The Forest Group v. Bon Tool Company

35 U.S.C. § 292 prohibits falsely marking a product with a patent number or “patent pending.” It allows anyone to sue to enforce this provision and split the fine with the U.S. The maximum fine is “not more than $ 500 for every such offense.”

At issue in FOREST GROUP V. BON TOOL was whether that maximum fine applied on a per “decision to mark” basis or on a per article basis. The Federal Circuit concluded that it “requires courts to impose penalties for false marking on a per article basis.” (p. 14.) This of course has the potential to result in substantial penalties, and to provide an incentive for “the possible rise of ‘marking trolls’ who bring litigation purely for personal gain.” (p. 12.) However, the court also noted that the $500 figure was a maximum and so “[i]n the case of inexpensive mass-produced articles, a court has the discretion to determine that a fraction of a penny per article is a proper penalty.” (p. 13.) Moreover, the statute explicitly allows for such suits and the court mentioned several policy reasons for discouraging improper marking:

• Acts of false marking deter innovation and stifle competition in the marketplace.
  
• False marks may also deter scientific research when an inventor sees a mark and decides to forego continued research to avoid possible infringement.
  
• False marking can also cause unnecessary investment in design around or costs incurred to analyze the validity or enforceability of a patent whose number has been marked upon a product with which a competitor would like to compete. (p. 11.)

Because “[t]hese injuries occur each time an article is falsely marked,” the court determined the penalty should be applied per product in the marketplace and qui tam suits should not be discouraged.

The take away: Double check your products to make sure they aren't being marked with expired patents.

For a discussion on standing, see STAUFFER V. BROOKS BROTHERS, INC.

i4i v. Microsoft

This case involved an invention for editing custom XML, a markup language, in which the “improvement stems from storing a document’s content and metacodes separately.” The jury found claims infringed and not invalid and awarded $200 million. The district court added $40 million in enhanced damages plus a permanent injunction going forward. Below are excerpts concerning some of issues considered.

Claim Construction

“Because the claims themselves do not use the word ‘file’ and the specification discloses embodiments where the storage format is not a file, we conclude that ‘distinct’ does not require storage in separate files.” “In evaluating whether a patentee has disavowed claim scope, context matters.” “The statements Microsoft now plucks from the prosecution history do not ‘clear[ly] and unmistakabl[y] disavow’ storage means that are not files.” (p. 9.)

“[N]ot every benefit flowing from an invention is a claim limitation.” (p. 10)

Permissive Language Alert. “The specification’s permissive language, ‘could be edited,’ ‘can be created,’ and ‘ability to work,’ does not clearly disclaim systems lacking these benefits.” (p. 11.) As such, there were “no statements that unequivocally narrow the claims.” (p. 11.)



Review of Obviousness Limited Without a JMOL. “The extent to which we may review the jury’s implicit factual findings depends on whether a pre-verdict JMOL was filed on obviousness. In this case, Microsoft has waived its right to challenge the factual findings underlying the jury’s implicit obviousness verdict because it did not file a pre-verdict JMOL on obviousness for [certain prior art] references. … [A] party must file a pre-verdict JMOL motion on all theories, and with respect to all prior art references, that it wishes to challenge with a post-verdict JMOL. Microsoft’s pre-verdict JMOL on anticipation … was insufficient to preserve its right to post-verdict JMOL on a different theory (obviousness), or on different prior art …. Accordingly, we do not consider whether the evidence presented at trial was legally sufficient to support the jury’s verdict. Our review is limited to determining whether the district court’s legal conclusion of nonobviousness was correct, based on the presumed factual findings.” (p. 14.)

Corroboration. “[W]e hold that corroboration was not required in this instance, where the testimony was offered in response to a claim of anticipation and pertained to whether the prior art practiced the claimed invention.” (p. 18.) The court was distinguishing the corroboration requirement that applies when “any witness whose testimony alone is asserted to invalidate a patent.” (p. 18.)

Contributory Infringement. “In assessing whether an asserted noninfringing use was ‘substantial,’ the jury was allowed to consider not only the use’s frequency, but also the use’s practicality, the invention’s intended purpose, and the intended market.” (p. 25.)

Damages: Review Limited Because Microsoft Did Not File Pre-Verdict JMOL. “Although Microsoft now objects to the size of the damages award, we cannot reach that question because Microsoft did not file a pre-verdict JMOL on damages.” (p. 36.) The court would not consider whether the damages award was excessive because “Microsoft waived its ability to have us decide that question by failing to file a pre-verdict JMOL on damages. Fed. R. Civ. P. 50(a), (b).” (p. 36-37.) “Instead of the more searching review permitted under Rule 50(b), we are constrained to review the verdict under the much narrower standard applied to denials of new trial motions. This standard is highly deferential: we may set aside a damages award and remand for a new trial only upon a clear showing of excessiveness. To be excessive, the award must exceed the maximum amount calculable from the evidence.” (p. 37.) Since it didn’t, the award was affirmed, though the court suggested it might have reached a different result under the other standard of review, sufficiency of the evidence.

Permanent Injunction

Past Harm Is Relevant to Irreparable Harm. “Although injunctions are tools for prospective relief designed to alleviate future harm, by its terms the first eBay factor looks, in part, at what has already occurred.” (p. 43)

Remedies at Law. “Difficulty in estimating monetary damages is evidence that remedies at law are inadequate.” (p. 44.) Microsoft took a large percent of the market and i4i had to change its business model.

Public Interest Satisfied by Narrow Scope. “The scope of this injunction is narrow, however. It applies only to users who purchase or license Word after the date the injunction takes effect. Users who purchase or license Word before the injunction’s effective date may continue using Word’s custom XML editor, and receiving technical support.” (p. 42.) “The injunction’s narrow scope substantially mitigates the negative effects on the public, practically and economically. By excluding users who purchased or licensed infringing Word products before the injunction’s effective date, the injunction greatly minimizes adverse effects on the public.” (p. 45.)

Date Injunction Begins. The court changed the effective date of the injunction based on the evidence presented to the district court. But since this change was applied to the district court’s order, the end result is that the injunction will take effect in a few weeks of this decision.

IN RE NINTENDO

Groundhog Writ. The Federal Circuit has granted a petition for a writ of mandamus, ordering a case to be transferred out of the Eastern District of Texas to another venue after the district court had denied a motion to transfer. “The writ of mandamus is available in extraordinary situations to correct a clear abuse of discretion or usurpation of judicial power.” (p. 3.) However, it has been used rather frequently recently to get cases out of the Eastern District of Texas. As in the other recent transfer cases, there was no real connection between the case and Texas. Further, the Federal Circuit noted that the district court gave too much emphasis on the plaintiff’s choice of venue and not enough emphasis on local interest and on the location of sources of proof and witnesses.

Automated Merchandising Systems v. Crane

This non-precedential decision discusses the standards for preliminary injunctions, in particular the requirements for showing irreparable harm, avoiding a finding of likelihood of success by making a case for invalidity, and the implications of a reexamination proceeding for seeking a preliminary injunction.

1. Irreparable Harm

The court discussed what is required to demonstrate irreparable harm, which is harm that cannot be compensated via monetary damages. Evidence of lost sales, by itself, is presumed to be compensable by monetary damages and thus does not provide evidence of irreparable harm. The court stated that, in light of eBay, the “burden is now on the patentee to demonstrate that its potential losses cannot be compensated by monetary damages.” (p. 6.) Loss of market share must be shown to be non-compensable by monetary damages. Similarly, price erosion “might support a finding of irreparable harm sufficient to warrant a preliminary injunction” if it could be shown that prices could fall enough to drive the plaintiff out of the market. (p. 7.)

2. Likelihood of Success

The district court improperly shifted the burden from the plaintiff (to show a likelihood of success) to the defendant (to show that the plaintiff is unlikely to success on the merits.) The defendant’s argument against a preliminary injunction was based on an invalidity claim. The court acknowledged that “it may be difficult to determine precisely how much of an invalidity case Crane needs to present at this preliminary stage” because it does in fact have the “burden at trial of proving invalidity by clear and convincing evidence.” (p. 8.) Nonetheless, the district court did not sufficiently analyze the defendant’s invalidity argument, and so the Federal Circuit could not agree with its conclusion.

3. Preliminary Injunctions and Stays Due to Reexamination

The court explained that, in almost all circumstances, it would be improper to both grant a preliminary injunction and a stay pending reexamination. “[T]he district court ordinarily should not grant both a preliminary injunction and a stay. This is because a stay pending reexamination is appropriate only if there is a substantial issue of patentability raised in the reexamination proceeding, while the injunction against the accused infringer is appropriate only if there is no substantial issue of patentability. Because it logically seems that there cannot simultaneously be a substantial issue of patentability and no substantial issue of patentability, stays pending reexamination are typically inappropriate in cases in which preliminary injunctions are appropriate.” (p. 10.)

Intellectual Science v. Sony Electronics

The issue on appeal was whether the patentee had provided sufficient evidence through its expert’s declaration to survive summary judgment of non-infringement. The patent was directed toward an “apparatus for reading optical discs in a computer that reduces the role of magnetic disk drives.” The defendants moved for summary judgment (before claim construction) based on the insufficiency of the patentee’s evidence for infringement. In particular, there was no evidence in the record pointing to specific structures in the accused devices that met the claimed “data transmission means.” Therefore, summary judgment of non-infringement was affirmed.

After reviewing the expert declaration, the court found that “it does not sufficiently identify the structural elements of the claimed ‘data transmitting means.’” (p. 8.) The expert declaration also failed to explain how one of skill in the art would recognize how the cited components were infringing. (p. 10.) To present a triable issue of fact on infringement, the patentee must provide at least a “clear identification of the claimed structure or its equivalent in the accused devices.” (p. 14.)

The court included additional statements about the sufficiency of expert opinions in the infringement context: “An expert’s unsupported conclusion on the ultimate issue of infringement will not alone create a genuine issue of material fact.” (p. 8.) “To satisfy the summary judgment standard, a patentee’s expert must set forth the factual foundation for his infringement opinion in sufficient detail for the court to be certain that features of the accused product would support a finding of infringement….” (p. 7-8.)

Source Search Technologies v. LendingTree

Obviousness. The claims at issue in this case involved “a computerized procurement service for matching potential buyers with potential vendors over a network.” One limitation, as construed, required that the system return from potential sellers “quotes” that included “price and other terms of a particular transaction in sufficient detail to constitute an offer capable of acceptance.” (p. 12.) Because there were at least factual issues about whether the prior art disclosed the use of such “quotes,” the district court’s grant of summary judgment of obviousness was vacated.

Infringement. The district court had also found that the accused system infringed. This finding was also vacated for a related reason—there were fact issues regarding whether the accused system returned “quotes” as construed (capable of acceptance) from potential buyers. (p. 19.)

Collateral estoppel. The patentee contended that the defendant should not be able to argue that its “quotes” were non-infringing based on positions it had taken in another litigation. The court agreed with the district court that collateral estoppel was not appropriate because the prior issue involved “an unrelated patent, with different asserted claims, and dissimilar claim constructions.” (p. 17.)

Indefiniteness. The defendant also argued that the claims were indefinite because a person of skill could not differentiate between the claimed “standard” and unclaimed non-standard goods and services. While noting that completely subjective claim terms were improper, the court rejected this argument, finding that a person of skill could determine what was standard once a market was chosen. “To hold otherwise would require the patent to list every possible good or service. This court does not load the indefiniteness requirement with this unreasonable baggage. Although at times difficult to determine the bounds of a “standard” product or service, a person having ordinary skill in the art will possess an understanding of the system that will supply an objective definition to the various markets and applications of the system.” (p. 21.)

Tyco Healthcare v. Ethicon Endo-Surgery

The district court dismissed without prejudice this patent infringement case because the plaintiff failed to prove it had ownership of the patents and therefore standing to sue. The defendant cross-appealed, contending that the dismissal should have been without prejudice. The Federal Circuit affirmed.

The standing issue turned on a contractual provision in an agreement that assigned certain patents to the plaintiff, but excluded patents that were “related to pending litigation.” Because the plaintiff failed to provide evidence regarding any pending litigation, it failed to meet its burden regarding standing.

On the with/without prejudice issue, the court noted that dismissal for lack of standing is “ordinarily” without prejudice and found no abuse of discretion by the district court. It is also worth noting that this issue was not raised until trial, and the court noted that the work done for the case could be used in a subsequent proceeding.

Encyclopaedia Britannica v. Alpine Electronics

This non-precedential opinion discusses the standards for the specificity of disclosure for functions carried out on computers. The court stated that, for means-plus-function claims, simply disclosing a general computer was not sufficient. The “corresponding structure for such claims is the algorithm disclosed in the specification. …If the algorithm is not adequately disclosed in the specification, the claim is invalid for indefiniteness.” (p. 6.)

The patentee made three arguments that were all rejected. First, it argued that the specification implicitly discloses a class of algorithms corresponding to the recited function to a person of skill in the art. This was rejected because it the “understanding of one of skill in the art does not relieve the patentee of the duty to disclose sufficient structure to support means-plus-
function claim terms.” (p. 7-8 (citing Lucent Techs., Inc. v. Gateway, Inc., 543 F.3d 710, 719 (Fed. Cir. 2008).)

Second, it argued that the specification discloses a one-step algorithm for the recited function. This was rejected because the “purported ‘one-step’ algorithm … is not an algorithm at all. Rather, it is simply a recitation of the claimed function.” (p. 9.)

And finally, it argued that it “need not disclose an algorithm where the computer function being performed is well known.” This was rejected because, regardless of the simplicity of the algorithm, “when a means-plus-function limitation is a computer programmed with software to carry out the claimed function, a recitation of the corresponding algorithm is required to provide sufficient disclosure of structure under § 112 ¶ 6 to avoid indefiniteness under § 112 ¶ 2.” (p. 10.)

Hewlett-Packard v. Acceleron

The Federal Circuit reversed a dismissal for lack of declaratory judgment jurisdiction. This was a typical letter writing dance case, but the court recognized that its decision represented a shift from past cases, and also that declaratory judgment cases can be tricky. “[T]here is no bright-line rule for distinguishing those cases that satisfy the actual case-or-controversy requirement from those that do not. Our decision in this case undoubtedly marks a shift from past declaratory judgment cases.” (p. 9.)

The opinion included excerpts from the exchanged letters, which showed both parties were quite cognizant of the declaratory judgment issue. While noting that “MedImmune may have lowered the bar for determining declaratory judgment jurisdiction in all patent cases,” it made clear that more is required than just any communication regarding a patent: “a communication from a patent owner to another party, merely identifying its patent and the other party’s product line, without more, cannot establish adverse legal interests between the parties, let alone the existence of a ‘definite and concrete’ dispute. More is required to establish declaratory judgment jurisdiction.” (p. 5.)

With no history of litigation, the determining factor here appeared to revolve in large part around the patent owner’s status as a patent holding company. Relevant facts included that “the receipt of such correspondence from a non-competitor patent holding company . . . may invoke a different reaction than would a meet-and-discuss inquiry by a competitor, presumably with intellectual property of its own to place on the bargaining table. Under the totality of the circumstances, therefore, it was not unreasonable for HP to interpret Acceleron’s letters as implicitly asserting its rights under the [] patent.” In addition, the court “observe[d] that Acceleron is solely a licensing entity, and without enforcement it receives no benefits from its patents….” (p. 8.)

Other factors that played a role were that the patent owner asserted the patent as “relevant” to a specific product line, imposed a short deadline for a response, insisted the other party not file suit, and refused a standstill agreement. (p. 7.) The court also noted that “it is the objective words and actions of the patentee that are controlling,” not its actual state of mind. (p. 7.)

Ultimax Cement v. CTS Cement

This case involves patents for rapid-hardening, high-strength cement. A few of the issues are discussed below.

Claim Construction
The Federal Circuit reversed the district court’s claim construction of “soluble CaSO4 anhydride” in part because it relied too heavily on a single dictionary definition divorced from the context of the claims and the specification. “[T]he [district] court erroneously relied on expert testimony and a single dictionary definition to the exclusion of other dictionary definitions and, most importantly, the context in which the term was used within the claim and the specification.” (p. 9.) The issue was whether “soluble CaSO4 anhydride” meant “a compound formed from an acid by removal of water” as the district court held or meant “soluble anhydrous calcium sulfate.” Because there was ambiguity in the dictionary definitions regarding what anhydride could mean, “the context must define what compound has had water removed. Here it is calcium sulfate, not an acid.” (p. 10.)

Laches
“An infringer does not escape liability merely by infringing in secret.” (p. 15.) Therefore, summary judgment of laches was not appropriate even though the accused product was available for 12 years because the patentee could not adequately test it until discovery. While 12 years is a long time, when “a claim limitation whose presence is undetectable in a finished product, it is reasonable that [patentee] might not have known or been able to find out whether [a product] infringed.” (p. 15.) Thus, there were genuine issues of fact, including whether the patentee had fulfilled its duty by hiring a private investigator.

Indefiniteness
“Merely claiming broadly does not render a claim insolubly ambiguous, nor does it prevent the public from understanding the scope of the patent.” (p. 19.) Thus, the fact that one formula in the claims may have covered 5000 variations did not render them indefinite because a person could fairly easily determine whether a given compound fell within the literal scope of the claims.

Correction of Typo
The district court refused to correct a typo (insertion of a comma) because, although the error was apparent to one of skill in the art, it was not “clear on the face of the patent.” The Federal Circuit clarified that such corrections can be made “if the correction is not subject to reasonable debate to one of ordinary skill in the art, namely, through claim language and the specification, and the prosecution history does not suggest a different interpretation, then a court can correct an obvious typographical error.” (p. 21.)

Perfect Web v. Infousa

Asserted claims for a patent for “managing bulk e-mail distribution to groups of targeted consumers” were found to be obvious on summary judgment and the Federal Circuit affirmed (and did not address an alternative holding that the claims were directed to unpatentable subject matter under section 101.) The claims involved sending e-mail messages in bunches and continuing to send new batches out until a certain number of messages were successfully received. The parties agreed that the first three steps of the four step method were known, so the issue was whether the fourth step—repeating the first three until a quota was met—would have been obvious.

An initial issue, which the court discussed at some length, was what kind of evidence was required for “common sense.” Relying on KSR, it found that the common sense available need not be shown in a reference or through expert testimony: “We therefore hold that while an analysis of obviousness always depends on evidence that supports the required Graham factual findings, it also may include recourse to logic, judgment, and common sense available to the person of ordinary skill that do not necessarily require explication in any reference or expert opinion.” (p. 9.) However, for summary judgment, “to invoke ‘common sense’ or any other basis for extrapolating from prior art to a conclusion of obviousness, a district court must articulate its reasoning with sufficient clarity for review.” (p. 10.)

Applying this standard to the case at hand, the court found that the district court adequately explained its reasoning in concluding that common sense would have rendered the claims obvious. It found that the “last step, and the claim as a whole, simply recites repetition of a known procedure until success is achieved.” (p. 10.) Further, because of the nature of the claims, “[n]o expert opinion is required to appreciate the potential value to persons of such skill in this art of repeating [the first three] steps.” (p. 10.)

The patentee’s argument that the patent met a long-felt need were rejected, in part because it “provided no evidence to explain how long this need was felt, or when the problem first arose.” (p. 15.)

The court also found that the claimed solution would have been obvious to try because the evidence showed that there were “at most a few potential solutions for this problem at the time” of the invention. (p. 12.)

In Re Hoffmann-La Roche Inc.

The Federal Circuit has once again granted a petition for writ of mandamus and directed a district court (in the Eastern District of Texas) to transfer a patent case to another district. The court had taken basically the same action in similar circumstances recently in both In re Genentech, Inc., 566 F.3d 1338 (Fed. Cir. 2009) and In re TS Tech USA Corp., 551 .3d 1315, 1322 (Fed. Cir. 2008).

Novartis, a California company, brought a patent infringement suit against defendants with facilities primarily in North Carolina (where the accused product was developed). They moved to transfer the case to the Eastern District of North Carolina and the motion was denied. The Federal Circuit found that there was a “there is a stark contrast in relevance, convenience, and fairness between the two venues” and concluded that the district court’s denial was an abuse of discretion under 5th Circuit law. (p. 5.) Applying these factors, the court found that there was virtually no connection to the Eastern District of Texas. It gave no weight to a “tactic” in which documents related to the patent were transferred to plaintiff’s counsel in Texas. (p. 5-6.)

The court found that “the Eastern District of North Carolina’s local interest in this case remains strong because the cause of action calls into question the work and reputation of several individuals residing in or near that district and who presumably conduct business in that community” and that this interest is “self-evident.” (p. 5, 6.) In contrast, the court again noted that “the sale of an accused product offered nationwide does not give rise to a substantial interest in any single venue.” (p. 8.)

Iovate Health Sciences v. Bio-Engineered Supplements

The court affirmed the district court’s finding of anticipation of method claims directed toward “the use of nutritional supplements containing [certain ingredients] to enhance muscle performance or recovery from fatigue.” (p. 3.) These claims were anticipated by advertisements for nutritional supplements in a magazine that were published before the critical date.

The claims required administering a composition of a combination of supplements. The ad disclosed this combination. The patentee sought to avoid anticipation by arguing that the ad did not disclose administering an effective amount and did not disclose anything specific about enhancing muscle performance or recovering from fatigue as recited in the preamble. The court rejected these arguments, noting that the claims do not require an effective amount and that the ad’s disclosure general concepts of muscle “recuperation” and “post-workout recovery” encompass performance and fatigue.

The patentee also argued that the ads might not be enabling because the ads “lack any guidance on appropriate ingredient dosages.” (p. 9-10.) However, a person of ordinary skill in the art “would have been able to determine such an amount based on the ad and the knowledge in the art at the time.” The patent specification itself disclosed “numerous pre-1996 publications that teach acceptable clinical dosages of the” claimed ingredients. (p. 10.)

The court decided the case based on the ad being a printed publication. The majority opinion did not consider use or on sale grounds were also sufficient for anticipation. (See p. 5 (“While the district court’s decision and the parties’ arguments discuss three of the grounds listed in § 102(b)—printed publication, public use, and on sale—we need affirm the district court’s decision on only a single ground….”).) In a concurring opinion, Judge Mayer noted that the “the products were on sale more than one year before the critical date.” Assuming this is a reference to the ads, then the claimed method would have to have been on sale. See NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282, 1320 (Fed. Cir. 2005) (“a method claim may be invalid if an offer to perform the method was made prior to the critical date”); see also Scaltech, Inc. v. Retec/Tetra, LLC, 269 F.3d 1321, 1328 (Fed. Cir. 2001) ("The on sale bar rule applies to the sale of an 'invention, 'and in this case, the invention was a process, as permitted by § 101. As a result, the process involved in this case is subject to § 102(b)."); Plumtree Software, Inc. v. Datamize, LLC, 473 F.3d 1152, 1162 (Fed. Cir. 2006). While it seems clear that the printed publication taught the claimed method, whether that method was on sale is a more difficult question.

Bilski v. Kappos--Oral Argument

During oral argument for the Bilski case, the justices seemed to be seeking guidance on how to put forth a rule that excludes patents for business methods of the sort at issue but leaves open the possibility that a legitimate invention would be patentable even if it fell outside of the Federal Circuit’s machine-or-transformation test. In other words, how can patent-eligible subject matter be reigned in from the extremes the Court fears it can reach (horse training, teaching antitrust law, the alphabet) without cutting off some great invention of the future that does not rely on any machine or a transformation of matter? (E.g., JUSTICE SOTOMAYOR: “So help us with a test that doesn't go to the extreme the Federal Circuit did, which is to preclude any other items, something we held open explicitly in two other cases, so we would have to backtrack and say now we are ruling that we were wrong, and still get at something like this?”)

Another concern of the Court seemed to be the loophole in the machine test that was left unresolved in the proceedings below—whether simply having the otherwise ineligible process performed on a computer lifts an invention into patent eligibility. (E.g., CHIEF JUSTICE ROBERTS: “If you develop a process that says look to the historical averages of oil consumption over a certain period and divide it by 2, that process would not be patentable. But if you say use a calculator, then it -- then it is?”)

The Court seemed to, despite its efforts, lapse into conflating the issues of patent eligible subject matter and patentability based on novelty and nonobviousness, as some of the examples posited suggested. (E.g., JUSTICE KENNEDY: “But you know, the insurance industry -- the insurance business, as we know it, really began in England in 1680, when they discovered differential calculus, and they had expectancy and actuarial tables, actuarial for life, expectancy for shipping, and this really created a whole new industry. In your view, I think, clearly those would be patentable, the -- the explanation of how to compile an actuarial table and -- and apply it to risk. That certainly would be patentable under your view, and it's -- it's difficult for me to think that Congress would want to -- would have wanted to give only one person the capacity to issue insurance.”)

The Court seemed to be legitimately grappling with the issues, but one firm statement stood out: JUSTICE SOTOMAYOR: “No ruling in this case is going to change State Street.” It will be interesting to see if that holds true.

Imation v. Philips

Imation brought a declaratory judgment action seeking to have two of its subsidiaries declared to be licensed to a patent under its agreement with Philips. The license agreement, between Philips and what became Imation, granted a license to Imation and its subsidiaries. Imation acquired the two subsidiaries in question after the expiration date of the agreement. The issues were whether they qualified as subsidiaries under the agreement and whether the granting of the license was a present grant or an agreement to grant (additional) licenses in the future.

Applying Eighth Circuit procedural law and New York contract law, the Federal Circuit reversed the district court’s ruling that the two subsidiaries were not licensees under the agreement. First, it found that the agreement provided a “singular, present grant,” relying on the language “agrees to grant and does hereby grant” and prior cases. (p. 9-10, emphasis in original.) Therefore, the grant took place before the expiration date provided in the agreement. Second, it found that the definition of “Subsidiary” in the agreement included the two subsidiaries at issue even though they did not exist at the time of the grant. Just as a license may include a present grant of rights to future inventions, so that the pool of patents could grow, the court found that
“the ‘Subsidiary’ definition allows class membership to grow (or shrink) over time, and so the non-existence of GDM and Memorex at the time of the license grant did not prevent either entity from receiving the benefits of the fully vested licenses.” (p. 10.)

The opinion can be found here.

Board of Trustees v. Roche Molecular

Propriety of Appeal. The district court granted summary judgment of obviousness, which the plaintiff appealed, but the defendant appealed adverse decisions regarding ownership and licensing. The Federal Circuit concluded that its “arguments would expand its rights under the judgment and, thus, are properly the subject of a cross-appeal.” (p. 7.) Namely, under the invalidity decision the defendant was free of worry from the asserted claims, but not necessarily the entire patent, as it would be under the ownership counterclaim.

Standing. The court never addressed the obviousness issue. Instead, it focused on the defendants’ claim regarding ownership. The court found that a state statute of limitations barred the defendants’ claim for ownership. However, the same facts on which the claim for ownership was based lead the court to conclude that the plaintiff did not have standing to bring its infringement case. Therefore, the judgment of invalidity was vacated and the case was remanded so that the case could be dismissed for lack of jurisdiction. The district court’s judgment regarding the defendants’ counterclaim was affirmed since they had standing to bring that claim. (p. 25.) The opinion is here.

Astrazeneca v. Teva

The district court granted summary judgment that the defendant did not present sufficient evidence for a jury to find inequitable conduct and the Federal Circuit affirmed. The issue is summarized as follows: “The issue presented in this case relates to the extent to which the patent applicant, having fully disclosed the relevant prior art and having provided comparative data to the satisfaction of the patent examiner, must also present any additional unpublished information in the applicant’s possession concerning other less structurally similar compounds, and must also synthesize additional compounds for comparative testing.” (p. 4.) The court concluded that the applicant need not. At least not in this case. (See p. 12 (“Although there may be situations in which the failure to conduct specific tests of specific compounds can be criticized, in this case there was no evidence that the information gleaned, if such tests had been conducted, would have been material to patentability.”).)

Regarding deceptive intent, the court made clear that a showing of a high degree of materiality does not reduce the need to show deceptive intent at least at some threshold level. “While the court must, as the final step, weigh and balance the findings of materiality and intent, this presupposes that a threshold level of both of these elements has already been established by clear and convincing evidence.” (p. 16; p. 15; p. 4.)

In Re ‘318 Patent Infringement Litigation

The ’318 patent “claims a method for treating Alzheimer’s disease with galanthamine.” The district court found that the claims were not enabled and the Federal Circuit affirmed. The court discussed the law of enablement and the policies behind it at some length, making the following general points before reaching the facts of the case at hand:

• “Enablement is closely related to the requirement for utility.” (p. 9.)
• “The utility requirement prevents mere ideas from being patented.” (p. 10.)
• “The utility requirement also prevents the patenting of a mere research proposal or an invention that is simply an object of research.” (p. 10.)
• The above is so because: “Allowing ideas, research proposals, or objects only of research to be patented has the potential to give priority to the wrong party and to confer power to block off whole areas of scientific development, without compensating benefit to the public.” (p. 11.)
• Methods of treatment are usually supported by tests, but the inventor need not conduct those tests. (p. 11.)

In this case, testing was not available as of the priority date. The patentee argued “that utility may be established by analytic reasoning” in lieu of testing. (p. 14.) The court accepted this as a possibility, but found that the specification in this instance failed to provide such reasoning. “[T]he specification, even read in the light of the knowledge of those skilled in the art, does no more than state a hypothesis and propose testing to determine the accuracy of that hypothesis. That is not sufficient.” (p. 16.)

This case was decided based on enablement although the entire discussion concerned utility. See generally In re Swartz, 232 F.3d 862, 864 (Fed. Cir. 2000) (“Lack of utility is a question of fact and the absence of enablement is a legal conclusion based on underlying factual inquiries.”) (citations omitted).

Kara Technology v. Stamps.com

This case is interesting in view of its treatment of a claim construction issue in light of a case decided just a few days earlier, Edwards Lifesciences v. Cook. (Kara Technology was decided by Schall, Plager, and Moore while Edward Lifesciences was decided by Lourie, Rader, and Moore.) In that case, discussed in a prior post, the court limited a claim based on the specification and rejected an argument that claim differentiation supported a broader construction. Here, the court seemingly took the opposite approach, refusing to limit a claim term based on the specification and relying in part on claim differentiation (under the same circumstance as were present in Edwards, namely a dependent claim included a term that was left off of its independent claim). Regarding claim differentiation, the court stated “when the inventor wanted to restrict the claims to require the use of a key, he did so explicitly. None of the claims at issue on appeal recite the term ‘key.’ By contrast, all of the other independent claims require either an ‘encryption key’ or ‘key data.’ In addition, dependent claim 2 … explicitly adds the limitation [at issue] to claim 1….” (p. 9.) The court was not convinced that the specification required the claims to be limited to having a key even though “the specification repeatedly discusses a key embedded in the preestablished data” and”[i]n the only detailed embodiments in the patent, the key is embedded in the preestablished data.” In this case, this was “not enough … to limit the patentee’s clear, broader claims.” (p. 9.) In Edwards, the court reached the opposite conclusion based in part on the fact that “the only devices described in the specification” included the limitation not expressly in the claims (Edwards, p. 11.) and despite the fact that, under the doctrine of claim differentiation, “the presence of a dependent claim that adds a particular limitation gives rise to a presumption that the limitation in question is not present in the independent claim.” (Kara, p. 9.)

Edwards Lifesciences v. Cook

In this case, the patents “relate to intraluminal grafts for treating aneurisms and occlusive diseases of the blood vessels without open surgery.” (p. 2.) The main arguments involved claim construction. The patentee argued that the use of the terms “graft” and “intraluminal graft” suggested that the term “graft” was broader. The court, relying on the written description, disagreed. First, the specification used the terms interchangeably. “The interchangeable use of the two terms is akin to a definition equating these two.” (p. 11.) Second,” the only devices described in the specification are intraluminal, supporting an interpretation that is consistent with that description.” (p. 11.) Third, “the specification frequently describes an ‘intraluminal graft’ as ‘the present invention’ or ‘this invention,’ indicating an intent to limit the invention to intraluminal devices.” (p. 12.) Fourth, the context of the claims supported this construction. The court also rejected arguments based on claim differentiation: “Even if the claim construction had rendered the dependent claim redundant, the doctrine of claim differentiation does not require us to give the ‘graft’ devices their broadest possible meaning. We may instead limit ‘grafts’ to ‘intraluminal’ devices, as demanded by the specification.” (p. 13; see also id. (“Different terms or phrases in separate claims may be construed to cover the same subject matter where the written description and prosecution history indicate that such a reading of the terms or phrases is proper.”) (quoting Nystrom v. TREX Co., 424 F.3d 1136, 1143 (Fed. Cir. 2005).)

Regarding another term, the patentee made another claim differentiation argument, this one based on the fact that a dependent claim added a requirement for a wire that was not expressly found in the independent claim. This is normally the strongest case for claim differentiation but it was dismissed quickly: “[C]laim differentiation is a rule of thumb that does not trump the clear import of the specification. Here, the specification and the parties’ agreement in the district court make clear that the claimed graft devices require wires.” (p. 16 (citation omitted).)

Concerning another term, the court stated that, for a definition provided by the patentee, “the location within the specification in which the definition appears is irrelevant.” (p. 20-21.) Accordinlgy, “the specification’s use of ‘i.e.’ signals an intent to define the word to which it refers … and that definition was not limited to the embodiment being discussed.” (p. 21.)

In Re Lister

This case involving a PTO rejection of claims for a method of playing golf using a tee for most of the shots hinged on whether a reference was “publicly accessible.” The applicant had submitted a manuscript describing the invention to the copyright office more than a year before filing an application. The key question is whether the manuscript was publicly accessible by virtue of being in the copyright office.

“In several cases involving references stored in libraries, we have considered whether the research tools available would have been sufficient to permit an interested researcher to locate and examine the reference.” (p. 6.) Cataloging and indexing are important research tools but not the whole story. “While cataloging and indexing have played a significant role in our cases involving library references, we have explained that neither cataloging nor indexing is a necessary condition for a reference to be publicly accessible.” (p. 7.) The standard for public accessibility is “whether an interested researcher would have been sufficiently capable of finding the reference and examining its contents” in light of all “the facts and circumstances surrounding the disclosure.” (p. 8.)

The court noted that “a reference can be considered publicly accessible even if gaining access to it might require a significant amount of travel” and that it is “unnecessary to show that anyone actually inspected the reference.” (p. 8.) The court also found that in this case the inability to make copies did not render the reference inaccessible. (p. 8.) Further, although the copyright database did not provide any reasonable means of searching, two other databases, Westlaw and Dialog, permitted searching of titles by keywords of materials in the copyright office. However, there was insufficient evidence to establish when the reference at issue was available in Westlaw or Dialog. “[I]n this case the government has not identified any evidence of the general practice of the Copyright Office, Westlaw, or Dialog with regard to database updates. Absent such evidence, we have no basis to conclude that the manuscript was publicly accessible prior to the critical date.” (p. 16.) The court rejected arguments that a prima facie case showing that the manuscript was in the databases was established. “We see little difference between the evidence in this case and a situation in which an examiner comes across an undated reference that discloses an invention for which an applicant is seeking the patent. We surely would not view the mere existence of the reference in the latter scenario as prima facie evidence that it was available prior to the applicant’s critical date.” (p. 16-17.)

Asymmetrx v. Biocare Medical

The Federal Circuit determined that the plaintiff in this matter did not have standing to sue since it did not have “all substantial rights” to the patent at issue. The parties and the district court had not addressed this concern, but the court noted that “an appellate court must satisfy itself that it has standing and jurisdiction whether or not the parties have raised them.” (p. 6.)

The court provided background on when a licensee can have standing to sue in its own name and concluded by stating that “the critical determination regarding a party’s ability to sue in its own name is whether an agreement transferring patent rights to that party is, in effect, an assignment or a mere license.” (p. 8.) The difference hinges on the extent of the rights retained by the patentee. In this case, the patentee retained several substantial interests, including:

• the right to sue for infringement;
• the right to make and use the patented product, p63 antibodies, for its own academic research purposes;
• the right to provide the p63 antibodies to non-profit or governmental institutions for academic research purposes;
• a great deal of control over aspects of the licensed products within the commercial diagnostic field;
• specifying that manufacture had to take place in the United States during the period of exclusivity; and
• maintaining input on sublicensing and receiving a share of those royalties. (p. 10-11.)

In addition, the licensee had “to cooperate with [the patentee] to maintain the patent rights, so as to enable [it] to apply for, to prosecute, and to maintain patent applications and patents in [its] name.” (p. 11.) The patentee, under the agreement, also had a right to join any suit, approve settlements, and brings its own infringement action. The court found that “[w]hile any of these restrictions alone might not have been destructive of the transfer of all substantial rights, their totality is sufficient to do so.” (p. 12.) The complete opinion is here.

Vita-Mix v. Basic Holding

Several issues decided on summary judgment were addressed in this decision, and certain aspects pertaining to contributory infringement and inducement are mentioned here.

Regarding contributory infringement, the court agreed that a commodity of commerce is suitable for substantial non-infringing uses non-infringing if those uses “are not unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental.” (p. 14.) However, “an infringer does not evade liability by bundling an infringing device with separate and distinct components that are capable of noninfringing use.” (p. 15.) The court found that the accused devices were capable of substantial non-infringing uses. Interestingly, it was possible that during the use of the devices in non-infringing ways, the device would occasionally infringe. This did not change the court’s analysis: “Even assuming that the device might inadvertently infringe the patent for a brief time in the majority of uses does not mean that the non-infringing use … is not substantial enough to avoid contributory liability. The analysis would be different if the [accused device] could not be operated in a non-infringing way unless the user infringed at some point. But where, as here, there is a common use that neither infringes nor requires infringement, the substantiality of that use is unaffected by any unrelated infringing operations.” (p. 16, n. 1.)

Regarding inducement, the court articulated the standard as follows: “Inducement requires a showing that the alleged inducer knew of the patent, knowingly induced the infringing acts, and possessed a specific intent to encourage another’s infringement of the patent.” (p. 16.) In this case, the court rejected the patentee’s attempt to support an inference of intent through “the product instructions and the design of the device.” (p. 17.) Since those things encouraged non-infringing uses and not infringing uses, there was no evidence that the defendant “intends to encourage infringement by its customers.” (p. 18.)

Prometheus v. Mayo

Seven amicus briefs were filed in this appeal of a finding by the district court that the claimed method was drawn to non-statutory subject matter. Relying on its Bilski opinion, the Federal Circuit in its opinion discussed the machine-or-transformation test and concluded that the claimed method of treatment was drawn to patent eligible subject matter.

The patents at issue “claim methods that seek to optimize therapeutic efficacy while minimizing toxic side effects,” and include two main steps: administering a drug to a person and determining the levels of the drug’s metabolites in the subject. (p. 2.) The “measured metabolite levels are then compared to pre-determined metabolite levels” to determine whether to adjust them. The court found that the two main steps were transformative and that although the remaining aspects involved only mental steps, this alone did not remove the claims from patent eligible subject matter.

Claims drawn to a fundamental principle are not patent eligible, but those drawn to an application of a fundamental principle are. The court acknowledged that determining “whether a claim is drawn to a fundamental principle or an application of a fundamental principle” is “hardly straightforward.” (p. 8.) It then quoted its “definitive test” from Bilski: “A claimed process is surely 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.” (p. 8.) This machine-or-transformation test can be satisfied for a method claim by showing that a “claim is tied to a particular machine, or by showing that his claim transforms an article.” (p. 8.) In addition, the machine or transformation part of the claim must not be “insignificant extra-solution activity” and must “must impose meaningful limits on the claim’s scope.” (p. 8.) “This transformation must be central to the purpose of the claimed process.”

The court found that the administering and determining steps were transformative. For the administering step, the ”transformation is of the human body following” administration and for the determining step the transformation is “the various chemical and physical changes of the drug’s metabolites that enable their concentrations to be determined.” (p. 14-15.) Rejecting arguments that the transformations were natural processes, the court stated that methods of treatment “are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition.” (p. 15.)

Similarly, the court distinguished natural processes from transformations by noting that “quite literally every transformation of physical matter can be described as occurring according to natural processes and natural law. Transformations operate by natural principles. The transformation here, however, is the result of the physical administration of a drug to a subject to transform—i.e., treat—the subject, which is itself not a natural process.” (p. 16.)

The determining step also involved a transformation because “those levels cannot be determined by mere inspection.” Rather, “some form of manipulation, such as the high pressure liquid chromatography method specified in several of the asserted dependent claims or other modification of the substances to be measured, is necessary to extract the metabolites from a bodily sample and determine their concentration.” (p. 16-17.)

The court distinguished the present case from In re Grams, 888 F.2d 835 (Fed. Cir. 1989), a case which involved “(1) performing a clinical test on individuals and (2) based on the data from that test, determining if an abnormality existed and determining possible causes of any abnormality by using an algorithm.” (p. 18-19.) In that case the process was merely an algorithm combined with a data-gathering step,” unlike here, where “the claims are to transformative methods of treatment, not correlations.” (p. 21.).

Although the court found that the final steps did not meet the machine-or-transformation test, this did not alter the outcome. “A subsequent mental step does not, by itself, negate the transformative nature of prior steps.” (p. 20.)

Amgen v. Roche

Here are a few points gleaned from this 80-page opinion.

Obviousness-type double patenting. The Federal Circuit held that §121’s safe harbor from obviousness-type double patenting for divisional applications did not apply to continuations. “We conclude that, because the … applications were filed as continuation—rather than divisional—applications, the … patents do not receive the benefit of § 121.” (p. 14.) It also reviewed the law of obviousness-type double patenting, which “entails two steps: (1) construction of the claims in the earlier patent and the claim in the later patent to identify any differences, and (2) determination of whether the differences in subject matter between the claims render the claims patentably distinct.” (30-31.) And the second “part of the obviousness-type double patenting analysis is analogous to an obviousness analysis under 35 U.S.C. § 103, except that the ’008 patent is not considered prior art.” (p. 32.) In this case, involving the “production of the protein erythropoietin (‘EPO’) using … DNA technology,” it found that those of “ordinary skill in the art would not have reasonably expected to successfully produce isolatable quantities of glycosylated EPO having the stated biological activities in transfected CHO cells. Put most simply, CHO cells transfected with the EPO DNA sequence and the production of recombinant, in vivo biologically active EPO glycoprotein are patentably distinct inventions.” (p. 34.)

Product-by-process claims. “It has long been the case that an old product is not patentable even if it is made by a new process.” (p.41.) “However, a new product may be patented by reciting source or process limitations so long as the product is new and unobvious.” (p.42.) Therefore, “[i]n determining validity of a product-by-process claim, the focus is on the product and not on the process of making it.” (p. 47.) And so “a product-by-process claim can be anticipated by a prior art product that does not adhere to the claim’s process limitation.” On the other hand, for infringement, “the focus is on the process of making the product as much as it is on the product itself.” This quirk creates an unusual situation:
“For product-by-process claims, that which anticipates if earlier does not necessarily infringe if later. That is because a product in the prior art made by a different process can anticipate a product-by-process claim, but an accused product made by a different process cannot infringe a product-by-process claim. Similarly, that which infringes if later does not necessarily anticipate if earlier. That is because an accused product may meet each limitation in a claim, but not possess features imparted by a process limitation that might distinguish the claimed invention from the prior art.” (p. 48.)

Indefiniteness. The court noted that the purpose of product-by-process claims is to allow “the patentee to obtain a patent on the product even though the patentee cannot adequately describe the features that distinguish it from prior art products.” They are therefore used when the patentable distinctions are “ difficult-to-describe.” “Thus, to call the process limitation indefinite in this situation would defeat one of the purposes of product-by-process claims, namely permitting product-by-process claims reciting new products lacking physical description.” (p. 55-56.)

Infringement under §271(g). This section provides for infringement when a product made by a patented process is imported. It applies unless “the product made by the patented process is ‘materially changed by subsequent processes’ prior to importation.” (p. 62.) In discussing materiality, the court noted the following: “Materiality is context-dependent.” (p. 65.) “A good source for determining whether a change in a product of a process is material under § 271(g) is the patent. Where the specification or asserted claims recite a structure or function for the product of the processes, then significant variations from the recited structure and function are material. What makes a variation significant enough to be a ‘material change,’ however, is a question of degree.” (p. 65-66.)

Jury instructions. The court left open the issue of whether jury instructions should be reviewed under its own law or the law of the regional circuit. (p. 44, n. 13.)

Lucent v. Gateway

This case involved a patent directed towards “entering information into fields on a computer screen without using a keyboard.” (p. 3.) Several parties were involved, including Microsoft, and the case went to trial. The jury awarded $357,693,056.18 to the plaintiff. Numerous issues were on appeal. The Federal Circuit upheld the validity and infringement findings but vacated the damages and remanded. Here are a few of the highlights gleaned from the detailed and lengthy opinion:

Regarding direct infringement, the court pointed out that, “[j]ust as anticipation can be found by a single prior art use, a finding of infringement can rest on as little as one instance of the claimed method being performed during the pertinent time period.” (p. 19.) With little direct evidence that anyone performed the claimed method using Microsoft products, the court relied on circumstantial evidence to uphold the verdict. However, it noted that the plaintiff “would have been on much firmer ground had it introduced some direct evidence of using the claimed method.” (p. 23.)

Regarding contributory infringement, as framed by the parties “the main issue reduces to whether the ‘material or apparatus’ is the entire software package or just the particular tool (e.g., the calendar date-picker) that performs the claimed method.” (p. 24-25.) This is because the entire software package had substantial non-infringing uses, but an individual component of the package did not. The court rejected the entire package argument, essentially concluding that if it were a prevailing argument, contributory infringement could be evaded by including extra features in a package with infringing features. “Here, the infringing feature for completing the forms, i.e., the date-picker tool, is suitable only for an infringing use. Inclusion of the date-picker feature within a larger program does not change the date-picker’s ability to infringe. Because Microsoft included the date-picker tool in Outlook, the jury could reasonably conclude, based on the evidence presented, that Microsoft intended computer users to use the tool—perhaps not frequently—and the only intended use of the tool infringed the Day patent.” (. 27.)

Regarding inducement, the court acknowledged, quoting DSU Medical, it “requires evidence of culpable conduct, directed to encouraging another’s infringement, not merely that the inducer had knowledge of the direct infringer’s activities.” But, in upholding the finding of infringement on thin evidence, also noted that a “plaintiff may still prove the intent element through circumstantial evidence, just as with direct infringement….” (p. 28.)

Regarding damages, the court noted two ways that litigants calculate a reasonable royalty: (1) “the analytical method, focuses on the infringer’s projections of profit for the infringing product,” and (2) “the hypothetical negotiation or the ‘willing licensor-willing licensee’ approach, attempts to ascertain the royalty upon which the parties would have agreed had they successfully negotiated an agreement just before infringement began.” (p. 33.) Concerning the hypothetical negotiation, the court discussed the differences between a running royalty and lump sum analysis. The court found that the evidence did not support the damages award. One factor was that the “evidence can support only a finding that the infringing feature contained in Microsoft Outlook is but a tiny feature of one part of a much larger software program.” (p. 48.) Thus, the resolution of the dispute concerning contributory infringement is mitigated somewhat on the damages side, with the court concluding “the glaring imbalance between infringing and non-infringing features must impact the analysis of how much profit can properly be attributed to the use of the date-picker compared to non-patented elements and other features of Outlook.” (p. 49.)

Regarding the entire market value rule, the court stated: “Although our law states certain mandatory conditions for applying the entire market value rule, courts must nevertheless be cognizant of a fundamental relationship between the entire market value rule and the calculation of a running royalty damages award. Simply put, the base used in a running royalty calculation can always be the value of the entire commercial embodiment, as long as the magnitude of the rate is within an acceptable range (as determined by the evidence).” (p. 61.) In other words, “[t]here is nothing inherently wrong with using the market value of the entire product, especially when there is no established market value for the infringing component or feature, so long as the multiplier accounts for the proportion of the base represented by the infringing component or feature.” (p. 62.)

Fresenius v. Baxter International

(2008-1306,-1331, Sept. 10, 2009) Baxter’s argument before the trial court that Fresenius failed to show that a system was prior art was not sufficient to preserve other arguments regarding the prior art, such as that it failed to show all the limitations: “[O]ne specific challenge to an anticipation finding does not preserve all possible challenges to that finding. If a party fails to raise an argument before the trial court, or presents only a skeletal or undeveloped argument to the trial court, we may deem that argument waived on appeal, and we do so here.” (p. 10.) Further, the parties disputed what the prior art system showed, and therefore were presenting a new factual dispute on appeal that “should have been presented to the district court for its consideration in the first instance.” (p. 11.)

Fresenius failed to provide substantial evidence of invalidity for certain means-plus-function claims because it failed to include any evidence that the corresponding structure was disclosed. “Just as a patentee who seeks to prove infringement must provide a structural analysis by demonstrating that the accused device has the identified corresponding structure or an equivalent structure, a challenger who seeks to demonstrate that a means-plus-function limitation was present in the prior art must prove that the corresponding structure—or an equivalent—was present in the prior art.” (p. 17.)

KSR and Motivation to Combine. The court noted that the trial was conducted and JMOL issues decided before KSR, and that “the district court applied the teaching-suggestion-motivation test for obviousness as it existed before it was modified by KSR.” (p. 19.) The district court had reversed the jury’s finding of obviousness, and the Federal Circuit reversed the district court. Referring to the motivation to combine test relied on in some form by the jury and the district court, the court stated: “We first note that it remains appropriate for a post-KSR court considering obviousness ‘to determine whether there was an apparent reason to combine the known elements in the fashion claimed by the patent at issue.’” (p. 20 (quoting KSR).) The court went on to find that, under KSR, there was substantial evidence of a suggestion to combine to support the jury’s finding of obviousness.

Regarding the granting of a permanent injunction, the court found that the district court correctly applied the four-factor post-eBay test and did not abuse its discretion, but nonetheless vacated and remanded for reconsideration in light of the other holdings in its opinion (that some of the claims at issue were invalid for obviousness). (p. 24.)

Damages. The court also vacated the royalty award for reconsideration in light of the fact that now fewer claims (and patents) were found to be infringed, noting that this may alter the hypothetical negotiation. (p. 24-25.)

Reexamination. In separate concurring opinions, Judges Dyk and Newman disagreed about whether a stay of the remaining proceedings is warranted in this case. While noting that reexam can be useful, Judge Newman cautioned: “if routinely available to delay the judicial resolution of disputes, the procedure is subject to inequity, if not manipulation and abuse, through the delays that are inherent in PTO activity.” (p. 3 of Newman concurrence.)

Ron Nystrom v. Trex Company

(2009-1026 Sept. 8, 2009) Claim preclusion barred the patentee from arguing that wood boards infringed because the boards were “essentially the same” with respect to the limitations at issue as boards previously found to be noninfringing. In a previous case, the defendant’s wood boards were found not to literally infringe based on two limitations. Furthermore, in that case the patentee had waived any argument for infringement under the doctrine of equivalents. In this suit, the patentee sought to argue infringement under the doctrine of equivalents for the defendants’ new product. The new boards were concededly materially different from those at issue in the first case in some respects, but not with respect to “the only two limitations leading to the judgment of noninfringement in the first suit.” (p. 6.)

Noting that this case presents a “slightly new angle on claim preclusion,” the court concluded that it should apply: “[If t]he accused device of the second suit remains unchanged with respect to the corresponding claim limitations at issue in the first suit, then [the plaintiff] has no remaining avenue to pursue his claims now. In essence, [the plaintiff] would be attempting to prove infringement of the same claim limitations as to the same features of the accused devices. As such, this case presents the exact situation that res judicata seeks to prevent.” (p. 7.)

The plaintiff also argued that the new boards were not “insubstantially different with respect to the pertinent claim elements,” but to no avail. So the “tactical decision” to not pursue an infringement theory based on the doctrine of equivalents in the first suit “did not pay off” and the plaintiff did not get “a second bite at the apple.” (p. 8-9.)

Note: This case was decided on claim preclusion grounds but might more precisely have been decided based on issue preclusion since the products were admittedly materially different but the dispositive infringement issue was the same.

In Re Robert Skvorecz

On appeal from a rejection of a reissue application by the PTO board, the court reversed and remanded on several grounds in this opinion. One involved indefiniteness and the court emphasized that this is determined from the perspective of one of skill in the art in the context of the claim and patent while concluding that a limitation did not require further antecedent basis. With regard to written description, the court again relied on how a person of skill in the art would view certain drawings to conclude that the description was adequate.

Another issue was the interpretation of “comprising,” which the court felt the Board had taken too far. The patent required each leg of the device to have an offset and a prior art reference disclosed a device in which some but not all legs had offsets. The Board interpreted the claim “to include wire legs without offsets, because the claim uses the open-ended transition term ‘comprising.’” (p. 7.) The Federal Circuit rejected this reasoning: “The signal ‘comprising’ does not render a claim anticipated by a device that contains less (rather th[a]n more) than what is claimed.” (p. 8.) Therefore, it was incorrect “to interpret ‘comprising’ to mean that not all the Skvorecz wire legs need have offsets, despite the claims that state that ‘each wire leg’ has an offset. (Id.) In this context, the court also discussed the “protocol of giving claims their broadest reasonable interpretation during examination,” noting that it “does not include giving claims a legally incorrect interpretation. This protocol is solely an examination expedient, not a rule of claim construction. Its purpose is to facilitate exploring the metes and bounds to which the applicant may be entitled, and thus to aid in sharpening and clarifying the claims during the application stage, when claims are readily changed.” (Id.)

Martek Biosciences v. Nutrinova

A five judge panel heard this case and disagreed about the construction of “animal.” The majority concluded that the patentee defined the term in the specification and that the term carried its ordinary meaning, in which case it included humans. However, the dissent felt that this was an “unusual situation in which a purported definition of a claim term in the written description is totally negated by the remainder of the text of the patent. [The patentee’s] attempt at lexicography does not conform to the way in which it otherwise describes its invention.” (p. 2 of dissent.) In other words, the dissent felt that the claims and most of the specification used the term “animal” in a manner that excluded humans even though the explicit definition included in one sentence of the specification did not exclude humans. The majority concluded that not only had the patentee acted as a lexicographer, but that the other portions of the specification did not “constitute a clear and manifest disavowal of human animals.”

The other aspects of the opinion were unanimous. The court noted that the written description requirement can be satisfied even if the scope of the claims is broader than the disclosure. “[A] patent claim is not necessarily invalid for lack of written description just because it is broader than the specific examples disclosed.” (p. 9.) Also, in a discussion concerning prior inventorship evidence, the court said that an abandoned application does not establish reduction to practice. “[W]hile an abandoned patent application is evidence of conception, it is insufficient to corroborate testimony that an alleged prior inventor reduced the invention to practice.” (p. 18.) Regarding enablement, two narrower dependent claims were not invalid for lack of enablement even though the independent claim may have been. (p. 25.) Finally, concerning infringement, the court stated that tests were not necessarily required to establish the presence of a functional limitation. In explaining Kim v. ConAgra Foods, Inc., 465 F.3d 1312 (Fed. Cir. 2006), it stated “we did not articulate a general rule requiring one who alleges infringement of a claim containing functional limitations to perform actual tests or experiments on the accused product or method.” (p. 15.) As such, the patentee was able to rely on “testimony from two experts, each of whom conceptually analyzed the accused process and testified that it must meet the functional claim limitation based on the [accused] composition … and the known effects of chloride concentration on stainless steel corrosion.” (Id. (emphasis added))

Sky Technologies v. SAP AG

After the district court found that the plaintiff had standing because it acquired all substantial rights to the patent, the defendant brought an interlocutory appeal. The Federal Circuit affirmed the district court in this opinion, holding that transfers of patent rights other than by assignment do not necessarily have to be in writing.

The plaintiff obtained the patent through a foreclosure proceeding. The court noted that patent ownership is generally determined by state law, but assignment of patents is determined by federal law. However, transfer of patent rights other than by assignment, i.e., by operation of law, is determined by state law. (p. 7-8.) Discussing and relying on Akazawa v. Link New Technology International, Inc., 520 F.3d 1354 (Fed. Cir. 2008), the court confirmed that “transfer of patent ownership by operation of law is permissible without a writing.” (p. 9.) Since this occurred in accordance with the applicable state law, the plaintiff had standing.

Cardiac Pacemakers v. St. Jude Medical

The en banc portion of this opinion holds that section 271(f) does not apply to method claims, overruling Union Carbide Chemicals & Plastics Technology Corp. v. Shell Oil Co., 425 F.3d 1366 (Fed. Cir. 2005). The court relied on the presumption against extraterritoriality, Congressional intent reflected in the legislative history, the language of Section 271(f), the overall statutory scheme, the fact that a clear majority of the amicus briefs agreed, and the general awkwardness of the notion of supplying steps to reach its conclusion, (p. 26 (“it is difficult to conceive how one might supply or cause to be supplied all or a substantial portion of the steps in a patented method in the sense contemplated by section 271(f)”).) The court also distinguished how the Supreme Court drew on similarities between method and apparatus claims in Quanta Computer, Inc. v. LG Electronics, Inc., 128 S. Ct. 2109 (2008), in the context of patent exhaustion from how the Federal Circuit has drawn “a clear distinction between method and apparatus claims for purposes of infringement liability, which is what Section 271 is directed to.” (p. 23-24.)

The other aspects of the opinion were decided by the panel only. One issue was whether a change in claim construction of one term was enough to raise new issues regarding validity. “While it is true that a changed claim construction may permit new anticipation arguments, that cannot be the case here because the ‘determining’ limitation never served as a basis for distinguishing the prior art from the ’288 patent and is therefore not a ‘directly related new issue.’” (p. 11.)

Concerning damages, the court found that damages should be limited to only those devices that can be shown to have actually performed the method since only a method claimed remained. The fact that the defendant did not raise this argument at the time of trial did not result in a waiver because at that time an apparatus claim was still at issue. “St. Jude cannot have been expected to raise at trial an argument that would not have reduced damages until after Cardiac abandoned its apparatus claim on remand.” (p. 16.)

Callaway v. Acushnet

Golf balls were at the center of this case, which went to trial on the issue of invalidity. Infringement was stipulated to, the district court granted summary judgment of no anticipation, and the jury found that all but one of the claims—a dependent claim—were not obvious. The Federal Circuit reversed the district court regarding anticipation and remanded for a new trial on obviousness because the jury’s conclusions were irreconcilably inconsistent (since a dependent claim can’t be obvious if the claim from which it depends is not.)

The Federal Circuit agreed with the district court’s construction of the one claim term at issue on appeal. Notably, it relied in part on extrinsic evidence to support this conclusion in the form of testimony regarding accepted practice in the art. (p. 11 (“Such evidence of accepted practice within the art, when not at variance with the intrinsic evidence, is relevant to the question of how a person of skill in the pertinent field would understand a term.” ) (citing Phillips)).

The district court’s exclusion of evidence of a made-for-trial golf ball that was made by combining prior art elements was not in error. The Federal Circuit agreed that such evidence “ran a substantial risk of leading the jury towards the inappropriate use of hindsight and towards unduly weighting Acushnet’s arguments concerning motivation to combine the prior art.” (p. 18.)
The district court did not abuse its discretion by not allowing evidence of an ongoing inter partes reexamination. The Federal Circuit agreed that “non-final re-examination determinations were of little relevance to the jury’s independent deliberations on the factual issues underlying the question of obviousness” but that the risk of confusion was high. (p. 19.) Although the plaintiff had stated “that multiple patent examiners had reviewed the patents” but did not reveal that the asserted claims stood rejected by other examiners in its opening statement, the defendant failed to object at that time. Countering this statement was not a sufficient reason to allow the inter partes evidence in.

On the issue of inconsistent verdicts, Third Circuit law was applied. Because “a reading of the verdicts that would solve the apparent inconsistency proves impossible and the evidence might support either of the two inconsistent verdicts,” a new trial was necessary. (p. 23.)

The anticipation issue hinged on whether material was incorporated by reference into a prior art reference. On this issue of law, the Federal Circuit disagreed with the district court’s conclusion because the reference “identifies with specificity both what material is being incorporated by reference … and where it may be found.” (p. 27.)

Finally, although model golf balls designed to demonstrate obviousness were properly excluded, the Federal Circuit stated that a model golf ball for demonstrating the teachings of a prior art reference for the purposes of anticipation could be admissible if properly authenticated.

Wedgetail v. Huddleston

This opinion provides an overview of the circumstances in which the award of attorney fees under § 285 may be appropriate. The case must be exceptional, which the court reviews for clear error, and if it is, the district court determines whether attorney fees are appropriate, which is reviewed for abuse of discretion. (p. 3; 4 (providing numerous cases as examples).) Exceptional cases may be found in the following situations: “inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.” (p. 3.) The Federal Circuit also stated that the district court need not necessarily provide its reasoning for its decision regarding attorney fees. In this case, the Federal Circuit determined that the lack of reasoning was at most harmless because the conclusion (no award of attorney fees) was supported by the record. (pp. 8-9.)

When To Determine Whether a Claim Is Indefinite

According to the standard for indefiniteness, whether a claim is invalid for indefiniteness would have to be determined at the time the claim is construed, not after. This is because the standard is whether the claim can be construed at all. See, e.g., Praxair, Inc. v. ATMI, Inc., 543 F.3d 1306, 1319 (Fed. Cir. 2008) (“A claim will be found indefinite only if it is insolubly ambiguous, and no narrowing construction can properly be adopted…. On the other hand, if the meaning of the claim is discernible, even though the task may be formidable and the conclusion may be one over which reasonable persons will disagree, we have held the claim sufficiently clear to avoid invalidity on indefiniteness grounds.”) (internal quotation marks and citations omitted); see also id. (“Indefiniteness is a matter of claim construction ….”).

Notwithstanding this standard, a defendant will often adopt the strategy of seeking a preferred construction and arguing that if the court adopts the patentee’s proposed construction the claim would be indefinite. And sometimes defendants will, after the court has construed the claims, argue that the adopted construction is indefinite. While the case law is not clear regarding the timing for deciding the issue of indefiniteness, the standard for indefiniteness should force defendants to decide early on, i.e., when proposing claim constructions, whether to pursue a defense of indefiniteness. A defendant should not be able to propose a definition for a term and later argue that the very same term is insolubly ambiguous. If a term can’t be construed, there should be no proposed construction for it. Therefore, a defendant should state its belief that a particular claim is indefinite when proposing constructions, and the court should decide this issue in the Markman ruling.

Hypothetical Claims for Determining Enablement

Determining Whether the “Full Scope” of Claims Is Enabled: The Need for Hypothetical Closed Claims

When assessing whether a patent has fulfilled the enablement requirement of section 112, it is the “full scope” of the claims that must be enabled. See Sitrick v. Dreamworks, LLC, 516 F.3d 993, 999 (Fed. Cir. 2008) (“The full scope of the claimed invention must be enabled.”). This standard, however, overstates the obligation for open-ended claims. Open-ended claims have, in theory, a virtually unlimited scope since they encompass anything that includes the limitations even if additional unclaimed features are also present. Therefore, it is not actually possible for the full scope of any open-ended claim to be enabled. There will always be an additional feature that would fall within the scope of the claim that the specification would never mention and would not be within the grasp of a person of ordinary skill in the art.

To be more precise, then, the enablement standard for open-ended claims should first assume that such claims are closed claims, and then determine whether the full scope of those hypothetical claims has been enabled. This would more accurately reflect the standard as applied in practice and would be the only realistic requirement that could be imposed on inventors.

Hyatt v. Doll

This opinion reviewed the history of 35 U.S.C. § 145, which allows a patent applicant to challenge the decision of the PTO in a district court proceeding (as an alternative to the more common path of seeking review in the Federal Circuit). At issue was whether evidence not introduced during the proceedings at the PTO could be considered by the district court. The applicant sought to have a declaration considered that he argued would have helped establish that the rejected claims met the written description requirement. The district court “excluded the Hyatt declaration because it found Hyatt had been ‘negligent’ in failing to submit it to the PTO during examination or in a timely manner to the Board on appeal.” (p. 11.) It then granted summary judgment that the claims were invalid for failure to meet the written description requirement. In a lengthy opinion, the Federal Circuit agreed with the district court on the issue of excluding the declaration and affirmed the grant of summary judgment.

In reaching its conclusion on “the issue of exactly what standard governs district courts in ruling on the admissibility of evidence withheld during examination in the PTO,” (p. 12), the Federal Circuit discussed the history of § 145, the Administrative Procedure Act (which it has held applies to actions under § 145 (p. 39)), and the “general practice of federal courts over eighty years” (p. 34). The court made clear both that there is no absolute rule against introducing new evidence in a § 145 action and that its decision was specific to the facts of this case. The applicant’s actions during prosecution appeared to weigh heavily in the decision, as the court noted in several ways: Noting that “On these facts…” the district court must be upheld (p. 50 (emphasis in original)), that the applicant “willfully refused to provide evidence in his possession in response to a valid action by the examiner” (p. 50), that the applicant exhibited “willful non-cooperation,” and concluding: “This blatant non-cooperation was willful. Allowing Hyatt to escape the consequences of his refusal to timely submit his own information to the PTO that he was required by law and requested by the examiner to submit would hardly be consonant with the APA or the legislative purpose of § 145.” (p. 51.)

In sum, the court found that in some circumstances, a district court may exclude new evidence in a § 145 action but made clear that it was not creating an absolute rule against ever admitting such evidence. “The dissent incorrectly describes our decision as promulgating a ‘sweeping exclusionary rule.’ We have not adopted a ‘sweeping’ or ‘per se rule.’ We express no opinion as to admissibility of evidence in the multitude of variegated factual scenarios that may arise in the future which the dissent claims are decided today.” (p. 55.)

Bayer v. Barr Labs

This is a pharmaceutical case in which the drug formula at issue was found to be obvious to try. The drug was known in the art but an effective formulation for delivery had not been developed. There were two obstacles to oral delivery of the drug—its solubility and the potential for acid degradation in the stomach. Reducing particle size could increase the solubility but that might also cause the drug to isomerize more in the acidic stomach. An enteric-coated pill would help protect the drug from the acid in the stomach (but this process has drawbacks itself.) Bayer ultimately found that the solubility could be increased by reducing particle size and that with this solution the bioavailability of the drug was not impacted, with or without an enteric coating. (p. 5-6.) So Bayer developed a “normal pill” with reduced particle size but no enteric coating.

The court found that this solution would have been obvious to try and that the two circumstances when what was “obvious to try” does not make something invalid as obvious were not met. Those two circumstances are (1) when all the possibilities must be tried because the prior art provides no way of eliminating some and (2) when it was in general obvious to use some new technology but the results weren’t predictable. The court, citing In re O’Farrell, 853 F.2d 894 (Fed. Cir. 1988) and KSR, 550 U.S. 398 (2007), described these as follows: (1) “When what would have been ‘obvious to try’ would have been to vary all parameters or try each of numerous possible choices until one possibly arrived at a successful result, where the prior art gave either no indication of which parameters were critical or no direction as to which of many possible choices is likely to be successful an invention would not have been obvious.” (p. 9.) And (2) “A finding of obviousness would not obtain where what was ‘obvious to try’ was to explore a new technology or general approach that seemed to be a promising field of experimentation, where the prior art gave only general guidance as to the particular form of the claimed invention or how to achieve it.” (p. 9-10.)

The court, based on the teachings of the art, concluded that one of skill in the art would have been “funneled” to just two options (the normal pill that Bayer developed or the enteric-coated pill) and that the prior art “guided the formulator precisely to the use of either a normal pill or an enteric-coated pill.” (p. 15.)

Secondary factors were not mentioned.

Judge Newman dissented, focusing largely on the degree of certainty required for there to be a reasonable expectation of success.

Touchcom v. Bereskin & Parr

This case was decided on jurisdictional grounds. The plaintiff had hired a Canadian law firm to prosecute its patent and something went wrong along the way. The plaintiff is now attempting to sue the firm in the U.S. and the issue of personal jurisdiction was raised. The main question, and answer, is "whether the act of filing an application for a U.S. patent at the USPTO is sufficient to subject the filing attorney to personal jurisdiction in a malpractice claim that is based upon that filing and is brought in federal court. For the reasons discussed below, we conclude that it is." (p. 7.)

The issue of personal jurisdiction was determined under Fed. R. Civ. P. 4(k)(2), which provides for jurisdiction for a claim that arises under federal law but "the defendant is not subject to the jurisdiction of any state’s courts of general jurisdiction." (p. 12.) This rule applies when a defendant did not have sufficient contacts with any single state to confer jurisdiction but did have sufficient contacts with the U.S. as a whole. (p. 14.)

Applying this rule, the Federal Circuit concluded that the defendants did have sufficient contacts and the due process requirements were met so that personal jurisdiction would be appropriate under Rule 4(k)(2) (subject to a determination on remand that they are not subject to jurisdiction in any state).

Judge Prost dissented, agreeing with the majority's conclusion concerning Rule (4)(k)(2) and personal jurisdiction, but differing on the grounds that exercising personal jurisdiction would violate due process. (p. 26.)

University of Pittsburgh v. Hedrick

This case centers around a dispute over the inventorship of an adipose-derived stem cell that can differentiate into other cells. The dispute was not between competing groups but among different researchers in the same lab. The researchers who wished to be included as inventors had arrived after some of the work on the claimed invention had been completed but they argued that their contributions were essential. The Federal Circuit spent three pages construing the claims at issue (pp. 7-9.) Interestingly, the researchers who sought to be included as inventors argued for a narrower construction, not broader. In fact, they argued that the broader construction would include prior art. (p. 8.)

At first glance one might assume that those arguing to be additional inventors (not prior sole inventors) would not be arguing for a narrower scope of invention. But here they were claiming that the actual, patentable invention occurred later in time, after their arrival and their contribution. Since the broader possible scope was clearly conceived before that time, they presumably had to seek a construction for a narrower invention that could not be shown to have been invented earlier.

Another aspect of this case that is of some interest is that the Federal Circuit had to construe the claims before a determination of inventorship could be made. Although inventorship has always been based on the scope of the claims, this seems to make this determination less certain.

Exergen v. SAAT

This case involves infrared thermometers for taking people's temperature. The Federal Circuit reversed the jury's finding that one of the patents at issue was not invalid and reversed the jury's findings of infringement. It also affirmed the district court's denial of a motion to amend its pleadings to add allegations of inequitable conduct. So, as is not all that unusual, the case left the Federal Circuit in a much different posture than it was after trial (when the plaintiff had a $2.5 million judgment.)

Three points of note that I see here. First, before trial, the plaintiff waived any argument for infringement based on the doctrine of equivalents (p. 5), and it came back to haunt. (pp. 15 ("Exergen’s [argument], including its criticism of SAAT’s alleged ‘word-sniffing,’ is an argument sounding in the doctrine of equivalents—a doctrine ‘designed to do equity’ and ‘to relieve an inventor from a semantic strait jacket,’ but one which Exergen expressly waived before trial.").) This is often a tough call for a plaintiff to make. Arguing for infringement under the doctrine of equivalents weakens or at least confuses your literal infringement arguments. Plus, it is cumbersome and time consuming, so it is very tempting to just go for literal infringement, especially in light of all the hurdles placed in front of finding infringement under the doctrine of equivalents. However, as seen in this case, you can't be certain how things will go. That being said, it may well have still been the correct call in this case, depending on what obstacles were placed in front of the doctrine of equivalents.

The second part of this case of interest is the Federal Circuit's holding regarding pleading inequitable conduct. First, it stated that this issue was one of Federal Circuit law, not of the regional circuit. Then, it held that an allegation of inequitable conduct must be plead with particularity: "Based on the foregoing, and following the lead of the Seventh Circuit in fraud cases, we hold that in pleading inequitable conduct in patent cases, Rule 9(b) requires identification of the specific who, what, when, where, and how of the material misrepresentation or omission committed before the PTO." (p. 23.) Specifically, "although ‘knowledge’ and ‘intent’ may be averred generally, a pleading of inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts from which a court may reasonably infer that a specific individual (1) knew of the withheld material information or of the falsity of the material misrepresentation, and (2) withheld or misrepresented this information with a specific intent to deceive the PTO.” (pp. 24-25.) While not 100% clear on what needs to be included in the pleadings, it provides decent guideposts.

Finally, the court made some surprisingly strong statements about the arguments of plaintiff's counsel. (p. 17, n.2.)