Patent Case Summaries

Article Date: Saturday, June 04, 2011

Written By: Robin McGrath, Kirk Bradley, Mike Connor, Ross Barton & Michele Glessner

The summaries below summarize patent-related opinions of interest issued by the Court of Appeals for the Federal Circuit from December 2010 through February 2011. These summaries were edited by Robin McGrath, a partner in Alston & Bird's Atlanta office; and Kirk Bradley and Mike Connor, partners, and Ross Barton and Michele Glessner, associates, in Alston & Bird's Charlotte office.

Litigation Practice and Procedure: Venue
In re Vistaprint Ltd., et al., Misc. No. 954 (Fed. Cir. (E.D. Tex.) Dec. 15, 2010). Opinion by Schall, joined by Gajarsa and Moore. The Federal Circuit denied a request for a writ of mandamus seeking transfer of venue out of the Eastern District of Texas, rejecting a proposed bright-line rule that would weigh the convenience factors more heavily than considerations of judicial economy. The court ruled that a transfer analysis balances a number of case-specific factors, not just convenience. In this case, the court rejected the writ of mandamus because it "cannot say that the trial court's balancing was so unreasonable as to warrant the extraordinary relief of mandamus."

ColorQuick, LLC, the holder of a patent relating to preparing production data for printing, brought suit against Vistaprint Limited and OfficeMax Incorporated in the U.S. District Court for the Eastern District of Texas. None of the parties resides in Texas: Vistaprint is a foreign corporation that has a wholly-owned subsidiary (which is not a party to the case) in Massachusetts; OfficeMax is a Delaware corporation with its principal place of business in Illinois; and ColorQuick is a New Jersey limited liability company.

Vistaprint and OfficeMax moved to transfer the case to the District Court in Massachusetts, which is close to the residences of many employees who may serve as witnesses at trial and where many of the documents that may be evidence are stored. The District Court denied the motion, weighing considerations of convenience in favor of transfer, but ultimately concluding that such considerations did not outweigh the importance of judicial economy. Specifically, the court had substantial experience with the patent-in-suit based on prior litigation involving the plaintiff, and there is a second, co-pending case before the court between the plaintiff and another defendant involving the same patent-in-suit, pertaining to the same underlying technology, and involving similar accused services. After receiving the District Court's order denying transfer, Vistaprint and OfficeMax petitioned for writ of mandamus directing the court to vacate its order and transfer the case to Massachusetts.

In denying the request for a writ, the Federal Circuit observed that, "A trial court has broad discretion in transfer decisions pursuant to 28 U.S.C. § 1404(a), but that is not the same as saying that it may accord weight simply as it pleases." Here, however, the District Court's weighing of the factors did not amount to a "patently erroneous result." Because the District Court took the plausible position that denial of transfer would preserve judicial economy, the only remaining issue was the propriety of the balance of convenience considerations. The petitioners essentially urged that it is always improper for a District Court to deny transfer based on judicial economy when all of the convenience factors clearly favor transfer, but the Federal Circuit rejected the proposed bright-line rule. "At the end of the day, § 1404(a) balances a number of case-specific factors, not just convenience. Further, § 1404(a) commits the balancing determination to the sound discretion of the trial court based not on per se rules but rather on an 'individualized, case-by-case consideration of convenience and fairness.'" (Quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)).

The Federal Circuit determined that the gain in judicial economy from keeping this case in the Eastern District of Texas "is more than negligible," providing "a substantial justification for maintaining suit" in that forum. The court also observed that "although some potential witnesses and sources of proof located in the transferee venue warrant weighing convenience factors in favor of transfer, no defendant party is actually located in the transferee venue and the presence of the witnesses in that location is not overwhelming." Thus, the court could not say that the trial court's balancing was so unreasonable as to warrant the extraordinary relief of mandamus. Finally, in a concluding footnote, the court stated that, "Our holding today does not mean that, once a patent is litigated in a particular venue the patent owner will necessarily have a free pass to maintain all future litigation involving that patent in that venue."
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-m954o.pdf

Labriah Lee is an Associate in the IP Group of Alston & Bird's Atlanta office.

Character of a Patent: Statutory Subject Matter
Prometheus Laboratories, Inc. v. Mayo Collaborative Services, No. 08-1403 (Fed. Cir. (on remand from Sup. Ct.) Dec. 17, 2010). Opinion by Lourie, joined by Rader and Bryson. On remand from the U.S. Supreme Court for further consideration in light of the Court's holding in Bilski v. Kappos, 561 U.S. __, 130 S. Ct. 3218 (2010), the Federal Circuit again held that Prometheus's asserted method claims are drawn to statutory subject matter, and again reversed the District Court's grant of summary judgment of invalidity under § 101. In its earlier decision, the Federal Circuit held that the District Court erred as a matter of law in finding Prometheus's asserted medical treatment claims to be drawn to non-statutory subject matter under the court's machine-or-transformation test, which it had held to be the definitive test for determining the patentability of a process under § 101. The Supreme Court held in Bilski that the machine-or-transformation test, although "a useful and important clue," is not the sole test for determining the patent eligibility of process claims. That ruling, however, did not change the Federal Circuit's analysis of Prometheus's method claims on remand.

Prometheus Laboratories, Inc. filed suit against Mayo Collaborative Services and Mayo Clinic Rochester (collectively "Mayo"), alleging infringement of U.S. Patent Nos. 6,355,623 and 6,680,302 (collectively "the patents-in-suit"). The patents-in-suit are directed to calibrating the dosage of thiopurine drugs. They generally claim a method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder that includes the steps of administering a drug and measuring the level of a metabolite of the drug produced in the patient. The U.S. District Court for the Southern District of California found that the patents were invalid because they were directed to nonstatutory subject matter under the machine-or-transformation test set forth in the Federal Circuit's en banc decision in In re Bilski. Prometheus appealed.

 On appeal, the Federal Circuit reversed, holding that the steps of administering the drug and determining the metabolite level are sufficiently transformative to satisfy In re Bilski. While the District Court found those steps to be merely data-gathering steps, the Federal Circuit held that these steps have transformative aspects beyond merely gathering data. For example, the Court of Appeals noted that the administration of the drug caused a physical transformation within the patient and that metabolite levels cannot be determined by mere inspection, but require manipulation of samples. Accordingly, the Federal Circuit reversed and remanded. Mayo then filed a petition for certiorari with the U.S. Supreme Court.

While Mayo's petition was before the Supreme Court, the court decided Bilski v. Kappos, holding that the machine-or-transformation test, although a "useful and important clue," was not the sole test for determining the patent eligibility of process claims. In light of that decision, the court vacated and remanded the Federal Circuit's Prometheus decision.

On remand, the Federal Circuit considered the Supreme Court's Bilski ruling and determined that "the court declined to adopt any categorical rules outside the well-established exceptions for laws of nature, physical phenomena, and abstract ideas, and resolved the case based on its decisions in Gottschalk v. Benson, 409 U.S. 63 (1972), Parker v. Flook, 437 U.S. 584 (1978), and Diamond v. Diehr, 450 U.S. 175 (1981)." The Federal Circuit noted that the court "did not, however, reject the machine-or-transformation test, but rather characterized the test as 'a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101.'"

In light of the Supreme Court's decision in Bilski, the Federal Circuit determined that patent eligibility in this case turns on whether Prometheus's asserted claims are drawn to a natural phenomenon, the patenting of which would entirely preempt its use as in Benson or Flook, or whether the claims are drawn only to a particular application of that phenomenon as in Diehr. The court concluded that they are drawn to the latter. The Federal Circuit noted that the Supreme Court's decision in Bilski did not undermine its preemption analysis of Prometheus's claims. Rather, it simply rejected the machine-or-transformation test as the definitive test. The Federal Circuit thus determined that the court's Bilski decision does not dictate a wholly different analysis or a different result on remand. Applying the Bilski test, the Federal Circuit determined that application of the ruling in Bilski "leads to a clear and compelling conclusion, viz., that the present claims pass muster under § 101. They do not encompass laws of nature or preempt natural correlations." Thus, the Federal Circuit again reversed the judgment of the District Court and remanded with instructions to deny Mayo's motion for summary judgment that the asserted claims are invalid under § 101.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/08-1403.pdf
 
Labriah Lee is an Associate in the IP Group of Alston & Bird's Atlanta office.

Patent Office Procedures: Reexamination
Claim Interpretation: Generally
Infringement: Literal Infringement
Infringement: Contributory and Induced Infringement: Generally
Remedies: Exclusion Orders in § 337 Actions
Spansion, Inc., et al. v. Int'l Trade Comm'n, et al., Nos. 09-1460, -1461, -1462, -1465 (Fed. Cir. (I.T.C.) Dec. 21, 2010). Opinion by Linn, joined by Lourie and Friedman. In affirming the International Trade Commission's ("ITC") determinations, including those on infringement and the issuance of exclusion and cease and desist orders, the Federal Circuit ruled that by statute, the ITC is required to issue an exclusion order upon finding a § 337 violation, absent a finding that the effects of one of the statutorily enumerated public interest factors dictate otherwise.

Tessera, Inc. ("Tessera") filed a complaint alleging violations by Spansion, Inc. and others (collectively "the appellants") of § 337 in the importation or sale of certain semiconductor chips that infringe U.S. Patent Nos. 6,433,419 ("the '419 patent") and 5,852,326 ("the '326 patent"), each of which address strain to semiconductor packages and printed circuit boards caused by temperature fluctuations. After an initial determination finding no infringement and that the two patents were neither indefinite nor anticipated, the ITC Commission reversed course, finding instead that the appellants directly infringed the '326 patent and contributorily infringed the '419 patent. The ITC Commission further issued a cease and desist order, along with a limited exclusion order against the appellants.

On appeal, the Federal Circuit rejected the appellants' argument that the ITC incorrectly determined that certain claim limitations were not indefinite. In so ruling, the court relied upon the ITC Commission's finding that two of the appellants' own experts were able to discern a dividing line between what degree of movement would provide an appreciable relief of stress and what would not. Further, the court stated that although determining whether claimed movement occurred required expert and detailed computer simulations, the difficulty of an infringement analysis did not necessarily speak to whether a claim is indefinite.

The Federal Circuit also rejected the appellants' argument that the testing done by Tessera's expert was defective and inherently unreliable in that it was only performed for the purpose of legal proceedings. In particular, the court accepted the ITC Commission's position that the testing methods were sufficient to support a finding of infringement because they properly simulated the external loads required to create movement, reasonably adopted a linear approximation of the forces required, and adopted industry-accepted modeling techniques to do so.

As to the awarded injunctive relief, the Federal Circuit rejected the appellants' argument that eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006) requires the ITC Commission to consider equitable factors such as the rejection of certain of the asserted claims as unpatentable in a reexamination and the fact that Tessera could have been made whole by monetary damages. In so ruling, the court relied upon the legislative history of § 337, which identifies four enumerated public interest factors and indicates that Congress intended injunctive relief to be the primary remedy under this provision. As a result, according to the court, eBay does not apply to ITC remedy determinations under § 337, and the ITC Commission did not err in ignoring the reexamination proceedings since they are not explicitly listed as a statutory public interest factor.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1460.pdf

Chris Lightner is an Associate in the IP Group of Alston & Bird's Atlanta office.

Litigation Practice and Procedure: Jurisdiction: Standing
WiAV Solutions LLC v. Motorola, Inc., et al., No. 10-1266 (Fed. Cir. (E.D. Va.) Dec. 22, 2010). Opinion by Linn, joined by Rader and Dyk. In reversing and remanding the District Court's dismissal for lack of constitutional standing, the Federal Circuit ruled that third-party licensing rights do not deprive a licensee of constitutional standing to assert its licensed patents upon suffering a legal injury.
 WiAV Solutions LLC ("WiAV"), a licensee of seven patents owned by Mindspeed Technologies, Inc. ("Mindspeed"), sued a set of companies (collectively "the defendants") for infringement of the Mindspeed patents. Notably, WiAV acquired its license from a previous licensee, which had limited WiAV's license to the field of wireless handsets, while also retaining the rights to license and to sue Qualcomm. At the District Court, the defendants moved to dismiss, arguing that WiAV lacked constitutional standing because WiAV was not an exclusive licensee of the Mindspeed patents. In granting the dismissal, the District Court agreed with the defendants that Textile Productions, Inc. v. Mead Corp., (Fed. Cir. 1998) established that a party cannot be an exclusive licensee, and thus have standing, when a third party has the right to license the patents at issue.

On appeal, the Federal Circuit disagreed with the defendants' contention that Textile created a bright-line rule that a party cannot be an exclusive licensee of a patent if others have the right to license the patent. In so ruling, the court stated that nothing in Textile or any other precedent freed the constitutional standing inquiry from its touchstone inquiry – whether a party can establish that it has any exclusionary right in a patent that, if violated, would cause the party to suffer legal injury. In contrast, according to the court, Textile merely addressed the narrow issue of whether a requirements contract for a patented product automatically converts an exclusive supplier into an exclusive licensee for purposes of constitutional standing.

The Federal Circuit further stated that, notwithstanding the broad rule for constitutional standing, because an exclusive licensee derives its standing from its exclusionary rights in a patent, it follows that standing will ordinarily be coterminous with those rights. Thus, while an exclusive licensee may have standing to sue some parties based upon its rights, it may lack standing to sue other parties.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1266.pdf
 
Chris Lightner is an Associate in the IP Group of Alston & Bird's Atlanta office.

Litigation Practice and Procedure: Venue
In re Microsoft Corp., Miscellaneous Dkt. No. 944 (Fed. Cir. (E.D. Tex.) Jan. 4, 2011). Per curiam opinion, before Newman, Friedman, and Lourie. In granting Microsoft Corporation's ("Microsoft") petition for a writ of mandamus and ordering that the United States District Court for the Eastern District of Texas transfer the case to the United States District Court for the Western District of Washington, the Federal Circuit held that under the circumstances, the Western District of Washington was the only convenient and fair venue for trial.

Allvoice Developments U.S., LLC ("Allvoice") sued Microsoft in the Eastern District of Texas, alleging that Microsoft's XP and Vista operating systems infringed U.S. Patent No. 5,799,273 entitled "Automatic Proofreading Using Interface Linking Recognized Words to Their Audio Data While Text is Being Changed." While Allvoice now maintains an office in Tyler, Texas, it is operated from the United Kingdom.

In the District Court, Microsoft moved to transfer the case to the Western District of Washington "where it maintains its corporate headquarters and where a substantial portion of its employees and its operations are located." Although Microsoft had indicated that all of its relevant documents and evidence related to marketing, development, and design of the accused products was located in the Western District of Washington, the District Court found that the Eastern District of Texas had a local interest in adjudicating the matter because Allvoice was incorporated under Texas law and maintained a local office in the district.

In granting Microsoft's writ of mandamus, vacating the District Court's order denying the transfer, and ordering the case be transferred to the Western District of Washington, the Federal Circuit noted that the overall expenses and time required for witnesses to attend trial would be minimized if the case were transferred to the Western District of Washington. The court also noted that all of Microsoft's witnesses lived within 100 miles of the Western District of Washington, twelve of Allvoice's fourteen identified witnesses reside outside of Texas, and Allvoice's Tyler, Texas offices staffed no employees and had been constructed primarily in anticipation of litigation. Additionally, because Allvoice had incorporated under Texas law only 16 days before Allvoice filed suit, this attempt at manipulation of venue was entitled to no weight.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-m944%20order.pdf
 
Chris McArdle is an Associate in the IP Group of Alston & Bird's New York City office.

Remedies: Damages: Reasonable Royalty
Infringement: Literal Infringement
Infringement: Willful Infringement
Patentable Invention: Obviousness: Generally
Patentable Invention: Anticipation: Generally
Litigation Practice and Procedure: Procedure: Admissibility of Evidence
Litigation Practice and Procedure: Procedure: Waiver
Litigation Practice and Procedure: Procedure: Expert Evidence
Uniloc USA, Inc., et al. v. Microsoft Corp., Nos. 10-1035, -1055 (Fed. Cir. (D.R.I.) Jan. 4, 2011). Opinion by Linn, joined by Rader and Moore. Although the Federal Circuit reinstated a jury verdict on infringement of the patentee's claim for a software registration system, it also granted defendant Microsoft's request for a new trial on damages. After the jury awarded the patentee $388 million in damages, the Federal Circuit rejected the "25 percent rule of thumb" as "a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation." The Court of Appeals ruled that the rule of thumb fails to account for the unique relationships between the patent and the accused product and between the parties, and is arbitrary. Such a rule "taints the jury's damages calculation." Also, Uniloc's damages award was improperly based in part on the entire market value rule, which can be used only where the patented feature creates the "basis for customer demand" or "substantially creates the value of the component parts" of a product. The Federal Circuit rejected the patentee's arguments that the entire market value of a product can be used if the royalty rate is "low enough" or if the entire market value is used only as a "check."

Uniloc USA, Inc. and Uniloc Singapore Private Limited (collectively "Uniloc") sued Microsoft Corporation ("Microsoft"), alleging that Microsoft's product activation feature in its Microsoft Word XP, Word 2003 and Windows XP products infringed Uniloc's U.S. Patent No. 5,490,216 ("the '216 patent"). The '216 patent is directed to a software registration system to deter software copying. At trial, the jury found that Microsoft willfully infringed the '216 patent and awarded $388 million in damages. Following the trial, the United States District Court for the District of Rhode Island denied Microsoft's motion for a judgment as a matter of law ("JMOL") regarding invalidity, granted JMOL as to noninfringement and lack of willfulness, granted a new trial on damages, and in the alternative, granted a new trial on infringement and willfulness. On appeal, Uniloc challenged all of the District Court's JMOL rulings except validity, while Microsoft cross-appealed regarding invalidity.

On appeal, the Federal Circuit reversed the District Court's grant of JMOL of noninfringement, holding that a reasonable jury could rely on the expert testimony and documentary evidence presented at trial to conclude that Microsoft's products included "summation algorithm[s]" according to the '216 patent. Holding that the jury's verdict was supported by substantial evidence, the Federal Circuit noted that the District Court's rejection of Uniloc's expert's testimony as incomplete was improper because the District Court had already fulfilled its role as "gatekeeper" by finding that Uniloc's expert was "qualified."

The Federal Circuit also held that the jury had substantial evidence to find that Microsoft's products included a "registration system" and "mode switching means," and that the District Court had erred in granting JMOL of noninfringement on this basis. The Federal Circuit rejected Microsoft's argument that its software did not directly infringe the patent because Microsoft did not supply or use the end-users' computers that performed the infringing acts stating:

"That other parties are necessary to
complete the environment in which the
claimed element functions does not
necessarily divide the infringement
between the necessary parties." The court
also affirmed the District Court's JMOL of
no willfulness.

 
Importantly, the Federal Circuit affirmed the District Court's grant of a new trial on damages but rejected the District Court's allowance of expert testimony regarding the use of the 25 percent rule to calculate a reasonable royalty. Under the rule, a licensee would pay "a royalty rate equivalent to 25 percent of its expected profits for the product that incorporates the IP at issue." The court noted that the admissibility of the 25 percent rule had never been squarely addressed by the Federal Circuit but had been only passively tolerated in cases where its acceptability had not been the focus of the case. The Federal Circuit held that as an "abstract and largely theoretical construct," the 25 percent rule "fails to tie a reasonable royalty rate to the facts of the case at issue." The Court of Appeals then held that evidence relying on the 25 percent rule of thumb is inadmissible:

This court now holds as a matter of
Federal Circuit law that the 25 percent
rule of thumb is a fundamentally flawed
tool for determining a baseline royalty
rate in a hypothetical negotiation.
Evidence relying on the 25 percent rule of
thumb is thus inadmissible under
Daubert and the Federal Rules of
Evidence, because it fails to tie a
reasonable royalty base to the facts of the
case at issue.

Slip. Op. at 41.

 
The Federal Circuit also held that the District Court did not abuse its discretion in granting a new trial on damages because Uniloc's expert misapplied the entire market value rule. Because there was no evidence that the accused Product Activation feature created the customer demand for Microsoft's products, the testimony regarding the entire market value rule improperly skewed the jury's damages finding because "[t]he $19 billion cat was never put back into the bag . . ." Slip. Op. at 51.
Finally, the Federal Circuit affirmed the District Court's denial of Microsoft's motion for a JMOL of invalidity, holding that a reasonable jury could have found that the prior art reference cited by Microsoft failed to disclose a licensee unique ID.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1035.pdf
 
Chris McArdle is an Associate in the IP Group of Alston & Bird's New York City office.

Patentable Invention: Obviousness: Scope and Content of Prior Art
Patentable Invention: Obviousness: Secondary Considerations of  Nonobviousness
Patent Office Procedures: Reexamination
In re Glatt Air Techniques, No. 10-1141 (Fed. Cir. (U.S.P.T.O.) Jan. 5, 2011). Opinion by Prost, joined by Newman and Moore. In reversing the Board of Patent Appeals and Interferences ("Board") of the United States Patent and Trademark Office's ("PTO") affirmance of the examiner's obviousness rejection during reexamination, the Federal Circuit held that the Board had not made a prima facie case of obviousness and did not properly consider evidence of commercial success, even when that evidence came from only one commercial embodiment.

Glatt Air Techniques, Inc. ("Glatt") is the owner of U.S. Patent No. 5,236,503 ("the '503 patent"). The '503 patent is directed to a mechanism for shielding a coating spray nozzle in a Wurster coater. During reexamination, the examiner construed the "shielding means" of Claim 5 to include an "air wall" that could be used to prevent particles from entering the stream. The examiner then rejected Claim 5 as obvious in view of German Patent DE 3323418 ("Naunapper"), which taught an "air wall" as a shielding means. The examiner found Glatt's evidence of secondary considerations insufficient to overcome the prima facie case of obviousness.

Glatt appealed to the Board the examiner's rejection of Claim 5. The Board upheld the rejection holding that Naunapper taught an arrangement that can perform the same function recited for the claimed shielding means. The Board likewise held that Glatt's evidence of secondary considerations was unpersuasive because none of Glatt's evidence demonstrated any unexpected result or commercial success based on the difference between Glatt's claimed invention and Naunapper's apparatus.

On appeal, the Federal Circuit reversed the Board's affirmance, holding that the Board had not made a proper prima facie case of obviousness because Naunapper did not teach a shielding mechanism. The Federal Circuit held that while Naunapper taught an air source that can be used to "1) circulate particles and 2) clear blockages," Naunapper's air source could not perform both of these functions simultaneously and, in any event, "neither of these functions constitute[d] shielding." Further, the Federal Circuit noted that the Board improperly rejected Glatt's evidence of commercial success. The Federal Circuit rejected the PTO's argument that Glatt must submit commercial success evidence from multiple embodiments of the disputed claim, instead noting that "[c]ommercial success evidence should be considered 'so long as what was sold was within the scope of the claims.'" Therefore, Glatt's evidence of commercial success from its commercial embodiment, which uses a physical shield as opposed to an air wall, should have been considered by the Board.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1141.pdf
 
Chris McArdle is an Associate in the IP Group of Alston & Bird's New York City office.

Claim Interpretation: Intrinsic Evidence: Specification
Claim Interpretation: Intrinsic Evidence: Importing Limitations from the Specification into Claims
Claim Interpretation: Intrinsic Evidence: Prosecution Disclaimer
Remedies: Injunction: Preliminary Injunction
Remedies: Damages: Attorneys' Fees
Remedies: Damages: Exceptional Case (Enhanced Damages)
iLOR, LLC v. Google, Inc., Nos. 10-1117, 10-1172 (Fed. Cir. (E.D. Ky.) Jan. 11, 2011). Opinion by Dyk, joined by Rader and Linn. The Federal Circuit reversed the Eastern District of Kentucky's finding that the case was exceptional under 35 U.S.C. § 285 and its award of attorneys' fees, costs, and expenses because the Federal Circuit found that the plaintiff's proposed claim construction was not objectively baseless.

iLOR, LLC sued Google, Inc. for infringement of U.S. Patent No. 7,206,839 ("the '839 patent"), which is directed to a "[m]ethod for adding a user selectable function to a hyperlink." iLOR sought a preliminary injunction, arguing the Google Notebook product infringed Claim 26 of the '839 patent. iLOR argued that the Google Notebook practiced the claim limitation "the toolbar being displayable based on a location of a cursor in relation to a hyperlink" by allowing a user to right-click on a hyperlink to bookmark the URL address of the hyperlink. The District Court disagreed, holding that the "being displayable" limitation meant that "the toolbar is 'automatically displayed' upon the placement of the cursor in proximity to a hyperlink with no further action on the part of the user." After iLOR's unsuccessful appeal of the claim construction ruling, Google moved to recover its attorneys' fees, costs, and expenses under 35 U.S.C. § 285. The District Court granted the motion, ruling that the claim construction was objectively baseless on the merits.

The Federal Circuit affirmed the District Court's claim construction, agreeing with the District Court that the ordinary meaning, specification, and prosecution history all made clear that the "being displayable" limitation did not cover users right clicking to initiate a toolbar.

However, the Federal Circuit reversed the District Court's ruling that the case was exceptional because iLOR's broader proposed construction was not "so unreasonable that no reasonable litigant could believe it would succeed." The Federal Circuit noted that, on its face, the claim language does not preclude iLOR's construction, and the specification and prosecution history do not clearly refute iLOR's construction. The court noted the unpredictability of claim construction rulings and the fact that the Federal Circuit heard oral argument and issued a precedential written opinion in the appeal on the claim construction ruling showed that iLOR's position was not objectively baseless.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1117.pdf
 
Matt McNeill is an Associate in the IP Group of Alston & Bird's Atlanta office.

Defenses: Fraud and Inequitable Conduct: Effect of Inequitable Conduct
Litigation Practice and Procedure: Jurisdiction: Subject Matter Jurisdiction
Warrior Sports, Inc. v. Dickinson Wright, P.L.L.C., No. 10-1091 (Fed. Cir. (E.D. Mich.) Jan. 11, 2011). Opinion by Bryson, joined by Newman and Prost. The Federal Circuit vacated the District Court's dismissal of a malpractice suit for lack of subject matter jurisdiction because the claim required the court to resolve a substantive issue of patent law.

Warrior Sports, Inc. ("Warrior"), represented by Artz & Artz, P.C., sued STX, L.L.C. ("STX") for patent infringement of U.S. Patent No. RE 38,216 ("the '216 patent"). STX argued that the '216 patent was unenforceable because of inequitable conduct based on an alleged mischaracterization by John S. Artz during the reissue proceedings. The District Court in the STX case bifurcated the litigation and stayed the infringement action pending the outcome of a bench trial on inequitable conduct. Before the bench trial occurred, Warrior and STX settled the entire case.

Following the settlement, Warrior sued Dickinson Wright ("Dickinson"), a successor in interest to Artz & Artz, for malpractice in Michigan state court, alleging that Artz & Artz's mischaracterization before the Patent and Trademark Office and failure to pay the maintenance fee for the '216 patent forced Warrior to settle its claim for less than it would have otherwise been worth. Following Dickinson's motion for summary judgment challenging the state court's subject matter jurisdiction, the parties stipulated to dismissal of the state court action and Warrior filed suit in District Court. The District Court dismissed the suit for lack of subject matter jurisdiction, ruling that the patent related issues were tangential to the state law claim.

The Federal Circuit reiterated that "federal courts have exclusive jurisdiction over state-law legal malpractice actions when the adjudication of the malpractice claim requires the court to address the merits of the plaintiff's underlying patent infringement lawsuit." The court held that Warrior's theory that its counsel's malpractice forced it to accept an otherwise unfavorable settlement required analysis of the merits of its patent infringement claim. Accordingly, the court held that the case falls into the category of cases "arising under" patent law.

The Federal Circuit also held that patent law is a "necessary element" of Warrior's right to relief because it was Warrior's burden to prove that Artz & Artz's negligence was the proximate cause of Warrior's injury and the fact and extent of the injury. This required Warrior to prove that but for Artz & Artz's malpractice, it would not have settled its meritorious infringement claim against STX for less than the true value of the claim. Accordingly, patent law was a necessary element of Warrior's malpractice claim.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1091.pdf
 
Matt McNeill is an Associate in the IP Group of Alston & Bird's Atlanta office.

Claim Interpretation: Ordinary Meaning
Claim Interpretation: Intrinsic Evidence: Specification
Claim Interpretation: Intrinsic Evidence: Importing Limitations from the Specification into Claims
Claim Interpretation: Intrinsic Evidence: Preferred Embodiments
Arlington Indus., Inc. v. Bridgeport Fittings, Inc., No. 10-1025 (Fed. Cir. (M.D. Pa.) Jan. 20, 2011). Opinion by Rader, joined by Moore. Opinion concurring-in-part and dissenting-in-part by Lourie. In vacating the trial court's grant of summary judgment of noninfringement, the majority on the Federal Circuit panel ruled that the District Court erred in its claim construction by importing a limitation from the specification into the construction of one of the claim limitations. In his dissent, Judge Lourie argued that the specification and prosecution history made clear that the claim required the specific limitation.

In concurrent litigations, Arlington Industries, Inc. ("Arlington") asserted two patents related to electrical connectors "used to connect cable to a junction box" against Bridgeport Fittings, Inc. ("Bridgeport"). In the first filed case ("Arlington I"), the District Court construed the claim term "spring metal adaptor" of U.S. Patent No. 5,266,050 ("the '050 patent") to mean "an adaptor made of spring metal." A jury returned a verdict in favor of Arlington that Bridgeport had infringed Claim 8 of the '050 patent, and the Federal Circuit stayed the appeal pending the judgment of the second case. In the second case ("Arlington II "), the District Court construed the same claim term "spring metal adaptor" of U.S. Patent No. 6,521,831 ("the '831 patent") to require a "split," "such that the diameter of the adapter can easily expand or contract." The District Court also construed the term "spring steel adapter" as requiring a "split." Bridgeport filed motions for summary judgment of noninfringement, nonwillfulness, and no damages as to the asserted claims of the '050 and '831 patents, and the District Court granted all of Bridgeport's motions. Arlington appealed the District Court's claim construction and grants of summary judgment in Arlington II.

Reviewing the District Court's claim construction and grants of summary judgment without deference, the Federal Circuit first discussed the claim construction in Arlington I of the "spring metal adaptor" language in Claim 8 of the '050 patent, and stated that the limitation required that the adaptor be made of spring metal. Bridgeport then argued alternative theories as to why the term "spring metal adaptor" instead required a "split" limitation: 1) the claim language supported reading "spring" as modifying the phrase "metal adaptor"; and 2) "spring metal adaptor" should be defined by implication to require a "split." On appeal, the Federal Circuit stated that the specification conflicts with Bridgeport's construction and noted that only one of the disclosed embodiments described an "opening" that changes diameter. Accordingly, the Federal Circuit determined that the District Court erred in construing "spring metal adaptor" to require a "split" and vacated and remanded the grant of summary judgment of noninfringement of the '050 patent. The Federal Circuit similarly construed the claim limitation "spring steel adapter" in the '831 patent as an adapter made from spring steel and vacated and remanded the District Court's grant of summary judgment of noninfringement of the '831 patent.
Judge Lourie joined the panel majority in vacating and remanding the District Court's grant of summary judgment of noninfringement of the '831 patent, but he dissented from the majority's opinion with respect to the '050 patent. Judge Lourie stated that the patentees were clear in the specification of the '050 patent that the spring metal adapters have a "split," or an opening, that prevents the adaptors from forming a complete circle.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/2010-1025.pdf

Patentable Invention:  Obviousness: Generally
Tokai Corp., et al. v. Easton Enterprises, Inc., et al., Nos. 10-1057, -1116 (Fed. Cir. (C.D. Cal.) Jan. 31, 2011). Opinion by Lourie. Dissenting opinion by Newman. The Federal Circuit affirmed the District Court's grant of summary judgment of invalidity. Specifically, the Federal Circuit held that the District Court correctly ruled that there were no genuine issues of material fact as to the obviousness of U.S. Patent Nos. 5,697,775; 5,897,308; and 6,093,017 in light of four prior art references: U.S. Patents 5,326,256 ("Shike"); 5,199,865 ("Liang"); 5,090,893 ("Floriot"); and 4,832,596 ("Morris").

The asserted patents relate to safety utility lighters having extended lighting rods. In determining invalidity of the asserted patents due to obviousness, the District Court applied the four-factor analysis set forth in Graham v. John Deere Co., 383 U.S. 1 (1966). With regard to the first and second Graham factors, the court found that utility lighters without a safety device were available as of the priority date, and that Shike, Liang, Floriot and Morris, together or individually, disclose each element of the asserted claims. Although the two parties disagreed as to the appropriate level of skill in the art to use for the third Graham factor, the District Court ruled that under either proposed level the asserted claims would have been obvious. Finally, with respect to the fourth Graham factor, secondary indicia of nonobviousness, the District Court stated that "Tokai proffered no evidence from which one could reasonably infer a nexus between its sales data and its utility lighters' automatic-locking features." Because the District Court found no material factual dispute as to each of the Graham factors, the District Court ruled that summary judgment was appropriate.

The Federal Circuit held that the District Court did not err in its determination of summary judgment. All of the elements from the asserted claims were obvious over the four prior art patents. The "only missing limitation, the intended position of the finger and thumb when using the lighter, [was] nothing more than a predictable variation of the prior art."

Circuit Judge Newman dissented. Judge Newman reasoned that the District Court applied the incorrect standard because obviousness does not depend on whether a person could reproduce the lighting rods from prior art or known principles, but rather, whether it would have been obvious to produce the same device that the patentee produced without knowledge of the patentee's achievement. Viewing the facts in the light most favorable to the non-moving party, Judge Newman would have ruled that there was an issue of material fact, and therefore, that summary judgment should not have been granted.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1057.pdf
 
Lance Soderstrom is an Associate in the IP Group of Alston & Bird's New York City office.

Litigation Practice and Procedure: Jurisdiction: Subject Matter Jurisdiction
Litigation Practice and Procedure: Declaratory Judgment Actions
ABB Inc., et al. v. Cooper Industries, LLC, et al., No. 10-1227 (Fed. Cir. (S.D. Tex.) Feb. 17, 2011). Opinion by Dyk, joined by Rader and Lourie. Reiterating that "declaratory judgment jurisdiction exists where the defendant's coercive action arises under federal law," the Federal Circuit held that subject matter jurisdiction existed for a declaratory judgment action premised on a state law license defense to patent infringement. The court held that, "Because the actual controversy in this case is over infringement, the declaratory defendant's hypothetical coercive complaint here is a patent infringement suit." Accordingly, the Federal Circuit reversed the District Court's dismissal of the case for lack of subject matter jurisdiction.

Cooper Industries, LLC and Cooper Power Systems, Inc. (collectively "Cooper") are the owners of several patents ("the Cooper patents") involving electrical equipment containing dielectric fluid. In 2003, Cooper sued ABB Inc. and ABB Holdings, Inc. (collectively "ABB"), alleging that ABB's BIOTEMP product infringed the Cooper patents. The parties settled that lawsuit in 2005. The settlement agreement provided that the licenses granted therein did not include the right of any third party to make BIOTEMP or any other fluid covered by the Cooper patents. After signing the settlement, ABB began outsourcing the manufacture of BIOTEMP to Dow Chemicals ("Dow"), and contracted to indemnify Dow against claims of infringement by Cooper. After learning of this, Cooper sent a letter to both ABB and Dow stating that the settlement agreement did not include the right of third parties, such as Dow, to manufacture BIOTEMP. Cooper's letter stated that it "will act vigorously to protect its rights."
ABB filed a declaratory judgment action in 2009 in Texas federal court, initially seeking a declaration that the outsourcing of manufacture to Dow was authorized under the license agreement. ABB later amended its complaint, seeking additional declarations that it did not infringe the Cooper patents. Cooper moved to dismiss ABB's declaratory judgment action, arguing that there was no actual controversy involving infringement. In opposition to this motion, ABB relied solely on Cooper's potential claim for patent infringement to demonstrate jurisdiction (which was allegedly defeated by a license defense), and did not assert any invalidity defenses. The District Court determined that the issues raised by ABB's complaint sounded entirely in contract, and therefore dismissed the complaint for lack of subject matter jurisdiction.

Citing the Supreme Court's decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the Federal Circuit reversed the District Court's holding that it lacked subject matter jurisdiction, finding a controversy "of sufficient immediacy and reality" surrounding infringement "to warrant the issuance of a declaratory judgment." Cooper had advised both ABB and Dow that they had no rights under the license, and that it would act "vigorously" to protect and defend its rights against those parties. According to the court, the warning letters indicated that there was an immediate controversy surrounding infringement, as ABB had an interest in determining whether it would incur liability for induced infringement, and whether it would be liable for indemnification, which turned on whether Dow would be liable for infringement.

The Federal Circuit also reversed the District Court's finding that the court did not have jurisdiction under Section 1338. Although acknowledging that the Supreme Court and other courts have left open the question of whether federal courts have jurisdiction over a declaratory judgment action where there is a federal cause of action but only a state law defense, the Federal Circuit found no reason to depart from the general rule that declaratory judgment jurisdiction exists where the defendant's coercive action arises under federal law. Because the actual controversy in the case was over infringement, the ABB's hypothetical coercive complaint was a patent infringement suit, which arose under federal law. 
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1227.pdf
 
Shri Abhyankar is an Associate in the IP Group of Alston & Bird's Atlanta office.

The Patent Application: Claims: Indefiniteness
Claim Interpretation: Means Plus Function
Defenses: Invalidity
In re Katz Interactive Call Processing Patent Litigation, Nos. 09-1450, -1451, -1452, -1468, -1469, 10-1017 (Fed. Cir. (C.D. Cal.) Feb. 18, 2011). Opinion by Bryson, joined by Newman and Lourie. The Federal Circuit affirmed in part, vacated in part, and remanded rulings of invalidity and noninfringement for numerous claims in Ronald A. Katz Technology Licensing LP's ("Katz") patent portfolio. Of particular note, the court held that Katz's due process rights were not violated where the District Court limited the number of claims Katz could assert. In addition, although the court found numerous claims invalid as indefinite under WMS Gaming Inc. v. International Game Technology, 184 F.3d 1339 (Fed. Cir. 1999), it clarified the scope of that ruling on means-plus-function claims for which the functions could be achieved by any general purpose computer without special programming.

Katz is the owner of a number of patents covering interactive call processing systems, certain of which were at issue on appeal. Between 2005 and 2006, Katz filed 25 separate actions in different federal District Courts, which were consolidated into a single multi-district litigation before the Central District of California. Across all 25 actions, Katz asserted a total of 1,975 claims from 31 patents against 165 defendants in 50 groups of related corporate entities. Based on the extraordinary number of claims at issue, several defendant groups asked the District Court to limit the number of asserted claims to be addressed in the action.  The District Court granted that request, and Katz thereafter moved the court to sever and stay the unselected claims. The District Court denied Katz's motion. 

On appeal, Katz argued that the District Court's refusal to sever and stay the unselected claims violated its due process rights because the court's judgments may have preclusive effects in any subsequent actions on the unselected claims. In rejecting Katz's due process argument, the Federal Circuit held that Katz had not shown that the claim selection procedure employed by the District Court was inadequate to protect Katz's rights with respect to the unselected claims. The District Court provided Katz the option to add more claims if it could show that additional claims presented unique issues. The court found that because Katz made no effort to identify any such claims, it could not now complain that it did not have a meaningful opportunity to be heard on those claims, and thus its due process rights were not violated.

Katz also appealed the District Court's grant of summary judgment of invalidity based on indefiniteness of numerous means-plus-function claims, in light of the applicable standards set forth in WMS Gaming. The court affirmed the District Court as to those claims that contained means-plus-function limitations reciting specific functions, but vacated the District Court's findings as to other claims for which, according to the court, Katz had not claimed a specific function performed by a special purpose computer, but had simply recited the claimed functions of "processing," "receiving," and "storing." In the court's view, absent a possible narrower construction of those functions, they could be achieved by any general purpose computer without special programming. As such, the court remanded to the District Court to construe the functions of "processing," "receiving," and "storing," and then to determine whether disclosure of an algorithm is required.

In addition, the Federal Circuit affirmed the District Court's grant of summary judgment that certain claims were indefinite under IPXL Holdings, LLC v. Amazon.com, Inc., 430 F.3d 1377 (Fed. Cir. 2005), which prohibits claiming both an apparatus and a method of use within the same claim. According to the court, certain of Katz's claims create confusion as to when direct infringement occurs because they are directed both to systems and to actions performed by individual callers.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1450.pdf
 
Shri Abhyankar is an Associate in the IP Group of Alston & Bird's Atlanta office.

The Patent Application: Specification: Written Description
Centocor Ortho Biotech, Inc., et al. v. Abbott Laboratories, et al., No. 10-1144 (Fed. Cir. (E.D. Tex.) Feb. 23, 2011). Opinion by Prost, joined by Bryson and Clevenger. Reversing the District Court, the Federal Circuit ruled that the asserted claims of U.S. Patent No. 7,070,775 ("the '775 patent") lack a sufficient written description to comply with 35 U.S.C. § 112. The court held that, to comply with § 112, a patent specification must demonstrate the applicant's constructive possession of the invention. Here, the patent specification at issue failed to meet this standard. The specification merely recited a description of the problem and claimed all solutions to it, leaving the actual inventive work for subsequent inventors to complete.

Centocor Ortho Biotech, Inc. and New York University (collectively "Centocor") sued Abbott Laboratories, Abbott Bioresearch Center, Inc., and Abbott Biotechnology Ltd. (collectively "Abbott") for infringement of Claims 2, 3, 14, and 15 of the '775 patent. The '775 patent involves therapeutic antibodies to human tumor necrosis factor a ("TNF- a"). Overproduc-tion of TNF-a can lead to various autoimmune conditions, including arthritis.

In 1991, Centocor filed a patent application disclosing both its A2 mouse antibody and the chimeric
antibody. Centocor subsequently filed a series of continuation-in-part ("CIP") applications. In 1993, the U.S. Patent and Trademark Office ("PTO") rejected certain pending claims in a CIP application because they encompassed antibodies with "less than an entire mouse variable region[]." The PTO asserted that the specification enabled only antibodies with fully-mouse variable regions. Instead of responding to the rejections, Centocor filed a new CIP application and abandoned the pending application. In due course, the PTO issued the same rejection. Again, instead of responding, Centocor abandoned its application and filed three substantially identical CIP applications in 1994. The 1994 CIP applications added new matter that Centocor relied on as evidence of written description to support the asserted claims. Although Centocor added new matter, it did not present claims to human variable regions when it filed the 1994 CIP applications.

Abbott pursued a different path of research and, by 1995, created the therapeutic antibody Humira®. Abbott filed a patent application disclosing this high affinity, neutralizing, and fully-human antibody to human TNF-a in 1996. The PTO granted the patent in 2000, and Abbott obtained regulatory approval to market Humira® in 2002.

After the grant of Abbott's patent and after regulatory approval of Humira®, Centocor filed its claims to fully-human antibodies. Because the patent family disclosing Centocor's own chimeric antibody was still pending in 2002, Centocor filed the claims as part of the application that became the '775 patent, claiming priority to Centocor's earlier applications, explicitly claiming human variable regions and fully-human antibodies. All of the asserted claims cover human variable regions and fully-human antibodies like Abbott's Humira®.

On appeal, the Federal Circuit noted that, to satisfy the written description requirement, the applicant must convey with reasonable clarity to those skilled in the art that, as of the filing date sought, the applicant was in possession of the invention, and demonstrate such possession by its disclosure in the patent specification. Because Abbott's application was filed in 1996, Centocor relied on a priority claim to the 1994 CIP applications. Thus, in order for Centocor to prevail, the asserted claims had to have been supported by adequate written description in the 1994 CIP applications.

The Federal Circuit reversed the District Court's decision for a variety of reasons. First, based on PTO guidelines, an applicant may claim an antibody to novel protein X without describing the antibody when (1) the applicant fully discloses the novel protein, and (2) generating the claimed antibody is so routine that possessing the protein places the applicant in possession of an antibody. Second, the undisputed trial testimony indicated that the sequence of Centocor's mouse variable region was "very different" from the sequence of a human variable region like the one in Abbott's fully-human antibody. Third, the ability to obtain a high affinity, neutralizing, A2 specific antibody with a human variable region was not possible in 1994 using conventional, routine, well developed and mature technology. Thus, the Federal Circuit held Claims 2, 3, 14, and 15 of the '775 patent invalid for lack of written description.
 
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1144.pdf
 
Matt Ennis is an Associate in the IP Group of Alston & Bird's Charlotte office.
 

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