Patent Case Summaries
Article Date: Wednesday, June 06, 2012
The summaries below summarize patent-related opinions of interest issued by the Court of Appeals for the Federal Circuit from January 2012 through April 2012. These summaries were edited by Kirk Bradley and Mike Connor, partners, and Ross Barton and Michele Glessner, associates, in Alston & Bird’s Charlotte office, as well as Wes Achey, a partner, in Alston & Bird’s Atlanta office.
Inventors and Inventorship: Co-Inventorship | Remedies: Damages: Attorneys’ Fees
Falana v. Kent State University, et al., No. 11-1198 (Fed. Cir. (N.D. Ohio) Jan. 23, 2012). Opinion by Linn, joined by Prost and Reyna. In an inventorship dispute, the Federal Circuit affirmed the trial court’s ruling that Dr. Olusegun Falana (“Falana”) was a co-inventor of a patent claiming a genus of chemical compounds. The Federal Circuit also concluded that it lacked jurisdiction to reach an award of attorneys’ fees because the district court had not yet quantified the amount of the award, rendering it non-final.
Falana sued Kent State University (“Kent State”) and the named inventors on the face of U.S. Patent No. 6,830,789 (“the ’789 patent”), seeking correction of inventorship under 35 U.S.C. § 256. Falana argued that he had been improperly omitted as a co-inventor of the ’789 patent, related to chiral additives for liquid crystal displays. In 1999, while employed by a Kent State research company, Falana worked on finding improved chiral additives, with targets including temperature independence. He developed a method for synthesizing a novel class of naphthyl substituted TADDOLs and synthesized a version called “Compound 7.” Compound 7 did not meet the full target for temperature independence, but was viewed as a significant improvement. In 2000, after Falana’s departure, the named inventor used Falana’s method in synthesizing “Compound 9,” which did meet the temperature independence goals.
At a bench trial, the court determined that Falana was a co-inventor. The defendants argued that the claims required high temperature independence, but the district court disagreed, finding no support for this position in the plain language of the claims.
The Federal Circuit affirmed. It agreed that the claim language covered a genus of chemical compounds, not limited by temperature independence. The court agreed with the inventorship conclusion and provided general guidance on conception of a chemical genus, stating: “[T]his court holds that a putative inventor who envisioned the structure of a novel genus of chemical compounds and contributes the method of making that genus contributes to the conception of that genus.” Falana’s lack of specific involvement with Compound 9 did not prevent him from being a co-inventor of the broader genus covered by the claims.
The district court determined that the case was exceptional and awarded Falana his attorneys’ fees, but did not quantify them prior to the appeal. The Federal Circuit concluded that it lacked jurisdiction to reach the fee award because it was not final. In so ruling, the Federal Circuit declined to exercise pendant appellate jurisdiction. The court also distinguished 28 U.S.C. § 1292(c)(2), which permits interlocutory appeals of fee awards that have not been quantified in infringement cases, which was deemed not applicable to this inventorship dispute.
Finally, the Federal Circuit concluded that the trial court’s exclusion of certain documents, which allegedly showed that Falana’s method was not novel, was at most harmless error where the named inventor had been allowed to explain these allegations.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1198.pdf
Byron Holz is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Defenses: Miscellaneous Defenses
Ninestar Technology Co., et al. v. International Trade Commission, No. 09-1549 (Fed. Cir. (I.T.C.) Feb. 8, 2011). Opinion by Newman, joined by Schall and Linn. In affirming a finding by the International Trade Commission (“Commission”), the Federal Circuit held that (1) the first sale doctrine is limited to sales that occurred under a U.S. patent and (2) the statute providing the Commission authority to levy civil penalties is constitutional.
A Section 337 Investigation into the trade practices of Ninestar companies (“Ninestar”) resulted in a Commission finding of unfair trade practices based on infringement of certain U.S. patents by Ninestar as a result of its importing and selling ink printer cartridges. The Commission then issued a general exclusion order, limited exclusion orders, and cease and desist orders. After issuance of these orders, two of the Ninestar companies, Ninestar Technology Company, Ltd. (“Ninestar U.S.”) and Town Sky, Inc. (“Town Sky”), continued to import the ink cartridges that were the subject of the orders. In an enforcement proceeding, the administrative law judge (“ALJ”) determined that a violation of the prior orders occurred and then levied a civil penalty against all of the Ninestar companies. The Commission adopted the conclusions of the ALJ, but reduced the civil penalty by half.
On appeal, Ninestar argued that the Commission incorrectly found infringement by the Ninestar products. Ninestar admitted that it purposefully imported products covered by the exclusion order, but argued that a sale in a foreign country of a product manufactured in that foreign country extinguishes any right to enforce a U.S. patent against that product when it is imported. The Federal Circuit disagreed and held that the first sale doctrine is limited to sales that occurred under the U.S. patent.
Ninestar then argued that the civil penalty should not have been levied based on Ninestar’s good faith belief that the Commission’s orders were based on incorrect law and that the Commission’s proceedings violated the Constitution. The factors considered when determining the amount of penalty for a violation are: (1) the good or bad faith of the respondent; (2) any injury due to the infringement; (3) the respondent’s ability to pay the assessed penalty; (4) the extent to which the respondent benefitted from its violations; (5) the need to vindicate the authority of the Commission; and (6) the public interest. The Federal Circuit affirmed the Commission’s levy of the penalty because its consideration of these factors was consistent with the legislative purpose of the civil penalty statute. The Federal Circuit then affirmed the Commission’s finding that the Ninestar companies were jointly and severally liable for Ninestar U.S. and Town Sky’s actions because the record contained substantial evidence to show that Ninestar China knew of the relevant orders, yet continued to supply the covered products to its U.S. subsidiaries rather than directing the U.S. subsidiaries to comply with the orders.
The Federal Circuit then addressed Ninestar’s constitutional arguments. The Federal Circuit held that the statutory provision allowing the Commission to levy civil penalties was within regulatory authority and appropriately assigned to an administrative facility. Further, the Federal Circuit held that, contrary to Ninestar’s claims that the Commission’s orders were unclear, substantial evidence supported the determination that Ninestar was aware and understood that its ink cartridges fell within the scope of the orders.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1549.pdf
David Frist is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Defenses: Invalidity | Inventors and Inventorship: Co-Inventorship
Remedies: Damages: Attorneys’ Fees
Remedies: Damages: Exceptional Case (Enhanced Damages)
Infringement: Willful Infringement
Bard Peripheral Vascular, Inc., et al. v. C.R. Bard, Inc., et al., No. 10-1510 (Fed. Cir. (D. Ariz.) Feb. 10, 2012). Opinion by Gajarsa, joined by Linn. Dissenting opinion by Newman. In affirming the district court, the Federal Circuit held, among other things, that (1) a person is not a joint inventor when he does not communicate a claimed element of the invention to the named inventor; (2) a patent did not fail to comply with the written description requirement when it provided only one possible range for a wall thickness, because the invention did not require a particular wall thickness; and (3) a defendant cannot avoid a claim of willfulness by relying on an opinion of counsel that was found to be incompetent.
Bard Peripheral Vascular, Inc. and David Goldfarb (collectively “Bard”) sued W.L. Gore & Associates, Inc. (“Gore”), alleging that Gore infringed U.S. Patent No. 6,436,135 (“the ’135 patent”). The ’135 patent is directed to a prosthetic vascular graft. At trial, the jury found that the ’135 patent was willfully infringed and awarded Bard lost profits and a reasonable royalty. The district court awarded Bard enhanced damages by doubling the jury’s award, granted Bard its attorneys’ fees and costs, and set an ongoing royalty for future sales. The district court then denied Gore’s attempt to receive post-trial relief via a series of motions for judgment as a matter of law (“JMOL”). On appeal, Gore contended that the jury’s verdict was not supported by the evidence and that the district court abused its discretion by awarding enhanced damages, an ongoing royalty, and attorneys’ fees.
Gore first argued that its plant manager, Peter Cooper, should have been named as a joint inventor on the ’135 patent. As background, Cooper provided epTFE tubes to a number of researchers, including the named inventor. Cooper eventually realized that certain of the tubes that he provided were suitable for vascular grafts. The named inventor similarly discovered the suitability of the tubes provided by Cooper for grafting. Both the named inventor and Cooper filed patents on this invention, and an interference was initiated at the U.S. Patent and Trademark Office. The interference proceeding eventually reached the Federal Circuit, where Goldfarb was held to be entitled to priority because Cooper did not appreciate that the material he provided to Goldfarb met the fibril length limitation of the interference count. In the present appeal, the Federal Circuit held that substantial evidence was presented to support the conclusion that Cooper did not communicate to Goldfarb that the intermodal distance was critical to the creation of successful grafts and, without such communication, Cooper was not a joint inventor.
Gore argued that by sending the embodiment of the invention (the tubes) to Goldfarb, Cooper communicated the critical portions of the embodiment. The Federal Circuit held, however, that there was no evidence that Cooper recognized or appreciated the critical requirement before Goldfarb reduced the invention to practice, and thus he could not have communicated that fact to Goldfarb.
The Federal Circuit also affirmed the district court’s denial of JMOL as to invalidity under the written description requirement. Gore argued that, while the patent described a prosthesis with a wall thickness within a certain range, the ’135 patent was invalid for failing to describe claims directed to wall thicknesses outside the range. The Federal Circuit held that the invention of the ’135 patent did not require a wall thickness within the range provided and thus was not invalid for lack of written description.
The Federal Circuit also affirmed the district court’s denial of Gore’s JMOLs regarding invalidity of the ’135 patent as anticipated or obvious. The Federal Circuit held that substantial evidence supported the jury’s verdict because the prior references did not disclose the intermodal distance requirement of the claims or render those claims obvious.
The Federal Circuit then turned to the finding of willfulness. The court held that substantial evidence demonstrated that Gore knew of the ’135 patent and the named inventor’s research activities. To avoid a finding of willfulness, Gore argued that it continued to practice the claimed invention based on an opinion of counsel that the ’135 patent was obvious. The Federal Circuit held that reliance on advice of counsel is insufficient to avoid a willfulness allegation when the advice was found to be incompetent. Here, the Federal Circuit held that substantial evidence supported the finding that the opinion of counsel provided to Gore was not based on an objective perspective and was directly contradictory to arguments that Gore presented during the interference proceeding. Thus, the Federal Circuit held that substantial evidence supported the finding that the advice was incompetent.
Finally, the Federal Circuit affirmed the district court’s award of enhanced damages because substantial evidence supported the award, and the district court appropriately considered all nine Read factors in reaching its decision to double, not triple, the jury’s damages award. Similarly, the Federal Circuit affirmed the district court’s findings as to attorneys’ fees, costs, and the award of an ongoing royalty.
In a dissenting opinion, Judge Newman stated that the court’s opinion allows a person who tests a material that is provided for a specific use to then patent the material when the test proves that the material is intended for that specific use. Judge Newman disagreed with this result, believing that substantial evidence showed that Cooper should have been listed as a joint inventor.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1510.pdf
David Frist is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Patentable Invention: Anticipation: Prior Publication
Litigation Procedure and Practice: Procedure: Waiver
Relationship to Other Intellectual Property: Trade Secrets
ClearValue, Inc., et al. v. Pearl River Polymers, Inc., et al., Nos. 11-1078, -1100 (Fed. Cir. (E.D. Tex.) Feb. 17, 2012). Opinion by Moore, joined by Prost and Schall. In reversing the district court’s denial of judgment as a matter of law (“JMOL”), the Federal Circuit reiterated that “whether a reference ‘teaches away’ from [an] invention is inapplicable to an anticipation analysis” and that the district court erred in holding that testimony relating to “teaching away” was substantial evidence supporting the jury’s verdict of no anticipation. See Cleritas Techs., Ltd. v. Rockwell Int’l Corp., 150 F.3d 1354, 1361 (Fed. Cir. 1998).
ClearValue, Inc. and Richard Alan Haase (collectively “ClearValue”) sued Pearl River Polymers, Inc., et al. (collectively “Pearl River”) in the Eastern District of Texas for indirect infringement of U.S. Patent No. 6,210,690 (“the ’690 patent”) and for trade secret misappropriation. The ’690 patent is directed towards a process for clarifying low alkalinity water using a blend of high molecular weight quaternized polymer and an aluminum polymer. After the jury found that the ’690 patent was not invalid and was infringed, the district court denied Pearl River’s motion for JMOL of invalidity and noninfringement based on testimony from ClearValue’s expert, which the district court held was sufficient to support the jury’s finding. Specifically, ClearValue’s expert testified that U.S. Patent No. 4,800,039 to Hassick (“Hassick”) teaches away from Claim 1 of the ’690 patent because Hassick shows that the claimed combination does not work well. The district court granted Pearl River’s motion for JMOL that Pearl River did not misappropriate ClearValue’s Trade Secret #1. The district court noted, in support of its grant of JMOL, that it found no evidence to support the jury’s determination that Trade Secret #1 was actually a trade secret, as Hassick disclosed every element of Trade Secret #1 prior to any alleged misappropriation by Pearl River.
Pearl River appealed the district court’s denial of its motion for JMOL of invalidity and noninfringement. ClearValue cross-appealed the district court’s grant of JMOL that Pearl River did not misappropriate ClearValue’s Trade Secret #1, arguing that Hassick does not publicly disclose Trade Secret #1 because Hassick does not teach that a combination of poly-aluminum hydroxychloride (“ACH”) and a high molecular weight di-allyl di-methyl ammonium chloride (“DADMAC”) is effective at clarifying low alkalinity water.
Before reaching the merits of the two JMOLs at issue, the Federal Circuit addressed ClearValue’s argument that Pearl River waived its invalidity defenses on appeal by including the defenses in its motion under Fed. R. Civ. P. 50(b) but not in its motion under Fed. R. Civ. 50(a). ClearValue did not argue waiver in opposing Pearl River’s Rule 50(b) motion. Because this is a procedural matter, the court applied the law of the Fifth Circuit and rejected ClearValue’s waiver argument. The Federal Circuit held that ClearValue could not argue waiver on appeal under Fifth Circuit law because when a party fails to make a Rule 50(a) motion, but brings a Rule 50(b) motion, the nonmoving party may raise waiver on appeal only if it also did so in opposing the Rule 50(b) motion.
In reversing the district court’s denial of Pearl River’s JMOL of invalidity and noninfringement, the Federal Circuit rejected the district court’s basis for denial of JMOL. Specifically, the Federal Circuit rejected the notion that expert testimony relating to “teaching away” can provide substantial evidence to support a jury verdict of no anticipation, ruling that “whether a reference ‘teaches away’ from [an] invention is inapplicable to an anticipation analysis.” On appeal, ClearValue argued that Hassick’s disclosure of clarifying water with alkalinity of 150 ppm or less is too broad to anticipate the 50 ppm limitation of Claim 1 of the ’690 patent. The Federal Circuit disagreed, noting that ClearValue never argued that the 50 ppm limitation in Claim 1 of the ’690 patent is critical and never argued that Hassick is not enabled. The Federal Circuit further noted that there was no evidence, or even any allegation, that the chemical process would work differently at 150 ppm or less, as in Hassick, versus 50 ppm or less, as in Claim 1 of the ’690 patent.
Finally, the Federal Circuit affirmed the district court’s grant of Pearl River’s motion for JMOL that Pearl River did not misappropriate ClearValue’s Trade Secret #1. On appeal, ClearValue argued that the district court erred because Hassick does not teach that the combination of ACH and high molecular weight DADMAC is effective at clarifying low alkalinity water. Pearl River argued that Hassick publicly disclosed Trade Secret #1; that Trade Secret #1, as presented to the jury, had no effectiveness requirement; and that Hassick does teach that the combination of ACH and high molecular weight DADMAC is effective at clarifying low alkalinity water. The Federal Circuit agreed with each of Pearl River’s arguments and affirmed the district court’s grant of JMOL.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1078.pdf
Matt Ennis is an Associate in the IP Group of Alston & Bird’s Charlotte office.
Character of a Patent: Statutory Subject Matter
Fort Properties, Inc. v. American Master Lease LLC, No. 09-1242 (Fed. Cir. (C.D. Cal.) Feb. 27, 2012). Opinion by Prost, joined by Schall and Moore. In affirming the district court’s grant of summary judgment invalidating U.S. Patent No. 6,292,788 (“the ’788 patent”) under 35 U.S.C. § 101, the Federal Circuit held that the claims of the ’788 patent disclose an abstract idea that is not patent-eligible because the patentee’s addition of a computer limitation to the claims does not impose meaningful limits on the claim’s scope. Furthermore, the Federal Circuit held that simply relating the claims to real property, deeds, and contracts do not exclude the claims from being abstract.
The ’788 patent discloses an investment tool designed to enable property owners to buy and sell properties without incurring tax liability. The patent took advantage of a tax liability exception under 26 U.S.C. § 1031 allowing owners of investment property to exchange one property for another of the like kind if certain conditions are met. In invoking the benefits of § 1031, the patent requires the aggregation of a number of properties into a “real estate portfolio” and requires that the property interests are divided into shares and sold to investors. Each share could be encumbered by its own mortgage debt. The U.S. District Court for the Central District of California, relying solely on the machine-or-transformation test, invalidated the patent for failing to claim patent-eligible subject matter under § 101.
Despite the U.S. Supreme Court’s clarification that the machine-or-transformation test is not the exclusive test for patentability under § 101, the Federal Circuit affirmed the district court’s judgment of invalidity. The Federal Circuit held that certain claims consisting of the conceptual steps of: (1) aggregating property into a real estate portfolio; (2) dividing the interests in the portfolio; and (3) subjecting those shares to a master agreement, are not patentable subject matter under § 101 because those steps are purely functional, and do not require the use of a computer. In rejecting the patentee’s argument that the claims are not abstract since they require a series of steps to take place in the real world that involve real property, deeds, and contracts, the Federal Circuit held that those reasons are insufficient to render an otherwise abstract idea patentable. In rejecting the remainder of the claims that add a limitation using a computer, the Federal Circuit, relying on Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011 ), held that “the basic character of a process claim drawn to an abstract idea is not changed by claiming only its performance by computers, or by claiming the process embodied in program instructions on a computer readable medium.” Further, the Federal Circuit required that the computer limitation in a claim must “play a significant part in permitting the claimed method to be performed.” The Federal Circuit held that the claims in this case are not patent-eligible because the patentee’s addition of a computer limitation to the claims does not impose meaningful limits on claim scope.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1242.pdf
Dan Huynh is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Patent Office Procedures: Interferences
Pioneer Hi-Bred International, Inc. v. Monsanto Technology LLC, No. 11-1285 (Fed. Cir. (B.P.A.I.) Feb. 28, 2012). Opinion by Clevenger, joined by Prost and Reyna. In affirming the Board of Patent Appeals and Interferences (“the Board”) decision, the Federal Circuit held that a party can overcome the time-bar requirement under 35 U.S.C. § 135(b)(1) by combining several earlier claims to provide a basis for priority as long as the earlier claims are “sufficiently congruent” to the later claims.
The Board declared an interference between the claims of a patent belonging to Pioneer Hi-Bred International, Inc. (“the Pioneer patent”) and those of a pending application owned by Monsanto Technology LLC (“Monsanto”). During the interference, Pioneer argued that Monsanto was time-barred under §135(b)(1), which sets forth the timeliness requirement for invoking an interference proceeding. Section 135(b)(1) states that “a claim . . . may not be made in any application unless such claim is made prior to one year from the date on which the patent was granted.” Pioneer argued that the Monsanto application was filed one year after the Pioneer patent had issued, and thus was time-barred under §135(b)(1). The Board, however, allowed the Monsanto application to claim priority to an earlier application even though the earlier Monsanto application had no single claim containing every limitation appearing in the Monsanto application at issue in the interference proceeding with Pioneer. The Board reasoned that § 135(b)(1) permits multiple claims operating together to provide a basis for showing that a later claim was actually made before the one-year bar. As a result, Monsanto was deemed the senior party, and Pioneer stipulated to judgment in Monsanto’s favor. Pioneer appealed, arguing that the Board was incorrect in relying upon multiple pre-critical date claims (as opposed to a single claim) to support Monsanto’s later claim.
The Federal Circuit affirmed the Board’s decision allowing the reliance on multiple claims since the claims were “sufficiently congruent” with the claims in the later Monsanto application. The Federal Circuit agreed with the Board’s approach to see if the earlier claims were directed to the “same invention” as the later claims to satisfy sufficient disclosure required by § 135(b)(1), and held that the Board was correct in combining several claims in demonstrating an intent to claim the later invention.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1285.pdf
Dan Huynh is an Associate in the IP Group of Alston & Bird’s Atlanta office.
The Patent Application: Types of Applications
In re Staats, et al., No. 10-1443 (Fed. Cir. (B.P.A.I.) Mar. 5, 2012). Opinion by Dyk, joined by Reyna. Concurring opinion by O’Malley. In reversing the Board of Patent Appeals and Interferences’ (“Board”) rejection of the claims of a reissue application, the Federal Circuit upheld the precedent set by In re Doll, 419 F.2d 925 (C.C.P.A. 1970), that the two-year limit for filing a broadening reissue application applies only to the filing date of the first broadening reissue application. Subsequently filed reissue applications that are continuing applications of a broadening application previously filed within the two-year time limit satisfy the requirement set forth in 35 U.S.C. § 251, even when filed after two years from the issuing date of the original patent. This rule still applies when the broadening claims of the subsequently filed reissue application are unrelated to the broadening claims filed in the first broadening application.
Erik P. Staats and Robin D. Lash (“Appellants”) filed a patent application, entitled “Isochronous Channel Having a Linked List of Buffers,” on April 1, 1996. The application described two separate embodiments: a first embodiment directed to a central processing unit (“CPU”) receiving isochronous data and being able to perform other tasks intermittently; and a second embodiment directed to transferring isochronous data directly between a sender node and a receiver node, thereby bypassing the CPU. The patent application, which included claims directed only to the first embodiment, issued as U.S. Patent No. 5,940,600 on August 17, 1999. Within two years, Appellants filed a first reissue application with broadening claims directed to the first embodiment. Appellants then filed a second reissue application as a continuation of the first reissue application, while the first reissue application was still pending (on May 12, 2004). This second reissue application addressed errors related only to the first embodiment. Appellants next filed a third reissue application as a continuation of the second reissue application, while the second reissue application was still pending (on August 11, 2006).
During prosecution of the third reissue application, Appellants added claims that were directed to the second embodiment. The patent examiner rejected these claims under 35 U.S.C. § 251, after finding that the new claims were “not related in any way to what was covered in the original broadening reissue.” On appeal before the Board, the examiner’s rejection was sustained, finding that the new claims were “directed to an invention that [was] independent and distinct” from that claimed in either the original patent application or the first broadening reissue application. In rejecting the new claims, the Board stated that attempting to claim the new embodiment was “unforeseeable” and that the “public notice function of § 251 had not been met.”
On appeal, the Federal Circuit noted that it was bound by precedent set in Doll and, on that basis, reversed the Board’s rejection of the claims under § 251. The Federal Circuit ruled that the Appellants’ first broadening reissue application was filed within the two-year window, and that the third reissue application properly claimed priority to the first broadening reissue application. In reversing the Board, the Federal Circuit dismissed the U.S. Patent and Trademark Office’s argument that the public was not properly notified of the subject matter of the new claims because they were “unrelated” to the claims of the first broadening reissue application. Specifically, the Federal Circuit noted that Doll made no distinction between related and unrelated claims.
In a concurring opinion, Judge O’Malley stressed the validity of the ruling in Doll, noting that the majority opinion appears to be “no more than a begrudging nod to Doll’s precedential effect with an invitation to reconsider that decision.” In particular, Judge O’Malley cites “the plain language of 251, the legislative history, long-standing unambiguous regulations implementing the statute, all relevant case law, and common sense” as compelling reasons to reverse the Board’s decision.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1443.pdf
Patrick Kartes is an Associate in the IP Group of Alston & Bird’s Charlotte office.
Infringement: Generally
Litigation Practice and Procedure: Jurisdiction: Generally
Zoltek Corp. v. United States, et al., No. 09-5135 (Fed. Cir. (Ct. Cl.) Mar. 14, 2012) (en banc). Opinion by Gajarsa, joined in part by Rader, Newman, Lourie, Bryson, Linn, Prost, Moore, O’Malley, Reyna, and Wallach. Dissenting opinion by Dyk. Determining that its 2006 decision in Zoltek Corp. v. United States was erroneous, the Federal Circuit held that contractors acting by and for the United States are immune from individual liability for patent infringement when the United States is subject to suit under 28 U.S.C. § 1498(a), and that the United States may be liable for infringement under § 1498(a) where it can be shown there was infringement by a contractor under 35 U.S.C. § 271(a) or § 271(g).
In 1996, Zoltek Corp. (“Zoltek”) sued the United States (“the Government”) for infringement of U.S. Reissue Patent No. 34,162, which is directed to methods for making carbon fiber. The alleged infringement relates to the Government’s F-22 fighter jet, which was manufactured by Lockheed Martin Corp. (“Lockheed”) pursuant to a contract with the Government. Zoltek alleged that the F-22 contains carbon fiber made in an infringing manner and that, under 28 U.S.C. § 1498(a), the Government is liable for infringement as the F-22 was “used or manufactured by or for” the Government.
Following Zoltek’s initial complaint, years of litigation ensued before the Court of Federal Claims. That litigation culminated in a Federal Circuit ruling that Zoltek’s infringement allegations were precluded by § 1498 as (1) direct infringement under 35 U.S.C. § 271(a) is a prerequisite for Government liability under § 1498(a) and (2) certain of the allegedly infringing manufacturing steps were performed in a foreign country and, thus, there was no direct infringement under § 271(a). Zoltek Corp. v. United States, 442 F.3d 1345 (Fed. Cir. 2006).
On remand to the Court of Federal Claims, Zoltek sought leave to amend its complaint to add a claim against Lockheed for infringement under 35 U.S.C. § 271(g) and to transfer that claim to the U.S. District Court for the Northern District of Georgia pursuant to 28 U.S.C. § 1631. The Court of Federal Claims held that the claim against Lockheed was permissible because (1) Zoltek’s claim arose in a foreign country, (2) the provisions of § 1498 do not apply to claims arising from a foreign country under § 1498(c), and thus (3) the government contractor immunity provided by § 1498(a) does not apply to Lockheed. The court then certified the following question for interlocutory appeal to the Federal Circuit: “whether 28 U.S.C. § 1498(c) must be construed to nullify any government contractor immunity provided in § 1498(a) when a patent infringement claim arises in a foreign country.”
On appeal, the Federal Circuit recognized that it had erred in its 2006 Zoltek decision and held that, under § 1498, the Government’s immunity is waived for any direct infringement by a contractor under either § 271(a) or § 271(g). Under § 271(g), the court noted that the allegedly infringing acts—use and importation of a product made by a process patented in the United States—occurred within the United States and thus § 1498(c) did not apply. In addition, the court clarified that “when the United States is subject to suit under § 1498(a) for alleged infringement of a patent by a contractor acting by and for the United States, the contactor by law is rendered immune from individual liability for the alleged infringement.”
In a dissenting opinion, Judge Dyk stated that the court did not have jurisdiction to order reinstatement of claims against the Government when the certified order for interlocutory appeal addressed only the transfer of claims against Lockheed. In addition, Judge Dyk felt it was erroneous on the merits to incorporate § 271(g) into § 1498(a).
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-5135.pdf
Chris Kelly is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Defenses: Miscellaneous Defenses
Claim Interpretation: Claim Differentiation
Claim Interpretation: Intrinsic Evidence: Specification
Claim Interpretation: Intrinsic Evidence: Preferred Embodiments
Marine Polymer Technologies, Inc. v. HemCon, Inc., No. 10-1548 (Fed. Cir. (D.N.H.) Mar. 15, 2012) (en banc). Opinion by Lourie, joined by Rader, Newman, Bryson, and Prost, and joined in part by Linn. Dissenting opinion by Dyk, joined by Gajarsa, Reyna, and Wallach, and joined in part by Linn. Affirming the district court’s claim construction and addressing an intervening rights issue stemming from a related reexamination, the Federal Circuit held that (1) intrinsic evidence, such as a patent’s specification, may overcome claim differentiation principles when construing claims, and that (2) intervening rights stemming from changes in claim scope during reexamination are available only for claims that were newly added or textually amended during reexamination.
Marine Polymer Technologies, Inc. (“Marine Polymer”) sued HemCon, Inc. (“HemCon”) for infringement of U.S. Patent No. 6,864,245 (“the ’245 patent”). The ’245 patent is directed to “biocompatible” compositions of p-GlcNAc, a naturally occurring polymer useful in various industrial, pharmaceutical, and biomedical applications. During a Markman hearing, the U.S. District Court for the District of New Hampshire concluded that “biocompatible” meant p-GlcNAc having “no detectable biological reactivity.” Applying this construction, the district court held that HemCon infringed the ’245 patent.
During the district court proceedings, HemCon filed a request for ex parte reexamination of the ’245 patent in the U.S. Patent and Trademark Office (“PTO”). In the reexamination, the examiner noted the breadth of certain dependent claims and concluded, on the basis of claim differentiation, that “biocompatible” should mean “little or no detectible reactivity.” Marine Polymer subsequently canceled these dependent claims and argued that the district court’s narrower construction of “biocompatible” was thus appropriate. The examiner agreed, and the PTO confirmed the remaining claims as patentable.
On appeal, the Federal Circuit affirmed the district court’s judgment on infringement and its injunction and damages award. The court first concluded that the district court’s interpretation of “biocompatible” was properly supported by intrinsic evidence, particularly the specification’s repeated disclosure of p-GlcNAc exhibiting no detectable reactivity. Recognizing the inconsistency between this construction and some of the original dependent claims, the court affirmed its earlier holdings that claim differentiation is not a rigid rule and “will be overcome by a contrary construction dictated by the written description or prosecution history.”
The court next assessed whether HemCon acquired intervening rights due to the change in scope of the ’245 patent’s claims resulting from reexamination. Pointing to 35 U.S.C. § 307(b)’s provision that any “amended or new claim” determined to be patentable in a reexamination may give rise to intervening rights, HemCon argued that a change to the scope of a claim via argument may constitute an “amendment.” The en banc court, by a split vote of 6-4, rejected this argument, holding that clear statutory language and “the long understanding of practitioners in the field” requires the text of a claim to be altered in order to qualify as being “amended” under § 307(b). As the claims asserted against HemCon were neither “new” nor “amended,” the court held that intervening rights were not available.
Dissenting from the majority, Judge Dyk stated that greater importance should be afforded to the doctrine of claim differentiation and warned that the majority’s approach would allow patentees to eliminate questions of validity post-issuance by narrowing claims to a single preferred embodiment. In addition, Judge Dyk stated that “intervening rights should be available where an argument during reexamination rises to the level of a clear and unambiguous disclaimer or disavowal of the original, correct claim construction.”
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1548.pdf
Chris Kelly is an Associate in the IP Group of Alston & Bird’s Atlanta office.
The Patent Application: Claims: Indefiniteness
Claim Interpretation: Means-Plus-Function
Ergo Licensing, LLC, et al. v. CareFusion 303, Inc., No. 11-1229 (Fed. Cir. (D. Me.) Mar. 26, 2012). Opinion by Moore, joined by Linn. Dissenting opinion by Newman. Affirming the district court’s judgment of invalidity, the Federal Circuit held that two computer-implemented means-plus-function terms were indefinite because there was no corresponding algorithm disclosed in the specification. The court ruled that the specification merely provides functional language without any algorithm for performing the function of “controlling the adjusting means.”
Ergo Licensing, LLC and Dr. Uvo Holschering (collectively “Ergo”) accused CareFusion 303, Inc. of infringing Claims 1-12, 15-16, and 18-20 of U.S. Patent No. 5,507,412, which relates to an infusion system used to meter and simultaneously deliver fluids from multiple sources into a patient’s body. Prior to the Markman hearing, the parties stipulated that several of the claim terms were means-plus-function terms, including the terms “programmable control means” and “control means.” The parties also agreed that the function for both of these terms was “controlling the adjusting means.” The U.S. District Court for the District of Maine held that both of these terms were indefinite for failure to disclose corresponding structure.
On appeal, Ergo argued that a “control device” disclosed in the specification provided the corresponding structure for the “control means” terms. The Federal Circuit disagreed, holding that the specification did not disclose sufficient structure for a “control device” because there were at least three different types of control devices commonly available and used at the time to control adjusting means. The court reasoned that although one of ordinary skill in the art may have been able to find a structure to perform the desired function, the specification did not disclose a specific corresponding structure to the function.
The Federal Circuit also held that even if a “control device” were synonymous with a general purpose computer, as Ergo also contended, the “control means” terms were still indefinite because there was no algorithm disclosed in the specification. The court referenced its precedent establishing that the corresponding structure for computer-implemented means-plus-function terms is limited to the algorithms disclosed in the specification, and that the disclosed structure must be more than simply a general purpose computer or microprocessor. A “narrow exception” to this rule is available when the function can be achieved by any general purpose computer without special programming. However, here, the court ruled that the exception did not apply because special programming was required for a general purpose computer to perform the claimed function of “controlling the adjusting means.”
Judge Newman dissented, stating that the patent disclosed sufficient structure for the “control device.” Judge Newman opined that the majority had not identified any specific deficiencies in the specification and failed to give proper deference to the Patent Office’s determination that the specification contained sufficient structure. Judge Newman also noted that this ruling called into question the validity of thousands of patents because the patentee had followed well-established protocol for disclosing components that all parties agreed were well known in the art.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1229.pdf
Matt McNeill is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Licenses
Promega Corp., et al. v. Life Technologies Corp., et al., No. 11-1263 (Fed. Cir. (W.D. Wis.) Mar. 28, 2012). Opinion by Dyk, joined by Rader. Dissenting opinion by Newman. The Federal Circuit affirmed an order by the U.S. District Court for the Western District of Wisconsin compelling arbitration between Promega Corporation (“Promega”) and Invitrogen IP Holdings, Inc. (“IP Holdings”) regarding a patent license agreement because IP Holdings had the right under a 1996 agreement between the parties to demand arbitration and because the dispute fell within the scope of the arbitration provision.
The Federal Circuit rejected Promega’s argument that the arbitration clause was permissive, rather than mandatory, which would have permitted Promega to refuse arbitration. While the agreement provided that the parties “may” invoke the arbitration provision, it also provided that any dispute arising out of the agreement “shall” be submitted for arbitration once the provision has been invoked. Accordingly, the court held that while the agreement does not compel a party to demand arbitration, once a party does so, the plain language of the agreement shows that arbitration is mandatory, not permissive.
In rejecting Promega’s argument that IP Holdings is merely a shell subsidiary and the real party-in-interest is Life Technologies, the Federal Circuit held that there was no question that Promega consented to Invitrogen’s assignment of rights under the agreement to IP Holdings and failed to consent to the assignment of rights from IP Holdings to Life Technologies. Thus, although IP Holdings may have intended to transfer its rights under all agreements, the transfer was not effective because Promega never consented, as required by the agreement.
The Federal Circuit also held that the dispute clearly fell within the plain language of the arbitration provision. The court rejected Promega’s argument that the provision was meant to apply only to small disputes or to disputes with those who did not compete with Promega because the unexpressed intent of the parties cannot limit the scope of the broad arbitration clause.
Stressing the well-established presumption in favor of arbitration, the Federal Circuit also rejected Promega’s argument that compelling arbitration would be unfair and unjust in this case due to the limits on third-party discovery set forth in the arbitration provisions of the agreement. The Federal Circuit noted that Promega had not identified any case in which limitations on discovery warranted a departure from the Federal Arbitration Act’s mandate to enforce arbitration provisions.
The Federal Circuit also rejected Promega’s argument that arbitration should be avoided because patent infringement claims would remain pending in the district court. The court noted that the relevant federal law not only permits, but requires piecemeal resolution of claims when necessary to give effect to an arbitration provision.
Judge Newman dissented, stating that there was no consent to assignment of rights under the agreement to Life Technologies, the party of interest for the dispute, and thus the arbitration provision could not be invoked.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1263.pdf
Matt McNeill is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Patentable Invention: Obviousness: Generally
Defenses: Fraud and Inequitable Conduct: Materiality
Defenses: Fraud and Inequitable
Conduct: Intent to Deceive
Aventis Pharma S.A., et al. v. Hospira, Inc., et al., No. 11-1018 (Fed. Cir. (D. Del.) Apr. 9, 2012). Opinion by Prost, joined by Linn and Dyk. In affirming the U.S. District Court for the District of Delaware’s rulings on obviousness, non-infringement, and inequitable conduct, the Federal Circuit held that an inventor who withheld from the USPTO a reference key to the district court’s obviousness determination committed inequitable conduct when the single most reasonable inference that could be drawn from the facts was that the withholding was intentional.
Aventis Pharma S.A. and Sanofi-Aventis U.S., LLC (collectively “Sanofi”) sued Hospira, Inc. (“Hospira”) and Apotex Inc. and Apotex Corp. (collectively “Apotex”) for infringement of U.S. Patent Nos. 5,750,561 (“the ’561 patent”) and 5,714,512 (“the ’512 patent”). The ’561 and ’512 patents cover Sanofi’s chemotherapy drug Taxotere. After a bench trial, the district court held that Claim 5 of the ’561 patent and Claim 7 of the ’512 patent were invalid as obvious under 35 U.S.C. § 103 and that Claim 7 of the ’512 patent was not infringed. The district court also determined that both patents were unenforceable for inequitable conduct because an inventor intentionally withheld references that were “but for” material to patentability.
On appeal, the Federal Circuit affirmed the district court’s construction of the claim term “perfusion,” as well as the district court’s rulings on obviousness and unenforceability.
In affirming the district court’s construction of the term “perfusion,” the Federal Circuit refused to read into the claim an additional limitation requiring that the perfusion was effective for treatment, safe, and stable for at least eight hours because the patentee did not act as its own lexicographer or limit the claim scope during prosecution.
After affirming the district court’s claim construction, the court then held that Claim 5 of the ’561 patent was obvious in light of the Gueritte-Voegelein reference (“the GV reference”) and the Dictionnaire Vidal (“the Vidal reference”). The court similarly affirmed the district court’s ruling that Claim 7 of the ’512 patent was obvious.
Finally, the Federal Circuit affirmed the district court’s determination that the ’561 and ’512 patents are unenforceable for inequitable conduct. The court held that, under the test recently set forth en banc in Therasense, Inc. v. Becton, Dickinson & Co., both the materiality and intent requirements had been met. The court held that the “but for” materiality standard was met because the claims were obvious in view of the withheld GV and Vidal references. In addition, the court held that despite the inventor’s assertion that he withheld the references because he considered them failed experiments, the inventor’s specific intent to deceive the USPTO was the “single most reasonable inference that could be drawn” from his conduct.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1018.pdf
Chris McArdle is an Associate in the IP Group of Alston & Bird’s New York City office.
The Patent Application: Claims: Indefiniteness
Claim Interpretation: Means-Plus-Function
Noah Systems, Inc. v. Intuit Inc., No. 11-1390 (Fed. Cir. (W.D. Pa.) Apr. 9, 2012). Opinion by O’Malley, joined by Rader and Reyna. In affirming the U.S. District Court for the Western District of Pennsylvania’s decision that a computer-implemented means-plus-function limitation in the asserted patent claims was indefinite, the Federal Circuit held that the patent’s specification failed to disclose algorithms that perform all of the functions associated with the means-plus-function term.
Noah Systems, Inc. (“Noah”) sued Intuit Inc. (“Intuit”) for infringement of U.S. Patent No. 5,875,435 (“the ’435 patent”). Noah asserted that Intuit’s Quicken and QuickBooks software products infringed its patent relating to a system allowing a business or individual to connect to a company’s computer system and transmit financial information. The district court granted Intuit’s motion for summary judgment of invalidity and held that the “access means” limitation found in all of the asserted claims of the ’435 patent was indefinite and that the claims were, therefore, invalid under 35 U.S.C. § 112, ¶ 2.
On appeal, the Federal Circuit affirmed the district court’s holding that the “access means” limitation was indefinite and that the claims containing that limitation were invalid. Because these claims contained means-plus-function limitations subject to 35 U.S.C. § 112, ¶ 6, the Federal Circuit looked at whether there was a “corresponding structure in the written description of the patent” that performed the claimed function. In this case, the Federal Circuit held that since the claimed limitation involved a “special purpose computer-implemented means-plus-function limitation” the structure found in the written description must be more than “simply a general purpose computer” and that “an algorithm for performing the claimed function” must be disclosed.
The Federal Circuit determined that the patent at issue involved a means-plus-function limitation with two distinct functional components: (1) providing access to a financial accounting computer’s file and (2) enabling the performance of specified operations (entering, deleting, reviewing, adjusting, and processing data inputs). The Federal Circuit agreed that although the patent specification disclosed an algorithm for providing access to the financial accounting computer’s file, it did not disclose an algorithm for the “enabling the performance” function associated with the “access means” limitation. The court further noted that it was insufficient for the written description to disclose an algorithm supporting some of the means-plus-function limitation’s functions but not others. In such a circumstance, the Federal Circuit noted that it treats the specification as if no algorithm has been disclosed. Thus, the Federal Circuit affirmed the district court’s grant of summary judgment of invalidity.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1390.pdf
Chris McArdle is an Associate in the IP Group of Alston & Bird’s New York City office.
Litigation Practice and Procedure: Procedure: Special Writs
Litigation Practice and Procedure: Privileges: Generally
In re MSTG, Inc., Misc. Dkt. No. 996 (On Petition for a Writ of Mandamus (N.D. Ill.) Apr. 9, 2012). Order by Dyk, joined by Rader and Moore. In affirming the U.S. District Court for the Northern District of Illinois’s order compelling MSTG, Inc. (“MSTG”) to produce documents related to license negotiation discussions between MSTG and six other companies, the Federal Circuit held, as a matter of first impression, that communications related to reasonable royalties and damages are not protected from discovery based on a settlement negotiation privilege.
In 2008 and 2009, MSTG sued AT&T Mobility, LLC (“AT&T”) and other cell phone service providers for infringement of MSTG’s patents covering third-generation (“3G”) mobile communications technologies. MSTG eventually settled its claims with all parties except AT&T and granted patent licenses to most of the settling parties. During discovery, and in response to AT&T’s document requests, MSTG produced six license agreements and an option agreement (collectively “settlement agreements”). MSTG objected, however, to AT&T’s requests for discovery into the negotiations of those settlement agreements, and a magistrate denied AT&T’s motion to compel. AT&T moved for reconsideration of the magistrate’s order based on an expert report submitted by MSTG stating that the expert did not find the royalty rates in the settlement agreements to be “comparable to the hypothetical negotiations between MSTG and AT&T” because most of the royalty agreements were “litigation related compromises.” In view of the expert report, the district court ordered MSTG to produce the negotiation documents leading up to the settlement agreements. MSTG petitioned the Federal Circuit for a writ of mandamus to vacate the district court’s order, urging the Federal Circuit to fashion a new privilege in patent cases that would prevent discovery of litigation settlement negotiations related to reasonable royalties and damages.
On appeal, the Federal Circuit denied MSTG’s petition and refused to recognize a new privilege relating to settlement negotiations. In deciding against the recognition of a settlement negotiation privilege, the court looked to several factors identified by the U.S. Supreme Court as relevant to defining a new privilege under Federal Rule of Evidence 501. First, the policy decisions of the states would not be frustrated by the failure to recognize the proposed privilege. Second, Congress previously failed to adopt such a privilege. Third, the Advisory Committee of the Judicial Conference of the United States had not recommended such a privilege. Fourth, an across-the-board recognition of a broad settlement negotiation privilege is not necessary to achieve settlement. Fifth, any settlement negotiation privilege would be riddled with exceptions, thereby limiting the privilege’s effectiveness. The court also recognized that other effective methods to limit the scope of discovery already existed.
Finally, the Federal Circuit held that it would be unfair to allow MSTG’s expert to rely on information outside of the four corners of the settlement agreements while at the same time denying AT&T discovery of that same information. The Federal Circuit thus denied MSTG’s petition and concluded that the district court did not clearly abuse its discretion in ordering the production of the settlement negotiation documents.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-m996%20order.pdf
Chris McArdle is an Associate in the IP Group of Alston & Bird’s New York City office.
Patentable Invention: Obviousness: Secondary Considerations of Nonobviousness
The Patent Application: Specification: Best Mode Requirement | Defenses: Invalidity
Litigation Practice and Procedure: Procedure: Burden of Proof
In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litigation, Nos. 11-1399, -1409 (Fed. Cir. (D. Del.) Apr. 16, 2012). Opinion by O’Malley, joined by Newman and Reyna. The Federal Circuit reversed and vacated the judgment of invalidity rendered by the U.S. District Court for the District of Delaware because without a known pharmacokinetic/pharmacodynamics (“PK/PD”) relationship for the claimed drug formulation, a finite number of identified, predictable solutions did not exist to support a finding of obviousness. The Federal Circuit further ruled that the district court erred in considering objective evidence of nonobviousness only for purposes of subsequently rebutting its obviousness determination. Lastly, the Federal Circuit clarified that once it is determined that an inventor had a best mode for practicing the invention, the determination whether that mode was disclosed should focus solely upon the content of the specification.
Aptalis Pharmatech, Inc. (“Aptalis”) owns U.S. Patent Nos. 7,387,793 and 7,544,372 (“the ’793 and ’372 patents”), which cover a modified-release dosage form of skeletal muscle relaxants and a corresponding method of relieving muscle spasms therewith. Aptalis sued Mylan Pharmaceuticals, Inc. and Mylan, Inc. (collectively “Mylan”), asserting that Mylan’s abbreviated new drug applications for generic versions of extended-release cyclobenzaprine hydrochloride infringed the ’793 and ’372 patents. The district court found the claims of both patents obvious based upon the bioequivalence of immediate versus extended-release PK profiles. Aptalis appealed the judgment of invalidity, and Mylan cross-appealed the district court’s later-imposed injunction.
On appeal, the Federal Circuit first rejected the district court’s determination of obviousness based upon bioequivalence alone, stating that the court was also required to consider the asserted claims’ limitation requiring therapeutic effectiveness, and whether it would have been obvious to one of ordinary skill in the art at the time of the invention that a bioequivalent PK profile would satisfy that limitation. In ruling that it would not, the Federal Circuit relied primarily upon evidence that PD profiles—not PK profiles—determine therapeutic effectiveness and that without a known PK/PD relationship for the claimed drug formulation, one of ordinary skill in the art would be “merely throw[ing] metaphorical darts at a board” in hopes of arriving at a successful result. According to the Federal Circuit, in these types of scenarios, district courts should reject such “hindsight claims of obviousness.”
The Federal Circuit then emphasized that none of its precedent should be construed as indicating or suggesting that the burden of persuasion of invalidity should shift to the patentee before consideration of objective considerations of nonobviousness. Instead, according to the court, the burden of establishing invalidity of a patent always rests upon the party asserting invalidity, and district courts, in their fact finding role, should consider any objective evidence of nonobviousness before reaching an obviousness determination. Otherwise, there is a risk of introducing hindsight bias into the analysis.
Lastly, the Federal Circuit rejected Mylan’s argument that the inventor did not seek to conceal his contemplated best mode, clarifying that the objective analysis must focus not on the inventor’s intentions, but only upon the scope and content of the as-filed specification.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1399-1409.pdf
Chris Lightner is an Associate in the IP Group of Alston & Bird’s Atlanta office.
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