Patent Case Summaries
Article Date: Monday, February 28, 2011
Written By: Robin McGrath, Lance Lawson, Mike Connor, Kirk Bradley, Ross Barron & Michele Glessner
The summaries below summarize patent-related opinions of interest issued by the Court of Appeals for the Federal Circuit from September 2010 to December 2010. These summaries were edited by Robin McGrath, a partner in Alston & Bird’s Atlanta office; and Lance Lawson, Mike Connor, and Kirk Bradley, partners, and Ross Barton and Michele Glessner, assosciates, in Alston & Bird’s Charlotte office.
The Patent Application: Specification: Best Mode Requirement
Defenses: Invalidity
Relationship to Other Intellectual Property: Trademarks
Relationship to Other Intellectual Property: Lanham Act and False Advertising
Green Edge Enterprises, LLC v. Rubber Mulch Etc., LLC, et al., Nos. 09-1455, -1479 (Fed. Cir. (E.D. Mo.) Sept. 7, 2010). Opinion by Lourie, joined by Rader and Bryson.
The Federal Circuit reversed and remanded the district court’s summary judgment ruling that U.S. Patent No. 5,910,514 (“the ‘514 patent”) was invalid for failure to comply with the best mode requirement of 35 U.S.C. § 112. The Federal Circuit also reversed the district court’s dismissal of trademark invalidity claims for lack of case or controversy and the court’s dismissal of a Lanham Act counterclaim for failure to prove damages.
Green Edge Enterprises, LLC (“Green Edge”), sued, inter alia, Rubber Mulch Etc., LLC (“Rubber Mulch”) and Rubber Resources Ltd., LLP (“Rubber Resources”) (collectively “Defendants”), alleging claims for patent and trademark infringement. The patent infringement claim concerned “the ‘514 patent,” which claims a synthetic mulch that is colored with a “water based acrylic colorant” to imitate natural mulch.
The specification of the ‘514 patent states that the colorant could be selected from a variety of different coloring systems, and that the preferred colorants were water based acrylic systems such as the colorant system supplied by Futura Coatings, Inc. (“Futura”) under the name “Visichrome.” At the district court, the parties agreed that a colorant system marketed under the name “Visichrome” did not actually exist as of the filing date of the application, but rather, that Futura offered a colorant system known by the product code “24009.” Nevertheless, the record included a letter from Futura’s vice president to Green Edge that referenced a “Visichrome” colorant system.
The district court granted summary judgment of invalidity of the ‘514 patent on the grounds that the inventors had failed to disclose the best mode of the invention because the only water-based colorant disclosed in the specification, “Visichrome,” did not exist. On appeal, Green Edge argued that the district court erred in granting summary judgment of invalidity because the inventors did not know the composition of the proprietary colorant, but only the name “Visichrome,” which they believed to be the product name, plus the product code number. The Federal Circuit reversed the district court, holding that a genuine dispute of material fact existed relating to whether Green Edge disclosed the best mode because evidence showed that, at the time of filing, a person of ordinary skill could have contacted Futura, inquired about “Visichrome,” and been led to the product known by code “24009.” The Federal Circuit also observed that the district court properly refused to grant summary judgment on the grounds of anticipation, obviousness, indefiniteness, and nonenablement because substantial fact issues existed as to those issues.
Green Edge’s complaint also asserted a claim against Rubber Mulch for infringement of the trademark “RUBBERIFIC MULCH.” Rubber Mulch and Rubber Resources counterclaimed for a declaratory judgment that the trademark was invalid and not infringed. The district court dismissed both defendants’ declaratory judgment counterclaims on the basis that there was no case or controversy. The Federal Circuit reversed as to Rubber Mulch’s declaratory judgment counterclaim because Green Edge’s assertion of a trademark infringement claim against Rubber Mulch had established a case or controversy concerning Rubber Mulch. However, the court affirmed the district court’s dismissal of Rubber Resources’ declaratory judgment claim because, unlike Rubber Mulch, Rubber Resources had neither been sued nor threatened with suit on the trademark.
Last, Rubber Resources had asserted a counterclaim against Green Edge for unfair trade practices under the Lanham Act that sought damages based on Green Edge’s profits. The district court dismissed this counterclaim on the basis that Rubber Resources’ initial disclosures and pretrial filings had only disclosed Green Edge’s sales data as relating to its theories of damages. The Federal Circuit held that Rubber Resources’ referencing of Green Edge’s sales data was sufficient to entitle Rubber Resources to recover Green Edge’s profits because the Lanham Act provides that a claimant must only prove the defendant’s sales, and that the defendant must prove any elements of cost or deduction. Thus, the Federal Circuit reversed the district court and concluded that if Rubber Resources prevails on its Lanham Act claim at trial, it would be entitled to recover Green Edge’s profits.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1455-1479.pdf
Shri Abhyankar is an associate in the IP Group of Alston & Bird’s Atlanta office.
Inventors and Inventorship: Original and First Inventor
The Patent Application: Specification: Written Description
The Patent Application: Specification: Enablement Requirement
Patent Office Procedures: Interferences
Goeddel, et al. v. Sugano, et al., Nos. 09-1156, -1157 (Fed. Cir. (B.P.A.I.) Sept. 7, 2010). Opinion by Newman, joined by Lourie and Bryson.
The Federal Circuit reversed and remanded the priority decisions of the Board of Patent Appeals and Interferences (the “Board”) because a related foreign application did not establish constructive reduction to practice of the subject matter of the interference counts.
The first interference was declared between David Goeddel’s and Roberto Crea’s (together “Goeddel”) U.S. Patent Application No. 07/374,311 and two patents owned by Haruo Sugano, Masami Muramatsu, and Tadatsugu Taniguchi (together “Sugano”), U.S. Patent No. 5,326,859 and its continuation-in-part, No. 5,514,567. The subject matter of that interference is directed to modified DNA that codes an amino acid sequence of mature human fibroblast interferon (“hFIF”), which is effective in combating pathogens and tumors in the human body. A second interference was declared between Sugano’s U.S. Application No. 08/463,757 and Goeddel’s U.S. Patent No. 5,460,811. That interference relates to a non-glycosylated mature hFIF. Based on a Sugano Japanese patent application (the “Japanese Application”), the Board held that application constituted constructive reduction to practice of the subject matter of the counts of both interferences, and awarded Sugano priority of inventorship.
On appeal to the Federal Circuit, Goeddel argued that the Japanese Application did not meet the written description and enablement requirements of 35 U.S.C. § 112 with respect to the interference counts, and therefore was not a constructive reduction to practice of the counts. In response, Sugano argued that, using the techniques disclosed in the Japanese Application, persons of skill in the art would have known how to modify the precursor hFIF gene so that it would express mature hFIF.
The Federal Circuit held that the Board erred in ruling that priority was established if a person of skill in the art could “envision” the invention of the counts. Section 112, in the context of interference priority, requires that the subject matter of the counts be described sufficiently to show that the applicant was in possession of the invention. It was undisputed that the Japanese Application did not describe mature hFIF and did not describe the DNA coding for mature hFIF unaccompanied by the presequence. Thus, the Federal Circuit ruled that the fact that a modified gene encoding the mature hFIF amino acid protein could have been “envisioned” did not establish constructive reduction to practice of the modified gene.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1156-1157.pdf
Shri Abhyankar is an associate in the IP Group of Alston & Bird’s Atlanta office.
Infringement: Literal Infringement
Infringement: Doctrine of Equivalents: Prosecution History Estoppel
Infringement: Willful Infringement
The Patent Application: Specification: Written Description Defenses: Invalidity
Remedies: Damages: Lost Profits
Remedies: Injunctions: Permanent Injunction
Litigation Practice and Procedure: Jurisdiction: Standing
Spine Solutions, Inc., et al. v. Medtronic Sofamor Danek USA, Inc., et al., No. 09-1538 (Fed. Cir. (W.D. Tenn.) Sept. , 2010). Opinion by Moore, joined by Dyk and Friedman.
The Federal Circuit affirmed the district court’s denial of judgment as a matter of law (“JMOL”) on obviousness and its denial of summary judgment of invalidity for failure to comply with the written description requirement, reversed the court’s denial of summary judgment of noninfringement, and reversed the district court’s denial of JMOL with respect to lost profits and the court’s denial of JMOL of no willfulness.
Spine Solutions Inc. (“SSI”) brought suit for patent infringement against Medtronic Sofamor Danek USA, Inc. and Medtronic Sofamor Danek, Inc. (collectively “Medtronic”), alleging that Medtronic infringed the asserted claims of U.S. Patent No. 6,936,071 (“the ‘071 patent”) relating to intervertebral implants. Medtronic raised various defenses, including noninfringement and invalidity for obviousness and failure to comply with the written description requirement. The district court ruled in favor of SSI on its motion for summary judgment of infringement.
The case went to trial on Medtronic’s obviousness defense, SSI’s willful infringement claim, and damages. The jury found in favor of SSI on its willfulness claim and awarded SSI lost profits. The court subsequently denied Medtronic’s motion for JMOL of obviousness and willfulness, and denied Medtronic’s motion for JMOL that SSI was not entitled to lost profits because its affiliated entities sold products covered by the patents. The court also entered a permanent injunction against Medtronic, prohibiting it from making or selling any accused devices outside of the United States.
On appeal, Medtronic argued that the district court erred in denying its motion for JMOL that the asserted claims of the ‘071 patent, which claimed a “single anchor,” would have been obvious to one of skill in the art. The Federal Circuit affirmed the district court’s decision on obviousness, holding that although the combination of prior art references identified by Medtronic disclosed each and every element of the asserted claims, the record contained substantial evidence to support the jury’s finding that it would not have been obvious to a person of skill in the art to use the “single anchor” disclosed in one prior art reference with the disclosed implant in the other.
Medtronic also argued that the district court erred in granting summary judgment that the ‘071 patent contained adequate written description to support the “single anchor . . . adapted to enter a groove” limitation in the asserted claims because the patent made no mention of “grooves.” The Federal Circuit affirmed the district court, finding that the claims at issue related to the implant, and did not cover the groove itself-accordingly, the applicants were not required to disclose grooves.
With respect to noninfringement, the Federal Circuit held that the district court erred in determining the accused product literally infringed the asserted claims. Under the district court’s claim construction, the accused product could not infringe the “single anchor” limitation because it had two anchors. Further, the Federal Circuit agreed with Medtronic that under prosecution history estoppel, SSI was barred from asserting infringement under the doctrine of equivalents because the applicants surrendered any designs containing more than one anchor.
The Federal Circuit also reversed the district court’s denial of Medtronic’s JMOL motion of no lost profits because SSI did not provide sufficient evidence that its affiliated entities were exclusive licensees of the patent, and that Medtronic could not have waived its standing argument as to those entities because standing is a jurisdictional requirement, and is not subject to waiver.
The Federal Circuit also reversed the district court’s denial of JMOL of no willfulness because Medtronic had raised a substantial question as to the obviousness of the ‘071 patent. Finally, the court reversed the district court’s grant of a permanent injunction with respect to Medtronic’s extraterritorial sales, as Medtronic’s overseas sales of its products could not infringe any U.S. patent.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1538.pdf
Shri Abhyankar is an associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Procedure: Summary Judgment: Sufficiency of Evidence
Baseload Energy, Inc. v. Roberts, No. 0-1053 (Fed. Cir. (D.D.C.) Sept. 9, 2010). Opinion by Dyk, joined by Lourie and Linn.
The Federal Circuit reversed the district court’s grant of summary judgment that a prior settlement agreement between the parties barred a declaratory judgment action that a patent was invalid and unenforceable because the language of the agreement did not release either claims of infringement to that patent or the accompanying defenses of invalidity or unenforceability.
Baseload Energy, Inc. (“Baseload”) filed an action seeking a declaratory judgment that U.S. Patent No. 6,781,254 (“the ‘254 patent”), owned by Defendant Bryan Roberts, was invalid and unenforceable. The declaratory judgment action represented the second round of litigation between the parties and their affiliates. In the first action, Baseload and its affiliates asserted breach of contract claims against Roberts, based on an unsuccessful joint venture partnership between the parties that turned sour. The complaint in the breach of contract action included no allegations of patent invalidity. In 2008, the parties entered into a settlement agreement (“2008 Settlement Agreement”), whereby the parties mutually agreed to release each other from “any and all losses, liabilities, claims, expenses, demands and causes of action of every kind and nature.” As part of the settlement, Baseload was granted an option to acquire a nonexclusive license to the ‘254 patent. The option lapsed when Baseload was unable to secure financing, and thereafter, Baseload brought its declaratory judgment action.
At the district court, Roberts moved for summary judgment that Baseload’s claims were barred by the expansive language contained in the 2008 Settlement Agreement. The court agreed, and held that both Roberts’ infringement claims and Baseload’s patent defenses were released through that agreement.
On appeal, the Federal Circuit reversed, recognizing that based on Supreme Court and Federal Circuit precedent, invalidity and unenforceability claims may be released, but only if the language of the settlement agreement is clear and unambiguous. The court held that there was no such clear language in the 2008 Settlement Agreement, and therefore there was no release of either patent claims or defenses. The court found that the parties could not possibly have intended to release any and all patent infringement claims because the 2008 Settlement Agreement granted Baseload an option to acquire a non-exclusive license to the ‘254 patent, and that license provision would have been unnecessary if all infringement claims under that patent were released. As the infringement claims were preserved, the court found that it necessarily followed that the defenses to infringement, including invalidity and unenforceability, were also preserved. Accordingly, the court concluded that the Settlement Agreement did not contain the clear and unambiguous language necessary to effect a release of Baseload’s patent invalidity defenses.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1053.pdf
Shri Abhyankar is an associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Jurisdiction: Standing Litigation Practice and Procedure:
Procedure: Motions to Dismiss
Tri-Star Electronics International, Inc. v. Preci-Dip Durtal SA., No. 09-1337 (Fed. Cir. (C.D. Cal.) Sept. 9, 2010). Opinion by Newman, joined by Bryson and Dyk.
In affirming the district court’s denial of defendant’s motion to dismiss for lack of standing, the Federal Circuit held that Tri-Star Electronics International, Inc., the successor-in-interest to the patent-in-suit, was the intended recipient of ownership rights to the patent-in-suit at the time of assignment and therefore had standing to sue.
The inventor of the patent-in-suit, U.S. Patent No. 6,250,974 (“the ‘974 patent”), executed an assignment of a continuation-in-part application that eventually issued into the patent-in-suit, in accordance with his employment contract with Tri-Star Electronics International, Inc., which at the time of assignment was an Ohio Corporation (hereinafter “Tri-Star Ohio”). The assignment was to Tri-Star Ohio and “its successors, legal representatives, and assigns.” Thereafter, Tri-Star Ohio underwent a restructuring, through which a separate California Tri-Star entity, also named Tri-Star International, Inc. (hereinafter “Tri-Star California”), merged with Tri-Star Ohio. Tri-Star California subsequently merged into a newly created Delaware corporation (“Tri-Star Delaware”).
Tri-Star Delaware sued Preci-Dip Durtal SA (“Preci-Dip”) for infringement of the ‘974 patent. Preci-Dip moved to dismiss for lack of standing, arguing that the inventor assigned his invention to a nonexistent entity, Tri-Star Ohio, and therefore the chain of ownership to Tri-Star California never came into effect. The district court interpreted the assignment to Tri-Star Ohio as conveying ownership to Tri-Star California, based on the “successors” language included in the assignment. Because there was no dispute that Tri-Star California transferred its rights to the Delaware corporation, the district court denied Preci-Dip’s motion to dismiss, finding that Tri-Star Delaware had standing to sue.
The Federal Circuit affirmed the district court’s decision, finding that under Ohio contractual interpretation, Tri-Star California was a “successor” under the assignment contract. Under that contract, Tri-Star California was the intended recipient of ownership rights to the ‘974 patent at the time of execution of the assignment. As the ensuing transfer to Tri-Star Delaware was not challenged, the Federal Circuit held that Tri-Star Delaware had standing to sue on the ‘974 patent.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1337.pdf
Shri Abhyankar is an associate in the IP Group of Alston & Bird’s Atlanta office.
Patentable Invention: Obviousness: Scope and Content of Prior Art
Patentable Invention: Obviousness: Teaching, Suggestion, or Motivation in Prior Art
Defenses: Invalidity
Daiichi Sankyo Co., et al. v. Matrix Laboratories, Ltd., No. 09-1511 (Fed. Cir. (D.N.J.) Sept. 9, 2010). Opinion by Lourie, joined by Friedman and Linn.
The Federal Circuit affirmed the finding of the U.S. District Court for the District of New Jersey that U.S. Patent No. 5,616,599 (“the ‘599 patent”) was not invalid under 35 U.S.C. § 103.
Daiichi Sankyo Co. and Daiichi Sankyo, Inc. (collectively “Daiichi”) own the ‘599 patent, which relates to compounds that are used as angiotensin receptor blockers (“ARBs”) for the treatment of high blood pressure. Claim 13 of the ‘599 patent covers the chemical compound olmesartan medoxomil (“OM”), an ARB approved by the Food and Drug Administration (“FDA”) and commercialized by Daiichi as the active ingredient in Benicar®, Benicar HCT®, and Azor®. Matrix Laboratories, Ltd., Mylan Inc., Mylan Laboratories, Inc., and Mylan Pharmaceuticals, Inc. (collectively “Mylan”) filed multiple Abbreviated New Drug Applications with Paragraph IV certifications under the Hatch-Waxman Act, 21 U.S.C. § 355, challenging the ‘599 patent and seeking FDA approval to manufacture generic OM.
In response, Daiichi filed suit against Mylan in the District of New Jersey for the alleged infringement of Claim 13 of the ‘599 patent. The parties stipulated that Mylan infringed Claim 13, leaving only Mylan’s counterclaim that Claim 13 would have been obvious in light of (i) the second-generation ARBs in United States Patent No. 5,137,902 (“the ‘902 patent”); (ii) U.S. Patent No. 5,138,069 (“the ‘069 patent”); and (iii) the known use of medoxomil as a prodrug. After a ten-day bench trial, the district court held that Claim 13 was not invalid as obvious because Mylan had failed to show by clear and convincing evidence that one skilled in the art would have chosen the ARBs from the ‘902 patent as lead compounds of other, more studied ARBs with greater potency. Moreover, the district court also found that Mylan had failed to establish that one of skill in the art would have been motivated to modify the teachings of the ‘902 patent to end up with OM, and that the ‘069 patent taught away from the use of a hydrophilic group as in OM. Finally, the district court also found that secondary considerations, such as unexpected results and commercial success, counseled against a finding of obviousness.
On appeal, the Federal Circuit affirmed the district court’s ruling, specifically that Mylan had failed to show that one of ordinary skill in the art would have been motivated to select the ‘902 ARBs as lead compounds or, even if they had, that a skilled artisan would have been motivated to modify the ‘902 compounds to synthesize OM. First, the Federal Circuit held that a medicinal chemist of skill in the art would not have been motivated to select the ‘902 compounds over other second generation ARBs because many had been more thoroughly studied than the ‘902 ARBs and several were over one hundred times more potent. The Federal Circuit rejected Mylan’s argument that a person of skill in the art would have chosen the ‘902 ARBs as a lead compound because they were the closest prior art compound because that impermissibly injected hindsight into the obviousness analysis. Second, concerning the motivation to modify, the Federal Circuit ruled that the clear preference for lipophilic groups of the ‘069 patent at a particular position of an imidazole ring taught away from the hydrophilic groups of Claim 13 of the ‘599 patent. The Federal Circuit did not consider the district court’s alternative grounds for holding that Mylan failed to establish a prima facie case of obviousness.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1511.pdf
Shri Abhyankar is an associate in the IP Group of Alston & Bird’s Atlanta office.
Claim Interpretation: Preamble Terms as a Measure of the Invention
Claim Interpretation: Intrinsic Evidence: Specification Claim Interpretation: Claim Differentiation
American Med. Sys., Inc. v. Biolitec, Inc., No. 09-1323 ( Fed. Cir. (D. Mass) Sept. 13, 2010). Opinion by Bryson, joined by Prost. Dissenting opinion by Dyk.
In reversing the district court’s grant of summary judgment of noninfringement, the Federal Circuit held that the preamble of the patent-in-suit does not limit the asserted claims.
American Medical Systems, Inc. and Laserscope (collectively “AMS”) sued Biolitec, Inc. (“Biolitec”) in the United States District Court for the District of Massachusetts, alleging that Biolitec’s Evolve™ laser system infringes U.S. Patent No. 6,986,764 (“the ‘764 patent”). The ‘764 patent is directed to various methods and devices for vaporizing tissue by using laser radiation. Following a Markman hearing, the district court construed the preamble term “photoselective vaporization” as limiting and construed that term to mean “using a wavelength that is highly absorptive in the tissue, while being absorbed only to a negligible degree by water or other irrigant.” Because Biolitec’s Evolve™ laser system operated at a wavelength at which the energy is absorbed more than “a negligible degree by water or other irrigant,” Biolitec moved for summary judgment of noninfringement. The district court granted Biolitec’s motion and AMS appealed.
On appeal, the Federal Circuit held that the district court erred by construing the preamble term “photoselective vaporization” as a limitation of the asserted claims. In so holding, the Court of Appeals noted that (i) there was no suggestion in the prosecution history of the ‘764 patent that the inventors had added the term in order to distinguish the invention from the prior art; (ii) the inventors did not rely on the preamble term to define or refine the scope of the asserted claims; and (iii) the descriptive term “photoselective” did not embody an essential component of the invention. Further, the panel explained that, under the doctrine of claim differentiation, the dependent claims that recite the use of a specific wavelength provide strong support that the asserted claims are not limited to a specific wavelength. The Court of Appeals also noted that the language in the body of the asserted claims recites a complete invention for achieving the stated purpose of the invention and, although the preamble term appears in the specification, the term was used consistently as a description of the overall process described and claimed in the ‘764 patent.
In his dissent, Judge Dyk argued that the Federal Circuit should create a uniform rule that all preambles are limiting in light of the court’s failure to articulate a clear and simple rule. Even under existing precedent, Judge Dyk argued that the preamble term in dispute should be limiting while noting that the majority misconstrued the use of that term in the specification and the prosecution history.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1323.pdf
Scott Amy is an associate in the IP Group of Alston & Bird’s Atlanta office.
Infringement: Literal
Infringement Claim Interpretation: Aids to Interpretation
Fujitsu Ltd. v. Netgear Inc., No. 10-045 (Fed. Cir. (W.D. Wis.) Sept. 20, 2010). Opinion by Moore, joined by Lourie and Friedman.
The Federal Circuit affirmed-in-part, reversed-in-part, and remanded the judgment of the United States District Court for the Western District of Wisconsin, which granted summary judgment of noninfringement for asserted claims of three patents that U.S. Philips Corp, Fujitsu Ltd., and LG Electronics, Inc. (respectively, “Philips,” “Fujitsu,” and “LG”; collectively, “Plaintiffs”) asserted against Defendant Netgear Inc. (“Netgear”).
The three companies asserted three patents, relating to various aspects of wireless communications and involving the IEEE 802.11 2007 Standard and the Wi-Fi Alliance Wireless Multi-Media Specification Version 1.1 (“the WMM Specification”). Plaintiffs were members of a licensing pool that “purports to include patents that any manufacturer of 802.11 and WMM complaint products must license.” After claim construction, Plaintiffs filed a first summary judgment motion, asserting that Netgear necessarily infringed the asserted claims by “simply complying with the standard.” The district court denied Plaintiffs’ motion, holding that Plaintiffs must demonstrate infringement for the accused products. Plaintiffs filed a subsequent motion for summary judgment, and Netgear filed summary judgment of noninfringement. The district court again denied Plaintiffs’ motion and granted Netgear’s motion for summary judgment of noninfringement.
Reviewing the district court’s grant of summary judgment de novo, the Federal Circuit evaluated the grant of summary judgment for each patent asserted by each plaintiff. First, the Federal Circuit reviewed the grant of summary judgment for Philips’ U.S. Patent No. 4,974,952 (“the ‘952 patent”), which concerned a method for transmitting data messages in a communications network. Philips asserted contributory and induced infringement, for which the district court granted summary judgment of noninfringement. Philips argued that the district court improperly relied on the industry standards for analyzing infringement. The Federal Circuit held that “a district court may rely on an industry standard in analyzing infringement,” but that “in many instances, an industry standard does not provide the level of specificity required to establish that practicing that standard would always result in infringement.”
Therefore, the Federal Circuit concluded that “only in the situation where a patent covers every possible implementation of a standard will it be enough to prove infringement by showing standard compliance.” Furthermore, Philips argued that the district court erred by requiring evidence that customers actually practiced the accused products in a way that directly infringed. The Federal Circuit held that the district court did not err, noting that “[u]nless the claim language only requires the capacity to perform a particular claim element,…it is not enough to simply show that a product is capable of infringement.”
Because Philips failed to establish that customers actually used the accused models in an infringing manner for all but four accused models, summary judgment of noninfringement (contributory infringement) was proper for all but those four models. With regard to those four models, however, the Federal Circuit held that summary judgment was improper because there was a genuine issue of material fact regarding the knowledge element of contributory infringement. Specifically, Philips had sent letters to Netgear “identify[ying] the ‘952 patent and stated that all 802.11 complaint products infringe.” Likewise, the court found that there were no substantial noninfringing uses of the products. The Federal Circuit also reversed the district court, holding that there were genuine issues of material fact on the issue of induced infringement. Finally, the court held that the district court erred in granting summary judgment on the failure to mark. The patent was directed at a method, and methods are not covered by the marking statute (35 U.S.C. § 287).
Next, the Federal Circuit reviewed the district court’s grant of summary judgment of noninfringement for Fujitsu’s U.S. Patent No. 6,018,642 (“the ‘642 patent”), which concerns a system for reducing power consumption in mobile devices that access wireless networks. Fujitsu argued that the district court erred in construing the claim terms “synchronously” and “data receive-ready period,” and thus erred in granting summary judgment of noninfringement based on these constructions. The Federal Circuit first reviewed the term “synchronously,” which the district court construed as meaning “at the same time.” It held that, in light of the specification, this construction was too narrow, and construed it to mean “just before or at the same time.” Next, the Federal Circuit reviewed the term “data receive-ready period,” which the district court construed as “a fixed period of time during which an intermittent power-on type mobile station is in its power-on state and prepared to receive data, with the period beginning immediately after the intermittent power-on type mobile station receives the first beacon signal telling it there is data to be transmitted to it.” The Federal Circuit affirmed this construction and in view thereof affirmed the district court’s holding that the accused products do not infringe the ‘642 patent as a matter of law.
Finally, the Federal Circuit reviewed the district court’s grant of summary judgment of noninfringement of LG’s U.S. Patent No. 6,469,993 (“the ‘993 patent”), which disclosed a method for ensuring quality of service in a communications network. The district court held that the accused products do not infringe the single asserted claim of the ‘993 patent because the WMM Specification required “message, rather than terminal, priority.” Although they complied with the WMM Specification, the accused products did not “set[] a priority level of each of a plurality of terminals.” The Federal Circuit affirmed the district court’s grant of summary judgment of noninfringement on this issue.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1045.pdf
Eric Andalman is an associate in the IP Group of Alston & Bird’s Atlanta office.
Infringement: Contributory and Induced Infringement: Generally
Global-Tech Appliances, Inc. v. SEB S.A., No. 10-6 ((S. Ct.) cert. granted Oct. 12, 2010)
French based SEB S.A. sells home cooking products in the United States. The French company owns U.S. Patent No. 4,995,310 (“the ‘312 patent”), which claims a deep fryer with an inexpensive plastic outer shell. Hong-Kong based Pentalpha Enterprises Ltd., a subsidiary of Global-Tech Appliances, Inc., copied the ‘312 patent and sold the accused deep fryers to Sunbeam Products, Inc. in 1997. SEB then sued Sunbeam Products and the two companies settled. Although Pentalpha was aware of that litigation, Pentalpha nonetheless continued to sell the infringing deep fryers.
SEB brought suit against Pentalpha for willful infringement and inducement. The district court entered judgment against Pentalpha and found damages of roughly $4.9 million. On appeal to the Federal Circuit, Pentalpha argued that it had no knowledge of the `312 patent for a portion of the time it had sold the deep fryers to Sunbeam Products. But the Federal Circuit held that Pentalpha acted with “deliberate indifference of a known risk” because Pentalpha should have known of the possibility that another company held a patent for the deep fryer being sold. Therefore, the Federal Circuit upheld the district court’s ruling that Pentalpha had induced infringement.
Pentalpha argued unsuccessfully that the Federal Circuit should have applied the Supreme Court’s logic used in MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) that induced infringement requires “purposeful, culpable expression and conduct.” Due to the apparent discrepancy in the two standards applied by the Federal Circuit and the U.S. Supreme Court, Pentalpha sought writ of certiorari from the Supreme Court. On October 12, the Supreme Court granted that writ of certiorari.
Lance Soderstrom is an associate in the IP Group of Alston & Bird’s New York City office.
Infringement: Generally Patentable Invention: Anticipation: Conception and Reduction to Practice
Claim Interpretation: Intrinsic Evidence: Generally
Claim Interpretation: Intrinsic Evidence: Specification
Solvay S.A. v. Honeywell Int., Inc., No. 09-1161 (Fed. Cir. (D. Del.) Oct. 13, 2010). Opinion by Schall.
The Federal Circuit affirmed-in-part and reversed-in-part the judgment of the district court. Specifically, the Federal Circuit held that the district court erred in ruling Claims 1, 5, 7, 10, and 11 of U.S. Patent No. 6,730,817 (“the ‘817 patent”) invalid, but that the district court did not err in ruling that Claims 1, 5, 7, 10, and 11 were infringed, and that Claims 12-18, 21, and 22 were not infringed.
The ‘817 patent has a priority date of October 23, 1995 and is directed to methods for making 1,1,1,3,3-pentafluoropropane (“HFC-245fa”), an insulation agent used in the preparation of expanded polymeric materials. Honeywell also produces HFC-245fa in its plant located in Geismar, Louisiana by reacting 1,1,1,3,3,-pentachloropropane (“HCC-240fa”) and hydrogen fluoride (“HF”) in the presence of a hydrofluorination catalyst (“the Geismar process”). Honeywell`s process was performed and reported to Honeywell in July 1994 by the Russian Scientific Center for Applied Chemistry (“RSCAC”), but the Geismar plant was not operational until February 1996. The parties stipulated that the process was both conceived and reduced to practice in Russia.
The district court ruled that Honeywell had previously made the invention of the ‘817 patent in the United States prior to the ‘817 patent’s priority date, and that the asserted claims thus were invalid based on Honeywell being a prior inventor under 35 U.S.C. § 102(g)(2). The court found no authority that barred Honeywell from being an “inventor” for purposes of § 102(g)(2) merely because it derived the invention from RSCAC as “the original inventor.” Therefore, the district court held Claims 1, 5, 7, 10, and 11 of the ‘817 patent infringed, but invalid under 35 U.S.C. § 102(g)(2). Additionally, the court held that asserted Claims 12-18, 21, and 22 were not infringed by Honeywell. The infringement analysis turned on the claim construction of the term “isolating,” which the district court construed as meaning “separating.”
In reviewing whether Honeywell was barred from being an “inventor” for purposes of § 102(g)(2), the Federal Circuit held that Honeywell did not have, or formulate, a definite and permanent “idea” of its own that was capable of being reduced to practice. Rather, the Federal Circuit held that such reproduction cannot be considered as conception because, if it were, the result would be that one who simply followed another inventor’s instructions to reproduce that person’s prior conceived invention would, by so doing, also become an “inventor.” Therefore, the Federal Circuit ruled that the district court erred by not applying the requirement that Honeywell be an original inventor of the process disclosed in Claims 1, 5, 7, 10, and 11 of the ‘817 patent. With respect to infringement, the Federal Circuit held that, based on the prosecution history, the district court correctly construed the term “isolating” in independent Claims 1 and 12. Based on that construction, the Federal Circuit upheld the district court’s ruling of infringement with respect to Claims 1, 5, 7, 10, and 11 and noninfringement of Claims 12-18, 21, and 22.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1161.pdf
Lance Soderstrom is an associate in the IP Group of Alston & Bird’s New York City office.
Patentable Invention: Anticipation: Prior Publication Claim Interpretation: Intrinsic
Evidence: Specification
Claim Interpretation: Extrinsic Evidence: Expert Testimony
Infringement: Contributory and Induced Infringement: Generally
Defenses: Invalidity
Remedies: Injunctions: Preliminary Injunction
AstraZeneca LP v. Apotex, Inc., Nos. 09-1381, -1424 (Fed. Cir. (D.N.J.) Nov. 1, 2010). Opinion by Linn, joined by Rader. Opinion concurring-in-part and dissenting-in-part by Bryson.
The Federal Circuit affirmed the judgment of the United States District Court for the District of New Jersey, which granted a preliminary injunction that barred Apotex, Inc. and Apotex Corp. (collectively “Apotex”) from marketing a generic version of AstraZeneca LP’s and AstraZeneca AB’s (collectively “AstraZeneca”) Pulmicort Respules®, a budesonide inhalation suspension drug that treats respiratory diseases.
AstraZeneca holds the approved New Drug Application for the budesonide drug and owns two patents listed for Pulmicort Respules® in the Orange Book: U.S. Patent Nos. 6,598,603 (“the ‘603 patent”) and 6,899,099 (“the ‘099 patent”). The two patents both contain method claims directed to a once-daily use of the budesonide composition and product claims directed to AstraZeneca’s drug product kit. In its attempt to avoid infringement to obtain approval of its Abbreviated New Drug Application (“ANDA”), Apotex asserted that it was not seeking the once-daily method of use claimed in the ‘603 and ‘099 patents and its labels would not mention once-daily administration. However, Apotex’s label retained the FDA-mandated downward-titration language found in AstraZeneca’s product label. This language instructed users to “‘titrate down’ to the lowest effective dose of the medication to avoid any adverse effects from excessive use of the medication.” The FDA nonetheless approved Apotex’s ANDA. AstraZeneca subsequently sought a declaratory judgment, along with a preliminary injunction, against Apotex for direct infringement of certain AstraZeneca product kit claims and induced infringement of several method claims related to once-daily use of the composition. The district court granted the preliminary injunction. The district court concluded that Apotex failed to show that the asserted method claims were anticipated. Regarding induced infringement, the trial court ruled that the “titrate down” label language “would lead many users to directly infringe the asserted method claims” because titrating down from the recommended starting doses would lead many users to once-daily usage. The trial court also found that AstraZeneca would suffer irreparable harm if the court did not issue an injunction. Apotex appealed.
Reviewing the district court’s grant of a preliminary injunction for abuse of discretion, the Federal Circuit initially discussed Apotex’s anticipation allegations. Apotex’s first argument turned solely on whether the term “budesonide composition” included “the involvement of liposomes.” Using the specification and expert testimony, however, the majority agreed with the district court and ruled that the term did not encompass liposomes but instead meant “budesonide dispersed in a solvent in the form of a solution or suspension.” In dissent, Judge Bryson disagreed with the majority and wrote that the term was not limited to this construction, resulting in the method claims being anticipated.
Further, Apotex argued that an advertisement for AstraZeneca’s budesonide product anticipated the two patents-in-suit. The advertisement, which appeared in a British medical journal, described a twice-daily use for AstraZeneca’s product. The majority similarly agreed with the district court and held that the advertisement did not anticipate the patents-in-suit because the ad did not disclose or enable the once-daily method claims. Judge Bryson again dissented, however, writing that because the British advertisement “suggest[ed] a reduction in dosage for particular patients, which would necessarily be achieved either by reducing the amount administered on each occasion or the frequency of administration,” a substantial question concerning the validity of the method claims still remained.
Regarding induced infringement, Apotex argued that it lacked the intent “to instruct or encourage either physicians or patients to use its generic drug once-daily.” In support, Apotex contended that the FDA had previously written a letter that the downward-titration language on the label did not teach a once-daily use of the drug. The same letter, however, stated that downward titration may, in fact, involve once-daily use and therefore was evidence of direct infringement. In addition, Apotex’s inclusion of the downward-titration language in the proposed label was evidence of Apotex’s affirmative intent that consumers use the generic drug in an infringing manner.
Lastly, the Federal Circuit analyzed whether AstraZeneca had shown the requisite standard of irreparable harm to warrant a preliminary injunction. The district court cited three ways that AstraZeneca would, in fact, suffer harm if Apotex brought the budesonide product to market:
First, the court determined that a
confidential settlement agreement
between AstraZeneca and Teva would
make calculating the economic harm
from a premature launch of Apotex’s
generic budesonide impossible. Second,
the court concluded that AstraZeneca
would incur unquantifiable damage to its
reputation and goodwill if Apotex were
allowed to launch its generic drug and
was subsequently forced to remove the
drug from the market. Third, the court
found that the damage caused by layoffs
stemming from entry of the generic drug
into the market would also be significant
and unquantifiable.
The Federal Circuit ruled that these three findings were not clearly erroneous and therefore affirmed the district court’s finding of irreparable harm. Accordingly, the Federal Circuit ruled that the district court’s grant of a preliminary injunction was not an abuse of discretion.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1381-1424.pdf
Win Bassett is an associate in the IP Group of Alston & Bird’s Charlotte office.
Litigation Practice and Procedure: Procedure: Waiver
Claim Interpretation: Ordinary Meaning
Infringement: Literal Infringement
Remedies: Damages: Reasonable Royalty
Remedies: Injunctions: Permanent Injunctions
Finjan, Inc. v. Secure Computing Corp., et al., Nos. 09-1576, -1594 (Fed. Cir.
(D. Del.) Nov. 4, 2010). Opinion by Linn, joined by Newman and Gajarsa.
The Federal Circuit affirmed-in-part, reversed-in-part, and remanded the judgment of the United States District Court for the District of Delaware, where a jury found that the asserted claims of the patents-in-suit were not invalid, that Finjan, Inc. (“Finjan”) did not infringe the asserted claims of Secure Computing Corp.’s, Cyberguard Corp.’s, and Webwasher AG’s (collectively “Defendants”) patents, and that Defendants willfully infringed all asserted claims of Finjan’s patents. The district court awarded damages to Finjan, enhanced the damages under 35 U.S.C. § 284, and imposed a permanent injunction against Defendants.
Finjan asserted three patents against Defendants related to “proactive scanning, or techniques directed to detecting and defeating previously unknown, Internet-based threats to computers, such as viruses.” Defendants counterclaimed against Finjan for infringement of two patents. After a jury found that the asserted claims of all five patents were not invalid, that Finjan did not infringe Defendants’ two patents, and that Defendants willfully infringed Finjan’s three patents, it awarded Finjan $9.18 million in royalties. Finjan and Defendants filed motions for judgment as a matter of law (“JMOL”) or a new trial, and the district court denied the motions. The district court then increased the damages awarded to Finjan by 50%, awarded additional damages accrued between the verdict and the entry of judgment, and entered a permanent injunction against Defendants. Defendants appealed the infringement of Finjan’s patents and damages rulings but did not appeal the jury determinations of noninfringement of Defendants’ asserted patent claims, validity of the asserted claims of all patents, or willfulness concerning infringement of Finjan’s asserted patent claims. Finjan cross-appealed the damages ruling.
Reviewing the district court’s infringement verdict “for substantial evidence when tried to a jury,” the Federal Circuit first discussed Defendants’ theory that “they sold no infringing products because all software modules that feature proactive scanning were locked when sold.” Defendants argued that Finjan’s failure to allege indirect or joint infringement was fatal because “infringement occurred only when customers purchased keys and unlocked proactive scanning modules because ‘[d]isabled code, by definition, is incapable of being used.’” Noting that Defendant’s reliance on “our precedent is misplaced,” the Federal Circuit distinguished Southwest Software, Inc. v. Harlequin Inc., 226 F.3d 1280, 1291 (Fed. Cir. 2000), where the court affirmed denial of a new trial on infringement, after a verdict of noninfringement, because the evidence showed that the accused software product “included a manual step which avoided the automatic selection feature of the patented invention even though the code for automatic selection remained in place.” In that case, the asserted claim was directed to a method that required performance of each claimed step. The Federal Circuit stated that here, however, Finjan’s asserted claims “are ‘system’ and ‘storage medium’ claims, which do not require the performance of any method steps.” Further, the court acknowledged that because “we have held that, to infringe a claim that recites capability and not actual operation, an accused device ‘need only be capable of operating’ in the described mode . . . an accused device may be found to infringe if it is reasonably capable of satisfying the claim limitations, even though it may also be capable of noninfringing modes of operation.” Thus, because Finjan’s asserted non-method claims are directed to capabilities that do not require the related software to be “active” or “enabled,” the Federal Circuit held that the jury’s infringement verdict on these claims was based on a “legally sufficient evidentiary basis” and consistent with the weight of the evidence.
With respect to Finjan’s asserted method claims of its three patents, however, the Federal Circuit reversed the district court’s denial of Defendants’ motion for judgment as a matter of law of noninfringement because Finjan “identifie[d] no evidence that Defendants infringed the method claims by testing or operating any copies of the accused products in the United States.”
Next, the Federal Circuit reviewed Defendants’ argument that a new trial should be granted because the district court erred in its claim construction of the term “addressed to a client.” Each asserted claim of one of Finjan’s asserted patents recites a “Downloadable addressed to a client.” The parties offered competing definitions to the trial court. Finjan argued the phrase has “an ordinary meaning within the context of the claims.” The district court did not give a construction of the term to the jury but instructed it to “give the rest of the words in the claims their ordinary meaning.” Defendants argued that “the district court shirked its responsibility to construe a disputed claim term by adopting ‘plain and ordinary meaning,’ violating the principles of O2 Micro.” Unlike O2 Micro, however, where the court failed to resolve the parties’ argument over the scope of the claims, the Federal Circuit here stated that because the district court rejected Defendants’ construction and because “[r]estating a previously settled argument does not create an ‘actual dispute regarding the proper scope of the claims’ within the meaning of O2 Micro[,] . . . the district court was not obligated to provide additional guidance to the jury.” Further, since Defendants did not propose an alternative construction on appeal or provide arguments as to how another construction would negate infringement, the Federal Circuit affirmed the jury’s findings on infringement and the district court’s denial of Defendants’ motion for a new trial.
Finally, the Federal Circuit examined the enhanced damages awarded to Finjan. Defendants objected to the application of the entire market value rule for the royalty base and the use of federal government sales in calculating the base. Because Defendants raised the entire market value rule objection for the first time on appeal, the Federal Circuit ruled that Defendants waived this argument.
With respect to federal government sales being included in calculating the royalty base, the Federal Circuit held that though “[t]his was impermissible because a patentee can recover damages only from the government for patented ‘use or manufacture for the United States’” under 28 U.S.C. § 1498(a), this error did not require a new trial. The district court instructed the jury that sales “to the United States government should not be included in any damages calculation you perform,” and “[j]urors are ‘presumed to have followed’ the instructions they were given.” Accordingly, the Federal Circuit affirmed the denial of Defendants’ motions for JMOL or new trial on damages “[b]ecause Defendants have not shown that the verdict is bereft of ‘a reasonable basis’ in the record.”
Further, Finjan cross-appealed that it was entitled to damages for the time period between the filing of its complaint and entry of the permanent injunction, an amount the district court failed to include in the award. The Federal Circuit corrected the award by remanding the issue to the district court to assess post-judgment, pre-injunction damages.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1576.pdf
Win Bassett is an associate in the IP Group of Alston & Bird’s Charlotte office.
The Patent Application: Specification: Written Description
Patent Office Procedures: Prosecution Before the Office:
Examination of Applications: Rejections
Patent Office Procedures: Prosecution of Applications: Appeals
Hyatt v. Kappos, No. 07-1066 (Fed. Cir. (D.D.C.) Nov. 8, 2010). Opinion by Moore, joined by Rader, Lourie, Bryson, Linn, and Prost. Opinion concurring-in-part and dissenting-in-part by Newman.
Dissenting opinion by Dyk, joined by Gajarsa.
In vacating and remanding the decision of the district court that had excluded new evidence in an action brought under 35 U.S.C. § 145, the Federal Circuit held en banc that § 145 imposes no limitation on an applicant’s right to introduce new evidence before the district court, apart from the evidentiary limitations applicable to all civil actions contained in the Federal Rules of Evidence and the Federal Rules of Civil Procedure. Thus, in a § 145 action, a district court may review a case on only the administrative record before the PTO, or it may accept new evidence. When the court reviews a case on the administrative record without new evidence, the court applies the Administrative Procedure Act (“APA”) standard of review to Patent Office fact findings. When new evidence is introduced, the court acts as a factfinder with respect to that new evidence and thus makes de novo fact findings if the evidence conflicts with any related Patent Office finding.
Gilbert P. Hyatt is the sole named inventor of U.S. Patent Application No. 08/471,702, which is related to a computer display system for image processing. The Examiner issued a final office action rejecting all 117 claims, and the Board of Patent Appeals and Interferences affirmed at least one of the Examiner’s rejections with respect to 79 claims. The Board dismissed Mr. Hyatt’s request for a rehearing because Mr. Hyatt raised new arguments that he could have presented to the Examiner or Board earlier.
Mr. Hyatt then filed a civil action in the U.S. District Court for the District of Columbia against the Director of the Patent Office (“Director”) pursuant to 35 U.S.C. § 145. The Director moved for summary judgment that the claims were invalid for failure to comply with the written description requirement, and Mr. Hyatt submitted a declaration supporting his opposition to the motion. The Director argued that the district court should not consider Mr. Hyatt’s declaration because it was new evidence not previously submitted to the Examiner or the Board. The district court agreed, ruling that it could not consider the declaration because it was directed to the Examiner’s written description rejections and, thus, Mr. Hyatt could have presented the declaration earlier. The court then granted summary judgment to the Director that the pending claims were unpatentable for failure to comply with the written description requirement.
On appeal, a divided panel of the Federal Circuit affirmed the decision of the district court, finding that while “in appropriate circumstances new evidence may be submitted to the district court in a § 145 action,” there was a “general practice” in federal courts “to exclude evidence which a party could and should have introduced before the Patent Office but did not despite an obligation to do so.” Following a petition for rehearing and rehearing en banc by Mr. Hyatt, the Federal Circuit agreed to rehear the appeal en banc and thus vacated the panel opinion.
The en banc court then reached the opposite conclusion, thus vacating the district court’s judgment that had excluded Mr. Hyatt’s newly presented evidence. After discussing the statutory history for § 145, as well as applicable Supreme Court cases, the Federal Circuit ruled that § 145 imposes no limitation on an applicant’s right to introduce new evidence before the district court, apart from the evidentiary limitations applicable to all civil actions contained in the Federal Rules of Evidence and the Federal Rules of Civil Procedure. The Federal Circuit rejected the Director’s argument that there exists a limitation on the introduction of new evidence that stems from the rules of equity practice applicable to § 4915 actions, the predecessor to § 145 actions.
The Federal Circuit also held that when no new evidence is presented in a § 145 action, the district court must review the case on the same record presented to the agency and must apply the APA’s “substantial evidence” standard to Patent Office fact findings. When, however, a party to a § 145 proceeding introduces new evidence, a reviewing court is no longer limited to the administrative record, but rather must consider the new evidence in addition to the administrative record, and the new evidence is considered de novo.
The Federal Circuit declined to adopt any of the Director’s public policy arguments. For instance, the Director argued that the court’s rule would encourage applicants to withhold evidence from the PTO during the examination process. The court noted, however, that Congress deterred exactly this type of procedural gaming by imposing on the applicant the heavy economic burden of paying “[a]ll the expenses of the proceedings” regardless of the outcome. 35 U.S.C. § 145. Thus, an applicant has every incentive to provide the Patent Office with the best evidence in its possession, to obtain a patent as quickly and inexpensively as possible. The Director also argued that the court’s rule is inconsistent with the rule that arguments waived in administrative proceedings may not be raised for the first time in federal court. The Federal Circuit agreed that, in general, parties may not raise issues in the district court that were not raised during the proceedings before the PTO or by the Board’s final decision. However, this rule does not preclude parties from introducing additional evidence as to issues that were properly raised.
Applying the stated standards to Mr. Hyatt’s case, the court held that the district court erred in determining that Mr. Hyatt had been “negligent” in not submitting his declaration to the Board, because the applicable standard is not one of negligence. Therefore, the district court abused its discretion in excluding the declaration.
Judge Newman joined the Federal Circuit’s holding that new evidence may be introduced in a § 145 action, but dissented from the Federal Circuit’s holding that when no new evidence is provided, the findings and rulings of the PTO receive the same deferential treatment in the district court as would apply if the proceeding was a direct appeal to the Federal Circuit under 35 U.S.C. § 141. Judge Newman observed that “[s]ection 145 calls upon the independent judgment of the district court, whether the evidence before the court augments or simply repeats the evidence that was before the Patent Office,” and noted that the court’s “new dual standard of evidentiary analysis in section 145 actions” raises new problems.
Judge Dyk, joined by Gajarsa, dissented from the Federal Circuit’s holding that an applicant may present new evidence to the district court in a § 145 action. After an exhaustive review of the statutory history, Judge Dyk argued that while section 145 “contemplates the introduction of live testimony,” it “does not provide for a trial de novo or excuse the applicant from submitting affidavit evidence to the PTO.” Judge Dyk noted that “allowing a trial de novo in the district court denigrates the important expertise of the PTO, is contrary to the established principles of administrative law, finds no support in the language of the statute, and is contrary to the decisions of at least five other circuits.” Judge Dyk also expressed concern that the court’s opinion might encourage applicants to “bypass the PTO in favor of a second bite at the apple in the district court.”
http://www.cafc.uscourts.gov/images/stories/opinions-orders/07-1066.pdf
Pamela Holland Councill is an associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Jurisdiction: Standing
Abraxis Bioscience, Inc. v Navinta LLC, No. 09-1539 (Fed. Cir. (D.N.J.) Nov. 9, 2010). Opinion by Gajarsa, joined by Linn. Dissenting opinion by Newman.
The Federal Circuit held that due to a break in the chain of title to the patents-in-suit, the plaintiff lacked standing to bring an infringement action. Further, the court held that an assignment agreement that was ineffective because the assignor did not own the patents at the time of the agreement could not be corrected by a later-in-time agreement to correct the title.
Abraxis Bioscience, Inc. (“Abraxis”) filed an infringement action against Navinta LLC (“Navinta”) in the U.S. District Court for the District of New Jersey, alleging infringement of U.S. Patent Nos. 4,870,086 (“the ‘086 patent”); 5,670,524 (the ‘524 patent”); and 5,834,489 (“the ‘489 patent”). These patents relate to methods of using low concentrations of ropivacaine hydrochloride to treat pain. The district court found that Navinta’s Abbreviated New Drug Application product would directly infringe the ‘086 patent and contribute to and induce infringement of the ‘524 patent and ‘489 patent.
The sole inventor of the ‘086 patent assigned his rights to Astra Lakemedel Aktiebolag (“Astra L”) in 1986. The sole inventor of the ‘524 and ‘489 patents assigned his rights in the patents to AB Astra in 1994. In conjunction with a merger, AB Astra assigned the rights in the ‘524 and ‘489 patents to AstraZeneca AB (“AZ-AB”). In 2006, Abraxis entered into an Asset Purchase Agreement (“APA”) with AstraZeneca (“AZ-UK”), which provided that AZ-UK “shall or shall cause one or more of its Affiliates to, Transfer to the Purchaser, and the Purchaser shall purchase and accept from the Seller or its Affiliates, as applicable, all of the right, title, and interests of the Seller and its Affiliates in” the asserted patents. Two months later, AZ-UK and Abraxis executed an Intellectual Property Assignment Agreement (“IP Assignment Agreement”) purporting to assign the asserted patents to Abraxis. At the time of execution of these agreements, the asserted patents were actually owned by Astra L and AZ-AB, neither of which had assigned rights in the asserted patents to AZ-UK.
On March 15, 2007, the same day Abraxis filed the action against Navinta, Astra L and AZ-AB executed assignments of their respective patents to AZ-UK, which reference the 2006 APA and “further convey” the asserted patents. Eight months later, in November 2007, AZ-UK executed a separate “Intellectual Property Assignment Agreement,” which recited that the agreement “confirmed the sale, assignment, conveyance, and transfer to Abraxis” of the asserted patents. The Federal Circuit held that the contractual language of the APA indicated that the transfer of patent rights was to occur in the future and that while the IP Assignment Agreement purported to assign the asserted patents from AZ-UK to Abraxis, AZ-UK could not assign the patents because it did not hold legal title. Because AZ-UK had no legal title to assign, it lacked standing to bring the action.
The court further held that the March 2007 assignment was “a futile attempt by the parties to correct a critical error by a nunc pro tunc assignment.” Even if the March 2007 agreement were considered to be retroactive, title to the asserted patents did not automatically vest in Abraxis upon the March 2007 transfer to AZ-UK, because the 2006 IP Assignment Agreement did not result in an immediate transfer of expectant interests to Abraxis. Rather, for title to vest in Abraxis, a further assignment by AZ-UK was required by the 2006 IP Assignment Agreement. The Federal Circuit further held that “[w]hether Astra L, AZ-AB, and AZ-UK are part of the same corporate structure and are not ‘complete strangers,’ therefore, is irrelevant because there was no written assignment to Abraxis.” Even between a parent and a subsidiary, a proper written assignment is required to transfer legal title.
Nor did the November 2007 assignment to Abraxis confer standing, because “if the original plaintiff lacked Article III initial standing, the suit must be dismissed, and the jurisdictional defect cannot be cured by the subsequent purchase of an interest in the patent in suit.” While a party may sue for past infringement transpiring before it gains legal title if a written assignment expressly grants this right, the agreements here at issue did not do so. Further, Abraxis did not have equitable title to the patents by virtue of the 2006 IP Assignment Agreement because AZ-UK did not own the patents at the time and thus was unable to confer either equitable or legal title.
Because Abraxis did not have title to the asserted patents and therefore lacked standing on the day it filed suit, the Federal Circuit reversed the denial of the motion to dismiss for lack of standing, vacated the judgment of the district court, and remanded the case with instructions for the district court to Abraxis’s complaint without prejudice.
Judge Newman dissented, noting that “[t]his court’s ruling that the transaction was legally void is negated by all precedent, is contrary to New York law, and is not within any federal exception to state law.” According to Judge Newman, the Federal Circuit improperly interpreted the contracts and ignored the clear intent of the parties to the agreements, all of whom agreed that title to the patents was transferred to Abraxis. In doing so, Judge Newman asserts, the Federal Circuit “creates a new and convoluted law unique to the patent aspect of commercial transactions,” which contradicts precedent and serves no public policy purpose.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1539.pdf
Pamela Holland Councill is an associate in the IP Group of Alston & Bird’s Atlanta office.
Defenses: Fraud and Inequitable Conduct: Materiality
Defenses: Fraud and Inequitable Conduct: Intent to Deceive
Defenses: Miscellaneous Defenses
Cancer Research Technology Ltd., et al. v. Barr Labs., Inc., et al., No. 10-1204 (Fed. Cir. (D. Del.) Nov. 9, 2010). Opinion by Lourie, joined by Newman. Dissenting opinion by Prost.
The Federal Circuit held that prosecution laches’ requirement of an unreasonable and unexplained delay includes a finding of prejudice, and “to establish prejudice an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay.” The Federal Circuit also held that, in the context of inequitable conduct, the elements of “materiality and intent are separate requirements, and intent to deceive cannot be found based on materiality alone.” Thus, the publication of an inventor’s articles disclosing material scientific data that contradicted the disclosure of the patent and that were not disclosed to the PTO cannot alone establish deceptive intent.
Cancer Research Technology, Ltd. and Schering Corporation (collectively “Cancer Research”), filed suit against Barr Laboratories, Inc. and Barr Pharmaceuticals, Inc. (collectively “Barr”) for infringement of U.S. Patent No. 5,260,291 (“the ‘291 patent”) in the U.S. District Court for the District of Delaware. The ‘291 patent is directed at a genus of tetrazine derivative compounds and methods for treating cancer with these compounds. The original application for the ‘291 patent was filed on August 23, 1982. The examiner rejected original Claim 31, directed to the treatment of leukemia, because the applicants had not established utility. Rather than respond to the office action, the applicants filed a continuation application and abandoned the original application. Once again, the examiner rejected Claim 31, and once again, the applicants filed a continuation application and abandoned the pending application. This pattern of rejection and filing continuations continued, occurring eight more times. In March of 1991, the rights in the patent application were assigned to Cancer Research, and in October of 1991, Cancer Research filed another continuation application, but for the first time since the original application, challenged the examiner’s utility rejection on the ground that the disclosure of animal testing data in the original specification was sufficient to establish utility in humans. The new examiner modified the utility rejection, stating that the specification established utility, but only for the particular activity listed and tested in the specification. Cancer Research again argued patentability based on the animal testing listed in the specification. A third examiner found the claims allowable and the ‘291 patent issued in 1993, more than ten years after the original application was filed.
The parties to the infringement action stipulated to infringement and validity of the asserted claim, which left only Barr’s counterclaims of unenforceability due to prosecution laches and inequitable conduct. Barr argued, and the district court agreed in a bench trial, that the “delay caused by eleven continuation applications, ten abandonments, and no substantive prosecution for nearly a decade was unreasonable and a sufficiently egregious misuse of the patent system to bar enforcement of the ‘291 patent for prosecution laches.” The district court further held that the ‘291 patent was unenforceable for inequitable conduct for failure to disclose highly material information to the PTO. In particular, the inventor Stevens did not disclose widely published material data, both positive and negative, to the PTO. Further, the district court found that inventor Stevens withheld that data with an intent to device because he knew about the material information and should have appreciated its materiality and because he could not provide a sufficient explanation for why he did not disclose the information.
Citing precedent of the Supreme Court and the Federal Circuit, the court held that “prosecution laches’ requirement of an unreasonable and unexplained delay includes a finding of prejudice, as does any laches defense.” The court also held that “to establish prejudice an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay.” Applying this standard, the court reversed the judgment of the district court, because Barr could not establish evidence of intervening rights for itself or any other party.
Turning to the ruling on inequitable conduct, the Federal Circuit ruled that the district court’s reliance solely on its finding of materiality to infer deceptive intent and inequitable conduct was improper, because “materiality and intent are separate requirements and intent to deceive cannot be found based on materiality alone.” The court further held that the district court’s inference of intent drawn from inventor Stevens’s publication of the withheld data was also improper and noted that “the prompt publication of data in multiple articles over the entire course of prosecution is inconsistent with a finding that intent to deceive is the single most reasonable inference to draw from the evidence in this case.” Accordingly, the court found that the district court committed clear error in finding deceptive intent and reversed the district court’s determination of unenforceability based on inequitable conduct.
Judge Prost dissented, asserting that the majority “propounds a new and unsupportable legal standard for prosecution laches,” “creates a new evidentiary standard for inequitable conduct,” and “ignores virtually unassailable credibility findings made by the district court after a four-day bench trial.” Judge Prost stated that a showing of intervening rights is not required to establish prosecution laches, nor must the showing of prejudice occur during the period of delay. Rather, Judge Prost noted that unjustifiably delaying prosecution for the business purpose of delaying the issuance of the patent can support a finding of laches. Further, Judge Prost stated that prejudice to the public in delaying free use of the patented invention should suffice as a cognizable prejudice. Regarding the majority’s opinion on inequitable conduct, Judge Prost asserted that the court created a new evidentiary standard for inequitable conduct by requiring that materiality and intent have separate evidentiary bases. Moreover, Judge Prost disagreed with the majority’s treatment of the district court judge’s credibility findings as to inventor Stevens’s proffered reasons for withholding the published data, stating that the majority should “not draw inferences that the district court has already excluded based on its own credibility findings.”
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1204.pdf
Pamela Holland Councill is an associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Jurisdiction: Standing
Litigation Practice and Procedure: Jurisdiction: State Eleventh Amendment Immunity
Litigation Practice and Procedure: Declaratory Judgment Actions
Litigation Practice and Procedure: Procedure: Motions to Dismiss
A123 Systems, Inc. v. Hydro-Quebec, No. 10-1059 (Fed. Cir. (D. Mass.) Nov. 10, 2010). Opinion by Lourie, joined by Bryson and Dyk.
The Federal Circuit held that in determining patent ownership for purposes of standing, unilateral representations and the labels given by the parties do not control. Rather, the court must determine whether the party alleging ownership has in fact received all substantial rights from the patent owner. The Federal Circuit also held that a state university does not waive its Eleventh Amendment immunity from suit by filing suit in a different jurisdiction in a separate action, even if the separate action involves the same patents. The Federal Circuit further ruled that, under First Circuit law, a patent owner who retains rights in the patent is an indispensable party to a declaratory judgment action brought against an exclusive field-of-use licensee.
A123 Systems, Inc. (“A123”) filed suit in the U.S. District Court for the District of Massachusetts seeking a declaration of noninfringement of U.S. Patent Nos. 5,910,382 and 6,514,640 (collectively “the asserted patents”). The asserted patents were assigned to the Board of Regents, University of Texas System (“UT”) and licensed to Hydro-Quebec (“HQ”). The asserted patents both claim a genus of lithium-based cathode materials for rechargeable batteries. HQ moved to dismiss the declaratory judgment action because UT, not named in the action, was a necessary and indispensable party and could not be joined as a defendant based on its entitlement to sovereign immunity under the Eleventh Amendment. A month after the commencement of the declaratory judgment action, HQ and UT jointly filed an infringement action against A123, among others, in the U.S. District Court for the Northern District of Texas.
A123 successfully requested reexamination of the asserted patents, at which point the Texas action was stayed and the Massachusetts action was dismissed without prejudice to either party to reopen within thirty days of the termination of the reexaminations. A123 filed a timely motion to reopen the case. HQ opposed the motion, asserting that reopening the case would be futile given its earlier arguments in its motion to dismiss. The district court denied the motion to reopen, noting that the action, if reopened, would immediately be subject to dismissal for failure to join a necessary party. The district court further held that A123 could not join UT because UT had not waived its sovereign immunity under the Eleventh Amendment.
In affirming the district court’s denial of the motion to reopen the declaratory judgment action, the Federal Circuit held that UT was a necessary party to the action because it had not transferred all substantial rights to the asserted patents to HQ. In particular, HQ held only a field-of-use license, despite A123’s argument that HQ held itself out as having all substantial rights to the asserted patents in prior litigations. The Federal Circuit held that, in determining ownership for standing purposes, the court must determine whether the party alleging effective ownership actually holds all of the substantial patent rights. Accordingly, UT was a necessary party to the declaratory judgment action.
The Federal Circuit also held that UT could not be joined as a defendant because it had not waived its sovereign immunity in the declaratory judgment action. A123 argued that UT had waived its immunity from suit by filing in Texas an infringement action regarding the asserted patents. HQ argued, and the Federal Circuit agreed, that a “state university’s participation in one lawsuit does not amount to waiver of immunity in a separate lawsuit, even one involving the same patents.” Absent this waiver of immunity, UT could not be joined to the action.
Finally, the Federal Circuit addressed the district court’s decision not to undertake a Rule 19(b) (indispensable party) analysis. The district court instead had based its decision on its discretion to decline to exercise jurisdiction over a properly brought declaratory judgment suit in favor of a later-filed suit. The Federal Circuit disagreed, ruling that a Rule 19(b) analysis was necessary. Applying First Circuit law, which permits a de novo Rule 19(b) analysis when the district court has made sufficient factual findings, the Federal Circuit ruled that UT was an indispensable party. Although HQ and UT share certain common goals, HQ’s status as a field-of-use licensee introduces potential conflicts of interest between HQ and UT that might prejudice UT. Further, allowing the suit to go forward without UT would present a substantial risk of multiple suits and liabilities against A123. Finally, the Federal Circuit found that the Texas action, in which UT had waived immunity, provided a forum in which A123 could litigate its defenses to infringement claims. Accordingly, the Federal Circuit held that UT was a necessary and indispensable party and affirmed the district court’s denial of A123’s motion to reopen the suit.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1059.pdf
Pamela Holland Councill is an associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Jurisdiction: Personal Jurisdiction
Litigation Practice and Procedure: Procedure: Generally (Service of Process)
Nuance Communications, Inc. v. Abbyy Software House, et al., No. 10-1100 (Fed. Cir. (N.D. Cal.) Nov. 12, 2010. Opinion by Rader, joined by Newman and Prost.
The Federal Circuit held that the U.S. District Court for the Northern District of California had personal jurisdiction over a foreign entity that sold software to a related entity, which then marketed and sold the software in the forum state. The Federal Circuit also held that the district court abused its discretion by dismissing another foreign entity without first allowing jurisdictional discovery. Further, the Federal Circuit held that service of process of a Russian entity need not be effected under the Hague Convention, due to Russia’s unilateral suspension of judicial cooperation with the United States as of 2003.
Nuance Communications, Inc. (“Nuance”) filed a patent infringement action against Abbyy USA Software House (“Abbyy USA”). Following initial discovery from Abbyy USA, Nuance filed an amended complaint naming as defendants Abbyy Production LLC (“Abbyy Production”), a corporation organized under the laws of the Russian Federation, and Abbyy Software, Ltd. (“Abbyy Software”), a corporation organized under the laws of the Republic of Cyprus. Abbyy Production and Abbyy Software (“the Abbyy defendants”) filed a motion to dismiss for lack of personal jurisdiction and improper service of process. The district court granted the motion to dismiss without an evidentiary hearing and without further discovery. The district court also dismissed Abbyy Software, sua sponte, based on improper process of service.
The evidence showed that Abbyy Production purposefully directed its activities at residents of California, out of which arose Nuance’s claims for patent infringement. Accordingly, the Federal Circuit held that the district court’s dismissal of Abbyy Production for lack of personal jurisdiction was improper. As evidence of its “purposefully directed” activities, the Federal Circuit pointed to Abbyy Production’s publicly stated goal of “conquering” the U.S. market, its extraction of royalty payments for the U.S. sale of these products, its agreement to provide Abbyy USA assistance in selling, reproducing, and modifying the accused products in California, and its importation of the accused products into California. Under these facts, Abbyy Production should have reasonably anticipated being brought into court in California, and accordingly, the district court erred in declining to exercise personal jurisdiction over Abbyy Production.
Turning to the exercise of personal jurisdiction over Abbyy Software, which claimed to be no more than a holding company, the Federal Circuit held that the evidence was insufficient to support the district court’s dismissal. The evidence showed the following: (i) Abbyy Software’s website portrays Abbyy as a single company with offices in several countries, including the United States; (ii) the CEO of Abbyy Software is the founder of all the Abbyy companies; (iii) the Abbyy Software website lists several California companies as purchasers of the accused software; and (iv) the Abbyy Software website promotes the sale of the accused software in California by listing the contact information for California retails stores selling the product. Under these facts, the Federal Circuit held that the district court abused its discretion by dismissing Abbyy Software without first permitting jurisdictional discovery.
The Federal Circuit next held that the district court erred in requiring Nuance to effect service of process on Abbyy Production under the Hague Service Convention. Rather, the opportunity for substitute service on Abbyy USA, as requested by Nuance in opposing the Abbyy defendants’ motion to dismiss, or some other alternative service as it deems appropriate, should have been permitted. Finally, the Federal Circuit held that the district court erred in dismissing Abbyy Software on its own initiative for insufficient service of process. Nuance should have been afforded the opportunity to prove that its service was proper. For these reasons, the Federal Circuit vacated the district court’s judgment and remanded for further proceedings.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1100.pdf
Pamela Holland Councill is an associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Venue
In re Acer America Corp., et al., Docket No. 942 (Fed. Cir. (E.D. Tex.) Dec. 3, 2010). Opinion by Schall, joined by Gajarsa and Moore.
The Federal Circuit granted a petition for a writ of mandamus directing the United States District Court for the Eastern District of Texas to transfer venue to the United States District Court for the Northern District of California.
Mediostream, headquartered in the Northern District of California, brought suit in the Eastern District of Texas against twelve hardware and software companies (collectively “Petitioners”). Of the Petitioners, five were also headquartered in the Northern District of California. Petitioners filed a motion pursuant to 28 U.S.C. § 1404(a) to transfer venue. The Texas district court denied the motion, citing the presence of one the Petitioners, Dell Inc., which is located outside the Eastern District of Texas in Round Rock, Texas. In response, Petitioners filed a motion for writ of mandamus to direct the Texas district court to transfer venue to the Northern District of California.
In granting the writ of mandamus, the Federal Circuit held that convenience of the parties and witnesses, sources of proof, local interest, and compulsory factors all significantly favored transfer of venue. The court, citing previous orders in venue transfer cases, acknowledged that none of the parties are headquartered in the Eastern District of Texas and multiple parties are headquartered in the Northern District of California. In addition, the court recognized that the subpoena power in the Northern District of California would be more effective since a considerable number of party witnesses, including inventors and prosecuting attorneys, reside in or close to that district. The court compared the sources of proof and local interests in both districts, respectively. Since most of the parties to the case and related inventors and prosecuting attorneys are residents of the Northern District of California, transfer was favorable.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-m942.pdf
Daniel Huynh is an associate in the IP Group of Alston & Bird’s Charlotte office.
Patentable Invention: Obviousness: Secondary Considerations of Nonobviousness
Patentable Invention: Obviousness: Generally Defenses: Invalidity
The Western Union Co. v. MoneyGram Payment Sys., Inc., Nos. 10-1080, 1210 (Fed. Cir. (W.D. Tex.) Dec. 7, 2010). Opinion by Lourie, joined by Rader and Prost.
Holding that all asserted claims would have been obvious to a person of ordinary skill in the art at the time of filing, the Federal Circuit reversed the United States District Court for the District of Western Texas’s denial of a motion for judgment as a matter of law (“JMOL”) on obviousness. Among other things, the Court of Appeals reasoned that elements of the claimed invention were obvious applications of computer technology and use of the Internet to replace older electronics or electronic processes.
The Western Union Co. (“Western Union”) asserted U.S. Patent Nos. 6,488,203 (“the ‘203 patent”); 6,502,747 (“the ‘747 patent”); 6,761,309 (“the ‘309 patent”); and 7,070,094 (“the ‘094 patent”) (collectively the “patents-in-suit”) against MoneyGram Payment Systems, Inc. (“MoneyGram”). Each of the patents-in-suit relate to methods for sending or receiving money through a financial services institution. The ‘094 patent claims methods for receiving transferred money. The ‘203 patent claims a method for performing formless money transfers using an electronic transaction fulfillment device (“ETFD”). The ‘747 and ‘309 patents are continuations of the ‘203 patent and also claim methods for formless money transfers. After a jury found the patents-in-suit infringed and not invalid, MoneyGram renewed its motion for JMOL on infringement and invalidity. The district court denied MoneyGram’s JMOL motion, and MoneyGram appealed.
On appeal, the Federal Circuit held that all asserted claims were rendered obvious by a prior art transfer system originally owned by Orlandi Valuta and later purchased by Western Union, in combination with an ETFD and use of the Internet. The Orlandi Valuta system required a customer to initiate a transfer by calling a customer service representative who entered information into the Orlandi Valuta computer system. The system would then fax an invoice to a retail location where an agent would call out the customer’s name and collect the amount to be transferred. The Court of Appeals rejected Western Union’s arguments that the Orlandi Valuta system failed to disclose three critical elements: (1) a code provided to the sender for use during the send transaction; (2) an ETFD; and (3) use of the Internet.
First, the panel noted that the Orlandi Valuta system utilized a code to identify transactions, and that although the system did not provide this code to the customer, it would have been obvious as common sense to do so to allow a customer to look up information in the manner claimed in the asserted patents. Second, the Court of Appeals ruled that the addition of an ETFD for customer use to the Orlandi Valuta system would have been obvious to one of ordinary skill in the art. The panel observed that the Orlandi Valuta system included using an FDX-400, which the ‘203 patent specification disclosed as an ETFD, by a customer service representative. The court reasoned that the claimed systems merely replaced the fax machine in the Orlandi Valuta system with a known ETFD device for completing the financial transaction, and held that this substitution was merely an obvious application of computer technology to replace older electronics. Third, the court held that the addition of Internet use was similarly an obvious application of the Internet to an existing electronic process.
Finally, the Federal Circuit held that Western Union failed to present sufficient evidence of secondary indicia of nonobviousness to overcome MoneyGram’s strong showing of obviousness. Western Union’s evidence of nonobviousness failed to establish a nexus between the claimed inventions and the commercial success of Western Union’s formless money transfer service. Similarly, Western Union’s payment to a third party consultant for development work failed to rebut the obviousness showing because these payments were not shown to have been made for developing the claimed inventions. Accordingly, the Federal Circuit reversed the district court’s denial of JMOL of obviousness of the asserted claims of the patents-in-suit. In light of ruling the asserted claims invalid, the Court of Appeals did not reach the issues of claim construction and infringement.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1080.pdf
Jennifer Liotta is an associate in the IP Group of Alston & Bird’s Atlanta office.
Character of a Patent: Statutory Subject Matter
The Patent Application: Specification: Written Description Defenses: Invalidity
Research Corp. Techs., Inc. v. Microsoft Corp., No. 10-1037 (Fed. Cir. (D. Ariz.) Dec. 8, 2010). Opinion by Rader, joined by Newman and Plager.
The Federal Circuit affirmed-in-part and reversed-in-part the district court’s summary judgment determination that certain asserted claims were not entitled to claim the benefit of earlier filed applications, and reversed the district court’s summary judgment determination that other claims were invalid under 35 U.S.C. § 101.
Research Corporation Technologies (“RCT”) asserted six patents relating to digital image halftoning, which allows computer displays and printers to render an approximation of an image by using fewer colors or shades of gray than the original image. On appeal, the patents at issue were U.S. Patent Nos. 5,111,310 (“the ‘310 patent”); 5,341,228 (“the ‘228 patent”); 5,726,772 (“the ‘772 patent”); and 5,477,305 (“the ‘305 patent”).
The Federal Circuit agreed with the district court that the asserted claims of the ‘772 patent were not entitled to claim the benefit of earlier-filed applications, but reversed the district court’s determination as to the priority date of the asserted claim of the ‘305 patent. The ‘772 and ‘305 patents had the same specification and claimed priority to earlier-filed applications that led to the ‘310 and ‘228 patents. As an initial matter, the Federal Circuit held that the district court correctly placed the burden on RCT to show that the claims were entitled to an earlier filing date because RCT did not argue that the prior art asserted by Microsoft (including the ‘310 patent) did not invalidate or render obvious the ‘772 or ‘305 patent claims at issue. Regarding the ‘772 patent, the Court of Appeals held that the asserted claims were not entitled to an earlier filing date because the claims were directed to halftone masks that produce a number of dot profiles, “substantially all” of which have substantial characteristics of a blue noise power spectrum. In contrast, the earlier-filed applications limited the claimed invention to a “blue noise mask.” Accordingly, the panel held that the asserted claims of the ‘772 patent were broader than the invention disclosed in the earlier-filed applications and were therefore not entitled to the earlier filing dates. Concerning the asserted claim of the ‘305 patent, the Federal Circuit reversed the district court and held that it was entitled to an earlier filing date. The asserted claim of the ‘305 patent is directed to an apparatus for comparing color planes of a color image “against a blue noise mask.” The Court of Appeals held that the district court improperly read process limitations regarding the creation of the blue noise mask into the apparatus claim. The Federal Circuit held that the ‘305 claim was entitled to the earlier filing dates because it expressly claims a “blue noise mask” and because the earlier-filed applications also claim a blue noise mask without regard to how the mask is created.
The Federal Circuit reversed the district court’s summary judgment determination that the asserted claims of the ‘310 and ‘228 patents were invalid as claiming unpatentable subject matter under 35 U.S.C. § 101. The Court of Appeals held that these claims-which are directed to processes for rendering halftone images-qualified as patentable subject matter under 35 U.S.C. § 101 and the process definition section of 35 U.S.C. § 100. The panel then addressed whether the claims fell within one of the three exceptions to patentable subject matter: laws of nature, physical phenomena, or abstract ideas. Microsoft did not argue that the claims were directed to laws of nature or physical phenomena. As to the last category, the Court of Appeals held that the claims were not directed to abstract ideas because the claims described “functional and palpable applications in the field of computer technology.” The panel noted that inventions with “specific applications or improvements to technologies in the martketplace” likely would not fall within the abstract idea exception to the Patent Act. Accordingly, the court affirmed-in-part and reversed-in-part the district court’s judgment, and remanded for further proceedings.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1037.pdf
Jennifer Liotta is an associate in the IP Group of Alston & Bird’s Atlanta office.
Claim Interpretation: Intrinsic Evidence: Prosecution Disclaimer
Claim Interpretation: Claim Differentiation
Relationship to Other Intellectual Property: TrademarksPatents and Antitrust Law
ERBE Elektromedizin GmbH, et al. v. Canady Tech. LLC, et al., Nos. 08-1425, -1426 (Fed. Cir. (W.D. Pa.) Dec. 9, 2010). Opinion by Prost, joined by Rader. Opinion concurring-in-part and dissenting-in-part by Newman.
The Federal Circuit affirmed each of the district court’s three grants of summary judgment: (1) for noninfringement of U.S. Patent No. 5,720,745 (“the ‘745 patent”) in favor of Dr. Jerome Canady and Canady Technology LLC (collectively “Canady”); (2) on ERBE Elektromedizin GmbH and ERBE USA, Inc.’s (collectively (ERBE”) trademark and trade dress claims in Canady’s favor for lack of a protectable mark; and (3) on Canady’s antitrust counterclaims in favor of ERBE and ConMed Corporation (“ConMed”).
Canady, ERBE, and ConMed are competitors that create argon gas-enhanced electrosurgical products for electrosurgery. ERBE owns the ‘745 patent, which is directed to electrosurgical systems and methods for argon plasma coagulation (“APC”), which uses flexible endoscopic probes for coagulating biological tissue with a high frequency current using ionized argon gas. ERBE sells APC endoscopic probes and registered the color blue as applied to the tube portion of its APC probes on the Patent and Trademark Office (“PTO”) Supplemental Register after the PTO rejected ERBE’s application for registration on the Principal register. ERBE sued Canady for infringement of the ‘745 patent and ERBE’s trade dress and trademark by selling blue APC endoscopic probes. ConMed sued Canady for infringing U.S. Patent No. 4,781,175; these claims were settled and jointly dismissed. Canady countersued ConMed and ERBE for antitrust violations under the sham litigation exception to the Noerr-Pennington doctrine.
First, the Federal Circuit affirmed the district court’s construction of “low flow rate” to mean flow rates less than 1 liter per minute and producing velocities less than 19 km/hr based on prosecution history estoppel. The Court of Appeals ruled that the prosecution history clearly showed that the inventors of the ‘745 patent expressly disclaimed flow rates of 1-12 liters per minute that lead to velocities of 19-22 km/hr to overcome a prior art disclosure of a device referred to by the inventors as a laminar jet. In light of this unequivocal prosecution history estoppel, the Federal Circuit rejected ERBE’s arguments that the district court’s construction improperly rendered the limitation “less than about 1 liter/minute” in two asserted claims as mere surplusage. The panel noted that claim differentiation may be helpful in some cases, but could not be used to overcome the clear prosecution disclaimer at issue. The Federal Circuit accordingly affirmed the district court’s grant of summary judgment of noninfringement because ERBE failed to show direct infringement under the court’s construction of “low flow rate.”
Next, the Federal Circuit applied the applicable circuit law and affirmed the district court’s grant of summary judgment on ERBE’s trademark and trade dress claims. Because ERBE’s mark was registered on the Supplemental Register, ERBE had the burden of showing that it held a valid mark. The Federal Circuit held that ERBE failed to show that it had a valid mark because ERBE did not establish a genuine issue of material fact either that the color blue as applied to APC probes is non-functional or has acquired secondary meaning. Accordingly, the Court of Appeals affirmed the district court’s grant of summary judgment on ERBE’s trademark and trade dress claims.
Lastly, the Federal Circuit addressed Canady’s appeal of the district court’s summary judgment dismissing Canady’s antitrust counterclaims against ERBE and ConMed. Canady argued that the district court applied the wrong standard for determining whether to apply the sham litigation exception to the Noerr-Pennington doctrine. Canady argued that all prior litigation between the parties was relevant under the Ninth-Second Circuit precedent. The Federal Circuit rejected this argument, finding that the prior litigation Canady referenced was irrelevant because it involved Dr. Canady and not Canady Tech. LLC, and that Dr. Canady did not assert antitrust counterclaims. Canady conceded that if the court applied the legal standard that only considered the current litigation, ConMed was entitled to summary judgment on Canady’s antitrust counterclaims. The Court of Appeals then held that when considering only the current litigation, ERBE’s patent infringement suit was not a sham litigation because ERBE’s claims, although unsuccessful, were not objectively baseless. Accordingly, the Federal Circuit affirmed the district court’s grant of summary judgment on Canady’s antitrust counterclaims.
Judge Newman dissented in part from the majority’s holding as to ERBE’s trademark and trade dress claims. Judge Newman wrote that ERBE had established a factual issue regarding whether the use of the color blue for the accused products was non-functional or had attained secondary meaning. Accordingly, summary judgment was inappropriate.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/08-1425.pdf
Jennifer Liotta is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Views and opinions expressed in articles published herein are the authors' only and are not to be attributed to this newsletter, the section, or the NCBA unless expressly stated. Authors are responsible for the accuracy of all citations and quotations.