge Rader and others on the
Circuit who feel section 101 should be a coarse strainer on patentability.
In re Roslin Institute, 750 F.3d 1333 (Fed. Cir. 2014)
In another pre-Alice decision, the Circuit determined that a cloned animal is not patentable because it is a
natural phenomenon that does not possess different characteristics than an animal found in nature. The
Court cited Chakabarty and Funk Bros. for the teaching that when the qualities of the invention sought to
be patented "are the work of nature” and are unaltered by the hand of man, there is no patentable
subject matter. Here, the methods of creating the clone were not at issue as they were separately
patented in another application. Roslin argued that clones like Dolly are patentable because they are not
created via nature, but instead by human handiwork. The Circuit disagreed, noting "Dolly’s genetic
identity to her donor parent renders her unpatentable” under Chakabarty because she possesses no
"markedly different characteristics from any animals found in nature.” The Circuit then examined Dolly
under the more recent Myriad doctrine but found Roslin had not created or altered any of the genetic
information of its claimed clones, or the genetic structures of the DNA used to make them.
Alice Corporation Pty. Ltd. v. CLS Bank International et al., 134 S.Ct. 2347 (2014)
The Supreme Court unanimously rules that the claimed invention is no more than an abstract concept for
managing risk in computerized trading, and as such does not constitute patentable subject matter. The
Court raises the bar on whether computer-related business method patents can recite patentable subject
matter. With three justices arguing in affirmance that business method patents can never recite
patentable subject matter, a unanimous Court strikes down the claims at issue.
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The claimed invention is designed to facilitate the exchange of financial obligations between two parties by
using a computer system as a third-party intermediary. Specifically, the patents in suit claim (1) a
method for exchanging financial obligations, (2) a computer system configured to carry out the method
for exchanging obligations, and (3) a computer-readable medium containing program code for performing
the method of exchanging obligations.
The Supreme Court holds that because the claims are drawn to a patent-ineligible abstract idea, they are
not patent eligible under §101. The opinion, written by Justice Thomas, is summarized by the Court:
(a) The Court has long held that §101, which defines the subject matter eligible for patent
protection, contains an implicit exception for ‘“[l]aws of nature, natural phenomena, and abstract
ideas.’” Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U. S.
(2013) In
applying the §101 exception, this Court must distinguish patents that claim the “‘buildin[g]
block[s]’ ” of human ingenuity, which are ineligible for patent protection, from those that
integrate the building blocks into something more, see Mayo Collaborative Services v.
Prometheus Laboratories, Inc., 566 U. S. ___ (2012), thereby “transform[ing]” them into a
patent-eligible invention.
(b) Using this framework, the Court must first determine whether the claims at issue are
directed to a patent-ineligible concept. If so, the Court then asks whether the claim’s elements,
considered both individually and “as an ordered combination,” “transform the nature of the claim”
into a patent-eligible application.
(1) The claims at issue are directed to a patent-ineligible concept: the abstract idea of
intermediated settlement. Under “the longstanding rule that ‘[a]n idea of itself is not
patentable,’ ” Gottschalk v. Benson, 409 U. S. 63 (1972), this Court has found ineligible
patent claims involving an algorithm for converting binary-coded decimal numerals into
pure binary form, a mathematical formula for computing “alarm limits” in a catalytic
conversion process, Parker v. Flook, 437 U. S. 584 (1978); and, most recently, a method
for hedging against the financial risk of price fluctuations, Bilski. It follows from these
cases, and Bilski in particular, that the claims at issue are directed to an abstract idea.
On their face, they are drawn to the concept of intermediated settlement, i.e., the use of
a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of
intermediated settlement is “ ‘a fundamental economic practice long prevalent in our
system of commerce,’ ” ibid., and the use of a third-party intermediary (or “clearing
house”) is a building block of the modern economy. Thus, intermediated settlement,
like hedging, is an “abstract idea” beyond §101’s scope.
(2) Turning to the second step of Mayo’s framework: The method claims, which merely
require generic computer implementation, fail to transform that abstract idea into a
patent-eligible invention.
(i) “Simply appending conventional steps, specified at a high level of
generality,” to a method already “well known in the art” is not “enough” to supply
the “ ‘inventive concept’ ” needed to make this transformation. Mayo . The
introduction of a computer into the claims does not alter the analysis. Neither
stating an abstract idea “while adding the words ‘apply it,’ ” Mayo , nor limiting the
use of an abstract idea “ ‘to a particular technological environment,’ ” Bilski, is
enough for patent eligibility. Stating an abstract idea while adding the words
“apply it with a computer” simply combines those two steps, with the same
deficient result. Wholly generic computer implementation is not generally the
sort of “additional featur[e]” that provides any “practical assurance that the
process is more than a drafting effort designed to monopolize the [abstract idea]
itself.” Mayo.
(ii) Here, the representative method claim does no more than simply instruct
the practitioner to implement the abstract idea of intermediated settlement on a
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generic computer.
Taking the claim elements separately, the function
performed by the computer at each step—creating and maintaining “shadow”
accounts, obtaining data, adjusting account balances, and issuing automated
instructions—is “[p]urely ‘conventional.’” Mayo. Considered “as an ordered
combination,” these computer components “ad[d] nothing . . .that is not already
present when the steps are considered separately.” Viewed as a whole, these
method claims simply recite the concept of intermediated settlement as
performed by a generic computer. They do not, for example, purport to improve
the functioning of the computer itself or effect an improvement in any other
technology or technical field.
An instruction to apply the abstract idea of
intermediated settlement using some unspecified, generic computer is not
“enough” to transform the abstract idea into a patent-eligible invention.
(3) Because petitioner’s system and media claims add nothing of substance to the
underlying abstract idea, they too are patent ineligible under §101. Petitioner conceded
below that its media claims rise or fall with its method claims. And the system claims
are no different in substance from the method claims. The method claims recite the
abstract idea implemented on a generic computer; the system claims recite a handful
of generic computer components configured to implement the same idea. This Court has
long “warn[ed] . . . against” interpreting §101 “in ways that make patent eligibility ‘depend
simply on the draftsman’s art.’” Mayo. Holding that the system claims are patent
eligible would have exactly that result.
In a concurring opinion, Justice Sotomayor wrote, citing Justice Steven’s concurring opinion in Bilski: “I
adhere to the view that any claim that merely describes a method of doing business does not qualify as
a‘process’ under §101.” She was joined in that opinion by Justices Ginsburg and Breyer.
In late July, while testifying before the House Judiciary Committee, Acting Deputy Director of the PTO
Michelle Lee noted that the PTO was pulling allowances for a reassessment of claims under CLS.
Applicants have been notified of the withdrawal and the applications were returned to the originally
assigned examiners. The PTO is in the process of evaluating public comments in preliminary examination
instructions it issued on June 30.
In a paper just published today in IP 360 on how to draft claims that will be acceptable under Alice, the
author said to (1) get technical (claim a particular way of doing it on a computer – not every way); (2)
narrow the claims (include elements that claim significantly more than the idea itself); (3) tell a compelling
story (in the spec and in at least some claims); (4) play up the distinctions between man and machine
(make the computer integral to the claimed invention, so a human can’t do it with a pencil and paper); and
(5) keep an eye on what the Federal Circuit says in applying Alice.
Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., et al.,
758 F.3d 1344 (Fed. Cir. 2014)
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.
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
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mathematical formula, even if the solution is for a specific purpose, the claimed method is non-statutory."
Parker v. Flook, 437 U.S. 584, 595 (1978).
Planet Bingo LLC v. VKGS LLC, 576 Fed. Appx. 1005, 2014 U.S. App. LEXIS 16412
(Fed. Cir. 2014)
In a non-precedential opinion the Circuit determines that patents directed to computer-aided methods and
systems for managing a game of Bingo do not claim patentable subject matter, noting that the case is a
straight-forward application of Alice Corp. v. CLS Bank.
The patents claim managing a bingo game while allowing a player to repeatedly play the same sets of
numbers in multiple sessions. According to the panel, reviewing the claims de novo, the district court
correctly concluded that managing the game of bingo “consists solely of mental steps which can be carried
out by a human using pen and paper.” Like the claims at issue in Gottschalk v Benson, 409 U.S. 63 (1972)
not only can these steps be “carried out in existing computers long in use,” but they also can be “done
mentally.” Thus, the panel holds that the subject matter claimed in the patents is directed to an abstract idea.
Abstract ideas may still be patent-eligible if they contain an “‘inventive concept’ sufficient to ‘transform’ the
claimed abstract idea into a patent-eligible application,” Alice, but, according to the panel, in this case, the
claims recite a generic computer implementation of the covered abstract idea. Accordingly, the panel holds
that the claims at issue do not have an ‘inventive concept’ sufficient to ‘transform’ the claimed subject matter
into a patent-eligible application.
buySafe, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014)
Claims directed to a system for ensuring security for online sales are no different than Alice’s computerized
method of managing risk in financial trading, so Buysafe’s patent is found invalid under § 101.
According to the panel, the Supreme Court explained that the method claims in Alice invoke “the use of a
computer to create electronic records, track multiple transactions, and issue simultaneous instructions,”
“electronic recordkeeping,” and “the use of a computer to obtain data, adjust account balances, and issue
automated instructions.” They do not, for example, purport to improve the functioning of the computer itself.
They do not effect an improvement in any other technology or technical field, and they merely invoke some
unspecified, generic computer. The system claims in Alice are no different, the Court added, explaining that
they invoke a “‘data processing system’ with a ‘communications controller’ and ‘data storage unit,’” which are
“purely functional and generic” components for “performing the basic calculation, storage, and transmission
functions required by the method claims.” Finally, the Court viewed the claims to a computer-readable
medium for the methods as indistinguishable for § 101 purposes.
Comment: The panel describes the analysis for determining whether a claim is patent-eligible as: whether
the claim is directed to one of the three excluded categories -laws of nature, natural phenomena, and
abstract ideas; and if so, is there enough extra included in the claim that it passes muster under §101 (and it
can do so even if it is a business method). In applying the first step, the breadth or narrowness of the law,
phenomenon or idea is not relevant. With regard to the second step, as noted in Alice and the Circuit’s
recent Planet Bingo case, simply requiring generic computer implementation does not move the claim into
the realm of patentable subject matter.
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Ultramercial, Inc. v. Hulu, LLC, and WildTangent, Inc.,
772 F.3d 709 (Fed. Cir. 2014)
After two prior reversals of a district court’s ruling that the claims do not recite patentable subject matter, the
Circuit finally agrees with the district, citing Alice and striking down the patent because the claims simply
instruct the practitioner to implement the abstract idea with routine, conventional activity.
While the Supreme Court has held that the machine-or-transformation test is not the sole test governing
§ 101 analyses, Bilski, that test can provide a useful clue in the second step of the Alice framework, see
Bancorp Servs., L.L.C., v. Sun Life Assurance Co. of Can., 687 F.3d 1266 (Fed. Cir. 2012). A claimed
process can be patent-eligible under § 101 if: "(1) it is tied to a particular machine or apparatus, or (2) it
transforms a particular article into a different state or thing." In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008)
(en banc), affd on other grounds, Bilski, 561 U.S. 593.
The claims of the '545 patent, however, are not tied to any particular novel machine or apparatus, only a
general purpose computer. The Internet is not sufficient to save the patent under the machine prong of the
machine-or-transformation test. CyberSource. It is a ubiquitous information-transmitting medium, not a novel
machine. And adding a computer to otherwise conventional steps does not make an invention patenteligible. Alice. Any transformation from the use of computers or the transfer of content between computers is
merely what computers do and does not change the analysis.
The claims of the '545 patent also fail to satisfy the transformation prong of the machine-or-transformation
test. The method as claimed refers to a transaction involving the grant of permission and viewing of an
advertisement by the consumer, the grant of access by the content provider, and the exchange of money
between the sponsor and the content provider. These manipulations of "public or private legal obligations or
relationships, business risks, or other such abstractions cannot meet the test because they are not physical
objects or substances, and they are not representative of physical objects or substances." Bilski, 545 F.3d at
963. We therefore hold that the claims of the '545 patent do not transform any article to a different state or
thing. While this test is not conclusive, it is a further reason why claim 1 of the '545 patent does not contain
anything more than conventional steps relating to using advertising as a currency.
DDR Holdings, LLC v. Hotels.com, et al.,
2014 U.S. App. LEXIS 22902 (Fed. Cir. Dec. 5, 2014)
The panel affirms denial of JMOL as to noninfringement and invalidity of a ‘399 patent, but reverses the
denial of JMOL as to anticipation with respect to a '572 patent. Judge Chen writes the most in depth
discussion of Alice v. CLS Bank we’ve seen from the Circuit, upholding patentability and providing some
guidance as to the drafting of patent-eligible claims, with Judge Mayer dissenting.
The ‘572 and ‘399 patents are directed to systems and methods of generating a composite web page that
combines certain visual elements of a "host" website with content of a third-party merchant. For example,
the generated composite web page may combine the logo, background color, and fonts of the host website
with product information from the merchant. Prior art systems allowed third-party merchants to lure the host
website's visitor traffic away from the host website because visitors would be taken to the third-party
merchant's website when they clicked on the merchant's advertisement on the host site. The patents-in-suit
discloses a system that provides a solution to this problem (for the host) by creating a new web page that
permits a website visitor, in a sense, to be in two places at the same time.
Patentable subject matter under § 101
The majority begins its § 101 analysis at Mayo/Alice step one: determining whether the computer
implemented claims at issue here are "directed to" a patent-ineligible abstract idea. Here, we note that the
'399 patent's asserted claims do not recite a mathematical algorithm, nor do they recite a fundamental
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economic or longstanding commercial practice. Although the claims address a business challenge (retaining
website visitors), it is a challenge particular to the Internet.
Like claims in the cases discussed above, the claims involve both a computer and the Internet. But these
claims stand apart because they do not merely recite the performance of some business practice known
from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed
solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in
the realm of computer networks.
It is also clear that the claims at issue do not attempt to preempt every application of the idea of increasing
sales by making two web pages look the same, or of any other variant suggested by NLG. Rather, they
recite a specific way to automate the creation of a composite web page by an "outsource provider" that
incorporates elements from multiple sources in order to solve a problem faced by websites on the Internet.
As a result, the '399 patent's claims include "additional features" that ensure the claims are "more than a
drafting effort designed to monopolize the abstract idea." Alice. In short, the claimed solution amounts to an
inventive concept for resolving this particular Internet-centric problem, rendering the claims patent-eligible.
In sum, according to the majority, the '399 patent's claims are unlike the claims in Alice, Ultramercial, and
buySAFE that were found to be directed to little more than an abstract concept. To be sure, the '399 patent's
claims do not recite an invention as technologically complex as an improved, particularized method of digital
data compression. But nor do they recite a commonplace business method aimed at processing business
information, applying a known business process to the particular technological environment of the Internet,
or creating or altering contractual relations using generic computer functions and conventional network
operations, such as the claims in Alice, Ultramercial, or buySAFE. The claimed system, though used by
businesses, is patent-eligible under § 101. The district court did not err in denying NLG's motion for JMOL of
invalidity under 35 U.S.C. § 101 as to these claims.
Comment: This is the first case post-Alice in which the Circuit has upheld claims that were subject to
a § 101 challenge. In its opinion the majority cites to its opinions in buySAFE and Ultramercial but the same
invalidity result was reached in Digitech Image Techs., LLC v. Electronics for Imaging, Inc., 758 F.3d 1344
(Fed. Cir. 2014) and Planet Bingo, LLC. v. VKGS LLC, 576 Fed. Appx. 1005 (Fed. Cir.
2014)(nonprecedential). In I/P Engine, Inc. v. AOL Inc., 576 Fed. Appx. 982 (Fed. Cir. 2014), the panel ruled
that the patent was invalid as obvious but Judge Mayer wrote in a concurring opinion that the case should
never have gone to trial since none of the asserted claims recited patentable subject matter. We’ll see in
future cases whether Judge Chen’s (and Judge Wallach’s) thinking represents the majority of the Circuit or if
Judge Mayer’s high bar under § 101 is accepted by the other judges.
Content Extraction and Transmission LLC v. Wells Fargo Bank, Nat’l. Assoc. et al., 2014 U.S. App.
LEXIS 24258 (Fed. Cir. Dec. 23, 2014); Diebold, Inc. v. Content Extraction and Transmission LLC,
et al., 2014 U.S. App. LEXIS 24258 (Fed. Cir. Dec. 23, 2014)
The Circuit affirms dismissal under Rule 12(b)(6) of patentee’s infringement suit due to the asserted patents
being patent ineligible under 35 U.S.C. § 101, and the dismissal of counterclaims for tortious interference
and RICO violations. This summary will deal only with the § 101 issue and the latter dismissal is discussed
later in this paper.
CET asserted four related patents directed generally to a method of 1) extracting data from hard copy
documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from
the extracted data, and 3) storing that information in a memory. This method can be performed by software
on an ATM that recognizes information written on a scanned check.
Applying Mayo/Alice step one, the panel agrees with the district court that the claims of the asserted patents
are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set,
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and 3) storing that recognized data in a memory. The concept of data collection, recognition, and storage is
undisputedly well-known. Indeed, humans have always performed these functions. And banks have, for
some time, reviewed checks, recognized relevant data such as the amount, account number, and identity of
account holder, and stored that information in their records.
CET attempts to distinguish its claims from those found to be abstract in Alice and other cases by showing
that its claims require not only a computer but also an additional machine—a scanner. CET argues that its
claims are not drawn to an abstract idea because human minds are unable to process and recognize the
stream of bits output by a scanner. However, the claims in Alice also required a computer that processed
streams of bits, but nonetheless were found to be abstract. Similar to how the computer-implemented claims
in Alice were directed to "the concept of intermediated settlement," and the claims in Dealertrack were
directed to the concept of "processing information through a clearinghouse," CET's claims are drawn to the
basic concept of data recognition and storage.
For the second step of the panel’s analysis, the panel looks to see whether the limitations present in the
claims represent a patent-eligible application of the abstract idea. Alice. For the role of a computer in a
computer implemented invention to be deemed meaningful in the context of this analysis, it must involve
more than performance of "well-understood, routine, and conventional activities previously known to the
industry." Further, "the mere recitation of a generic computer cannot transform a patent ineligible abstract
idea into a patent-eligible invention."
Applying Mayo/Alice step two, we agree with the district court that the asserted patents contain no
limitations—either individually or as an ordered combination that transform the claims into a patent-eligible
application. There is no "inventive concept" in CET's use of a generic scanner and computer to perform wellunderstood, routine, and conventional activities commonly used in industry. At most, CET's claims attempt to
limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and
a computer to a particular technological environment. Such a limitation has been held insufficient to save a
claim in this context. See Alice, 134 S. Ct. at 2358; Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715– 16
(Fed Cir. 2014); buySAFE, 765 F.3d at 1355.
Obviousness
Hoffman-La Roche Inc. and Genentech, Inc. v. Apotex Inc. et al.,
748 F.3d 1326 (Fed. Cir. 2014)
In a split decision, the court affirmed a summary judgment determination of invalidity of patents directed to
Roche’s popular Boniva® osteoporosis drug, the panel members vehemently disagreeing on the teachings
of the prior art and the proper analysis for the “obvious to try” issue.
The issue in this case is whether it would have been obvious at the time of invention to select a once
monthly oral dosing regimen of ibandronate to treat osteoporosis and to set that dose at 150 mg. As to
the frequency of dosing, the majority found that there was at least a reasonable expectation that once
monthly dosing of ibandronate could successfully treat osteoporosis and reduce fracture risk. According to
the majority, conclusive proof of efficacy is not necessary to show obviousness. The prior art established at
least a reasonable expectation that once monthly dosing of ibandronate could successfully treat
osteoporosis and reduce fracture risk As to the amount of the monthly dose, the panel found that the
combination of several prior art references suggested a dosage level of about 150 mg per month, or at
least indicated that a monthly dose of 150 mg was obvious to try. A person skilled in the art looking to
scale to a monthly dose of oral ibandronate from a known-effective daily dose was faced with a very
limited set of possibilities, and all the law requires is a reasonable expectation of success.
11
Sanofi-Aventis Deutschland GmbH et al. v. Glenmark Pharmaceuticals Inc., USA et al.,
748 F.3d 1354 (Fed. Cir. 2014)
In her second discussion of the “obvious-to-try” issue in the past two weeks, Judge Newman, this time
writing for a unanimous panel, reminded us that the standard of “obvious-to-try” requires a limited number of
specific alternatives offering a likelihood of success in light of the prior art and common sense.
Intouch Technologies, Inc. v. VGO Communications, Inc.,
751 F.3d 1327 (Fed. Cir. 2014)
The Circuit determined that the evidence “did not even come close” to being substantial enough to
support an obviousness finding and therefore reversed the denial of JMOL.
But the Circuit affirmed the denial of a motion for new trial, even though defendant’s witness testified
about an opinion despite the fact that privilege had not been waived prior to trial, and defendant’s expert
discussed prior art that had not been disclosed prior to trial.
K/S Himpp v. Hear-Wear Technologies, LLC,
751 F.3d 1362 (Fed. Cir. 2014)
A split panel of the Circuit affirms an obviousness finding of the PTO Board in a ruling that in some
respects seems inconsistent with the KSR’s dictate that “common sense” is to be considered in
obviousness rulings.
HIMPP argues that the Examiner and the Board failed to consider the knowledge of a person having
ordinary skill in the art solely because HIMPP did not provide documentary evidence to prove purportedly
well-known facts. HIMPP asserts that refusing to consider the knowledge of a person having ordinary skill in
the art because of a lack of record evidentiary support is contrary to the Supreme Court's admonishment
in KSR against the overemphasis on the importance of published articles and the content of issued patents.
The majority disagreed with HIMPP, and ruled that the Board was correct to require record evidence to
support an assertion that the structural features of the claims were known prior art elements.
Q.I. Press Controls, B.V. v Lee, 752 F.3d 1371 (Fed. Cir. 2014)
The Circuit reverses and remands a portion of the Board's inter partes reexamination decision because
very similar claims were found to be valid and invalid, citing an obligation to the public not to provide
inconsistent rulings of patentability.
Allergan, Inc. and Duke University v. Apotex Inc.,
754 F.3d 952 (Fed. Cir. 2014)
A divided panel reverses a determination of invalidity as to obviousness of the two patents in suit directly to
an eyelash growth stimulant after deciding that there was insufficient corroboration to prove that the
claimed invention was conceived before an article that rendered the claimed invention obvious. Given the
overwhelming weight of evidence, the majority felt that remand is unnecessary “as here, the content of
the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material
dispute, and the obviousness of the claim is apparent in light of these factors.” Accordingly, the majority
reverses the district court’s finding that the patent is not invalid for reasons of obviousness.
12
Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc.,
752 F.3d 967 (Fed. Cir. 2014)
The Circuit affirms a determination of obviousness as to a BMS patent covering its Baraclude® drug
used for the treatment of hepatitis B. According to the panel, a party seeking to invalidate a patent as
obvious must demonstrate that a skilled artisan would have been motivated to combine the teachings of
the prior art references to achieve the claimed invention, and that the skilled artisan would have had a
reasonable expectation of success from doing so. To establish obviousness in cases involving new
chemical compounds, the accused infringer must identify some reason that would have led a chemist to
modify a known compound. Generally, an obviousness inquiry concerning such known compounds focuses
on the identity of a "lead compound." A lead compound is a compound in the prior art that would be "a
natural choice for further development efforts."
Leo Pharmaceutical Products, Ltd. v. Teresa Stanek Rea,
726 F.3d 1346 (Fed. Cir. 2013)
Based largely on its conclusion that the claimed combination would not have been “obvious to try,” and that
the objective indicia of unexpected result, commercial success, and long felt but unsolved need all support a
finding of nonobviousness, the panel reverses the Board’s determination that a patent to a treatment for
psoriasis was invalid under §103.
Obviousness
Although patents to Dikstein and Serup attempt the combination of a vitamin D analog with a corticosteroid,
neither discloses or addresses the stability problems of combining vitamin D analogs and corticosteroids into
one pharmaceutical formulation. Leo presented experimental evidence to the Board that each of these
ingredients harmed the storage stability of the vitamin D analog and corticosteroid combination. If these
discoveries and advances were routine and relatively easy, the record would undoubtedly have shown that
some ordinary artisan would have achieved this invention within months of Dikstein or Serup. Instead this
invention does not appear for more than a decade.
Objective Evidence of Nonobviousness
This record shows “extensive experimental evidence” of unexpected results that contradict the Board’s
obviousness finding. The commercial success of Leo Pharmaceutical’s Taclonex® ointment is a testament to
the improved properties of the ’013 patent’s claimed invention. The record also shows evidence of long felt
but unsolved need, i.e., the need for a single formulation to treat psoriasis. The length of the intervening
time between the publication dates of the prior art and the claimed invention can also qualify as an objective
indicator of nonobviousness.
Scientific Plastic Products, Inc. v. Biotage AB,
766 F.3d 1355 (Fed. Cir. 2014)
A majority of the panel affirms a determination of obviousness, holding that the Board did not err in holding
that it would have been obvious to modify a chromatography cartridge with the resealable threaded cap
taught by art that the majority found to be analogous.
SPP is the owner of the three patents that relate to a resealable cartridge for low pressure liquid
chromatography (LPLC). After SPP filed suit against Biotage for patent infringement, Biotage requested
inter partes reexamination of the three patents, and the district court stayed the litigation. The patent
examiner rejected all claims of the three patents based on obviousness, and the Board affirmed the
rejections.
13
The primary issue on reexamination concerned the obviousness of combining the LPLC cartridge of the
Yamada reference with the King or Strassheimer pressure-resistant caps. The examiner found that Yamada
discloses all of the features of the SPP cartridge except for the complementary inclined sealing surfaces of
the cap and the lip of the container.King relates to improved seals for container closure assemblies, and is
“especially applicable to the sealing of containers in substantially gas-tight and liquid-tight fashion, such as
the sealing of . . . beverage containers.” King shows a container closure assembly with a threaded polymer
cap that ensures a fluid tight seal. The examiner found that King shows sealing surfaces that have
oppositely-inclined surfaces with respect to the cap and lip of the container, as in the SPP closure.
Strassheimer relates to plastic bottles and closures therefor that are especially useful for carbonated
beverages. Strassheimer also shows a plastic threaded cap that ensures a fluid-tight seal even after
repeated use. The examiner found that Strassheimer shows a taper on the lip of the plastic container that
corresponds to a taper on the cap, as in the SPP closure.
Are King and Strassheimer Analogous Prior Art?
Here, the King and Strassheimer references address the problem of providing a fluid-tight seal at elevated
pressures, between a container and a resealable cap. According to the majority, this is sufficiently close to
the problem addressed by the claimed invention, and substantial evidence supports the Board’s finding that
King and Strassheimer are available as prior art.
Was the Claimed Invention Obvious?
The question remains as to whether combining the cartridge of Yamada with the pressure-resistant cap of
King or Strassheimer would have been obvious to a person of ordinary skill in the field of liquid
chromatography devices. The issue here is not whether the Yamada cartridge leaked, but whether there
was a concern with leakage in LPLC cartridges such that a person of ordinary skill would have provided a
known pressure-resistant cap, as in King or Strassheimer, to the cartridge of Yamada. The majority
concludes that substantial evidence supports a finding that there was such a concern, and goes on to hold
that the Board did not err in holding that it would have been obvious for a person of ordinary skill in the field
of the invention to modify the chromatography cartridge of Yamada with the resealable threaded cap of King
or Strassheimer.
Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc.,
769 F.3d 1339 (Fed. Cir. 2014)
On a 7-4 vote the Circuit refuses to grant en banc hearing to review the invalidation of a BMS patent to a
hepatitis B treatment even though the prior art drug from which it evolved was toxic to humans. Dissenting
opinions note that the panel’s decision sets the bar too high to maintain the validity of drug patents. The
reasoning of the panel and the majority is that the toxicity of the prior art drug was not discovered until after
the filing date of the patent in suit and therefore was not relevant to what would have been obvious at the
time of the invention.
Judge O’Mally concurs, writing separately to assuage BMS and the amici’s fears that the panel decision has
rewritten the test for obviousness for pharmaceutical patents. In her view, the concerns expressed are
unjustified and mischaracterize the opinion. This case does not forge new ground or set down immutable
principles. It simply decides that, on the record before it, the district court did not err in finding the asserted
claim of the patent invalid as obvious.
Judge Newman, with Judges Lourie and Reyna, argues that the panel’s decision creates several new
standards for determination of obviousness. For example, the court deemed it irrelevant to the obviousness
determination that the prior art “lead compound,” the carbocyclic analog of 2’-deoxyguanosine (2’-CDG), is
highly toxic to humans, whereas the new product entecavir is non-toxic.
14
Judge Newman notes that the case has aroused extensive commentary, particularly in the chemical and
pharmaceutical fields; the request for rehearing en banc is supported by much of the nation’s researchbased industry, which has filed briefs as amici curiae to point out the disincentives and uncertainties flowing
from the court’s rulings. Until this case, inventors could confidently establish patentability of a new product or
a new use by showing that the new property or use was unexpected in light of the prior art.
Judge Taranto also dissents, expressing the concern that the ruling raises questions about core aspects of
the widely used approach to obviousness analysis—particularly, the proper meaning of “reasonable
expectation of success” and “unexpected results.” Those questions would benefit from plenary consideration
and would allow a focus on and full analysis of the doctrinal issues, considering the language of section 103
(what it resolves and what it leaves open); the role of section 103 in the statute as a whole (which places a
premium on early filing).
Comment: Given the sharp split of the Circuit and the significance of this issue to the pharmaceutical
industry, this is a case that would benefit from Supreme Court review. Evidently it is common that a great
deal of evidence regarding new drugs is developed after patent applications are filed. While Judge
O’Malley’s concurrence suggests this ruling applies only to the narrow facts of this case, the panel decision
and Judge Dyk’s opinion seem to be fairly absolute: post-filing evidence is not to be considered in the
obvious analysis.
Par Pharmaceutical, Inc. and Alkermes Pharma Ireland Ltd. v. TWI Pharmaceuticals, Inc.
2014 U.S. App. LEXIS 22737, 112 U.S.P.Q. 2d 1945 (Fed. Cir. 2014)
A bench trial determination of invalidity is reversed, with the Circuit ruling that the district court failed to apply
a sufficiently high standard in order to rely on inherency. According to the panel, the limitation at issue
necessarily must be present, or must be the natural result of the combination of elements explicitly disclosed
by the prior art in order for a claimed invention to be rendered obvious.
The inherent teaching of a prior art reference is a question of fact. In re Napier, 55 F.3d 610, 613 (Fed. Cir.
1995). The use of inherency, a doctrine originally rooted in anticipation, must be carefully circumscribed in
the context of obviousness. See, e.g., In re Oelrich, 666 F.2d 578, 581 (C.C.P.A. 1981) ("[M]ere recitation of
a newly discovered function or property, inherently possessed by things in the prior art, does not distinguish
a claim drawn to those things from the prior art."). In Oelrich, inherency in an obviousness analysis was
discussed:
Inherency, however, may not be established by probabilities or possibilities. The mere fact
that a certain thing may result from a given set of circumstances is not sufficient. If,
however, the disclosure is sufficient to show that the natural result flowing from the
operation as taught would result in the performance of the questioned function, it seems to
be well settled that the disclosure should be regarded as sufficient.
Thus, early precedent established that the concept of inherency must be limited when applied to
obviousness, and is present only when the limitation at issue is the "natural result" of the combination of
prior art elements.
More recent Circuit analysis does not diminish this conclusion. A party must meet a high standard in order to
rely on inherency to establish the existence of a claim limitation in the prior art in an obviousness analysis—
the limitation at issue necessarily must be present, or the natural result of the combination of elements
explicitly disclosed by the prior art. The district court, however, did not require that TWi present evidence
sufficient to prove inherency under this standard. The district court's broad dictates regarding the effect of
particle size on bioavailability and food effect are not commensurate with the actual limitations at issue.
While it may be true that a reduction in particle size naturally results in some improvement in the food effect,
15
the district court failed to conclude that the reduction in particle size naturally results in "no substantial
difference" in the food effect.
Tyco Healthcare Group LP and United States Surgical Corp. v. Ethicon Endo-Surgery, Inc.,
2014 U.S. App. LEXIS 22777, 112 U.S.P.Q. 2d 1979 (Fed. Cir. 2014)
The panel throws out a $176 million verdict based on the district court’s improper decision to exclude §
102(g) prior art in its obviousness determinations, even though that art was found by the district court to
apply in its anticipation analysis. The asserted patents disclose a surgical device that employs ultrasonic
energy to cut and coagulate tissue in surgery. The device includes a stationary and movable handle at one
end and a shaft with a tube within a tube construction at the other. A clamp and a curved blade sit at the
distal end of the shaft. The clamp opens and shuts like a jaw against the blade via a dual cam mechanism.
The Davison Patent and the Ethicon Prototype
In 1993, Ultracision, Inc. commercialized an ultrasonic surgical device similar to the claimed invention. The
device includes a shaft capable of fitting through a trocar with a ten millimeter diameter. In 1994, Ultracision
obtained the Davison patent covering that invention. The Davison patent describes and depicts both straight
and curved blade clamp configurations, and discloses that a benefit of using a curved blade is that it
facilitates treatment of tissue at awkward angles of approach. Ultracision then worked to modify the patented
device so that it could fit through a trocar with a five millimeter diameter. By November 1995, Ultracision had
a prototype using this design that could cut and coagulate tissue.
After Ethicon acquired Ultracision at the end of 1995, Ethicon worked to perfect the modified design for
commercialization. Ethicon completed this design by November 1996. This so-called Ethicon Prototype
employed a single pin and slot design and could successfully cut and coagulate tissue by December 1996.
Ethicon nevertheless sought to increase the size of the blade so that the device could cut and seal larger
blood vessels, and modified the clamp to use two pins and slots to accommodate the larger blade. From
August to December 1997, the Ethicon Prototype was used to cut and seal large vessels, and Ethicon
launched products based on the prototype in August 1998. Ethicon also filed patent applications covering
the Ethicon Prototype in October 1997. These applications resulted in the Ethicon patents.
The '662 Patent
The '662 patent, filed in 1992, discloses an “approximating apparatus for jaw structure in surgical
instrumentation." The device employs a pair of camming members and slots to open and close the jaw. The
'662 patent further discloses that the jaw structure can be used for many surgical purposes including
"grippers, graspers, dissectors, cutters, measurers, staplers, etc."
Anticipation
The district court properly held that the Ethicon Prototype anticipates twenty-six of the asserted claims
because Ethicon conceived of the prototype before Tyco's January 1997 conception date and diligently
reduced it to practice without abandoning, suppressing, or concealing it thereafter. Under § 102(g), Ethicon
can establish that its Prototype was prior art by proving "either that it reduced its invention to practice first or
that it conceived of the invention first and was diligent in reducing it to practice."
Section 102(g) Prior Art as Section 103 Prior Art
The district court erred when it inconsistently applied § 102(g) to the Ethicon Prototype by not requiring prior
reduction to practice for anticipation purposes but requiring it for the obviousness analysis. The clear
language of § 102(g) does not require prior reduction to practice so long as the inventor can prove that he or
she conceived of the invention first and was diligent in later reducing it to practice.
16
Curved Blade Claims
Claims would have been obvious if they are nothing more than a combination of familiar elements that yield
predictable results. KSR, Intl. Co. v. Teleflex Inc., 550 U.S. 398, 417 (2007). The district court should have
concluded that the Curved Blade Claims would have been obvious in view of the Ethicon Prototype and the
Davison patent.
Dual Cam Claims
The district court also ruled that switching from a single cam to a dual cam mechanism in an ultrasonic
device would not have been an obvious design decision. But Tyco's own expert agreed that the single and
dual cam mechanism operate in the same way, which suggests that the switch from a single cam to a dual
cam was more trivial than Tyco alleges.
Prior Art
Solvay S.A. v. Honeywell International, Inc.,
742 F.3d 998 (Fed. Cir. 2014)
In a split decision the Circuit holds that an invention conceived by a foreign inventor and reduced to
practice in the U.S. by others can qualify as prior art under 35 U.S.C. §102(g)(2). That section provides,
"[a] person shall be entitled to a patent unless . . . before such person's invention thereof, the
invention was made in this country by another inventor who had not abandoned, suppressed, or concealed
it." W hile §102(g) was eliminated in the AIA, that amendment only affects patents having a filing date of
March 16, 2013 or later, so §102(g) cases are still very relevant. –
Suffolk Technologies, LLC v. AOL Inc. and Google Inc.,
752 F.3d 1358 (Fed. Cir. 2014)
The Circuit affirms summary judgment of anticipation based on a post by a college student despite the
patentee’s argument that the post would not have been accessible to those with ordinary skill in the art. The
patentee Suffolk contends that the Usenet newsgroup was populated mostly by “beginners,” not those
of ordinary skill in the art. Suffolk bases this claim on the college student’s comment that he was a “newbie”
and that “this question might seem ridiculous.” The panel noted the evidence that there were no courses or
books concerning CGI at the time of the post in 1995, and the inventor learned about CGI through selfstudy, presumably using the Internet. Second, the record indicates that those of ordinary skill in the art
actually were using such newsgroups at the time. Specifically, both Suffolk’s validity expert and the inventor
both used the newsgroups.
In Re Rambus, 753 F.3d 1253 (Fed. Cir. 2014)
The Circuit reverses a determination of anticipation by the Patent Trial and Appeal Board in an inter
partes reexamination where there is no substantial evidence to support the Board’s decision. This case,
like the Tobinick case decided two weeks earlier and discussed above, shows that the Circuit is not
reluctant to reverse determinations by the PTAB, even when the standard of review is so low that it is
simply looking for "substantial evidence" to support the Board's decision.
17
Prior Invention by Another
Fleming v. Escort Inc. and Beltronics USA, Inc.,
2014 U.S. App. LEXIS 24419 (Fed. Cir. Dec. 24, 2014)
The panel affirms a finding of infringement and validity as to most of the asserted claims. The panel also
affirms the court’s finding of invalidity based on prior invention, rejecting patentee’s argument that there was
insufficient corroboration. Also affirmed is a ruling that the reissuance of the patent in suit was appropriate,
rejecting the argument that the reason for seeking reissue did not meet the “error” precondition for
reissuance.
Hoyt Fleming owns two reissue patents related to radar detectors for detecting police signals, which
incorporate a GPS unit. The incorporated GPS can reduce false alarms (i.e., the signaling of a police
presence when none exists) by allowing the detector to disregard signals from an identified location known
to produce such false alarms (e.g., a storefront door opener transmitting a radar signal that can be mistaken
for a police presence).
Escort contends that Steven Orr, who works for Escort as a consultant, had invented a GPS-incorporating
radar detector before Fleming did—a prior invention under 35 U.S.C. §§ 102(g) and 103 (2006). Fleming's
claimed priority date is April 14, 1999—the filing date of his patent application. Orr alleged that he conceived
his invention in 1988 and made a working embodiment that reduced it to practice in April 1996. From 1988
to 1996, Orr was working at Cincinnati Microwave (“Cincinnati”), and when Cincinnati entered bankruptcy,
Escort acquired rights to the Orr invention. During the summer of 1997 Escort sought Orr's assistance in the
new enterprise, and Orr filed a patent application to claim his alleged invention, with Escort as assignee, on
June 14, 1999, two months after Fleming filed his application.
The jury in this case found most of Fleming's asserted claims to be infringed by Escort and not to be invalid.
It found invalid several other claims based upon Orr’s prior invention either independently or in combination
with other prior art. The district court denied motions for JMOL.
Sufficiency of Orr’s prior invention evidence
The invalidity verdict rested first on Orr's prior invention, which the jury found to anticipate some of the
claims, and second, on the combination of Orr's prior invention and prior art patents to invalidate other
claims. The content of those teachings and the motivation to combine are fact questions, which the panel
assumes the jury answered in Escort's favor.
The evidence makes credible Orr's general account: in 1988, when he had his specific conception, various
industry participants were thinking generally about equipping radar detectors with GPS to reduce false
alarms; Cincinnati, in particular, was interested in the idea; by 1992, Orr was collecting data and working
toward reducing the conception to practice; and in 1996, spurred by great interest in his project, Orr reduced
his invention to practice. The evidence, in referring to frequencies and to using a GPS-given location to mute
a detector alarm, also provides substantial corroboration of the more specific claim limitations concerning
lockout frequencies and distances that Fleming highlighted in his argument.
Fleming is correct that none of the corroborating evidence constitutes definitive proof of Orr's account or
discloses each claim limitation as written. But the corroboration requirement has never been so demanding.
It is a flexible, rule-of reason demand for independent evidence that, as a whole, makes credible the
testimony of the purported prior inventor.
18
Abandoned, suppressed or concealed
Fleming's final challenge is that, even if Orr had priority of invention by virtue of his activities through 1996,
he lost priority under 35 U.S.C. § 102(g)(2)'s disqualification of prior inventions that have been abandoned,
suppressed, or concealed. Although the Circuit accepts the facts as found by the jury where (as here) they
are supported by substantial evidence, suppression or concealment is a question of law to be reviewed de
novo.
In this case, there is no evidence of any active efforts to suppress or conceal. And the panel finds the timing
of Orr's activities leading to his June 1999 patent application not to warrant an inference of abandonment,
suppression, or concealment.
In these circumstances, the panel does not infer suppression, concealment, or abandonment for two
reasons. First: In making his argument, Fleming's position has been that his priority date is April 14, 1999,
when he filed his patent application. That date is later than the dates of Orr's conception (1988) and
reduction to practice (1996). It also is later than the latest possible date—summer 1998—that the evidence
establishes Orr resumed work on his prior invention when joining Escort. Even if the focus were solely on
Orr (thus disregarding Escort, the patent-rights owner), and even if Orr had abandoned his invention before
summer 1998, the defense of abandonment is properly rejected on the ground that Orr resumed his active
work before Fleming's April 1999 priority date.
“Error” under section 251
Escort, in its cross-appeal, argues that Fleming's patents are invalid because there was no "error" to qualify
for reissuance under section 251. The asserted error here is that, when drafting his original patent, Fleming
failed to appreciate the full scope of his invention and the inadequacy of the original claims for properly
capturing the full scope. This is a classic reason that qualifies as error. It identifies a deficient understanding
of some combination of fact and law bearing on the meaning of claim language, the inventions disclosed in
the written description, and how particular language does or does not map onto products or processes that
could be claimed under section 251 consistent with the written description.
Claim Indefiniteness Under Section 112
Alcon Research Ltd. v. Barr Laboratories, Inc.,
745 F.3d 1180 (Fed. Cir. 2014)
A ruling of noninfringement was affirmed where the patentee never read its claims on the accused drugs
but instead analyzed infringement based on tests performed during development of its own product.
However, the panel reversed rulings that the patents in suit violated enablement and written description
requirements of § 112.
Chicago Board Options Exchange, Inc. v. Intl. Securities Exchange, LLC,
748 F.3d 1134 (Fed. Cir. 2014)
The Circuit reverses a determination of indefiniteness because one of ordinary skill would be able to
determine the meaning and scope of the claim.
GE Lighting Solutions, LLC v. Agilight, Inc.,
750 F.3d 1304 (Fed. Cir. 2014)
A Federal Circuit panel agrees as to 3 of the 4 patents in suit but is divided as to the fourth where the
written description apparently did not conform to the figures.
19
In re Thomas Packard, 751 F.3d 1307 (Fed. Cir. 2014)
In this case, decided prior to Nautilus v. Biosig, the Circuit upholds the validity of different standards for
claim indefiniteness during prosecution proceedings at the PTO and during post-issuance proceedings
before a court.
The MPEP provides at §2173.05(e) that "a claim is indefinite when it contains words or phrases whose
meaning is unclear." The applicant argued to the Circuit that the proper standard for determining
indefiniteness in the PTO should be the same as the standard applied by the Circuit; that is, whether the
term is "insolubly ambiguous." He argued that this would be an easier standard for him to meet since a
claim is not "insolubly ambiguous" if "a court can give any meaning to the disputed term in the context of
the claim." The more lenient “insolubly ambiguous” test was, as noted above, thrown out by the Supreme
Court in Nautilus.
Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014)
The Supreme Court reverses the Federal Circuit’s holding that a claim meets the dictates of 35 USC 112 as
long as it is not “insolubly ambiguous,” unanimously rejecting the Circuit’s standard, which “tolerates some
ambiguous claims but not others.”
According to the Supreme Court, section 112’s definiteness requirement must take into account the
inherent limitations of language. On the one hand, some modicum of uncertainty is the “price of
ensuring the appropriate incentives for innovation,” and patents are “not addressed to lawyers, or even to
the public generally,” but to those skilled in the relevant art. At the same time, a patent must be precise
enough to afford clear notice of what is claimed, thereby “‘apprising the public of what is still open to
them,’ ”
To tolerate imprecision just short of that rendering a claim “insolubly ambiguous” would diminish the
definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of
uncertainty,” against which this Court
has warned.
The expressions “insolubly ambiguous” and
“amenable to construction,” which permeate the Federal Circuit’s recent decisions concerning §112, ¶2, fall
short in this regard and can leave courts and the patent bar at sea without a reliable compass.
Triton Tech of Texas, LLC v. Nintendo of America, Inc.,
753 F.3d 1375 (Fed. Cir. 2014)
In an infringement case directed against Nintendo’s Wii product, the Circuit affirms that the asserted
claims are indefinite because structure for the claimed “integrator means” is not adequately disclosed in
the specification.
The patent in suit is directed to an input device in which a user can communicate with a computer by
moving the input device — much like using a mouse, but in three dimensions. The input device sends
commands to the computer based on the input device's three-dimensional position, orientation, and
motion. In the preferred embodiment, these components include three accelerometers and three
rotational rate sensors. The patent does not further explain how the numerical integration is performed,
only that it is performed in a "conventional manner."
The panel cited to the pertinent language of § 112 ¶ 6 and noted that, in exchange for using means plus
function claiming, the patent must disclose the corresponding structure for performing the claimed
function and clearly link that structure to the function. The panel held that if the function is performed by a
general purpose computer, the specification must also disclose the algorithm that the computer performs to
accomplish that function.
20
H-W Technology, L.C. v. Overstock.com, Inc.,
758 F.3d 1329 (Fed. Cir. 2014)
The Circuit affirms a ruling that (1) a claim corrected by a certificate of correction cannot be asserted
where the infringement began prior to issuance of the certificate, and (2) an apparatus claim that includes
method limitations is invalid as indefinite.
The patentee argued that the district court itself had authority to correct a claim error but the panel holds
that a district court can correct a patent only if the error is evident from the face of the patent. Here, the
error is not evident from the face of the patent since the claim reads coherently without the missing
limitation.
The Circuit also held that the apparatus claim at issue combines two statutory classes of invention and
therefore the claim is indefinite. Here, because of the disputed language (“wherein said user completes”
and “wherein said user selects”), it is unclear here when infringement would occur.
ScriptPro, LLC, et al. v. Innovation Associates, Inc.,
762 F.3d 1355 (Fed. Cir. 2014)
The Circuit reverses summary judgment of invalidity under § 112, ¶ 1, holding that issues of fact remain as to
whether the claims of the patent that do not recite “sensors” are broad enough to include sensor-less
systems even though the patent specification states that “the collating unit of the present invention broadly
includes several components, including “a plurality of sensors.”
Interval Licensing, LLC v. AOL, Inc., et al.,
766 F.3d 1364 (Fed. Cir. 2014)
In its first application of the Supreme Court’s Nautilus v. Biosig decision, the Circuit rules that the phrase
“unobtrusive manner that does not distract a user,” in reference to the manner in which an attention
manager displays images, fails to inform those skilled in the art about the scope of the invention with
reasonable certainty, and the Circuit therefore affirms the district court’s judgment of invalidity under § 112, ¶
2.
The key claim language at issue in this appeal includes a term of degree, “unobtrusive manner.” The panel
does not understand the Supreme Court to have implied in Nautilus, and it does not hold today, that terms of
degree are inherently indefinite. Claim language employing terms of degree has long been found definite
where it provided enough certainty to one of skill in the art when read in the context of the invention. As the
Supreme Court recognized in Nautilus, absolute precision in claim language is unattainable. Although
absolute or mathematical precision is not required, it is not enough, as some of the language in prior cases
may have suggested, to identify some standard for measuring the scope of the phrase. The Supreme Court
explained that a patent does not satisfy the definiteness requirement of §112 merely because a court can
ascribe some meaning to a patent’s claims. The claims, when read in light of the specification and the
prosecution history, must provide objective boundaries for those of skill in the art.
The patents’ “unobtrusive manner” phrase is highly subjective and, on its face, provides little guidance to
one of skill in the art. The lack of objective boundaries in the claim language is particularly troubling in light
of the patents’ command to read the term “image” broadly to mean any sensory stimulus that is produced
from the set of content data, including sounds and video. The patents contemplate a variety of stimuli that
could impact different users in different ways. A term of degree fails to provide sufficient notice of its
scope if it depends on the unpredictable vagaries of any one person’s opinion. Where, as here, there is
a purely subjective claim phrase, the panel says to turn to the written description for guidance.
21
After reviewing the specification and prosecution history, the panel concludes that the “unobtrusive manner”
phrase has too uncertain a relationship to the patents’ embodiments. Contrary to Interval’s suggestion, the
wallpaper embodiment does not provide a reasonably clear and exclusive definition, leaving the facially
subjective claim language without an objective boundary.
In sum, the panel holds that the “unobtrusive manner that does not distract a user” phrase, when viewed in
light of the specification and prosecution history, fails to inform those skilled in the art about the scope of the
invention with reasonable certainty. The claims that depend on that phrase are thus invalid for
indefiniteness.
Naming Proper Inventor(s)
General Electric Company and GE Wind Energy, LLC v. Thomas Wilkins, Mitsubishi Heavy
Industries, Ltd., et al.,750 F.3d 1324 (Fed. Cir. 2014)
When determining whether a putative inventor has met his burden of providing "clear and convincing
evidence" of inventorship, the Circuit determines that a court should assess whether credible testimony has
been given, and if so, whether corroborative evidence has also been provided. Here the putative
inventor "refused four times to take an unqualified oath to tell the truth at his deposition" and "filed a
declaration calling the district court 'obtuse,' 'overly assumptive,' and 'ignorant'," and failed to produce any
realiable documents supporting his allegations. Not surprisingly, the district court concluded that W ilkins
and Mitsubishi failed to establish W ilkins' inventorship, and that ruling is affirmed by the Circuit.
Claim of Priority
Medtronic CoreValve, LLC v. Edwards Lifesciences Corp.,
741 F.3d 1359 (Fed. Cir. 2014)
The Circuit affirmed a district court's summary judgment ruling of invalidity based on the failure to comply
with the priority claiming requirements of 35 USC 119 and 120. Here the Circuit determined that the patent
was not entitled to the priority date it claimed, and therefore the patent was invalid.
The Federal Circuit first looked to the language of Section 120, which allows a later-filed application to claim
the benefit of an earlier filing date if "it contains … a specific reference to the earlier filed application…." The
Circuit had previously held that the "specific reference" requirement mandates that each intermediate
application in the chain of priority must refer to the prior applications. Here, intermediate applications, but not
the actual patent in suit, failed to specifically reference each of the earlier-filed applications in the priority
chain. Therefore, the patent in suit was not entitled to claim priority back to the priority date of the first
international application, which thus became invalidating prior art.
Inequitable Conduct
Apotex, Inc. v. UCB, Inc., 763 F.3d 1354 (Fed. Cir. 2014)
The Circuit affirms unenforceability based upon the intentional withholding of material prior art, keeping true
facts from an expert, and making affirmative misrepresentations of material facts. The panel also notes that
the actions come close to the misconduct that Therasense held could justify a finding of inequitable conduct
without showing but-for materiality. The case shows that the Circuit will uphold findings of inequitable
conduct after Therasense but in almost every case where it has done so there has been misconduct at issue
in addition to the withholding of prior art.
22
American Calcar, Inc. v. American Honda Motor Co., Inc.,
768 F.3d 1185 (Fed. Cir. 2014)
A divided panel affirms a determination that the district court followed the tests set forth in Therasense and
did not abuse its discretion in determining that the patents in suit are unenforceable due to inequitable
conduct.
This appeal arises from Calcar’s suit against Honda asserting the infringement of several related
patents directed to navigation and other systems for use in a car. Before trial, Honda moved for a finding
of inequitable conduct based on the actions of Calcar’s founder, Mr. Obradovich. Among the three coinventors, Mr. Obradovich was the one primarily responsible for preparing the patent application.
Honda alleged that while Mr. Obradovich disclosed the existence of the 1996 Acura RL (“96RL”)
navigation system, he intentionally did not disclose additional information that would have led the PTO to
deny the patent as anticipated or rendered obvious by the system.
In 1996, Honda added the navigation system as an option for the Acura RL. At the time, Calcar
was publishing “Quick Tips” guides: booklets with condensed information from a car’s owner’s
manual. During the course of developing a QuickTips guide for the 96RL, Mr. Obradovich drove the car
and operated the navigation system, and Calcar personnel took photographs of the navigation system
and owner’s manual.
Subsequently, Mr. Obradovich began working on the parent application
that ultimately issued as one of the patents in suit. The application explicitly referred to the 96RL system as
prior art, and Mr. Obradovich acknowledged that the system was used as the basis of Calcar’s inventions.
Honda alleged that Mr. Obradovich knew that the owner’s manual and photographs were in Calcar’s
possession and deliberately withheld them during prosecution. Honda argued that the operational details
that he did not disclose were precisely those that were claimed in the other patents at issue—the use of the
system to display the status of vehicle functions.
Therasense requires ”but for” materiality and specific intent
Inequitable conduct is an equitable defense to patent infringement. The defendant proves
inequitable conduct “by clear and convincing evidence that the patent applicant (1) misrepresented
or omitted information material to patentability, and (2) did so with specific intent to mislead or deceive
the PTO.” Intent and materiality must be separately established. Therasense, 649 F.3d at 1290.
On appeal, the district court’s findings of materiality and intent are reviewed for clear error and the ultimate
finding of inequitable conduct based on those underlying facts is reviewed for abuse of discretion.
Materiality
Calcar’s principal argument is that the district court improperly failed to account for the
inventive differences between the prior art 96RL navigation system and the claims of the ’465 and ’795
patents. Calcar points to examples listed in the patent’s specification, such as the ability to retrieve such
features as climate control functions, “the radio, the engine, and other aspects of the vehicle.” The district
court did address the differences between the 96RL system and what Calcar actually claimed. It found that
the only difference was “the nature of the information contained in the systems”: navigational
details (destinations, addresses, directions) in the 96RL system and information about the vehicle itself in
the ’465 and ’795 patents. The district court found that the PTO would have not allowed the patents as
“it would have been obvious to a person of ordinary skill in the art to include different information in the 96RL
navigation system.” Id.
Because the district court did not commit clear error in its finding of materiality, the panel affirms the district
court’s determination that the undisclosed operational details of the 96RL navigation system are material to
the patentability of the patents.
23
Intent
Calcar provided a limited disclosure of the 96RL navigation system in the patents’ specification, and
it also submitted a New York Times article describing the system during prosecution. As the district found,
however, these disclosures exclude material information about the 96RL system, such as the manner in
which the prior art system provided notifications to the user and displayed search results. Partial disclosure
of material information about the prior art to the PTO cannot absolve a patentee of intent if the disclosure is
intentionally selective.
For the aforementioned reasons, the majority affirms the district court’s judgment that the ’497, ’465,
and ’795 patents were obtained through inequitable conduct and are thus unenforceable.
Double Patenting
AbbVie, Inc., et al. v. The Mathilda, et al.,
764 F.3d 1366 (Fed. Cir. 2014)
After having paid $100 million to license a first patent from plaintiffs to market its Humira anti- inflammatory,
AbbVie was sued for infringement of a second patent. That second patent was found invalid for double
patenting since the narrow species of the newer patent were not patentably distinct from the genus claimed
in the first patent.
Public Use
Delano Farms Company, et al. v. The California Table Grape Commission, et al.,
2015 U.S. App. LEXIS 346 (Fed. Cir. Jan. 9, 2015)
The Circuit affirms a judgment that two plant patents are not invalid based on the plants being in “public use”
more than one year prior to the filing date. Two individuals obtained samples of patented plant varieties in an
unauthorized manner and planted them in their fields. The district court found, and the panel agreed, that
there were sufficient confidentiality assurances that the uses could not be considered a “public use” under
35 USC §102(b).
The Legal Tests to be Applied
The proper test for the public use prong of the §102(b) statutory bar is whether the purported use was
accessible to the public or was commercially exploited. The question in a case such as this one is thus
whether the actions taken by the inventor (or, as in this case, a third party) create a reasonable belief as to
the invention's public availability. Factors that we have previously identified as being helpful in analyzing that
question include the nature of the activity that occurred in public; the public access to and knowledge of the
public use; and whether there was any confidentiality obligation imposed on persons who observed the use.
The last factor captures the common sense notion that whether an invention is “accessible to the public”
depends, at least in part, on the degree of confidentiality surrounding its use. An agreement of
confidentiality, or circumstances creating a similar expectation of secrecy, may negate a public use where
there is not commercial exploitation.
The analysis is similar when the allegedly public use is performed by an unaffiliated third party rather than
the inventor. In order to be invalidating, such use must still be publicly accessible; secret or confidential
third-party uses do not invalidate later-filed patents. The adequacy of any confidentiality guarantees are
measured in relation to the party in control of the allegedly invalidating prior use.
24
The Use Was Not a “Public Use”
The appellants argue that the cultivation of the unreleased varieties by Jim Ludy and Larry Ludy constituted
public use because they made no attempt to maintain confidentiality and made no discernible effort to
maintain the invention as confidential. The problem with the appellants' argument is that it is squarely
contrary to the district court's findings of fact. Larry Ludy was present during Jim Ludy's conversation with
Klassen, and knew Klassen did not have the authority to provide the Ludys with unreleased varieties. When
Jim Ludy gave Larry Ludy the plants, Jim Ludy told his cousin to "keep knowledge of the plants to ourselves"
and expected the fact of their possession of the plants to remain private. After the critical date, Larry Ludy
allowed Sandrini to sell the fruit of the unreleased vines under a different name to avoid detection. Moreover,
during a deposition, Larry Ludy refused to identify Klassen as the source of the Ludys' unreleased plants.
The findings of the district court clearly establish, therefore, that both Ludys knew that they were not
authorized to have the plants and that they needed to conceal their possession of the plants.
The facts of this case show that Jim Ludy sought to maintain control of the plants he obtained from Klassen.
Although Jim Ludy shared the plants with his cousin, the evidence showed that Larry Ludy was aware of the
need to keep the plants secret, and at Jim Ludy's urging, Larry Ludy continued to treat his possession of the
plants as confidential and non-public.
Finally, the appellants argue that the lack of secrecy with which the Ludys cultivated the unreleased varieties
mandates a finding of public use. The Ludys grew the plants in locations that were visible from public roads
but grape varieties cannot be reliably identified simply by viewing the growing vines alone. The unreleased
varieties were not labeled in any way, and the appellants introduced no evidence that any person other than
the Ludys and Sandrini had ever recognized the unreleased varieties. A reasonable jury could conclude that
if members of the public are not informed of, and cannot readily discern, the claimed features of the
invention in the allegedly invalidating prior art, the public has not been put in possession of those features. In
this case, the district court, sitting as the trier of fact, came to exactly that conclusion, and the evidence
supports the court's conclusion.
Defenses
Laches and Estoppel
SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC,
767 F.3d 1339 (Fed. Cir. 2014)
The panel affirms a grant of summary judgment of laches based on more than a six-year delay in filing suit,
but finds that issues of fact preclude summary judgment as to equitable estoppel. However, the case has
now been accepted for en banc review.
On October 31, 2003, SCA sent a letter to First Quality, contending that some of First Qualities’ adult
incontinence products infringed SCA’s ‘646 patent. If First Quality disagreed, SCA asked it to provide an
explanation. First Quality responded that a ‘649 patent invalidated the ‘646 patent. SCA and First Quality
exchanged four more letters over the next eight months, but those letters concerned a different patent
and different products.
On July 7, 2004, SCA filed an ex parte reexamination request based in part on the prior art ’649 patent.
About three years later, on March 27, 2007, the PTO confirmed the patentability of all of the claims of the
‘646 patent. SCA never notified First Quality about the reexamination.
25
Starting in 2006, First Quality began expanding its line of adult incontinence products. In 2008 First Quality
acquired Covidian’s Tyco Healthcare Retail Group and, along with it, some of the products at issuehere. It
continued its expansion in 2009 at a cost of more than $10 million.
SCA claims that it began preparing to file suit against First Quality immediately after the reexamination was
concluded. But SCA did not file suit or otherwise contact First Quality until August 2, 2010, when it filed
its complaint in this case—six years and nine months after SCA first contacted First Quality regarding the
’646 patent. According to SCA, it spent the ensuing three years implementing new business management
structures, evaluating outside counsel, and examining other potentially infringing products.
The court granted First Quality’s summary judgment as to laches and equitable estoppel, and SCA appeals.
Laches exists in this case.
SCA argues that the reexamination proceedings preclude application of the laches presumptions in this
case because the reexamination period should be excluded from the total delay. Reasonable
explanations for delay include attempts to enforce the patent, such as filing suit against another infringer or
participating in post-grant PTO proceedings. The district court concluded that SCA’s stated reasons for
delay, principally the reexamination, were insufficient to overcome the presumption of unreasonable delay.
Although the panel disagrees that SCA was required to provide notice of the reexamination proceedings to
First Quality, it agrees that SCA failed to rebut the presumption of unreasonable delay.
Issues of fact remain as to equitable estoppel.
The first element of equitable estoppel requires SCA to have made a misleading communication, either
affirmatively or by omission. The panel notes that silence alone will not create an estoppel unless there
was a clear duty to speak or somehow the patentee’s continued silence reenforces the defendant’s
inference that the defendant will be unmolested. Although the most common example of equitable
estoppel is a patentee who objects to allegedly infringing activities and then remains silent, that silence
must be coupled with other factors, such that the patentee’s misleading conduct is essentially misleading
inaction.
Compared to prior case law finding equitable estoppel, the interaction between SCA and First Quality
was meager. SCA and First Quality exchanged only six terse letters over a course of eight months. Only
two of those letters referenced the ’646 patent or the accused products. First Quality never
solicited further comment from SCA. A reasonable juror could conclude that First Quality raised an issue
SCA had overlooked and that SCA, rather than acquiescing, took immediate action.
Infringement
Gemalto S.A. v. HTC Corporation, 754 F.3d 1364 (Fed. Cir. 2014)
The Circuit affirms claim construction and defendants’ motion for summary judgment of noninfringement
that the Android operating system does not infringe three Gemalto patents. Included as defendants are
HTC, Google, Samsung, Motorola Mobility and Exedea. The summary judgment means that Java cards
that are installed in smartphones using Google’s Android operating system dd not infringe the Gemalto
patents.
A plaintiff must provide “particularized testimony and linking argument to show the equivalents” are
insubstantially different, and Gemalto provided no testimony asserting that the difference in functionality
between cache memory and permanent memory is in fact insubstantial. Therefore, no reasonable fact
finder could find that the two types of memory function in substantially the same way to achieve
substantially similar results. Moreover, if cache memory were equivalent to the recited memory that stores
26
an application and interpreter, Gemalto’s claims would read on microprocessor systems that were widely
used prior to its invention. According to the panel, the doctrine of equivalents cannot be applied to
encompass the prior art. Therefore, the panel agreed with the district court that the accused devices do not
infringe under the doctrine of equivalents due to their use of cache memory.
Ferring B.V. v. Watson Laboratories, Inc. and Apotex, Inc.,
764 F.3d 1401 (Fed. Cir. 2014)
In two separate rulings the Circuit finds that generic versions of Lysteda®, a popular treatment for heavy
menstrual bleeding, to be non-infringing, either because the active ingredient released more slowly or too
quickly to infringe the patents in suit.
Based on the Actions Outside of the US
Halo Electronics, Inc. v. Pulse Electronics, Inc.,
769 F.3d 1371 (Fed. Cir. 2014)
Actions taking place entirely outside of the U.S. do not, in this case, subject the defendant to liability
for infringement of two Halo patents. Infringement of those same patents based upon actions in the U.S.
is not willful where the defendant had an engineer perform a “cursory examination” of the patents
and concluded that the patents were invalid.
Sale and Offer for Sale
Halo argues that the district court erred in granting summary judgment of no direct infringement as to the
sale and offer for sale of products that Pulse delivered abroad.
a. Sale of such products
The patent statute does not define the meaning of a “sale” within the U.S. for purposes of § 271(a).
The ordinary meaning of a sale includes the concept of a transfer of title or property. Indeed, Article 2 of
the UCC provides that “a sale consists in the passing of title from the seller to the buyer for a price.”
U.C.C. § 2-106; separately defines a “contract for sale” as including “both a present sale of goods and
a contract to sell goods at a future time.”
The products were manufactured, shipped, and delivered to buyers abroad. Pulse received the
actual purchase orders for those products abroad. While Pulse and Cisco engaged in quarterly
pricing negotiations for specific products, the negotiated price and projected demand did not constitute a
firm agreement to buy and sell, binding on both Cisco and Pulse. Instead, Pulse received purchase
orders from Cisco's foreign contract manufacturers, which then firmly established the essential terms
including price and quantity of binding contracts to buy and sell. Pulse was paid abroad by those
contract manufacturers, not by Cisco, upon fulfillment of the purchase orders. Thus, substantial activities of
the sales transactions at issue, in addition to manufacturing and delivery, occurred outside the U.S. Any
doubt as to whether Pulse's contracting activities in the U.S. constituted a sale within the U.S. under §
271(a) is resolved by the presumption against extraterritorial application of our laws.
b. Offer for Sale
The panel then turns to consider whether Pulse offered to sell within the U.S. those products that
Pulse manufactured, shipped, and delivered abroad. The location of the contemplated sale controls
whether there is an offer to sell within the United States. In order for an offer to sell to constitute
infringement, the offer must be to sell a patented invention within the U.S. The panel adopts the reasoning of
Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296 (Fed. Cir.
27
2010) and concludes that Pulse did not directly infringe the Halo patents by offering to sell the products in
the U.S. because Cisco outsourced all of its manufacturing activities to foreign countries, and the
contemplated sales were outside the U.S. Likewise with respect to other Pulse customers, there is no
evidence that the products at issue were contemplated to be sold within the U.S. The panel therefore
concludes that Pulse did not offer to sell the products “within the U.S.”
Concurring opinion
Judges O’Malley and Hughes concur but think the full Circuit should reevaluate the standard for
the imposition of enhanced damages in light of Highmark Inc. v. Allcare Health Management Systems,
Inc., 134 S. Ct. 1744 (2014) and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749
(2014). Judge Hughes reiterated this feeling in his recent concurrence in Bard Peripheral Vascular, Inc. et
al. v. W.L. Gore and Associates, Fed. Cir. Case 2014-1114 (January 13, 2015).
Claim Construction
Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc.,
134 S.Ct. 1761 (2014)
When reviewing a district court's resolution of subsidiary factual matters made in the course of its
construction of a patent claim, the Federal Circuit is to apply a "clear error," not a de novo, standard of
review. However, in its ruling the Court establishes a gaping exception that provides for de novo review
to claim constructions that are largely based on intrinsic evidence, which should continue to cover most
such constructions.
Federal Rule of Civil Procedure 52(a)(6) states that a court of appeals must not set aside a district
court's findings of fact unless clearly erroneous. It sets out a clear command, Anderson v. Bessemer
City, 470 U. S. 564, 574, and does not make exceptions or exclude certain categories of factual findings
from the court of appeals' obligation. The Rule thus applies to both subsidiary and ultimate facts. Even if
exceptions to the Rule were permissible, there is no convincing ground for creating an exception here.
Markman v. Westview Instruments, Inc., 517 U. S. 370, neither created, nor argued for, such an
exception. There, the Court held that the ultimate question of claim construction is for the judge, not the
jury, but it did not thereby create an exception from the ordinary rule governing appellate review of
factual matters. Instead, the Court pointed out that a judge, in construing a patent claim, is engaged in
much the same task as the judge would be in construing other written instruments, such as deeds,
contracts, or tariffs. Construction of written instruments often presents a "question solely of law," at least
when the words in those instruments are "used in their ordinary meaning." Great Northern R. Co. v.
Merchants Elevator Co., 259 U. S. 285, 291.
Clear error review is "particularly" important in patent cases because a district court judge who has
presided over, and listened to, the entire proceeding has a comparatively greater opportunity to gain the
necessary "familiarity with specific scientific problems and principles," Graver Tank & Mfg. Co. v. Linde
Air Products Co., 339 U. S. 605, 610, than an appeals court judge who must read a written transcript or
perhaps just those portions referenced by the parties. But if a written instrument uses "technical words or
phrases not commonly understood," which may give rise for the need to consider extrinsic evidence,
those words may give rise to a factual dispute. In that circumstance, the determination of the matter of
fact will precede the function of construction.
Sandoz claims that separating "factual" from "legal" questions may be difficult and, like the Federal
Circuit, posits that it is simpler for the appellate court to review the entirety of the district court's claim
construction de novo than to apply two separate standards. But courts of appeals have long been able to
separate factual from legal matters, and the Federal Circuit's efforts to treat factual findings and legal
28
conclusions similarly have brought with them their own complexities. As for Sandoz's argument that
"clear error" review will bring about less uniformity, neither the Circuit nor Sandoz has shown that
divergent claim construction stemming from divergent findings of fact on subsidiary matters should occur
more than occasionally.
When the district court reviews only evidence intrinsic to the patent, the judge's determination is solely a
determination of law, and the court of appeals will review that construction de novo. However, where the
district court needs to consult extrinsic evidence in order to understand, for example, the background
science or the meaning of a term in the relevant art during the relevant time period, and where those
subsidiary facts are in dispute, courts will need to make subsidiary factual findings about the extrinsic
evidence. The district judge, after deciding the factual dispute, will then interpret the patent claim in light
of the facts as he has found them. The ultimate construction of the claim is a legal conclusion that the
appellate court can review de novo. But to overturn the judge's resolution of an underlying factual
dispute, the appellate court must find that the judge, in respect to those factual findings, has made a
clear error.
Justice Thomas dissents, joined by Justice Alito, arguing that the standard of review for claim construction
should continue to be solely on a de novo basis.
Comment: As we know, many claim constructions are resolvable by reference solely to the intrinsic
evidence. Often, when one party attempts to reference extrinsic evidence, it results in the court noting that
extrinsic evidence will not be considered when it is inconsistent with the intrinsic evidence. Given the hybrid
approach pronounced by the Court, counsel having little faith in the construction they think will be adopted
by the district court will undoubtedly be relying exclusively on the intrinsic record and those believing that a
judge is leaning their way will want to present and argue the extrinsic evidence.
In re Gianelli, 739 F.3d 1375 (Fed. Cir. 2014)
In this appeal from the PTAB, the Federal Circuit reverses a determination of obviousness based on
the panel’s holding that “adapted to” is not synonymous with “capable of” when considering whether one of
ordinary skill would have thought to modify a prior art exercise machine to arrive at the claimed invention.
Because these terms are commonly used claim terms, the court’s holding is one to closely consider.
EnOcean GmbH v. Face Int’l. Corp.,
742 F.3d 955 (Fed. Cir. 2014)
Claims that recite “means” are presumptively to be construed under § 112, ¶ 6, while those that don’t are
presumptively not to be construed as means plus function claims.
The Circuit reiterates the test to be applied in determining whether claims that don’t use “means
for” language should nonetheless be construed under § 112, ¶ 6. Here the panel unanimously determined
that § 112, ¶ 6 did not apply because there was an adequate description of the structure through the use of
the claim term “receiver.” The panel compared it to "height adjustment mechanism," "computing unit ... for .
. . evaluating," or "detent mechanism" in other cases. We see other cases where means plus function claims
are not construed under § 112, ¶ 6 where there is sufficient structure recited in the claim to overcome the
presumption of construction under § 112, ¶ 6. W e just have to remember it is just a rebuttable construction
so we should keep this in mind both when drafting a claim and arguing claim construction.
Tempo Lighting, Inc. v. Tivoli, LLC,
742 F.3d 973 (Fed. Cir. 2014)
29
The Circuit affirms the PTAB’s reversal of an examiner's claim construction that had improperly relied on
extrinsic evidence, but vacated the Board's determination that an inter partes reexamination requester had
waived its right to present an invalidity argument by not cross appealing a PTO Office action.
The panel notes that extrinsic evidence is of relatively little probative value, especially where, as here, it is
inconsistent with the intrinsic evidence. The panel also supported the Board's rejection of the argument that
the examiner was construing the claims with an eye to preserving their validity under § 112, noting that this
was a doctrine of limited utility.
Elcommerce.com, Inc. v. SAP AG and SAP America, Inc.,
745 F.3d 490 (Fed. Cir. 2014)
In a split decision, the Circuit affirmed a venue transfer, but vacated the district court’s rulings on meansplus-function claims, holding that it was necessary to have expert testimony as to whether one with
ordinary skill in the art would have understood the functions described, and whether there was
adequate disclosure in the specification to support the claims.
While the majority of the panel determined that expert witness testimony may not be necessary in every
case, it was necessary here for the court to decide whether SAP had met its burden of proving invalidity.
The panel explained that a patent must describe sufficient structure or acts whereby a person of ordinary
skill in the field could perform the specified function without undue experimentation. The panel held that it
cannot be assumed that, without evidence, a general purpose judge can ascertain the position of persons of
skill in the art and conclude that there is insufficient support for the eleven interrelated means-plusfunction claim limitations. Instead of evidence, SAP submitted only attorney argument. The majority thus
vacated the rulings as to the system claims.
Butamax Advanced Biofuels LLC v. Gevo, Inc., 746 F.3d 1302 (Fed. Cir. 2014);
Frans Nooren Afdichtingssystemen B.V. v. Stopaq Amcorr Inc., 744 F.3d 715 (Fed. Cir. 2014);
Starhome GmbH v. AT&T Mobility LLC , 743 F.3d 849 (Fed. Cir. 2014);
Ancora Technologies, Inc. v. Apple, Inc., 744 F.3d 732 (Fed. Cir. 2014)
Shire Development, LLC v. Watson Pharmaceuticals, Inc., 746 F.3d 1326 (Fed. Cir. 2014);
and Braintree Laboratories, Inc. v. Novel Laboratories, Inc., 749 F.3d 1349 (Fed. Cir. 2014)
The Circuit flexes its muscle reversing claim construction rulings by the district court in de novo claim
rulings consistent with Ballast Lighting.
Lighting Ballast Control LLC v. Philips Electronics North America Corporation,
744 F.3d 1272 (Fed. Cir. 2014)
In a 6-4 en banc decision, the Federal Circuit held that arguments and evidence presented by the
appellants, the dissent, and many of the amici did not justify reversing the holding of Cybor Corp. v. FAS
Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc) that claim construction required a de novo
standard of review. The majority opinion by Judge Newman noted that the question before it was not
simply whether to defer to district courts or instead to examine claim construction de novo. T h e q
ues t ion was whether there is “compelling justification” to depart from the doctrine of stare decisis,
particularly when that precedent is an en banc Federal Circuit decision.
Starhome GmbH v. AT&T Mobility LLC,
743 F.3d 849 (Fed. Cir. 2014)
In what seems to be a rare affirmance of claim construction, a unanimous panel affirmed the district
court's use of extrinsic evidence to support claim construction. The Circuit determined that the term
30
"gateway" had a well-understood meaning in the art at the time of filing, and plaintiff Starhome's definition
was just too different from the way the industry had been using the term. The panel rejected Starhome's
attempt to use the doctrine of claim differentiation since the pertinent claims differed in scope in several
respects. The panel also refused to accept Starhome's attempt to use the prosecution history of a related
European application. While noting that statements made to foreign patent offices are sometimes
relevant, the panel felt that the European history actually supported defendant's position that the patentee
did not intend to depart from the ordinary definition of the terms at issue.
E2Interactive, Inc. v. Blackhawk Network, Inc.,
561 Fed. Appx. 895 (Fed. Cir. 2014)
In a nonprecedential but interesting decision rendered two days prior to Vederi, the Circuit reached a
conclusion that was different from that in Vederi, reversing a claim construction ruling based upon what the
panel determined to be a clear prosecution disclaimer.
This decision is interesting because the panel did not even address arguments by the patentee (1) that the
plain language in claim supported the district court’s construction and (2) that the narrower construction
would exclude coverage of one of the disclosed embodiments, both of which were considered critical in
Vederi. This case again demonstrates the importance of closely studying the prosecution history when
rendering an infringement opinion or when presenting claim construction arguments to the district court,
even when the claim language appears to be clear and broad.
Vederi, LLC v. Google, Inc., 744 F.3d 1376 (Fed. Cir. 2014)
The Circuit reverses a district court’s ruling that Google’s popular Street View product does not infringe,
noting that the district court’s claim construction relied too heavily on extrinsic evidence and an alleged
disclaimer, and that did not give sufficient weight to the plain language of the claim or the specification.
The district court based its construction largely on extrinsic evidence regarding the technical meaning of
“elevation” as an architectural term of art. The panel disagreed with this approach because the court did not
adequately consider the intrinsic evidence that supported a broader construction. For example, the claim
language itself supports a broader interpretation since the operational language in this case is “substantially
elevations” and not simply “elevations.” The panel found that the district court’s construction effectively read
“substantially” out of the claim, and “a claim construction that gives meaning to all the terms of the claim is
preferred over one that does not do so.”
The panel also noted that the specification supports a broader construction. For example, the specification
discloses the option of using a fish-eye lens and such an image “provides a curved, as opposed to vertical,
projection, and almost certainly reflects curvature and perspective.” Google’s “flat” construction would not
allow the claims to cover the fish-eye lens embodiment. The examples in the specification that provide flat
images do not require the narrower construction since those examples are merely described as preferable.
Google also cites to a statement in the specification that distinguishes prior art imaging providing samplings
on the surface of an imaginary sphere, which is "computationally intensive and hence cumbersome and
inefficient in terms of time and cost." However, the panel did not think this statement amounted to a clear and
unmistakable disavowal of claim coverage, noting that this reference is fundamentally different from the use
of a cluster of cameras to take images looking out in all directions. Google also suggested that an argument
made during prosecution to distinguish prior art disclaimed the construction sought by Vederi, but the panel
similarly did not think that argument constituted a clear and unambiguous disavowal of spherical or curved
images.
Comment: We can take a lot from this case – make sure to describe the preferred embodiments as merely
“preferred,” exercise care in distinguishing the prior art in the specification and the prosecution - but perhaps
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the clearest teaching is that, wherever possible, do not use the same verbiage to distinguish the prior art in
all of the independent claims. While Vederi appears to be on the road to winning this case, its road might
have been easier had it not included the phrase “substantially elevations” in all of the asserted claims in the
four patents in suit.
GE Lighting Solutions, LLC v. Agilight, Inc.,
750 F.3d 1304 (Fed. Cir. 2014)
Noting that the standards for finding lexicography and disavowal are exacting, the panel stated: “To act as
his own lexicographer, a patentee must clearly set forth a definition of the disputed claim term, and clearly
express an intent to define the term. Similarly, disavowal requires that the specification make clear that
the invention does not include a particular feature.” The panel found neither here. Similarly, while the
specification only discloses a single embodiment of an IDC connector, it does not disavow or disclaim the
plan meaning of IDC connector or otherwise limit it to that embodiment.
In each of these cases the Circuit reminds us there must be a clear and unambiguous disavowel of a broad
definition. In Golden Bridge and Hill-Rom the alleged disavowal was in the prosecution history while in X2Y
and GE Lighting it was alleged to have been in the specification. . In Vederi the disavowal was alleged to
have been in both. However, despite this high bar, these cases show that the Circuit will, if the evidencen is
clear and unambiguous, find such disavowals. - The X2Y case is a good example of how the careless
drafting of a specification can doom a patentee’s claim construction because, other than the limiting
language in the specification, X2Y had strong arguments for a broad claim construction. Golden Bridge
shows how careful we have to be in prosecution to avoid a disavowal.
Hill-Rom Services, Inc. et al. v. Stryker Corporation et al.,
755 F.3d 1367 (Fed. Cir. 2014)
A divided panel reverses the district court's claim construction on several grounds, including improperly
reading limitations from the specification into the claims and improperly invoking judicial estoppel to limit the
claims.
X2Y Attenuators, Inc. v. ITC and Intel Corporation, et al.,
757 F.3d 1358 (Fed. Cir. 2014)
The Circuit affirms the ITC’s claim construction and a determination that Intel and its customers did not
infringe X2Y’s patents. The technology at issue relates to structures for reducing electromagnetic
interference in electrical circuits, and is used in many Apple and Hewlett-Packard computers. The patented
inventions use shielding electrodes to reduce the undesirable buildup of charge, known as “parasitic
capacitance,” between electrodes used for conduction.
Golden Bridge Technology, Inc. v. Apple, Inc., et al.,
758 F.3d 1362 (Fed. Cir. 2014)
The Circuit determines that the patentee disclaimed a broader scope of the claim term “preamble” in an IDS
submission that included a previously-agreed-upon construction. An additional infringement theory argued
by the patentee in a motion for reconsideration was waived because the argument was made for the first
time in a motion for reconsideration.
The panel notes that the Circuit generally construes terms according to their plain and ordinary meanings to
one of ordinary skill in the art, but departs from that meaning where there is disclaimer. Here, GBT clearly
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and unmistakably limited the term “preamble” to "a signal used for communicating with the base station that
is spread before transmission." During reexamination of the '267 patent and prosecution of the '427 patent,
GBT submitted and requested that the PTO "expressly consider" its stipulated construction of preamble from
the Texas litigation. The stipulation required the preamble to be spread before transmission. According to the
panel, it would have been natural for both the PTO and the public to rely upon the stipulation in determining
the scope of the claimed invention.
Amdocs (Israel) Limited v. Openet Telecom, Inc., et al.,
761 F.3d 1329 (Fed. Cir. 2014)
In a split decision the Circuit reverses the granting of a motion for summary judgment of noninfringement as
to four patents in suit. The panel finds issues of fact as to the first three patents based on its
conclusion that certain evidence should not have been excluded, and that the district court improperly
resolved factual issues against the non-moving party. The majority disagrees with the court as to claim
construction on the fourth patent.
CardSoft, LLC, v. Verifone, Inc., et al.,
769 F.3d 1114 (Fed. Cir. 2014)
Because the district court erred by failing to give “virtual machine” its ordinary and customary meaning, the
Circuit reverses the court’s construction of this term, throwing out a $15 million verdict against payment
terminal manufacturer VeriFone. Because CardSoft waived any argument that Verifone infringes under the
correct construction, the Circuit grants Appellants’ judgment of no infringement as a matter of law.
CardSoft alleges that Appellants infringe two patents directed to software for small, specialized computers,
like payment terminals. In construing the patent claims, the district court adopted CardSoft’s proposed
construction for the claim term “virtual machine.” Applying the court’s construction, a jury returned a verdict
for CardSoft.
Construction of “Virtual Machine”
The evidence establishes that, at the time the asserted patents were filed, the defining feature of a “virtual
machine” was its ability to run applications that did not depend on any specific underlying operating system
or hardware. That the specification would emphasize this aspect of a virtual machine is not surprising in
light of the extrinsic evidence, which also supports VeriFone’s proposed construction. The prosecution
history expressly ties this extrinsic evidence—the “write once, run anywhere” Java virtual machine—to the
patent’s use of “virtual machine.” During prosecution of the ’945 patent, the applicant stated that the Java
virtual machine was a “conventional” virtual machine that allowed “different incompatible computers
(incompatible hardware and operating systems)” to “be programmed to emulate the same hypothetical
computer” so that “applications” written for that hypothetical computer “are therefore portable to the
previously incompatible computers.” The applicant explained that the claims describe “an addition to a
conventional virtual machine,” not a wholly new structure. In short, the asserted patents use “virtual
machine” in exactly the same way Sun used the term—the patents simply optimize the virtual machine for
use on a payment terminal.
CardSoft waived its argument so Verifone is entitled to judgment of no infringement.
VeriFone contends that, applying the correct construction, it is entitled to judgment of no infringement as
a matter of law because the accused payment terminals run applications that depend on a specific
underlying operating system or hardware. CardSoft did not respond to this argument in its responsive brief
on appeal. It instead argued that “because Appellants’ construction of ‘virtual machine’ is wrong” the jury’s
verdict should be affirmed. By failing to respond to VeriFone’s argument, CardSoft effectively conceded that
the accused devices run applications that depend on a specific underlying operating system or hardware.
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Consequently, the panel concludes that CardSoft waived this argument, and grants Appellants judgment of
no infringement as a matter of law.
World Class Technology Corporation, v. Ormco Corporation,
769 F.3d 1120 (Fed. Cir. 2014)
The patent in suit claims a bracket for orthodontic braces that avoids or reduces interference with the gums
even when being mounted on a molar tooth. While the panel notes that the meaning of “support surface” is
not unambiguous from the claim language, the specification makes it clear that the construction determined
by the district court was the proper one.
The claim language does not by itself convey a clear, unambiguous meaning in the respect at issue.
Where, as here, the claim language itself leaves interpretive questions unanswered, a construction that
stays true to the claim language and most naturally aligns with the patent’s description of the invention will
be, in the end, the correct construction.
Critically, the specification in this case identifies gum avoidance as the sole purpose of the acute angle the
support surface must make with the slot base. Under Ormco’s construction, however, the acute angle would
not serve the sole stated purpose in the arrangement that Ormco’s construction is aimed at covering—in
which the slide is inserted from the top, first moves along the ledge, and arrives at the support surface for
closing after crossing the slot. In that embodiment, there is no problem of gum contact and no need for the
acute angle. Such a construction is unmoored from, rather than aligned with, the description of the invention.
The specification also sharpens the distinction between the support surface and the ledge surface that is
suggested by the use of two different terms for the two surfaces. Whereas the support surface is linked with
slide movement, the ledge is not. It is mentioned in a single paragraph. That paragraph explains that when
the slide is closed, one end of the slide “abuts the labial surface of [the] ledge.” The rest of the paragraph
then describes a portion of the bracket connected to the ledge that covers the end of the slide, protecting the
slide against food and acting as a stop for the slide’s movement. Such statements are inconsistent with
Ormco’s constructions of “ledge” and “support surface,” which would allow the slide to move along either
surface interchangeably.
For those reasons, the panel concludes that the specification makes clear that the district court correctly
resolved the uncertainties in the claim language, adopting a construction that aligns with the description of
the invention.
Means-Plus-Function Claims
Robert Bosch, LLC v. Snap-On Inc.,
769 F.3d 1094 (Fed. Cir. 2014)
The Circuit disagrees with the district court’s handling of the presumption of “means plus function” claiming
but affirms that the terms “program recognition device” and “program loading device” invoke 35 U.S.C. §
112, ¶ 6. The panel determines that the specification does not disclose corresponding structure for these
terms, so the claims are found to be indefinite and therefore invalid.
Bosch owns the rights to the ’313 patent, which claims a diagnostic tester that determines whether the
computerized control unit in a motor vehicle needs to be reprogrammed. The external diagnostic tester is
made up of a “program recognition device” and a “program loading device,” defined in claim 1 as follows:
1. An external diagnostic tester for motor vehicles . . . comprising,
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a program recognition and program loading device, wherein a program version
contained in a connected control unit is queried and recognized by means of the program
recognition device, and, if the program available in the motor vehicle and recognized via
the diagnostic/test plug is not stored there in a latest and most current version, a respective
most current version is loaded by the program loading device into a program storage device
of the pertinent control unit of the motor vehicle, wherein the external diagnostic tester
automatically establishes communication with a central data base in order to check the
program version and, if necessary, to obtain the current program version that applies for
the control unit connected to the diagnostic tester and to store it there. (emphasis added)
Section 112, ¶ 6 (now § 112(f)) allows a patentee to express a claim limitation as “a means or step for
performing a specified function without the recital of structure, material, or acts in support thereof,” and claim
limitations expressed in this manner “shall be construed to cover the corresponding structure, material, or
acts described in the specification and equivalents thereof.” According to the panel, the framework under
which the courts are to determine if a claim limitation invokes § 112, ¶ 6 is a two-step process. First,
we must determine if the claim limitation is drafted in the means-plus-function format. The use of the term
“means” triggers a rebuttable presumption that § 112, ¶ 6 governs the construction of the claim term.
EnOcean GmbH v. Face Int’l Corp., 742 F.3d 955, 958 (Fed. Cir. 2014). Alternatively, where the claim
language does not recite the term “means,” we presume that the limitation does not invoke § 112, ¶ 6. When
a claim term lacks the word “means,” the presumption can be overcome if the challenger demonstrates that
“the claim term fails to ‘recite sufficiently definite structure’ or else recites ‘function without reciting sufficient
structure for performing that function.’”
If a claim term invokes § 112, ¶ 6, then we proceed to the second step and attempt to construe the disputed
claim term by identifying the “corresponding structure, material, or acts described in the specification”
to which the claim term will be limited. Welker Bearing Co. v. PHD, Inc., 550 F.3d 1090, 1097 (Fed. Cir.
2008). If we are unable to identify any “corresponding structure, material, or acts described in the
specification,” the claim term is indefinite. Determining whether certain claim language invokes § 112, ¶ 6 is
an exercise in claim construction and is therefore a question of law, subject to de novo review.
There is No Presumption that “Program Recognition Device” Is a Means-Plus-Function Term
Bosch claims that the use of the term “by means of” in the claim does not trigger the presumption in favor of
§ 112, ¶ 6. The panel agrees with Bosch, noting that we are unaware of any precedent stating that the
presumption is triggered by a claim’s use of the expression “by means of.”
The Presumption Against Invoking § 112, ¶ 6 Is Overcome for Both Terms
Although both “program recognition device” and “program loading device” are presumed not to invoke §
112, ¶ 6, the panel then turns to the issue of whether this “strong” presumption against means-plus-function
claiming is overcome. In undertaking this analysis, we ask if the claim language, read in light of the
specification, recites sufficiently definite structure to avoid § 112, ¶ 6. The question is whether the claim
language names particular structures or, instead, refers only to a general category of whatever may perform
specified functions. In the latter case, § 112, ¶ 6 then commands a construction of the limitation as referring
to specification-identified corresponding structures and their equivalents.
The ’313 patent’s specification does not contain a single reference to the structure of the “program
recognition device” itself; all of the proffered citations from the specification merely explain its function.
Although Bosch was entitled to a presumption against means-plus-function claiming, for the foregoing
reasons the panel agrees with the district court and Snap-On that this presumption was overcome. The
claim terms, construed in light of the specification, fail to provide sufficiently definite structure to one of skill
in the art. The claim terms “program recognition device” and “program loading device” invoke § 112, ¶ 6.
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The Two Claim Terms Are Indefinite
Since the panel concludes that both claim terms invoke § 112, ¶ 6, it attempts to construe the terms
by identifying the corresponding structure described in the specification to which the claim term will be
limited. If there is no structure in the specification corresponding to the means-plus-function limitation in the
claims, the claim will be found invalid as indefinite. On this point, however, little needs to be said, as the
panel finds no such disclosure. Therefore, the panel concludes that “program recognition device” and
“program loading device” are indefinite. Since these terms are found in the only independent claim of the
patent, all claims in the ’313 patent are invalid.
Williamson v. Citrix Online, LLC, Microsoft Corp., et al.,
770 F.3d 1371 (Fed. Cir. 2014)
A split panel reverses a ruling on claim construction and a determination of invalidity for indefiniteness, and
remands for a decision as to whether products such as Microsoft’s Office Live Meeting and Citrix’s
GoToMeeting infringe. The majority determines that the district court’s narrow construction was inconsistent
with the intrinsic evidence and rules that “distributed learning control module” should not be construed as a
means plus function clause.
Construction of the “graphical display” limitations
The majority rules that the district court erred in construing this phrase as requiring a “pictorial map.” First,
the claim language itself contains no such “pictorial map” limitation. While the specification discloses
examples and embodiments where the virtual classroom is depicted as a “map” or “seating chart,” nowhere
does the specification limit the graphical display to those examples and embodiments. In fact, they are
repeatedly described in terms of preference. The Circuit has repeatedly cautioned against limiting the
claimed invention to preferred embodiments or specific examples in the specification.
Construction of the phrase “distributed learning control module”
The majority rules that the district court erred in concluding that “distributed learning control module” is a
means plus function claim term. Section 112, para. 6, provides that "an element in a claim for a combination
may be expressed as a means or step for performing a specified function without the recital of structure,
material, or acts in support thereof." As stated in many Circuit opinions, the failure to use the word “means”
in a claim limitation creates a rebuttable presumption that § 112, para. 6 does not apply. This presumption is
a strong one that is not readily overcome. To rebut this strong presumption, it must be demonstrated that
skilled artisans, after reading the patent, would conclude that the claim limitation is so devoid of structure
that the drafter constructively engaged in means plus function claiming. A claimed expression cannot be
said to be devoid of structure if it is used in common parlance or by persons of skill in the pertinent art to
designate structure, even if the term covers a broad class of structures and even if the term identifies the
structures by their function.
Technical dictionaries, which are evidence of the understandings of persons of skill in the technical arts, may
inform whether claim terms connote structure. Moreover, in circumstances in which a structure-connoting
term is coupled with a description of its operation, sufficient structural meaning generally will be conveyed to
persons of ordinary skill in the art. In making this assessment, it is important to consider the claimed
expression as a whole, and not merely any single word, as well as its surrounding textual context.
The court here failed to give weight to the strong presumption that § 112, para. 6, did not apply based on the
absence of the word “means.” The Circuit has seldom held that a limitation not using “means” must be
considered to be in means plus function form, and the circumstances must be unusual to overcome the
presumption. Moreover, in determining that the strong presumption was overcome, the district court erred:
(1) in failing to appreciate that the word “module” has a number of dictionary meanings with structural
36
connotations; (2) in placing undue emphasis on the word "module" apart from the claimed expression
"distributed learning control module"; and (3) in failing to give proper weight to the surrounding context of the
rest of the claim and the supporting text of the specification in reaching the conclusion that the drafter
employed means plus function claiming.
The court, in characterizing the word “module” as a mere nonce word, failed to appreciate that the word
“module” has understood dictionary meanings as connoting either hardware or software structure to those
skilled in the computer arts. The court also failed to consider the claimed expression “distributed learning
control module” as a whole. The adjectival modifiers “distributed learning control” cannot be ignored and
serve to further narrow the scope of the expression as a whole. These claimed interconnections and
intercommunications support the conclusion that one of ordinary skill in the art would understand the
expression "distributed learning control module" to connote structure.
The specification further explains that the distributed learning control module operates as a functional unit of
the distributed learning server and coordinates the operation of the streaming data module through input
from the presenter computer system. While the specification describes the claimed phrase in a high degree
of generality, in some respects using functional expressions, it is difficult to conclude that it is devoid of
structure.
Comment: The issue of whether a claim phrase should be interpreted as means plus function language
continues to be the basis of precedential opinions of the Circuit. Less than a month ago in Bosch, LLC v.
Snap-On, Inc., 2014 U.S. App. LEXIS 19671 (Fed. Cir. Oct. 14, 2014), the presumption against interpreting
a phrase as means plus function was overcome as to “program recognition device” and “program loading
device.” The cases of Elcommerce.com., Inc. v. SAP, 564 Fed. Appx. 599 (Fed. Cir. 2014) and Chicago
Board Options Exchange, Inc. v. Intl. Securities Exchange, LLC, 748 F.3d (Fed.Cir. 2014) both dealt with
whether there was adequate disclosure in the specification to support means plus function language in the
claims.
“For the US”
IRIS Corporation v. Japan Airlines Corporation,
769 F.3d 1359 (Fed. Cir. 2014)
IRIS Corporation brought suit in district court, alleging that JAL committed patent infringement by examining
the electronic passports of its passengers within the U.S. Because the allegedly infringing acts were carried
out "for the United States" under 28 U.S.C. § 1498(a), the panel affirms the district court's decision to
dismiss IRIS's complaint.
IRIS alleges that JAL infringed its patent under 35 U.S.C. § 271(g) by "using electronic passports in the
processing and/or boarding of passengers at JAL services passenger check-in facilities throughout the
United States." JAL moved to dismiss IRIS's suit for failure to state a claim upon which relief can be granted,
among other things, arguing that federal laws requiring the examination of passports conflict with the patent
laws and therefore exempt JAL from infringement liability. It also argued that IRIS's exclusive remedy is an
action against the United States under 28 U.S.C. § 1498(a). The district court granted JAL's motion to
dismiss, adopting only JAL's conflict-of-laws rationale. IRIS appeals.
The parties ask us to decide, among other things, whether the United States has assumed liability under 28
U.S.C. § 1498(a) for JAL's allegedly infringing activities. The statute states:
Whenever an invention described in and covered by a patent of the United States is used or
manufactured by or for the United States . . . the owner's remedy shall be by action against
the United States in the United States Court of Federal Claims . (emphasis added).
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The statute further clarifies that an accused activity is "for the United States" if two requirements are met: (1)
it is conducted "for the Government," and (2) it is conducted "with the authorization or consent of the
Government."
The government's authorization or consent may be either express or implied. In this case, the government
has clearly provided its authorization or consent because—as the parties and the United States agree—JAL
cannot comply with its legal obligations without engaging in the allegedly infringing activities. Under such
circumstances, the government has expressly authorized or consented to those activities.
But, standing alone, a governmental grant of authorization or consent does not mean that the alleged use or
manufacture is done "for the United States" under § 1498(a). To qualify, the alleged use or manufacture
must also be done "for the benefit of the government." "[I]ncidental benefit to the government is insufficient,"
but "[i]t is not necessary [for the Government] to be the sole beneficiary. . . . ."
The government benefits here because JAL's examination of passports improves the detection of fraudulent
passports and reduces demands on government resources. This, in turn, directly enhances border security
and improves the government's ability to monitor the flow of people into and out of the country. When the
government requires private parties to perform quasi-governmental functions, such as this one, there can be
no question that those actions are undertaken "for the benefit of the government."
Accordingly, because JAL's allegedly infringing acts are carried out "for the United States" under 28 U.S.C. §
1498(a), we affirm the district court's decision to dismiss IRIS's suit.
Indirect Infringement
Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S.Ct. 2111 (2014)
The Supreme Court reverses the Circuit’s en banc ruling that a defendant who performed some steps of a
method patent and encouraged others to perform the rest could be liable for inducement of infringement
even if no one was liable for direct infringement.
Justice Alito says once and for all, citing Aro Convertible, that liability for inducement must be predicated
on direct infringement. Here the method has not been infringed because the performance of all of its
steps is not attributable to any one person. Since direct infringement has not occurred, there can be no
inducement of infringement under §271(b). The Federal Circuit’s contrary view would deprive §271(b) of
ascertainable standards and require the courts to develop two parallel bodies of infringement law.
The Court’s reading of §271(b) is reinforced by §271(f)(1), which illustrates that Congress knows how to
impose inducement liability predicated on non- infringing conduct when it wishes to do so. In
Deepsouth v Laitram the Supreme Court looked to see whether §271(a), prevents someone from making
parts of a shrimp deveining machine to sell to foreign buyers to assemble outside of the US. The
Deepsouth decision said that §271(a) did not prevent that. As a result of Deepsouth, Congress
established §271(f)(1) providing that whoever supplies from the US a substantial portion of the components
of a patented invention as to actively induce the combination outside of the US, they are liable just as
though those parts were combined in the US. There is no reason to apply a different rule for inducement.
Akamai subsequently asked the Circuit to revisit en banc the issue of whether joint performance of a
patented method can create liability for direct infringement. On July 24, 2014 the Circuit rejected Akamai’s
request, instead referring the case on remand to its two remaining panel members and a newly-selected
judge.
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Doctrine of Equivalents
Ring & Pinion Service Inc. v ARB Corporation,
743 F.3d 831 (Fed. Cir. 2014)
The Circuit rejected the argument of an appellant that foreseeability of an equivalent at the time of filing is a
bar to a finding of infringement based upon the doctrine of equivalents. In doing so the panel provided a
good review of the effect of foreseeability, the difference between equivalence analysis under 112(f) and the
doctrine of equivalents, the doctrine of vitiation, and the effect of factual stipulations at trial.
The district court held that foreseeability at the time of filing is not a formally recognized limitation on the
doctrine of equivalents. R&P argued, as many accused infringers do, that the doctrine of equivalents does
not apply to equivalents that were foreseeable at the time of filing. The panel ruled that it is clear that
known interchangeability weighs in favor of a finding of equivalence.
There are only two differences between the equivalence determination for literal infringement purposes
under 112(f) and the doctrine of equivalents: timing and function. Equivalence under 112(f) is evaluated at
the time of issuance, while equivalence under the doctrine of equivalents is evaluated at the time of
infringement. Hence, a technology that did not exist at the time of patenting can be found to be an
equivalent under the doctrine of equivalents even though it cannot be an equivalent under the literal
infringement analysis of 112(f). The second difference between literal infringement under 112(f) and
doctrine of equivalents infringement relates to the function of the element. For literal infringement, the
accused structures must perform the identical function, while the doctrine of equivalents covers accused
structures that perform substantially the same function in substantially the same way with substantially
the same results. This is true whether the accused equivalent was known at the time of patenting or later
arising. Where a finding of non-infringement under 112(f) is based solely on the lack of identical function, it
does not preclude a finding of equivalence under the doctrine of equivalents.
Epos Technologies Ltd., et al. v. Pegasus Technologies Ltd., et al.,
766 F.3d 1338 (Fed. Cir. 2014)
The district court’s claim construction regarding four different claim terms is erroneous so the Circuit vacates
and remands summary judgments of literal noninfringement and under the doctrine of equivalents where the
district court “shortcut” consideration of the equivalence evidence.
The patents in suit relate to pens that digitize writing and devices for retrofitting writing surfaces so that
writing can be digitally captured. The panel finds that the district court improperly construed the
terms “drawing implement,” “given time interval,” “marking implement,” and “temporary attachment.” The
panel also determines that issues of equivalence remain that preclude summary judgment of
noninfringement under the doctrine of equivalents. This analysis under the doctrine of equivalents is the
most interesting part of the decision.
Summary judgment of noninfringement under the doctrine of equivalents
All of the claims at issue in the ’371 patent claim a handheld device for use with a board comprising several
components, including an ultrasonic receiver or transmitter device for receiving or transmitting an
“intermittent” ultrasound signal. The district court adopted Pegasus’ proposed construction of “intermittent”
as “something that occurs occasionally, in a non-continuous manner, in a random or unpredictable manner,
or at selected times.” The court stated that “intermittent” could “refer only to those times when the user is
actively using the device.” Applying its construction, the district court determined that EPOS is entitled
to summary judgment on Pegasus’s claim of literal infringement because the EPOS Products generate a
continuous ultrasound signal. Pegasus does not appeal these determinations.
39
The district court devoted only two sentences to its decision on infringement of the ’371 patent under
the doctrine of equivalents. It reasoned that allowing continuous ultrasound signals to be equivalents “would
eliminate the intermittent limitation entirely,” and that “the doctrine of equivalents cannot extend that far.”
The panel states that when addressing the doctrine of equivalents, a court must ask whether an asserted
equivalent is an “insubstantial difference” from the claimed element, or whether it matches the “function,
way, and result of the claimed element. Courts should be cautious not to shortcut this inquiry by identifying a
‘binary’ choice in which an element is either present or ‘not present.’”
Here, the district court shortcut the inquiry by identifying a binary choice (continuous or intermittent) that
is not compelled by the ’371 patent or the evidence. The court’s decision does not consider the functioning
of the EPOS Products as part of its determination, and did not consider Pegasus’ expert declaration
explaining why the EPOS Products’ signals are equivalent to the claimed intermittent ultrasound signal.
The panel therefore vacates the district court’s constructions of “drawing implement,” “given time interval,”
“marking implement,” and “temporary attachment,” and reverses the summary judgments of noninfringement
based upon those faulty constructions. The panel also vacates the district court’s grant of summary
judgment of noninfringement of the ’371 patent under the doctrine of equivalents and remands for
proceedings consistent with this opinion.
Prosecution History Estoppel
EMD Millipore Corporation et al. v. Allpure Technologies, LLC,
768 F.3d 1196 (Fed. Cir. 2014)
The Circuit affirms summary judgment of no literal infringement, and holds that the district court should not
even have reached the doctrine of equivalents because of prosecution history estoppel.
There is a presumption that prosecution history estoppel applies when a patentee has filed an
amendment seeking to narrow the scope of a claim, and “the reason for that amendment was a substantial
one relating to patentability.” The patentee bears the burden of rebutting the application of prosecution
history estoppel by establishing one of three exceptions: (1) the equivalent was unforeseeable at the time of
the application; (2) the rationale underlying the amendment bears no more than a tangential relation to the
equivalent in question; or (3) there is some other reason suggesting that the patentee could not reasonably
be expected to have described the equivalent. See Warner-Jenkinson Co. v Hilton Davis Chem. Co., 520
U.S. 17, 30-31 (1997) and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 734
(2002).
During prosecution of the ’543 patent, the applicant amended claim 1’s language, adding the requirement
that the transfer member’s seal have “a first end comprised of a bellows-shaped part sealingly attached
to said holder, and a second end comprising a self-sealing membrane portion interiorly formed at an end of
said bellows part.” The applicant stated that the purpose of the amendment was to make claim 1
“allowable and distinguishable over the cited references.”
The panel concludes that it was unnecessary for the district court to perform a doctrine of equivalents
analysis because prosecution history estoppel bars Millipore’s arguments. Although the applicant eliminated
the “after use” language, the applicant nonetheless added the requirement that the seal have a first and
second end with distinct elements. This narrows the seal limitation, which in turn narrows the transfer
member limitation. And the applicant even stated in its reasons for amendment that “none of the references
show or disclose a seal formed like the present one.” Thus, these amendments were added to overcome a
previous rejection. And to the extent this statement is ambiguous, the panel notes that the Supreme
Court has stated “[w]here no explanation is established . . . the court should presume that the patent
40
applicant had a substantial reason related to patentability for including the limiting element added by
amendment.” Warner-Jenkinson, 520 U.S. at 33.
Willful Infringement
SSL Services, LLC v. Citrix Systems, Inc. and Citrix Online, LLC,
769 F.3d 1073 (Fed. Cir. 2014)
This case has already been discussed in the damages section but has an interesting willful infringement
discussion as well. In the case, the Circuit affirms motions denying a new trial as to whether Citrix’s “GoTo”
products dealing with encrypted data communication infringe, and denying JMOL as to willful infringement
and invalidity of the patents. The panel also vacates and remands the denial of prevailing party status to
SSL. The ruling thus preserves the district court’s adding $5 million to a $10 million judgment against Citrix
as a result of the willful infringement.
Willful Infringement
To establish willful infringement, the patent holder must show clear and convincing evidence that: (1)
“the infringer acted despite an objectively high likelihood that its actions constituted infringement” and (2)
“that this objectively-defined risk . . . was either known or so obvious that it should have been known to the
accused infringer.” In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). We review
the first objective prong de novo and the second subjective prong for substantial evidence.
(1) Objective Prong
Citrix argues that, because its non-infringement and invalidity defenses were reasonable, the district court
erred in denying JMOL of no willful infringement. In support, Citrix relies on the fact that the court did not
grant summary judgment and that the USPTO rejected the relevant claims of the ’011 Patent multiple times
over the same prior art references presented at trial during the initial phases of an ex parte reexamination.
However, the panel rules that the court’s finding that SSL met the threshold objective prong is supported by
the record. The jury soundly rejected Citrix’s invalidity argument and non-infringement arguments. As noted
above, the Takahashi reference does not disclose an applications level encryption program. Although not
dispositive, the USPTO similarly found Citrix’s invalidity arguments unfruitful, despite the lower
preponderance of the evidence standard.
(2) Subjective Prong
The panel agrees that SSL presented substantial evidence that Citrix knew of the objectively high risk that
its products infringed the asserted claims of the ’011 Patent. SSL presented evidence that Citrix first became
aware of the ’011 Patent in 2000 based on the V-One Agreements. Citrix negotiated and executed the
agreements with V-One, which identified and incorporated the ’011 Patent. Furthermore, a former Citrix
executive, Bill Mangum, testified that he knew of the ’011 Patent as a result of Citrix’s relationship with VOne. A V-One executive also testified that Citrix knew of the ’011 Patent and that V-One had provided Citrix
with access to its technology relating to the ’011 Patent. Based on this evidence, the panel finds that the
district court did not err in denying Citrix’s motion for JMOL on the subjective prong of SSL’s claim of willful
infringement.
Citrix argues that it should receive a new trial on willfulness because the court prevented the jury
from hearing testimony from its Chief Engineer regarding Citrix’s good faith belief that its products were noninfringing and that reexamination had been initiated at the PTO. We find that the district court did not abuse
its discretion in precluding that testimony since its probative value was outweighed by its potential prejudice.
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Aqua Shield v. Inter Pool Cover Team, et. al.,
2014 U.S. App. LEXIS 24132 (Fed. Cir. Dec. 22, 2014)
The panel vacates (1) a decision granting patentee damages of only $10,800 since the award was
inappropriately limited to the profits defendants made, and (2) a ruling that there was no willful infringement
since that determination was improperly based on the denial of a motion for preliminary injunction and the
court failed to consider all of the factors relevant to recklessness under Seagate. The following discussion
will deal with the willful infringement holdings of the case.
To prove that its patent was willfully infringed, a patentee must make two related showings. First, it must
show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its
actions constituted infringement of a valid patent. In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007).
Second, the patentee must also demonstrate that this objectively-defined risk (determined by the record
developed in the infringement proceeding) was either known or so obvious that it should have been known
to the accused infringer. Id.
Here the district court gave only one reason for concluding that IPC reasonably believed that its products did
not infringe—namely, the denial of the preliminary injunction. Our opinion in Seagate expressly connects
findings of willfulness to preliminary-injunction rulings. ("A substantial question about invalidity or
infringement is likely sufficient not only to avoid a preliminary injunction, but also a charge of willfulness
based on post-filing conduct."). But it states no rigid rule, and it notes that preliminary injunctions can be
denied even when a defendant has not raised substantial questions about invalidity or infringement. In a
later willfulness determination, the significance of a preliminary-injunction denial depends on why the
preliminary injunction was denied. Here the New York court denied Aqua Shield's motion because of
personal-jurisdiction questions and because Aqua Shield lacked sufficient knowledge of IPC's product to
make the required showing of a likelihood of success on the merits. The denial of the motion here is thus a
legally insufficient reason for determining that IPC did not willfully infringe.
The panel therefore vacates the court's decision that IPC did not willfully infringe. If the district court
determines on remand that IPC willfully infringed Aqua Shield's patent, it should reconsider its decision to
deny enhanced damages and attorney's fees.
Comment: This is one of only a few decisions since Seagate reversing denial of willful infringement. More
common are decisions like the one last week in Stryker Corporation v. Zimmer, Inc., Fed. Cir. Case 20131668 (Dec. 19, 2014) reversing a willfulness determination based upon the defendant’s arguments of
noninfringement and invalidity arguments being reasonable.
Design Patents
Pacific Coast Marine Windshields Limited v. Malibu Boats,
739 F.3d 694 (Fed. Cir. 2014)
Presented with the issue of whether prosecution history estoppel should apply to design patents, the
panel states that the same principles of public notice that underlie prosecution history estoppel apply to
design patents as well as utility patents. With each type of patent, prosecution history estoppel promotes
the “clarity that is essential to promote progress.” Refusing to apply the principles of prosecution
history estoppel to design patents would undermine the “definitional and public-notice functions of the
statutory claiming requirement.”
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MRC Innovations, Inc. v. Hunter Mfg., LLP,
747 F.3d 1326 (Fed. Cir. 2014)
In a design patent case, the Circuit affirmed a finding of invalidity where the lower court properly followed
the test for obviousness. The Circuit restated the two-step test as follows:
First, the court must identify “a single reference, ‘a something in existence, the design
characteristics of which are basically the same as the claimed design.’” The “basically the
same” test requires consideration of the “visual impression created by the patented design
as a whole.” The trial court judge may determine almost instinctively whether the two
designs create basically the same visual impression,” but “must communicate the reasoning
behind that decision.
Once the primary reference is found, other “secondary” references “may be used to
modify it to create a design that has the same overall visual appearance as the claimed
design.” These secondary references must be “‘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.’”
Remedies
Damages
VirnetX v. Cisco Systems, 767 F.3d 1308 (Fed. Cir. 2014)
Apple successfully appeals a $368 million judgment that its Face Time feature infringes a patent of VirnetX.
The panel vacates and remands, based on faulty claim construction, the improper denial of a motion for
JMOL based on non-infringement under the doctrine of equivalents, and the admission of improper expert
witness testimony as to damages. The panel’s comments on the expert testimony could make it significantly
more difficult for patentees to argue for big damage awards.
VirnetX accuses Apple of infringement based on its “FaceTime” system. The patents at issue claim
technology that resolves domain names and facilitates establishing “secure communication links.” After
discussing claim construction and infringement, the panel turned to the most important issueof this opinion,
and that is damages.
Damages
Even though the case had to be remanded due to faulty claim construction, the panel takes the opportunity
to address the expert witness testimony VirnetX presented, which the jury apparently accepted, to get to the
$368 million award.
Weinstein’s First Approach: Royalty Base
Apple argues that the testimony of VirnetX’s expert Roy Weinstein on the proper royalty base should have
been excluded because it relied on the entire market value of Apple’s products without demonstrating that
the patented features drove the demand for those products. However, the panel concludes that his
testimony confirms that he did not even attempt to subtract any other unpatented elements from the base,
which therefore included various features indisputably not claimed by VirnetX, e.g., touchscreen, camera,
processor, speaker, and microphone, to name but a few.
Weinstein's Testimony as to Comparable Licenses
One of Weinstein’s theories relied on a 1 to 2 percent royalty on the price of the device based on
comparable licenses. Apple contended those licenses were not comparable but the panel disagreed, noting
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that some of those licenses were related to the patents in suit, and the differences between those licenses
and the present dispute had been explained to the jury. Given the issues the panel had with the rest of the
damages testimony, the evidence of comparable licenses is likely to play an important part in the remand if
VirnetX prevails on infringement.
Weinstein’s Second and Third Approaches: Nash Bargaining Solution
In addition to arguing reasonable royalty, Weinstein offered two other estimates of damages attributable to
the FaceTime feature. Both of these estimates relied on the Nash Bargaining Solution. According to the
panel, the Nash theorem arrives at a result that follows from a certain set of premises. It asserts nothing
about what situations in the real world fit those premises. Anyone seeking to invoke the theorem must
establish that fit, because the 50/50 profit-split result is proven by the theorem only on those premises.
Weinstein did not do so. Conclusory assertions cannot form the basis of a jury’s verdict
Ericsson, Inc. v. D-Link Systems, Inc., et al., 2014 U.S. App. LEXIS 22778, 113 U.S.P.Q. 2d 1001
(Fed. Cir. 2014)
The Circuit reverses denial of JMOL following a $10 million verdict, and remands based on improper jury
instructions relating to application of the entire market value rule to standard essential patents covering a
Wi-Fi standard. The most interesting discussion in this opinion is the panel’s decision to vacate the damage
award and remand the case due to faulty jury instructions as to what were reasonable and nondiscriminatory
or RAND terms. This summary will focus on the panel’s analysis of that issue.
Admissibility of Evidence of Prior Licenses
As we explained recently in VirnetX, Inc. v. Cisco Systems, Inc., 767 F.3d 1308 (Fed. Cir. 2014), where
multicomponent products are involved, the governing rule is that the ultimate combination of royalty base
and royalty rate must reflect the value attributable to the infringing features of the product, and no more.
What is taken from the owner of a utility patent for purposes of assessing damages under § 284 is only the
patented technology, and so the value to be measured is only the value of the infringing features of an
accused product.
The Circuit has recognized that licenses may be presented to the jury to help the jury decide an appropriate
royalty award. Prior licenses, however, are almost never perfectly analogous to the infringement action.
Recognizing that constraint, however, the fact that a license is not perfectly analogous generally goes to the
weight of the evidence, not its admissibility. In short, where expert testimony explains to the jury the need to
discount reliance on a given license to account only for the value attributed to the licensed technology, as it
did here, the mere fact that licenses predicated on the value of a multi-component product are referenced in
that analysis—and the district court exercises its discretion not to exclude such evidence—is not reversible
error.
The District Court's RAND Jury Instruction
The panel notes that this is an issue of first impression for the Circuit, and to its knowledge, only three other
courts have considered the issue of appropriate RAND royalty rates—all district courts.
a. The district court's use of the Georgia-Pacific factors
The panel notes that it is unwise to create a new set of GeorgiaPacific-like factors for all cases involving
RAND-encumbered patents, but cautions that courts must consider the facts of record when instructing the
jury and should avoid rote reference to any particular damages formula.
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b. Apportionment analysis for Standard Essential Patents (SEPs)
As with all patents, the royalty rate for SEPs must be apportioned to the value of the patented invention.
When dealing with SEPs, there are two special apportionment issues that arise. First, the patented feature
must be apportioned from all of the unpatented features reflected in the standard. Second, the patentee's
royalty must be premised on the value of the patented feature, not any value added by the standard's
adoption of the patented technology. Just like modern electronic devices, technological standards include
multiple technologies. We know that patents often claim only small portions of multicomponent products and
we have precedent which covers apportionment of damages in those situations. Similarly, SEPs can, and,
often do, claim only limited aspects of the overall standard.
Just as we apportion damages for a patent that covers a small part of a device, we must also apportion
damages for SEPs that cover only a small part of a standard. In other words, a royalty award for a SEP must
be apportioned to the value of the patented invention (or at least to the approximate value thereof), not the
value of the standard as a whole. A jury must be instructed accordingly. Our decision does not suggest that
all SEPs make up only a small part of the technology in the standard. Indeed, if a patentee can show that his
invention makes up “the entire value of the" standard, an apportionment instruction probably would not be
appropriate.
This is particularly true for SEPs. When a technology is incorporated into a standard, it is typically chosen
from among different options. Once incorporated and widely adopted, that technology is not always used
because it is the best or the only option; it is used because its use is necessary to comply with the standard.
In other words, widespread adoption of standard essential technology is not entirely indicative of the added
usefulness of an innovation over the prior art. This is not meant to imply that SEPs never claim valuable
technological contributions. We merely hold that the royalty for SEPs should reflect the approximate value of
that technological contribution, not the value of its widespread adoption due to standardization.
Because SEP holders should only be compensated for the added benefit of their inventions, the jury must be
told to differentiate the added benefit from any value the innovation gains because it has become standard
essential. The panel concluded that that was not done here.
Aqua Shield v. Inter Pool Cover Team, et. al.,
2014 U.S. App. LEXIS 24132 (Fed. Cir. Dec. 22, 2014)
The panel vacates (1) a decision granting patentee damages of only $10,800 since the award was
inappropriately limited to the profits defendants made, and (2) a ruling that there was no willful infringement
since that determination was improperly based on the denial of a motion for preliminary injunction and the
court failed to consider all of the factors relevant to recklessness under Seagate. The following discussion
will deal only with the decision as to reasonable royalty.
Reasonable Royalty
The panel agrees that the infringer's actual profits earned during the period of infringement can be relevant,
but finds that the court erred in the use it made of IPC's profit figures. What an infringer's profits actually
turned out to have been may be relevant, but only in an indirect and limited way—as some evidence bearing
on a directly relevant inquiry into anticipated profits. Thus, when the infringer is a profit-making enterprise, a
reasonable royalty is the amount that a person, desiring to manufacture, use, or sell a patented article, as a
business proposition, would be willing to pay as a royalty and yet be able to make, use, or sell the patented
article, in the market, at a reasonable profit. In hypothetical-negotiation terms, the core economic question is
what the infringer, in a hypothetical pre-infringement negotiation under hypothetical conditions, would have
anticipated the profit-making potential of use of the patented technology to be, compared to using
noninfringing alternatives. If a potential user of the patented technology would expect to earn X profits in the
future without using the patented technology, and X + Y profits by using the patented technology, it would
45
seem, as a prima facie matter, economically irrational to pay more than Y as a royalty—paying more would
produce a loss compared to forgoing use of the patented technology.
The district court did not err in considering IPC's profits, but it did err in treating the profits actually earned
during the period of infringement as a royalty cap. That treatment incorrectly replaces the hypothetical
inquiry into what the parties would have anticipated, looking forward when negotiating, with a backwardlooking inquiry into what turned out to have happened.
Enhanced Damages
Therasense, Inc. v. Becton, Dickinson & Co.,
745 F.3d 513 (Fed. Cir. 2014)
A divided panel affirms the denial of a motion for attorney fees incurred on appeal, on remand and in
pursuing additional fees.
In the district court Becton and Nova (“Becton”) won judgments of non-infringement, invalidity, and
inequitable conduct, supporting a finding that the case was exceptional and awarding almost $6 million in
attorney fees. On appeal, in an important en banc ruling, Therasense v. Becton Dickinson & Co., 649 F.3d
1276, 1297 (Fed. Cir. 2011), the Federal Circuit elevated the standard of proof for inequitable conduct to
require that the accused infringer must prove both elements – intent and materiality - by clear and convincing
evidence. The Circuit thus vacated the district court’s judgment of inequitable conduct but, applying the
higher standard on remand, the district court again concluded that the patent was procured through
inequitable conduct.
On appeal, Becton argued it was entitled to appellate and remand fees because of the district court’s
exceptional case finding. The majority noted that Becton presented no evidence of bad faith, and the mere
act of pursuing appellate review cannot by itself suggest an abuse of the legal system. Here the fact the en
banc ruling required a remand shows that the appeal was not without merit. Therefore, the district court did
not abuse its discretion in declining to award fees for the appeal, the rehearing en banc, or the remand.
Becton also argued that Abbott forced it to incur additional fees in pursuing additional attorney fees. These
“fees for fees” were denied by the district court and the panel affirmed that ruling, citing Supreme Court
precedent for the proposition that such fees for fees litigation should be excluded as such “can spawn a
Kafkaesque judicial nightmare of infinite litigation to recover fees for the last round of litigation over fees.”
Octane Fitness, LLC v. Icon Health & Fitness, Inc.,134 S.Ct. 1749 (2014)
The Supreme Court holds that district courts should determine whether a case is “exceptional” in a caseby-case exercise of their discretion, considering the totality of the circumstances.
The district court and the Circuit had applied the test set forth in Brooks Furniture Mfg., Inc. v. Dutailier Int’l,
Inc., 393 F. 3d 1378 (2005). In that case the Circuit held that a case is exceptional under §285 only “when
there has been some material inappropriate conduct related to the matter in litigation, such as willful
infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation,
vexatious or unjustified litigation, conduct that violates Fed. R. Civ. P. 11, or like infractions.” Absent
misconduct in conduct of the litigation or in securing the patent, fees may be imposed against the
patentee only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively
baseless.
In reversing the Circuit, Justice Sotomayor stated the proper test to be as follows:
46
We hold, then, that an “exceptional” case is simply one that stands out from others with
respect to the substantive strength of a party’s litigating position (considering both the
governing law and the facts of the case) or the unreasonable manner in which the case
was litigated. District courts may determine whether a case is “exceptional” in the caseby-case exercise of their discretion, considering the totality of the circumstances.
On remand from the Supreme Court the Federal Circuit ruled on August 26 that the district court must now
decide whether the case is exceptional to warrant the award of attorney fees to the accused infringer. But if
the case comes back to the Circuit, the Circuit will be applying the abuse- of-discretion standard as it was
instructed to in the Highmark case.
Highmark, Inc. v. AllCare Health Management System, Inc., 134 S.Ct. 1744 (2014
The Supreme Court rules that the district court’s decision on whether a case is exceptional should be
reviewed on appeal for abuse of discretion and not de novo.
Highmark vacated another decision of the Circuit, based upon its ruling in Octane. Octane held that a
determination of “exceptional” is to be decided by the district court on a case-by-case exercise of their
discretion considering a totality of the circumstances, so the district court’s decision should be reviewed on
appeal for abuse of discretion and not de novo.
Lessons to be considered in view of Octane and Highmark:
1.
The Circuit will have to accord more respect to district court decisions, suggesting that the Court
may similarly jettison de novo review of claim construction in the pending Teva Pharmaceuticals
case;
2.
Like KSR, this is an example of the Federal Circuit being told it is applying too high a burden of
proof, particularly on patent infringement defendants;
3.
Like eBay, this is an example of the Court telling the Federal Circuit it should not be applying
special rules to patent cases;
4.
In combination with post-issuance validity proceedings, this shows a power shift from NPE’s
to those defending unreasonable patent infringement filings;
5.
Although the Senate is prepared to consider fee-shifting legislation, it would seem that Octane
would cause both the Senate and the House to reconsider the need for such legislation, much
like damages cases decided by the Circuit in 2010 and 2011 rendered less necessary legislation
reducing the likelihood of excessive damage awards that otherwise might have been included in
AIA; and
6.
The cases will likely increase the tendency of plaintiffs to file in jurisdictions perceived as being
friendly to patentees, such as the Eastern District of Texas, to reduce the risk of an adverse
fee award.
Kilopass Technology, Inc. v. Sidense, 2014 U.S. Dist. LEXIS 112321, 112 U.S.P.Q. 2d 1376 (N.D.
Cal. 2014)
In view of the Supreme Court’s Octane Fitness decision, the Northern District of California reverses its prior
denial of an attorney fee award, finding the case to be “exceptional” because bad faith is no longer required.
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AntiCancer, Inc. v. Pfizer, Inc., et al.,
769 F.3d 1323 (Fed. Cir. 2014)
The district court ordered that AntiCancer would be permitted to supplement Preliminary Infringement
Contentions that the court found defective under the local patent rules, provided that it concurrently pay the
attorney fees and costs incurred by the defendants in connection with their motion for summary
judgment related to the Contentions. AntiCancer objected to this condition, and the district court entered
summary judgment of noninfringement, dismissing the complaint with prejudice. The Circuit determines that
the fee-shifting condition was improperly imposed because the court did not find that AntiCancer’s filing
constituted or was tantamount to bad faith, so the judgment based thereon is vacated.
Patent Local Rule 3.1
The purpose of preliminary infringement contentions is to assist the court and guide the parties in focusing
on potentially dispositive issues, providing a framework for discovery and generally facilitating the
proceedings. Rule 3.1 provides that the patentee must serve preliminary infringement contentions that
include an identification of each claim allegedly infringed and the product(s) infringed, an element-byelement claim chart, and a statement as to whether each element is found literally or as an equivalent.
The Preliminary Infringement Contentions
AntiCancer states that its Contentions showed its theories of infringement, provided notice of the information
to be obtained by discovery, and complied with the letter and purpose of Patent Local Rule 3.1. AntiCancer
states that its “infringement theories were as crystallized as they could be” before AntiCancer could “possibly
have taken any discovery to support its infringement claims and to learn the actual details of the defendants’
internal research activities.” For each patent claim identified as infringed in AntiCancer’ s Preliminary
Infringement Contentions, and each element of each claim, AntiCancer identified a specific portion of the
Pfizer publication. The district court held that AntiCancer’s claim charts did not provide all of the information
the Patent Local Rules require.
The panel reviews the three claim elements for which the district court found AntiCancer’s Preliminary
Infringement Contentions deficient, and concludes that there is no reasonable basis for making the finding of
bad faith that would be required to sustain the fees sanction, without which summary judgment here is
improper. In Network Caching, the Northern District court explained that the Preliminary Infringement
Contentions “are not meant to provide a forum for litigation of the substantive issues; they are merely
designed to streamline the discovery process.” 2003 WL 21699799, at *5.
Conclusion
When a complaint meets the standards of the Federal Rules, and there has been no reasonable opportunity
for discovery and evidentiary development of the issues, it is rarely appropriate to summarily decide the
merits against the complainant. The Circuit need not intrude upon the district court’s authority to require
supplementation of the Preliminary Infringement Contentions when such supplementation may assist the
procedures of trial. However, exercise of a court’s inherent authority to levy a sanction as a condition of
supplementing the Contentions requires conduct that constituted or was tantamount to bad faith. The panel
determines that there is no finding, and there is no basis for a finding, of such impropriety here.
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Injunctive Relief and Damages
Trebro Manufacturing, Inc. v. FireFly Equipment, LLC,
748 F.3d 1159 (Fed. Cir. 2014)
The Circuit reverses the denial of a motion for preliminary injunction, holding that an infringement finding
was “more likely than not,” that defendant had “not raised a substantial question as to validity,” and that
the patentee had demonstrated irreparable harm even though it did not practice the patented invention. Chief
Judge Rader, writing for a unanimous panel, found that the district court abused its discretion in denying
Trebro’s motion for preliminary injunction.
The panel's analysis regarding irreparable injury is interesting. The defendant had done well in competing
for sales and therefore would have been able to satisfy any monetary judgment. However, the Circuit
found to be critical the fact that very few machines were sold each year, and that once a machine was sold,
that customer was likely to be lost to FireFly forever. This may be true to a certain extent in every case. It
shows the importance of statistics in briefing irreparable injury, on the rate at which customers buying from
the accused infringer return to purchase again from the patentee.
Apple lnc. and Next Software, lnc. v. Motorola, Inc.,
757 F.3d 1286 (Fed. Cir. 2014)
This decision deals with claim construction, summary judgments of noninfringement, injunctive relief, and
damages relating to each party's patents. Given the length of the opinion, the many issues discussed in it,
and the fact that there are two partial dissents, it is impossible to cover it all in the relatively short
discussions we provide.
Prevailing Party/Costs
SSL Services, LLC v. Citrix Systems, Inc. and Citrix Online, LLC,
769 F.3d 1073 (Fed. Cir. 2014)
The Circuit affirms motions denying a new trial as to whether Citrix’s “GoTo” products dealing with encrypted
data communication infringe, and denying JMOL as to willful infringement and invalidity of the patents. The
panel also vacates and remands the denial of prevailing party status to SSL. The ruling thus preserves the
district court’s adding $5 million to a $10 million judgment against Citrix as a result of the willful infringement.
The case has already been addressed in the damages and willful infringement sections but its discussion of
what constitutes a “prevailing party” is interesting in that this issue is not normally treated by the Circuit.
The district court’s determination of whether a party is the “prevailing party” under Federal Rule of
Civil Procedure 54(d) and 35 U.S.C. § 285 de novo. To be the “prevailing party,” the Circuit requires: (1)
that the party “received at least some relief on the merits,” and (2) “[t]hat relief must materially alter the
legal relationship between the parties by modifying one party’s behavior in a way that ‘directly benefits’
the opposing party.” A party does not need to prevail on all claims to qualify as the prevailing party.
The district court found that Citrix prevailed on non-infringement of the ’796 Patent and SSL
prevailed on willful infringement of the ’011 Patent. Accordingly, the district court concluded that neither
party is the prevailing party because “both parties achieved some success and sustained some failure.”
Despite some success by Citrix in defending against some of SSL’s claims, the panel agrees with SSL that it
is the prevailing party. Finding SSL to be the prevailing party, however, does not automatically entitle it
to any particular level of fees. Accordingly, the panel vacates the district court’s finding of no prevailing party
49
and remands so that the district court may assess the amount of fees or costs to award to SSL in connection
with the claims on which it prevailed.
Patent Reissue
Gilead Sciences, Inc et al. v. Natco Pharma Limited et al.,
753 F.3d 1208 (Fed. Cir. 2014)
A divided panel expands the double patenting doctrine by concluding that a patent that issues after but
expires before another patent can qualify as a double patenting reference for the other patent.
In re Dinsmore and Caruso, 757 F.3d 1343 (Fed. Cir. 2014)
The Circuit affirms a Board decision that applicants’ filing of a terminal disclaimer is not an error that can
be remedied by a reissue application even though applicants mistakenly thought their application and a
cited patent were commonly owned at the time of the disclaimer.
“Original Patent” Requirement
Antares Pharma, Inc. v. Medac Pharma Inc. and Medac GmbH,
771 F.3d 1354 (Fed. Cir. 2014)
The panel affirms the denial of Antares’ motion for preliminary injunction based on the finding that the patent
in suit, a reissue patent, is invalid due to the failure of Antares to comply with the "original patent"
requirement of 35 U.S.C. § 251.
Antares is a developer of automatic injection devices used to self-administer pharmaceuticals. The patent in
suit, entitled "Needle Assisted Jet Injector," discloses a system for injecting medicant in which a needle
punctures the skin before forcefully expelling the medicant, thereby minimizing some of the downsides of
typical jet injectors in which the medicant ruptures the outer layers of skin, while maintaining advantages of
typical jet injectors. During prosecution applicants repeatedly distinguished their invention from the prior art
by focusing on the “jet injector" limitation in the claims but not in the prior art. The originally-issued claims all
included the “jet injection" limitation.
Antares filed a broadened reissue application within the two year statutory limit set forth in 35 U.S.C. § 251.
The originally-allowed claims of the patent recite various embodiments of a jet injection device and specify,
for example, the exact depth the needle assist plunges to, the force at which the medicant is expelled, and
the gauge of the needle. The reissue claims cover embodiments of injection devices (not restricted to jetinjection devices) with particular combinations of safety features, such as a latch, pushbutton, and needle
guard.
The original patent requirement is well-established, being recognized in the reissue statute and longstanding
Supreme Court jurisprudence. The current statute (§ 251(a)) governing reissues provides in relevant part:
Whenever any patent is, through error. . deemed wholly or partly inoperative or invalid . . .
by reason of the patentee claiming more or less than he had a right to claim in the patent,
the Director shall . . reissue the patent for the invention disclosed in the original patent . .
.(emphasis added)
The Supreme Court's definitive explanation of the original patent requirement appears in U.S. Industrial
Chemicals, Inc. v. Carbide & Carbon Chemicals Corp., 315 U.S. 668 (1942). Applying the Industrial
Chemicals standard, asserted reissue claims in the present case are invalid. The original claims focused on
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jet injectors while the asserted claims are focused on particular safety features and do not contain the jet
injection limitation. The original patent requirement focuses on the original specification rather than the
original claims. The original specification here does not adequately disclose the later-claimed safety
features. The specification discussed only one invention: a particular class of jet injectors. This is clear from
the title of the patent ("Needle Assisted Jet Injector"), the abstract ("A jet injection device. . ."), the summary
of the invention ("The present invention relates to a needle assisted jet injector."), the repetitive descriptions
of the "present invention" as being for a jet injector, and the entirety of the specification (“jet" is mentioned 48
times in the 7-page specification). Nowhere does the specification disclose, in an explicit and unequivocal
manner, the particular combinations of safety features claimed on reissue, separate from the jet injection
invention. This does not meet the original patent requirement under § 251.
Licensing
Endo Pharmaceuticals Inc. v Actavis, Inc. and Roxane Laboratories, Inc.,
746 F.3d 1371 (Fed. Cir. 2014)
A majority of the panel reverses and remands the district court’s determination that defendants had implied
licenses under the terms of a settlement agreement involving related patents. While the asserted patents
claim priority to the same provisional applications as the patents that were the subject of the settlement
agreement, the specifications of the asserted patents are different, and that the claims cover different
subject matter.
ITC
Align Technology, Inc. v. International Trade Commission, et al.,
771 F.3d 1317 (Fed. Cir. 2014)
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.
uPI Semiconductor Corporation v. International Trade Commission and Richtek Technology Corp.,
767 F.3d 1372 (Fed. Cir. 2014)
The panel affirms an ITC ruling that uPI violated a consent order by aiding and abetting the import of
infringing computer parts, and reverses a ruling that uPI’s post-Consent Order controllers were not produced
using Richtek trade secrets.
The ALJ found that the formerly accused products contained or were produced using Richtek’s trade
secrets and that the formerly accused products infringed the patents. The ALJ also found that the postConsent Order products infringed the patents. However, the ALJ found that the post-Consent Order
products were not produced using Richtek’s trade secrets, due to clean room procedures uPI had
implemented.
The full Commission affirmed the ALJ’s findings that the formerly accused products were produced using
Richtek’s trade secrets and that the post-Consent Order products were produced without Richtek’s trade
secrets. The Commission also affirmed the ALJ’s finding that uPI’s formerly accused products violated
the Consent Order with respect to the ’190 patent because uPI knowingly aided or abetted the sale or
importation of formerly accused products that directly infringe the ’190 patent.
uPI’s Appeal as to Third Party Imports
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uPI objects to any bar under the Consent Order against importation by uPI’s customers of products
containing infringing DC- DC controllers. uPI cites the Kyocera case for the proposition that, despite its
agreement by Consent Order not to knowingly aid, abet or induce importation of products produced using or
containing Richtek trade secrets or infringing Richtek patents, because this case was terminated by Consent
Order with no general exclusion order, no penalty can be based on importations by non-respondents.
Kyocera Wireless Corp. v. International Trade Commission, 545 F.3d 1340 (Fed. Cir. 2008).
The panel finds that substantial evidence supports the Commission’s findings that uPI post-Consent Order
upstream sales were linked to subsequent downstream U.S. imports or sales of the formerly accused
products and that uPI knowingly aided or abetted U.S. imports or sales of the formerly accused
products. The Commission relied on spreadsheets produced by uPI showing uPI’s purchase order data and
sales of formerly accused products to downstream customers after the Consent Order issued. The
Commission also relied on testimony by uPI executives that uPI knew the contract manufacturers to whom
uPI’s distributors sold the formerly accused products, and knew that these contract manufacturers imported
downstream products into the U.S.
Richtek’s Appeal as to the use of Trade Secrets in Post-Consent Order Products
Richtek challenges the Commission’s finding that uPI’s post-Consent Order controllers are not produced
using Richtek trade secrets. uPI argued to the Commission that its post-Consent Order products were
independently developed through “clean room” procedures, and did not use the Richtek trade secrets.
The record as a whole does not support with substantial evidence the Commission’s finding that uPI’s postConsent Order products were not produced using Richtek trade secrets. uPI stated that it engaged outside
design firms to create new layouts and schematics to produce a new line of DC-DC controller chips, and that
it did not provide the outside design firms with Richtek trade secrets or uPI’s former schematics or layouts.
However, the evidence was grossly inadequate. Richtek’s experts testified to the high degree of similarity
and identity between uPI’s post-Consent Order products and formerly accused products, compared
with Richtek’s trade secrets. Richtek witnesses pointed to the many unchanged features of the layouts and
the circuitry, including errors therein. The reproduction of design errors, notations and extraneous markings
is not consistent with independent development.
Civil Procedure
Consumer Watchdog v. Wisconsin Alumni Research Foundation,
753 F.3d 1258 (Fed. Cir. 2014)
A consumer advocacy group does not have standing to appeal the loss of a patent reexamination even
though under the patent statute it was able to file a reexamination request. Federal courts do not have
authority to entertain every dispute. To meet the constitutional minimum for standing, the party seeking to
invoke federal jurisdiction must satisfy three requirements. First, the party must show that it has suffered
an "injury in fact" that is both concrete and particularized, and actual or imminent (as opposed to
conjectural or hypothetical). Second, it must show that the injury is fairly traceable to the challenged
action. Third, the party must show that it is likely, rather than merely speculative, that a favorable judicial
decision will redress the injury. Although Article III standing is not necessarily a requirement to appear
before an administrative agency such as the PTO, once a party seeks review in a federal court, "the
constitutional requirement that it have standing kicks in."
Krauser v. Biohorizons , Inc. and BioLok,
753 F.3d 1263 (Fed. Cir. 2014)
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The Circuit transfers back to the Eleventh Circuit the appeal of a declaratory judgment action seeking to
establish patent ownership rights, holding that it has no jurisdiction to hear the appeal.
Videx, Inc. v. Triteq Lock and Security, LLC,
2014 U.S. Dist. LEXIS 63653 (D. Or. May 8, 2014)
In a ruling dealing with patent pleading requirements under Iqbal and Twombly, the Oregon District grants
defendants’ motion to dismiss where the plaintiff failed to set forth sufficient details regarding infringement
following inter partes reexamination of the patent in suit.
AbbVie Deutschland GmbH et al. v. Janssen Biotech, Inc. and Centocor Biologics, LLC,
759 F.3d 1285 (Fed. Cir. 2014)
The Circuit affirms a ruling that AbbVie’s patents are invalid for lack of adequate written description,
permitting defendants to continue to market their Stelara® psoriasis treatment. In doing so the panel rejects
AbbVie’s argument that defendants were precluded by collateral estoppel from challenging validity based
upon a ruling by the PTO in a related interference proceeding.
According to the panel, because a district court can make a de novo determination of facts upon the
submission of new evidence, a Board decision that is reviewed under § 146 is not a "binding final
judgment" to preclude a losing party from litigating the same or related issues in a parallel proceeding.
Consequently, the Board's priority and nonobviousness decisions lacked the requisite finality for purposes of
collateral estoppel.
Stauffer v. Brooks Brothers Group, Inc.,
758 F.3d 1314 (Fed. Cir. 2014)
The panel affirms dismissal of a pre-AIA qui tam action based on improper patent marking despite plaintiff’s
arguments that the AIA amendments were unconstitutional because they amounted to a pardon by
Congress rather than the President, thus violating the separation of powers doctrine.
In Re Nokia, 760 F.3d 1348 (Fed. Cir. 2014)
In a prior appeal the Circuit said Nokia could not address an issue raised on appeal, but instructed that
the issue be presented to the Commission on remand. The Commission ruled the issue had been waived so
refused to permit consideration. In a split decision the majority denies mandamus to Nokia, but the dissent
couches this in terms of the Commission “defying this court’s order.”
Arlington Industries, Inc. v. Bridgeport Fittings, Inc., 759 F.3d 1333 (Fed. Cir. 2014)
The Circuit dismisses for lack of jurisdiction an appeal of a contempt order because the order is not a final
judgment or otherwise appealable until the sanctions are decided by the district court. The fact that
sanctions were ordered by the district court after the notice of appeal was filed does not help the
appellant since the Circuit cannot normally consider documents outside of the record on appeal.
ePlus, Inc. v. Lawson Software, Inc., 760 F.3d 1350 (Fed. Cir. 2014)
The Circuit vacates an injunction, a contempt order and an $18 million penalty because all of the claims of
the two patents in suit have been determined by the Circuit to be not infringed or invalid. The most
interesting part of the case is that while the patent was in litigation and the patentee was prevailing as to
injunctive relief and contempt, the PTO invalidated the claims at issue in a reexamination proceeding. In
Fresenius the Circuit held that a non-final money judgment of damages for infringement must be set aside
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where the judgment rested on a patent claim that the PTO had found invalid. Thus, the invalidation of the
patent claim precluded the patentee from recovering damages in Fresenius. Similarly here, the civil contempt
sanctions must be set aside.
mFormation Technologies, et al. v. Research in Motion Limited, et al.,
764 F.3d 1392 (Fed. Cir. 2014)
A JMOL of noninfringement is affirmed because there was no legally sufficient evidentiary basis on which a
reasonable jury could have found that BlackBerry infringes the asserted claims. In so holding, the Circuit
rejects the arguments of mFormation that the district court altered claim construction after the verdict was
rendered, that claim construction was incorrect in that it limited the steps to the order in which they were
claimed, and that there was substantial evidence to support the verdict.
Collateral Estoppel
e.Digital Corporation v. Futurewei Technologies, Inc., et al.,
772 F.3d 723 (Fed. Cir. 2014)
The Circuit affirms a judgment of non-infringement based on a determination that e.Digital was collaterally
estopped from seeking construction of a limitation presented in a claim added during reexamination of a first
patent but improperly applied the doctrine to a second, unrelated patent.
Before the cases at issue in this appeal, e.Digital asserted claims 1 and 19 of the '774 patent in a prior
action in Colorado. The '774 patent discloses a device with a microphone and a removable, interchangeable
flash memory recording medium that allows for audio recording and playback. Asserted claims 1 and 19
recited "a flash memory module which operates as sole memory of the received processed sound electrical
signals" (sole memory limitation). The court construed the sole memory limitation to require "that the device
use only flash memory, not RAM or any other memory system" to store the "received processed sound
electrical signals." Based on the claim construction, the parties to the prior action stipulated to dismiss the
case with prejudice.
After dismissal of the Colorado case the PTO cancelled claims 1 and 19 in an ex parte reexamination. It
issued reexamined claim 33, which recites the limitations of cancelled claims 1 and 19, including the
identical sole memory limitation, and added additional limitations, such as a microprocessor.
e.Digital then filed the present action in the Southern District of California, asserting reexamined claim 33
and claims 2 and 5 of a '108 patent. Based on the Colorado court’s construction, the defendants moved to
apply collateral estoppel to the construction of the sole memory limitation in the '774 and '108 patents.
The court granted the motions and adopted the Colorado court's construction, reasoning that the '774 patent
reexamination never addressed the sole memory limitation, and that the '108 and '774 patents are "closely
related."
Collateral Estoppel
Collateral estoppel applies if: (1) the issue necessarily decided in the previous proceeding is identical to the
one which is sought to be relitigated; (2) the first proceeding ended with a final judgment on the merits; and
(3) the party against which collateral estoppel is asserted was a party or in privity with a party at the first
proceeding. On appeal, the parties only dispute whether construction of the sole memory limitation presents
an identical issue.
The panel holds that the district court correctly applied collateral estoppel to the '774 patent
because reexamined claim 33 recites the sole memory limitation identical to claims 1 and 19, and because
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the '774 patent reexamination never addressed that limitation or the presence of RAM. The panel noted that
it was not saying that reexamination history cannot ever create a new issue that would preclude collateral
estoppel, such a scenario does not exist here because the reexamination history in no way modifies,
clarifies, or even informs the construction of the sole memory limitation.
The '108 patent, on the other hand, presents a separate claim construction issue. The '108 patent is
not related to the '774 patent, but does disclose a purported improvement to the '774 patent. While the '108
patent may incorporate by reference the '774 patent as prior art, it does not change the fact that the patents
are not related. The '108 patent discloses a separate invention, includes a distinct prosecution history, and is
supported by a different written description—including Figures 3 and 4, which clearly depict RAM. These
distinctions reinforce the well understood notion that claims of unrelated patents must be construed
separately so the panel holds that the district court erred in applying collateral estoppel to the '108 patent.
Necessary Parties
STC.UNM v. Intel Corporation, 754 F.3d 940 (Fed. Cir. 2014)
Rejecting the argument that the involuntary joinder provisions of Rule 19(a) should be applied, a divided
panel of the Circuit affirms the dismissal for lack of standing because a co-owner of the patent elected not to
join the suit.
Rule 19(a) states:
(1) Required Party. A person who is subject to service of process and whose joinder will not
deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person’s absence, the court cannot ac- cord complete relief among existing
parties; or
(B) that person claims an interest relating to the subject of the action and is so situated
that disposing of the action in the person’s absence may:
(i) as a practical matter impair or impede the per- son’s ability to protect the
interest; or
(ii) leave an existing party subject to a substantial risk of incurring double,
multiple, or otherwise in- consistent obligations because of the interest.
(2) Joinder by Court Order. If a person has not been joined as required, the court must order that
the person be made a party. A person who refuses to join as a plaintiff may be made either a
defendant or, in a proper case, an involuntary plaintiff.
The panel feels that Rule 19(a) does not change the fact that rules of procedure, such as that in Rule
19(a), must give way to substantive patent rights. There are two exceptions that the co-owner of a patent
may use to overcome the rule against involuntary joinder: (1) when a patent owner has granted an
exclusive license, and (2) when, by agreement, a co-owner has agreed to be joined in an enforcement
action. Neither situation is present here.
This shows the importance of making sure there is a provision in your ownership agreement that the coowner agrees to be joined as a party in any infringement effort, even if it is at the cost of the other owner.
STC.UNM v. Intel Corporation, 767 F.3d 1351 (Fed. Cir. 2014)
A 6-4 majority denies a petition for rehearing en banc based upon the absence of a necessary party. The
majority disagrees with the argument that the provision of Rule 19(a) requiring joinder of a party without
55
whom an action cannot be heard should control over the substantive provision of patent law that prevents
fewer than all owners of a patent from suing for patent infringement.
Two dissenting opinions were filed, one of which is by Judge Newman, who dissented as part of the threejudge panel originally hearing the case. Judge Newman reiterated that Rule 19(a) should be used to add the
reluctant co-owner in order to permit the original plaintiff to assert its patent. Her reasons are threefold. First,
by this action the Circuit is applying a special exclusion from Rule 19(a); second, 35 USC 281 gives a patent
owner the right to sue for infringement and by this action the Circuit is depriving the patentee of that right;
and third, Rule 19 is mandatory, stating that where, in that person’s absence, the court cannot accord
complete relief among existing parties; the missing party “must” be joined. According to Judge Newman, the
majority holds that a party who is necessary to the action cannot be joined, and therefore that the
action cannot proceed. Yet our constitutional framework provides for resolution of property disputes through
judicial attention. An arbitrary rule that excludes enforcement of a property right that is owned in common,
cannot be reconciled with the principles of the rule of law. At a minimum, she expresses, this ruling should
be reviewed by the en banc court, not tacitly confirmed.
Judge O’Malley adds in a separate dissent that it is Rule 19—not substantive judge-made laws governing
joinder—that establishes the criteria for assessing joinder. See Provident Tradesmens Bank & Trust Co.
v. Patterson, 390 U.S. 102, 118 n.13 (1968). She concludes: Rather than once again simply exempt
patent law from the rules that govern all federal litigation, we should either: (1) clarify the basis for this socalled substantive right against involuntary joinder in patent infringement cases and explain why it can
overcome the dictates of Rule 19; or (2) hold that Rule 19 applies, including the provisions for involuntary
joinder set forth therein, and direct the lower court to consider the propriety of joinder or dismissal under that
rule alone.
Comments: Judge Newman’s dissent is consistent with recent Supreme Court patent rulings instructing the
Circuit that there should be no special rules for patent cases. Earlier this year in Medtronic v. Mirowski the
Court ruled that the party with the substantive cause of action, that is, the patentee, should have the burden
of proof even in a DJ case. In eBay Inc. v. MercExchange, the Court ruled that the same test for injunctions
should apply in patent cases that applies in other cases. And, just a couple of months ago, the Court ruled in
Octane Fitness, LLC v. Icon Health & Fitness, Inc., that in deciding whether a case is “exceptional,”
justifying an award of attorney fees, courts should simply look to see whether they case is unusual, and that
it is too high of a burden to require the moving party to have to prove bad faith.
When we look at the rights of the parties that are affected by this decision, the majority expresses the need
to protect the reluctant co-owner from participating in an action in which it does not wish to appear.
Compared to the rights of the party attempting to enforce its patent in accordance with its statutory right, the
importance of protecting the recalcitrant co-owner would appear to pale.
Of course, this entire issue can be avoided by contractually providing, when the original co-ownership
arrangement is established, that each co-owner agrees it will be joined to litigation at the request of the
other party. This decision will hopefully encourage parties to agree to such provisions.
Noerr Pennington Immunity
Content Extraction and Transmission LLC v. Wells Fargo Bank, Nat’l. Assoc. et al., 2014 U.S. App.
LEXIS 24258 (Fed. Cir. Dec. 23, 2014); Diebold, Inc. v. Content Extraction and Transmission LLC,
et al., 2014 U.S. App. LEXIS 24258 (Fed. Cir. Dec. 23, 2014)
The Circuit affirms dismissal under Rule 12(b)(6) of patentee’s infringement suit due to the asserted patents
being patent ineligible under 35 U.S.C. § 101, and the dismissal of counterclaims for tortious interference
56
and RICO violations. We previously discussed the patentable subject matter issue so the following will deal
only with the dismissal of the tortious interference and RICO violations.
CET asserted four related patents directed generally to a method of 1) extracting data from hard copy
documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from
the extracted data, and 3) storing that information in a memory. This method can be performed by software
on an ATM that recognizes information written on a scanned check.
Diebold's claims arise from the filing of allegedly frivolous infringement suits by CET against Diebold
customers. Under Noerr-Pennington, a person's act of petitioning the government is presumptively shielded
from liability by the First Amendment against certain types of claims. To overcome this presumptive
immunity, a plaintiff must establish that the defendant's instigation of litigation was merely a "sham." Prof’l
Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (1993) (PRE). This two-part test
requires the plaintiff to show (1) that the litigation was objectively baseless, and (2) that the defendant
subjectively intended to harm the plaintiff through the abuse of a governmental process itself, as opposed to
harms flowing from the outcome of that process.
Under the first prong, a "sham" lawsuit must be objectively baseless "in the sense that no reasonable litigant
could realistically expect success on the merits." Given the focus on the act of filing the complaint as the
actionable event, CET's infringement suits, though unsuccessful, were not objectively baseless even though
we dismiss the patent under section 101. This is because the state of the law of § 101 was deeply uncertain
at the time CET filed its complaints against Wells Fargo and PNC in 2012. Under these circumstances, we
cannot conclude that as a matter of law, no reasonable litigant in 2012 could have expected success on at
least one of CET's claims. Therefore, since the act of filing its suits was shielded from liability by the NoerrPennington doctrine, the district court correctly dismissed Diebold's tortious interference and RICO violation
claims against CET.
Comment: In a footnote, the panel references decisions from other circuits noting that the filing of a lawsuit,
even one that is frivolous, cannot by itself constitute an act of “extortion” under RICO. According to the
panel: “Treating meritless litigation as a form of extortion punishable under RICO would substantially chill
even valid court petitioning, as it could subject almost any unsuccessful lawsuit or set of lawsuits to a
colorable claim of a RICO violation.” This shows how high the bar would be for a RICO action to survive a
Federal Circuit appeal.
However, contrast the often-criticized case of Tyco Healthcare Group, L.P. v. Mutual Pharmaceutical
Company, Inc., 762 F.3d 1338 (Fed. Cir. 2014), remanding a case to the district court to determine whether
an infringement action was in fact baseless and thus potentially qualifying as “sham litigation.”
Tyco Healthcare Group LP, et al. v. Mutual Pharmaceutical Company, Inc., et al.,
762 F.3d 1338 (Fed. Cir. 2014)
In a split decision the Circuit vacates summary judgment that Tyco’s infringement claims were not a sham,
therefore remanding for a determination of whether the sham exception to Noerr-Pennington immunity is
applicable. The panel also vacates the summary judgment that Tyco’s citizen petition to the FDA was not a
sham.
The majority of the panel ruled that the patentee’s infringement action following an ANDA filing could give
rise to antitrust violations as “sham litigation.” The majority further held that the Citizen’s Petition–alleged to
contain baseless allegations of non-equivalence, filed by patentee following a finding of non- infringement,
could also give rise to antitrust liability. Judge Newman wrote in dissent that the patentee has a statutory
right to file an infringement suit after it receives notice of an ANDA certification. She also wrote that the
patentee has a constitutional right to file a Citizen’s Petition that should trump any speculative antitrustbased claims for damages.
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The decision recognizes that the presumption of validity for a patent holder creates a high bar for a party
claiming sham litigation based on invalidity. The dissent’s argument that a patentee may, as a matter of law,
rely on the presumption of validity to defeat a sham litigation claim was not accepted by the majority, so the
opinion makes it clear that the presumption can be overcome.
Transfer of Cases
In re Apple Inc., 743 F.3d 1377 (Fed. Cir. 2014)
Applying the “clear abuse of discretion” standard of review, a split panel denies a writ of mandamus that
would have ordered the E.D. of Texas to transfer case to the N.D. of California.
In re Toyota Motor Corporation and Gulf States Toyota, Inc.,
747 F.3d 1338 (Fed. Cir. 2014)
The Circuit rules that the E.D. of Texas abused its discretion in denying a motion to transfer an action to
the E.D. of Michigan.
Apple and Toyota show that regardless of how confident we are in our position on a motion to
transfer, we nonetheless have to disclose our case strategies early on and review, in exhaustive
detail, the particular witnesses and documents that will be used to defend a case brought in a remote
forum. It also shows the value in bringing a case in a forum of your client's choosing, whether for
patent infringement or declaratory judgment, as to achieve a transfer the defendant will have to lay out
its evidence far earlier than it otherwise would have to do so. In Toyota AVS simply alleged it was
based in Texas without identifying any witnesses that had pertinent evidence. Yet such evidence
probably existed.
In re Nintendo of America, Inc., 756 F.3d 1363 (Fed. Cir. 2014)
The Circuit determines that the Eastern District of Texas abused its discretion in denying a motion to sever
and transfer a patent infringement case against Nintendo and its customers to the Western District of
Washington when all of the identified witnesses reside in the transferee forum.
Sanctions under Rule 11
Source Vagabond Systems Ltd. and Pearl Cohen Zedek Latzer LLP v. Hydrapak, Inc.,
753 F.3d 1291 (Fed. Cir. 2014)
The district court did not abuse its discretion in sanctioning a law firm $200,000 under Rule 11 where its
arguments in support of claim construction violated all of the applicable canons of construction and its
arguments of infringement had no reasonable basis.
Ceats, Inc. v. Continental Airlines et al.,
755 F.3d 1356 (Fed. Cir. 2014)
The Circuit refuses to throw out a judgment despite finding the court-appointed mediator acted improperly
by failing to disclose “an endearing social relationship” with a law firm and attorney who represented the
defendants in the mediation and in the subsequent trial.
Standing
MadStad Engineering , Inc. and Mark Stadnyk v. USPTO and Michelle K. Lee,
756 F.3d 1366 (Fed. Cir. 2014)
58
An inventor and his company lack standing to challenge the constitutionality of the first-to-file provision of
the AIA because plaintiffs fail to show actual or imminent injury, fairly traceable to the challenged action.
The panel rejects plaintiffs’ argument that they were subjected to increased risk of hacking because they
had to spend less money on computer security due to the increased costs associated with additional
patent filings required under the first-to-file system. Other arguments relating to costs associated with
increased filings were also rejected as not being fairly traceable to the first-to-file provisions of the AIA.
Azure Networks, LLC and Tri-County Excelsior Foundation v. CSR PLC, et al.,
771 F.3d 1336 (Fed. Cir. 2014)
In a split decision, the majority vacates the judgment of noninfringement because the court improperly
construed the term “MAC address.” However, the most interesting part of the opinion deals with the panel’s
affirmance of the district court ruling that Tri-County is dismissed for lack of standing.
The '129 patent passed through many hands of ownership, and was eventually acquired by Azure, which
sought local charities to join in patent enforcement activities. Ultimately Azure partnered with Court
Appointed Special Advocates, which formed Tri-County, a Texas nonprofit corporation. In 2010, Azure
donated to Tri-County multiple patents and patent applications, including the application that would issue as
the '129 patent. A few weeks after the donation, Tri-County and Azure entered into an “Exclusive Patent
License Agreement,” which transferred back to Azure certain rights in the '129 patent. Tri-County retained
other rights, including the right to practice the patent and to receive a percentage of litigation and licensing
proceeds.
Tri-County and Azure filed suit together against the Appellees, who sought to dismiss Tri-County, arguing
that the transfer to Azure constituted an assignment for purposes of standing, leaving TriCounty with no
rights to sue as co-plaintiff. The district court agreed, and this appeal followed.
The Patent Act governs standing to sue for infringement, and provides that only the patentee and its
successors are entitled to bring an action for infringement. A party is a patentee if it holds legal title to the
patent, either by issuance or assignment. When a patentee transfers rights, the party that has been granted
all substantial rights under the patent is considered the owner regardless of how the parties characterize the
transaction that conveyed those rights. In that event, the transferee is treated as the patentee and has
standing to sue in its own name. And whichever party has all, or substantially all, rights in the patent alone
has standing to sue for infringement.
To determine whether an exclusive license is tantamount to an assignment, the panel states that it must
ascertain the intention of the parties to the license agreement and examine the substance of what was
granted. The parties’ intent alone is not dispositive. We must also consider a non-exhaustive list of rights for
determining whether a licensor has transferred “all substantial rights” to the licensee, including: (1) the
nature and scope of the right to bring suit; (2) the exclusive right to make, use, and sell products or services
under the patent; (3) the scope of the licensee’s right to sublicense; (4) the reversionary rights to the licensor
following termination or expiration of the license; (5) the right of the licensor to receive a portion of the
proceeds from litigating or licensing the patent; (6) the duration of the license rights; (7) the ability of the
licensor to supervise and control the licensee’s activities; (8) the obligation of the licensor to continue paying
maintenance fees; and (9) any limits on the licensee’s right to assign its interests in the patent.
The parties do not dispute that the Agreement transferred to Azure an exclusive license to practice the
'129 patent. Also critical to the panel’s inquiry is that the Agreement granted Azure the exclusive right to
enforce and defend the '129 patent. In determining the nature of a transfer of rights, the Circuit has
repeatedly recognized that a key factor has often been where the right to sue for infringement lies. It is not
uncommon for a licensor to transfer to its licensee the exclusive right to enforce the patent. But significant to
this case, Tri-County reserved no right to have control over, to veto, or to be notified of any of Azure's
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licensing or litigation activities. Retaining control of these activities is also critical to demonstrating that a
patent has not been effectively assigned to the licensee.
Rather than retaining any control over litigation activities, Tri-County has a strict duty under the Agreement
to “join Azure as a party and cooperate with Azure in any patent infringement suit, if desirable to address a
legal issue,” such as standing. Tri-County must join “at Azure's request,” and after joinder, “Azure would
maintain full and absolute control over any such patent infringement suit, including settlement of any related
claims or causes of action.” Tri-County’s joinder “would be limited solely to cooperation and that which is
necessary to address the legal issue.” As the district court recognized, nothing about this structure indicates
that Tri-County has control over any aspect of litigation. Azure’s exclusive right to sue, exclusive license, and
freedom to sublicense are factors that strongly suggest that the Agreement constitutes an effective
assignment.
After weighing all the factors, the panel agrees with the district court that Azure acquired significant rights
under the '129 patent, including the right to enforce, to license, to control the licensing and litigation, to
sublicense, to practice exclusively, and to maintain the patent. Tri-County’s economic interests, limited
termination rights, and unfixed reversionary interest with only a very limited amount of time remaining on the
patent do not demonstrate that it retained ownership. The balance of factors establishes that Tri-County
transferred all substantial rights in the '129 patent to Azure, making Azure the effective owner for purposes
of standing.
Comment: Usually in licensor-licensee standing cases, the licensor or the exclusive licensee brings suit
alone, and the court needs to decide whether the licensor has transferred away enough rights to divest it of
the right to sue. This case was different in that the licensor and licensee brought the action together.
Therefore, the inquiry was whether Tri-County transferred all substantial rights to Azure and, if so, whether
Tri-County may nonetheless join in the infringement action. Normally the defendant is not going to care if an
additional plaintiff is named but Tri-County was what tied the action to the Eastern District of Texas, where
Azure would like to have the case heard. Now it will be interesting to see if defendants/appellants are able to
get the case transferred to another venue.
Subject Matter Jurisdiction in DJ Actions
Danisco US Inc. v. Novozymes A/S,
744 F.3d 1325 (Fed. Cir. 2014)
The Circuit reverses the dismissal of a declaratory judgment action filed the day a patent issued based upon
pre-patent-issuance conduct by the patentee. A unanimous panel refused to accept the “bright line” rule that
activity prior to issuance of a patent cannot give rise to a justiciable controversy. Citing MedImmune the
panel noted that the Supreme Court has repeatedly found the existence of an actual case or controversy
even in situations in which there was no indication that the declaratory judgment defendant was preparing to
enforce its legal rights. The Court has instead only “required that the dispute be definite and concrete….”
Here Novozymes’s claim covering genetically modified enzymes was the sole claim of its patent and is the
same claim that Novozymes described during prosecution as interfering with the claim in a Danisco patent.
Novozymes twice asserted that Danisco’s patent covering similar subject matter was invalid and that
Novozymes, not Danisco, was entitled to a patent on the claimed invention. Novozymes has twice sued
Danisco or its predecessors for patent infringement regarding related products, once on the day its patent
issued. Novozymes has never withdrawn its allegation that Danisco’s variant is encompassed by the claim
that issued in Novozymes’s patent.
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According to the panel, Danisco was in the position of either abandoning its product or running the risk of
being sued for infringement, which is precisely the situation that the Declaratory Judgment Act was intended
to remedy.
StoneEagle Services, Inc. v. David Gillman et al.,
746 F.3d 1059 (Fed. Cir. 2014)
A declaratory judgment action is dismissed for lack of subject matter jurisdiction where the sole basis for
the action was that the defendant claimed he had written the patent application for the patent at issue, but
never claimed he was an inventor.
Microsoft Corporation and SAP America, Inc. v. Datatern, Inc.,
755 F.3d 899 (Fed. Cir. 2014)
A divided panel rules on the lack of sufficient controversy to support subject matter jurisdiction where
declaratory judgment actions were based on infringement actions against a customer.
Judge Rader dissents from the majority’s ruling as to Microsoft’s action on the ‘402 patent based on his
feeling that the majority viewed each fact in isolation instead of considering a totality of the circumstance.
“The unfortunate consequence of this decision creates a roadmap to avoid declaratory judgment when it
may be most valuable to resolve disputes early and efficiently.”
Sandoz Inc. v. Amgen Inc. and Hoffmann-La Roche Inc.,
2014 U.S. App. LEXIS 22903, 112 U.S.P.Q. 2d 2004 (Fed. Cir. 2014)
The Circuit affirms dismissal of a declaratory judgment action because the complaint did not allege an injury
of sufficient immediacy and reality to create subject matter jurisdiction. The complaint was filed before
plaintiff Sandoz filed an application for approval with the FDA. In fact, Sandoz had just begun testing its
product that is similar to a drug patented by Hoffman-La Roche and licensed to Amgen.
Amgen moved to dismiss the complaint, arguing that the court lacked jurisdiction because no immediate,
real controversy between the parties yet existed. The motion was granted. The district court also relied on a
separate ground for dismissal—that the BPCIA prohibited Sandoz's suit. Among its provisions, the BPCIA
establishes procedures for the narrowing and resolution of patent disputes between biosimilarity applicants
and reference-product sponsors. The court concluded that Sandoz could not obtain a DJ before filing an
FDA biosimilarity application. The court reasoned that, because Sandoz planned to enter the market by the
biosimilarity route, it had to follow the BPCIA's patent-related procedures applicable to biosimilarity
applicants—which it had not done.
To answer the underlying case-or-controversy question, the Circuit asks "whether the facts alleged, under all
the circumstances, show that there is a substantial controversy, between parties having adverse legal
interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." The inquiry,
focused on the combination of immediacy and reality, involves no bright line test. The required distinction is
between a suit involving a real and substantial dispute that admits of specific relief through a decree of a
conclusive character and a suit that calls for an opinion advising what the law would be upon a hypothetical
state of facts.
The Circuit has frequently applied Medlmmune's "all the circumstances" standard to determine, in the patent
context, whether a declaratory-judgment plaintiff has presented a case of sufficient "immediacy and reality."
Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).We have assessed "immediacy" by considering
how far in the future the potential infringement is, whether the passage of time might eliminate or change
any dispute, and how much if any harm the potential infringer is experiencing, at the time of suit, that an
adjudication might redress. We have assessed "reality" by examining any uncertainties about whether the
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plaintiff will take an action that will expose it to potential infringement liability and, if so, exactly what action.
In short, we have focused on related questions of timing and contingency regarding the existence and
content of any needed patent adjudication, as well as current concrete harms to the declaratory-judgment
plaintiff from delaying an adjudication.
Without adopting a categorical rule, the panel concludes that the present case does not meet the
requirements of immediacy and reality. We begin with the immediacy requirement, noting again that
contingency plays a role in applying this requirement as it does in applying the reality requirement. When
Sandoz filed its suit, it was conducting a Phase III trial of a drug it hopes to make the subject of an FDA
application. It told the NIH that its trial would last until April 2015. Even that date, let alone any FDA
approval, was several years away when Sandoz brought this suit. And if the Phase III trial uncovers material
problems, Sandoz may, at a minimum, need to delay any FDA application considerably longer.
The Supreme Court and this court have indicated that Congress may act to "articulate chains of causation
that will give rise to a case or controversy where none existed before"—thus, in some circumstances,
effectively creating justiciability that attenuation concerns would otherwise preclude. See Consumer
Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258, 1261 (Fed. Cir. 2014). But Sandoz, in its current
posture, cannot invoke any statutory relaxation of otherwise-applicable immediacy and reality requirements.
Congress has not specifically provided for suits where the potential infringer has not filed an FDA application
for the approval required before it can undertake the activity that might expose it to liability.
Subject Matter Jurisdiction on Removal and Remand
State of Vermont v. MPHJ Technology Investments, LLC,
763 F.3d 1350 (Fed. Cir. 2014)
An NPE’s writ of mandamus relating to the remand of a case that was removed to federal court is denied
because the Circuit lacks jurisdiction. Therefore, Vermont’s action contending that patent infringement
demand letters violated consumer protection laws will be litigated in state court.
The State of Oregon has addressed this issue a little differently. Oregon’s law, signed into law on March 3 of
this year, prohibits a person or its affiliate from communicating a patent-infringement demand if it
alleges, asserts or claims in bad faith that the recipient has infringed or contributed to infringing a patent or
rights that the patentee, assignee or licensee has under patent. The statute permits prosecuting attorneys
to make findings regarding whether the accusing entity has acted in bad faith. The prosecuting attorneys
may also serve investigative demands or take enforcement actions under the Unlawful Trade Practices Act
related to bad-faith demands. The law also prescribes criteria for findings of bad-faith and good-faith
claims, requiring prosecuting attorneys to tell the accused if a claim was made in bad faith within 10
days and only permits recipients to sue for damages once a finding has been made that a claim was made
in bad faith. For a good discussion of the statute see Patent Troll Legislation by Julianne R. Davis. AIPLA
Newsstand, Aug. 14, 2014.
Stay Pending PTO Proceedings
VirtualAgility, Inc. v. Salesforce.com, 759 F.3d 1307 (Fed. Cir. 2014)
A majority of the panel reverses as an abuse of discretion the district court’s refusal to stay an
infringement case pending post-grant review under the AIA’s business method patent review program.
The statute instructs the district court to consider the following four factors when deciding whether to
grant a stay:
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(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the
trial;
(B) whether discovery is complete and whether a trial date has been set;
(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or
present a clear tactical advantage for the moving party; and
(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on
the court.
The statute further provides that the Circuit shall review the district court’s decision to ensure consistent
application of established precedent, and such review may be de novo. §18(b)(2).
Benefit Funding Systems LLC v. US Bancorp,
767 F.3d 1383 (Fed. Cir. 2014)
In the context of a stay determination, a district court need not and should not analyze whether the PTAB
might, at some later date, be determined to have acted outside its authority in instituting and conducting
CBM review based on § 101.
Appellant Benefit Funding sued on a patent directed to a system for enabling beneficiaries of retirement
benefits to convert future benefits into current resources to meet financial needs. Ten months into the
litigation, appellees filed a petition for post-grant review under the Transitional Program for Covered
Business Method Patents. The PTAB instituted the CBM review on the basis of 35 U.S.C. § 101,
holding that it is more likely than not that the challenged claims were unpatentable. The court granted
appellees’ motion to stay the litigation, and Benefit Funding filed an interlocutory appeal.
Section 18(b) of the AIA identifies four factors to be considered when deciding whether to grant a stay:
(A) whether a stay, or the denial thereof, will simplify the issues in question and
streamline the trial;
(B) whether discovery is complete and whether a trial date has been set;
(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving
party or present a clear tactical advantage for the moving party; and
(D) whether a stay, or the denial thereof, will re- duce the burden of litigation on the
parties and on the court.
The district court concluded that all of the factors strongly favored a stay.
Standard of Review
Traditionally, the Circuit reviews decisions on motions to stay pending PTO proceedings under the abuse of
discretion standard. The AIA, however, provides the authority to conduct more searching review, stating
that the Circuit “shall review the district court’s decision to ensure consistent application of established
precedent, and such review may be de novo.” AIA § 18(b)(2).
Argument
Appellants’ argument rests on the premise that the PTAB is not authorized to conduct CBM review based on
§ 101 grounds. That argument is a collateral attack similar to ones the Circuit recently held impermissible in
VirtualAgility, Inc. v. Salesforce.com, 2014 WL 3360806. Allowing such a collateral attack would create
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serious practical problems, including mini-trials that would overwhelm and dramatically expand the nature of
the stay determination. A district court, in the context of a stay determination, need not and should
not analyze whether the PTAB might, at some later date, be determined to have acted outside its authority in
instituting and conducting the CBM review. This is not to say that a patent owner could never attack the
PTAB’s authority to conduct CBM review. Indeed, Appellants might potentially challenge that authority in the
context of a direct appeal of the PTAB’s final decision. They simply cannot mount such a challenge in
opposition to a stay.
Having rejected Appellants’ sole argument on appeal, the panel concludes that the district court did not
abuse its discretion in granting the stay. Further, consistency with established precedent was not at issue in
this case and no other compelling reason for a more searching review was presented. Finally, the panel
notes that it will not address the underlying merits of that attack, namely whether § 101 is a valid ground for
CBM review.
Versata Software, Inc., et al. v. Callidus Software, Inc.,
771 F.3d 1368 (Fed. Cir. 2014)
The panel instructs the district court to grant a motion to stay action pending post-grant review under the
Covered Business Method (CBM) review program, noting that a stay may be warranted even when the CBM
proceeding does not address all asserted patents in the litigation.
The four factors to be considered under section 18(b)(1) of the AIA are set forth in the Benefit Funding case
discussed above.
(A): Simplification of Issues
The panel rules that the court clearly erred by essentially creating a categorical rule that if any asserted
claims are not also challenged in the CBM proceeding, this factor disfavors a stay. Though the panel factor
weighs more heavily in favor of a stay “when all of the litigated claims are undergoing CBM review” “stays
can be warranted even when a CBM proceeding does not address all asserted patents, claims, or invalidity
defenses.” VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1312-14 (Fed. Cir. 2014).
A proper simplification analysis would look to what would be resolved by CBM versus what would remain.
The district court erred in not finding relevant the fact that all of the independent claims, as well as some
dependent claims, of the ’304 and ’024 patents are undergoing CBM review. The panel also takes judicial
notice of the fact that the PTAB had instituted a second CBM review, this time on all remaining claims.
Finally, the panel explains that it is not necessary for the CBM proceedings to simplify all invalidity issues to
warrant stay. The statute explicitly allows petitioners to raise one invalidity defense without invoking estoppel
as to other defenses that could have been raised. Compare AIA § 18(a)(1)(D) with 35 U.S.C. § 315(e)(2).
Balancing all of these interests, the panel finds that the first factor strongly favors stay.
(B): Whether Discovery Is Complete and Whether A Trial Date Has Been Set
The district court weighed this factor against a stay or was at best neutral, finding that though discovery
wasn’t complete, the trial date that is scheduled is within months of when the PTAB is expected to issue its
decision. The panel found two errors with this reasoning: first, the court did not explain how the PTAB’s
decision before the trial date counsels against stay; second, the court failed to analyze how much more
remains to be done in litigation before reaching the trial date.
Callidus filed its first CBM petitions and motion to stay when the litigation was still in its infancy. The district
court clearly erred when it evaluated the stage of litigation at the time of its decision because “as we
explained in VirtualAgility, generally the time of filing the motion will be the relevant stage at which to
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measure this factor.” Further, while the panel noted that it is correct for the district court to wait for the
PTAB’s institution of a CBM review before granting a stay, whether “we look at the date the motion to stay
was filed or the date when the PTAB granted review, the factor strongly favors a stay.”
With the close of expert discovery still seven months away, no exchange of claim construction terms or
constructions, and Markman and trial over a year away, the panel finds that much of the litigation was still in
front of the parties and the district court. The panel noted that courts must be mindful of the burden on the
parties and the court in completing both discovery, resolving summary judgment motions, completing the
Markman process, and preparing for trial. This timing factor thus strongly favors stay.
(C) Undue Prejudice or Tactical Advantage
The district court made no factual findings that Versata would suffer undue prejudice as a result of a stay,
yet found that Callidus would gain a tactical advantage because it would still seek its own infringement
counterclaims during the stay on Versata’s patents. The panel finds these findings clearly erroneous
considering Callidus’ admission that it was seeking a stay as to all proceedings and Versata’s silence as to a
stay of the entire litigation. Because the record does not suggest any undue prejudice to Versata or tactical
advantage to Callidus, the court clearly erred, and this factor strongly favors a stay.
(D) Reduced Burden of Litigation
The district court found that “Callidus’ tactics in filing motions to transfer and dismiss under 12(b)(6) have
actually increased the burdens of litigation, rather than reduced them.” In so finding, the court determined
that this factor weighed against a stay. The panel finds that the district court clearly erred because the
correct test is one that focuses prospectively on the impact of the stay on the litigation, not on the past
actions of the parties.”
As previously noted in VirtualAgility, the “simplification factor analysis under the first factor points in the
same direction as reducing the burden of litigation under the fourth factor.” For these reasons and the
reasons given in the first factor, the panel found that this factor strongly favors a stay.
Comment: This case, and its recent VirtualAgility decision, show how strongly the Circuit feels about cases
being stayed pending CBM review. Though the CBM petition on appeal in Versata was not on all claims in
the case and only on § 101 grounds (without mention of § 102, 103, or 112), the panel finds it enough of a
simplification of issues to warrant a stay. The Circuit also does not give much weight to what has already
occurred in the litigation as long there is much left to do before trial.
Waiver of Arguments
Retractable Technologies, Inc. v. Becton Dickinson,
757 F.3d 1366 (Fed. Cir. 2014)
Becton Dickinson must pay a $5 million award, despite the fact that the infringement verdict was partially
reversed in a prior appeal, since Becton never argued for lower damages in the earlier appeal. "While this
court regularly issues remands when requested and appropriate, or on our own initiative if some but not all
products are found on appeal not to infringe, there is no 'normal rule' giving district courts the authority to …
recalculate damages that fall within our mandate." Becton argued that fairness requires relief but in
response, the Circuit reiterates that the company had fair opportunity to raise the damages issue in the
prior appeal. "To permit this issue to be revisited anew would be to endorse an end-run around the
mandate rule, which we are not about to do.”
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Claim and Issue Preclusion, and Collateral Estoppel
Brain Life, LLC v Elekta Inc.,
746 F.3d 1045 (Fed. Cir. 2014)
In an opinion that discusses claim preclusion, issue preclusion and the Kessler Doctrine, the Circuit
affirms the district court’s dismissal of a subsequent case brought against the same defendant for the
same imaging system found not to infringe in a prior action. In doing so the panel relied not on claim
preclusion as the district court had, but instead on the so-called Kessler Doctrine. The panel also ruled that
none of the foregoing doctrines precludes an action alleging infringement by equipment that was
different from that found to infringe in the prior action, and was introduced after the judgment in the earlier
case.
Based on this case, the Kessler Doctrine will undoubtedly be a part of every future claim and issue
preclusion discussion.
Senju Pharmaceutical Co., Ltd. et al. v. Apotex Inc.,
746 F.3d 1344 (Fed. Cir. 2014)
In the second claim preclusion case in the past week, a divided panel affirms the dismissal of Senju’s
patent infringement case based on claim preclusion. Apotex filed an ANDA with the FDA, asking for
permission to sell a generic version of Gatifloxacin eye solution. In response, Senju filed suit for patent
infringement. The district court found the asserted claims to be invalid as obvious. Senju filed for and
received a reexamination certificate amending claims that had been invalidated, and then filed a second
action based upon the reexamined claims. The district court granted Apotex’s motion to dismiss the second
case based on claim preclusion. Senju appealed, contending this was not the same cause of action
litigated in the first case since the claims were substantially different.
The majority of the panel disagreed with Senju that differences in the claims were critical to claim
preclusion. According to the opinion, the claims that emerge from reexamination do not in and of
themselves create a new cause of action.
Burden of Proof
Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S.Ct. 843 (2014)
Even though the patentee was barred from filing an infringement suit due to the license agreement, the
Supreme Court felt that the public interest in maintaining a well-functioning patent system should not
favor changing the ordinary burden of proof rule in patent cases.
This case deals with a dispute over whether certain implantable heart simulators sold by Medtronic are
within the scope of a patent that had been licensed from Mirowski to Medtronic. The ultimate issue for the
Court was which party had the burden of proving infringement - the licensee/declaratory judgment plaintiff or
the patentee/declaratory judgment defendant.
The Federal Circuit acknowledged that the patentee
normally bears the burden of proof, but held that where the patentee is the declaratory judgment
defendant and is foreclosed from asserting infringement by the continued existence of a licensing
agreement, the declaratory judgment plaintiff bears the burden of persuasion.
The Supreme Court felt this was an arbitrary distinction, and one that did not justify making such a
definitive change in the way declaratory judgment cases are tried. Citing Medimmune v. Genentech, Inc.,
549 U.S. 118, 128 (2007), the Court found that there was no convincing reason why burden of proof case
law should favor the patentee. Here, Medtronic followed the procedure set forth in Medimmune, which
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held that a patentee does not need to stop paying royalties, and thereby subject itself to the risk of a
patent infringement suit, in order to file a declaratory judgment action. Even though Mirowski was barred
from filing an infringement suit due to the license agreement and Medtronic's continued payment of
royalties into an escrow account, the Court felt that the patentee should still bear the burden of proof
cases.
JMOL Motions
Medisim Ltd. V. Bestmed, LLC, 758 F.3d 1352 (Fed. Cir. 2014)
The Circuit vacates denial of JMOL as to anticipation because defendant failed to move after presentation
of the evidence, but affirms the grant of JMOL on an unjust enrichment claim and the grant of a new trial
on anticipation.
Ownership of Patent and Assignment
Memorylink Corp. v. Motorola Solutions, Inc. and Motorola Mobility, Inc.,
2014 U.S. App. LEXIS 22901, 113 U.S.P.Q. 2d 1088 (Fed. Cir. Dec. 5, 2014)
The Circuit affirms the granting of summary judgment on contract and patent infringement claims and in the
dismissal of tort claims based on the running of the statute of limitations.
The Illinois statute of limitations for fraud is five years. The discovery rule delays the start of the clock until
the plaintiff knew or should have known of the injury. Memorylink argues that mere knowledge of the facts
underlying a claim is insufficient to start the statute of limitations clock; rather, the claim should not accrue
until those facts lead to the conclusion that a legal claim exists. Because of the fiduciary duty owed to it by
Motorola's attorney, Memorylink maintains that it had no reason to question the improper inventorship
determination and thus could not have concluded that any of the tort claims existed before its external
investigation in 2007.
The panel holds that the court properly dismissed the tort claims because Memorylink knew all the facts
necessary to assert its claims, and therefore its causes of action accrued, more than five years before it filed
suit. Memorylink alleged that as of April 1998, although neither Schulz nor Wyckoff had contributed or done
anything towards the conception of the Invention, Motorola had asserted that all four people were coinventors. The Dunlop letter provided a prime opportunity for Strandwitz and Kniskern to question that
inventorship determination, yet they failed to do so. Memorylink had additional occasions in 1998 at which to
inquire about or challenge the issue of inventorship, including the signing of the invention disclosure, the
assignment, and the inventor declaration for the patent application. Even accepting the Complaint's
allegations as true, the panel agrees with the court that Memorylink should have concluded that a legal claim
existed based on Schulz and Wyckoff having contributed nothing to the conception of the invention yet being
included as co-inventors on documents relating to the invention. Memorylink did not later learn of any new
and significant facts underlying the tort claims to warrant tolling the statute of limitations.
Memorylink's arguments about the timing of and the fiduciary duties owed from the attorney—client
relationship are also unpersuasive. Even if Motorola's attorney had not explained inventorship, assignment,
or joint ownership, Strandwitz and Kniskern were aware of that when they signed the assignment. Moreover,
Memorylink obtained independent counsel soon thereafter, and thus reasonably should have discovered any
legal claims it had well before the statute had run. Instead, it failed to challenge the inventorship
determination until June 2008. The court therefore did not err in dismissing the various tort claims as
untimely.
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Proper Appeal
Jang v. Boston Scientific Corporation, 767 F.3d 1334 (Fed. Cir. 2014)
After ruling that a patent license dispute is properly before the Federal Circuit and not the regional circuit
because plaintiff’s right to relief depends on an issue of patent law, the panel exercises its discretion not to
accept this interlocutory appeal under 28 USC. §1292(b).
Dr. G. David Jang and BSC entered into an agreement whereby Jang assigned his patent rights in
exchange for a promise to pay compensation if BSC sold stents covered by Jang’s patents. In 2005, Jang
brought suit for breach of contract, basing jurisdiction on diversity of citizenship, alleging that BSC had failed
to compensate Jang for the sale of certain covered stent products. BSC subsequently filed requests for ex
parte reexamination in the PTO. The PTO rejected the claims and the claims at issue were canceled.
In light of the PTO proceedings, BSC moved for summary judgment, arguing that under Lear, Inc. v. Adkins,
395 U.S. 653 (1969), the parties’ agreement cannot require payment for practice of claims subsequently
held to be invalid. The court denied the motion, ruling that, pursuant to Studiengesellschaft Kohle, MB.H. v.
Shell Oil Co., 112 F.3d 1561 (Fed. Cir. 1997) (“Kohle”), a patentee is not precluded under Lear from
recovering royalties until the date the licensee or assignee first challenges the validity of the patent.
On petitioners’ motion, the district court certified an interlocutory appeal of the order denying summary
judgment pursuant to 28 U.S.C. § 1292(b), but the Circuit directed the parties to address the jurisdictional
question prior to consideration of the merits of the petition.
This Appeal is properly before the Federal Circuit and not a regional circuit
This court has exclusive jurisdiction to decide an appeal from a final decision of a district court in any civil
action “arising under” any Act of Congress relating to patents. 28 U.S.C. §§ 1338(a), 1295(a)(1). Even
though BSC does not contend that federal patent law creates the asserted causes of action, the panel notes
that this case nonetheless presents a patent issue that is “(1) necessarily raised, (2) actually disputed, (3)
substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance
approved by Congress.” Gunn et al. v. Minton, 133 S. Ct. 1059 (2013).
In ruling that the Circuit has jurisdiction over Jang’s prior appeal, the panel notes that although this case
arises from a contract claim, Jang’s right to relief on that claim depends on an issue of federal patent law—
whether the stents sold by BSC would have infringed Jang’s patents. Nothing in Gunn alters that conclusion.
Jurisdiction depends upon facts as they were at the time of filing the complaint.
Jang argues that the Federal Circuit no longer has appellate jurisdiction because the PTO’s cancellation of
the claims in issue means the question of patent validity as it relates to the public at large can no longer be
said to be “substantial.” The panel disagrees. Just as subject matter jurisdiction in diversity cases such as
this one is determined on the facts as they existed at the time the claim was filed, the Federal Circuit’s
exclusive appellate jurisdiction is predicated on the cause of action and the basis of the facts as they existed
at the time the complaint was filed. 28 U.S.C. §§ 1338(a), 1295(a)(1). Here, the actions of the PTO in
cancelling the claims at issue did not take place until long after the complaint had been filed. Because the
patent law issues raised in the complaint were at that time substantial for the reasons noted above,
jurisdiction of the petition is and properly remains before this court.
The Circuit exercises its discretion and decides not to take the interlocutory appeal.
BSC seeks this court’s review of whether the district court correctly applied Lear and Kohle. Title 28 U.S.C.
§ 1292(b) authorizes a district court to certify for appeal an otherwise-unappealable order under
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circumstances in which it is “of the opinion that such order involves a controlling question of law as to which
there is substantial ground for difference of opinion and that an immediate appeal from the order may
materially advance the ultimate termination of the litigation.” The panel notes that the Circuit grants
interlocutory review only rarely and declines to grant such review here. It is not clear that the issues
identified in the questions will be controlling, and each question depends on the resolution of factual issues
not yet addressed by the district court.
Summary Judgments
Amdocs (Israel) Limited v. Openet Telecom, Inc.,
761 F.3d 1329 (Fed. Cir. 2014)
In a split decision the Circuit reverses the granting of a motion for summary judgment of noninfringement as
to four patents in suit. The panel finds issues of fact as to the first three patents based on its
conclusion that certain evidence should not have been excluded, and that the district court improperly
resolved factual issues against the non-moving party. The dissent disagrees with the court as to claim
construction on the fourth patent.
This opinion provides a helpful analysis of the use of “plain meaning” in claim construction. In the
construction of “enhance,” the panel finds no support in the specification for what might otherwise be
considered the plain meaning of the term. With respect to the construction of “single record” the panel
determines that the specification needs to be clear in order to override the plain meaning of a claim term.
Discovery Sanctions
Monsanto Company v. E.I. DuPont Nemours,
748 F.3d 1189 (Fed. Cir. 2014)
The Circuit upheld the district court’s finding of fraud upon the court and award of sanctions against a party
whose discovery documents were found by the district court to contradict statements made in the party’s
pleadings. The panel found that the sanctions award was narrowly tailored to respond to the factual
allegations the court found were made, pointing to the fact that the district court had performed its own
interpretation of the license upon hearing Monsanto’s first motion to dismiss, had sided with
Monsanto on the interpretation issue, and that DuPont’s problematic allegations were an attempted endrun around that dismissal. The opinion reviewed the path of discovery, found the documents fairly
discovered in relation to the factual issues being determined, and gave deference to the court’s factual
findings in relation to DuPont’s material misrepresentations.
Contempt
Proveris Scientific Corporation v Innovasystems, Inc.,
739 F.3d 1367 (Fed. Cir. 2014)
The Circuit vacates a contempt order because the district court had not construed the claim language at
issue. In so ruling, the panel discusses: the tests to be applied in deciding whether a contempt order is
appropriate; when claim construction requires language in the preamble to be considered limiting; whether a
defendant that did not previously challenge validity is permitted to do so at the contempt stage; and whether
overseas sales of component parts of a device found to directly infringe and is the subject of an injunction
should be the basis of a finding of contempt.
The panel also instructed the district court that regardless of what claim construction the court adopts on
remand, Innova is not entitled to present new invalidity arguments at the contempt stage. In contrast to claim
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construction, validity was disputed in the underlying infringement lawsuit, so Innova has already had a full
and fair opportunity to present its arguments relating to invalidity. The panel noted that it saw no error in the
court's denial of sanctions for Innova's overseas sales of component parts, since liability for those sales is
premised on 35 U.S.C. § 271(f), while the underlying infringement action alleged direct infringement by sales
of whole products.
Energy Recovery, Inc., v. Hauge, 745 F.3d 1353 (Fed. Cir. 2014)
The Circuit reverses a district court's contempt ruling because the defendant did not violate the
"intellectual property rights" or any other clear restriction of a Consent Order.
The parties were previously in litigation over intellectual property rights related to pressure exchangers
used in reversed osmosis. Hauge had been president of ERI, and to settle litigation resulting from his
separation from the company, the parties entered into an agreement that was adopted by the district court in
a Consent Order. After the expiration of the non-compete provisions of the Order, Hauge filed for and was
issued a patent directed to a pressure exchanger, and subsequently began selling equipment based on his
patent. He also entered into a consulting agreement with two then-current ERI employees to assist him in
his new venture.
The panel noted that while Hauge's hiring two employees of ERI may constitute trade secret
misappropriation, that would not justify a finding of contempt. But then the opinion just mentions what
would seem to be critical - that ERI's trade secret claim in California state court based on the same
conduct resulted in a unanimous jury verdict in favor of Hauge. In any event, concluding that Hauge did not
violate any provision of the Order, the panel held that the district court abused its discretion in finding
Hauge in contempt, and vacated the injunction.
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