Patent Case Summaries
Article Date: Thursday, March 08, 2012
Defenses: Miscellaneous Defenses | Remedies: Damages: Patent Marking/Notice of Infringement
Monsanto Co., et al. v. Bowman, No. 10-1068 (Fed. Cir. (S.D. Ind.) Sept. 21, 2011). Opinion by Linn, joined by Bryson and Dyk.In upholding the U.S. District Court for the Southern District of Indiana’s grant of summary judgment of infringement, the Federal Circuit held that the right to “use” does not encompass the right to construct or replicate a new article based on the template for the original. In this case, the Federal Circuit concluded that the right to use does not include planting the progeny of genetically altered seeds covered by U.S. patents.
Monsanto Co. (“Monsanto”) is the owner of two patents covering genetically modified “Roundup Ready®” soybeans that exhibit resistance to certain herbicides, such as Monsanto’s Roundup® product: U.S. Patent Nos. 5,352,605 and RE 39,247E. Since 1996, Monsanto marketed and sold Roundup Ready® soybean seeds and licensed its technology to seed producers who insert the Roundup Ready® genetic trait into their own seed varieties. All sales to growers, whether from Monsanto or its licensed producers, were subject to Monsanto’s Technology Agreement.
In 2002, Pioneer Hi-Bred (“Pioneer”), one of Monsanto’s licensees, sold Pioneer Hi-Bred® brand seeds containing the Roundup Ready® technology to Vernon Hugh Bowman (“Bowman”), the defendant-appellant. Bowman was required to sign the Pioneer Technology Agreement, which contained the same language and restrictions as the Monsanto Technology Agreement. In 1999, however, Bowman also purchased commodity seed from a local grain elevator for a second-crop. That same year, Bowman applied herbicide to the fields in which he had planted the commodity seeds to determine, in part, whether the plants would exhibit resistance, which they did. Bowman saved the seed harvested from his second-crop for replanting additional second-crops in later years. Monsanto sued Bowman for patent infringement based on Bowman’s second-crops.
The district court granted summary judgment of infringement in favor of Monsanto. On appeal, Bowman argued that theories of patent exhaustion preclude a finding of infringement. Bowman also asserted that Monsanto could not recover pre-Complaint damages for lack of actual notice and failure to mark in compliance with 35 U.S.C. § 287(a).
In affirming the district court’s decision with respect to patent exhaustion, the Federal Circuit noted that Monsanto’s patent rights in the commodity seeds were not exhausted because the Monsanto Technology Agreement related to the use of the seeds, and the price paid by the purchaser reflected only the value of the “use” rights conferred by the patentee, i.e., the right to plant seeds covered by Monsanto’s patents. The Federal Circuit noted that even if Monsanto’s patent rights in the commodity seeds were exhausted, a conclusion of patent exhaustion would be of no consequence because once a grower plants the commodity seeds containing Monsanto’s Roundup Ready® technology and the next generation of seed develops, the grower has created a newly infringing article. The Federal Circuit disagreed with Bowman’s contention that, pursuant to the Monsanto Technology Agreement, a seed “substantially embodies” all later generation seeds and noted that nothing in the record indicated that the “only reasonable and intended use” of commodity seeds is to replant them to create new seeds.
The Federal Circuit also noted that Bowman had actual notice of the patents covering Monsanto’s Roundup Ready® soybeans. Monsanto’s letter identified the infringing product, explained that Bowman would infringe the identified patent by planting unlicensed seeds, and noted that Bowman could pay a fee to license seeds. The Federal Circuit noted that Monsanto’s notice letter was sufficient to constitute “actual notice” under § 287(a), rendering the issue of constructive notice through marking moot.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1068.pdf
Matt Ennis is an Associate in the IP Group of Alston & Bird’s Charlotte office.
Patentable Invention: Anticipation: Generally | Claim Interpretation: Intrinsic Evidence: Specification | Litigation Practice and Procedure: Procedure: Waiver | Litigation Practice and Procedure: Procedure: JMOL Procedure | Cordance Corp. v. Amazon.com, Inc., Nos. 10-1502, -1545 (Fed. Cir. (D. Del.) Sept. 23, 2011). Opinion by Linn, joined by Lourie and Dyk. The Federal Circuit affirmed the U.S. District Court for the District of Delaware in holding that, when seeking to swear behind prior art references, parties must link the disclosures in documents to the asserted claims at issue. The Federal Circuit also reversed the lower court’s grant of Cordance Corporation’s (“Cordance”) post-grant judgment as a matter of law (“JMOL”) regarding invalidity and held that Cordance waived arguments relating to a new trial on invalidity for two claims by failing to present arguments relating to the claims. Finally, the Federal Circuit upheld the court’s construction of the claim term “feedback information.”
Cordance sued Amazon.com, Inc. (“Amazon”), alleging infringement of U.S. Patent Nos. 5,862,325 (“the ’325 patent”); 6,088,717 (“the ’717 patent”); and 6,757,710 (“the ’710 patent”), all relating to online purchasing systems. Following a trial, the jury found that although Amazon infringed certain claims of the ’710 patent, all asserted claims of the ’710 patent were invalid. The jury also found that Amazon did not infringe any of the asserted claims of the ’717 patent or the ’325 patent. Following the jury’s verdict, the district court granted Cordance’s motion for JMOL that insufficient evidence supported the jury’s finding that certain claims of the ’710 patent are invalid for various reasons.
Amazon appealed the court’s grant of JMOL, claiming that substantial evidence supported the jury’s findings of invalidity. Cordance cross-appealed the jury’s finding of invalidity as to certain other claims of the ’710 patent, as well as the lower court’s construction of the claim term “feedback information” and its finding that the ’710 patent was entitled to an effective filing date of Sept. 27, 1996.
With respect to the effective filing date of the ’710 patent, Amazon argued that Cordance failed to link any disclosure contained in the alleged priority documents to any asserted claims of the ’710 patent. The Federal Circuit agreed with Amazon and held that Cordance failed to prove what the disclosures in the alleged priority document would mean to one of skill in the art or how that meaning would support or describe the asserted claims of the ’710 patent.
Regarding the district court’s grant of JMOL relating to invalidity, the Federal Circuit held that certain claims of the ’710 patent are anticipated by Amazon’s earlier-disclosed shopping cart system as a matter of law, relying on testimony from Amazon’s expert. The Federal Circuit also held that Claim 9 of the ’710 patent was invalid because the district court had no basis to find the jury’s general verdict of invalidity unsustainable. Because Cordance never argued the separate issue of certain other claims and did not seek an amended judgment as to those claims, the Federal Circuit held that Cordance had waived its challenge to the sufficiency of the evidence and a new trial as to the validity of those claims.
Finally, the Federal Circuit held that the lower court properly construed the claim term “feedback information” as “information that includes an evaluative review and may also include information related to the review such as its subject or the evaluator” based on the specification of the ’710 patent.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1502-1545%20.pdf
Matt Ennis is an Associate in the IP Group of Alston & Bird’s Charlotte office.
Litigation Practice and Procedure: Procedure: Appellate Jurisdiction and Procedure | Spread Spectrum Screening LLC v. Eastman Kodak Co., et al., No. 11-1019 (Fed. Cir. (N.D. Ill.) Sept. 26, 2011). Opinion by O’Malley, joined by Rader and Lourie. In dismissing an appeal for lack of jurisdiction, the Federal Circuit held that an order staying a district court proceeding is immediately appealable only in a few circumstances.
Spread Spectrum Screening LLC (“S3”) sued Eastman Kodak Co. (“Kodak”) and four of its customers in the Northern District of Illinois for infringement of U.S. Patent No. 5,689,623. The district court granted Kodak’s motion to sever claims asserted against Kodak from the claims against its customers, stay the action against Kodak’s customers, and transfer the case to the Western District of New York. S3 appealed the order, asserting jurisdiction under 28 U.S.C §§ 1292 and 1295. In support, S3 argued that jurisdiction is appropriate because (1) a stay order is a final appealable order; (2) jurisdiction is proper under the customer suit exception to the first-to-file rule; and (3) the stay was effectively an injunction barring suit against Kodak’s customers.
The Federal Circuit disagreed with each of S3’s arguments and dismissed the appeal for lack of jurisdiction. Specifically, the Federal Circuit held that a stay does not dispose of S3’s claims and is thus not a final judgment. While a stay is appealable if it puts the plaintiff effectively out of court, the Federal Circuit held that S3’s reliance on this exception was misguided because the exception applies only where the stay surrenders federal court jurisdiction to a state court or administrative body. The Federal Circuit also rejected any notion that the Supreme Court’s decision in Gillespie, which allowed for appeal from an interlocutory decision that disposed of an unsettled issue of national significance, was applicable to the jurisdictional dispute in the present case.
The Federal Circuit then held that the customer suit exception also did not provide the court with jurisdiction because the exception is primarily concerned with injunctive relief, and S3 did not seek a preliminary injunction or introduce evidence of irreparable harm. The Federal Circuit also noted that the fact that S3 is still able to pursue its claims in federal court is further evidence that the exception did not apply.
Finally, the Federal Circuit held that the stay did not effectively bar suit against Kodak’s customers because it merely suspended litigation.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1019.pdf
David Frist is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Defenses: Fraud and Inequitable Conduct: Intent to Deceive | Claim Interpretation: Generally
Litigation Practice and Procedure: Procedure: JMOL Procedure | Cordis Corp. v. Boston Scientific Corp., et al., Nos. 10-1311, -1316 (Fed. Cir. (D. Del.) Sept. 28, 2011). Opinion by Gajarsa, joined by Bryson and Mayer. In affirming the district court’s grant of judgment as a matter of law, the Federal Circuit (1) held that a district court can clarify, but not alter, a prior claim construction after a jury verdict, and (2) affirmed a district court’s findings of a lack of the specific intent to deceive necessary for a finding of inequitable conduct.
Cordis Corporation (“Cordis”) sued Boston Scientific Corporation and Boston Scientific Scimed, Inc. (collectively “BSC”) for patent infringement, alleging that BSC’s NIR stent infringed U.S. Patent Nos. 5,643,312 (“the ’312 patent”) and 5,879,370 (“the ’370 patent”), which are directed to balloon-expandable stents having undulating longitudinal sections.
After a jury trial, the district court granted BSC’s motion for judgment as a matter of law (“JMOL”) that BCS’s stent did not literally infringe Claims 25 and 26 of the ’370 patent, but denied BCS’s motion for JMOL that Claim 25 of the ’370 patent and Claim 21 of the ’312 patent were invalid for lack of written description. The district court denied Cordis’s motion for JMOL on the reverse doctrine of equivalents as moot. The district court then held a bench trial on the issue of unenforceability due to inequitable conduct and concluded that the ’370 and ’312 patents were unenforceable for failure to disclose U.S. Patent No. 4,856,516 (“the Hillstead patent”) during the prosecution of the ’312 patent, which is the parent patent to the ’370 patent.
In a first appeal, the Federal Circuit held that the Hillstead patent was material, but remanded for additional findings regarding intent. The Federal Circuit declined to reach the infringement holdings of the lower court, but affirmed the district court’s ruling that the ’370 patent was not invalid.
Upon remand, the district court found that the evidence of deceptive intent was not clear and convincing and thus the ’370 and ’312 patents were not unenforceable. BCS appealed the district court’s finding, and the parties renewed their appeals related to infringement.
In this appeal, Cordis argued that BCS’s motion for JMOL of noninfringement of Claim 25 of the ’370 patent sought to alter the court’s claim construction of “undulating” and thus should have been denied. The Federal Circuit held that, while altering a claim construction after a jury’s verdict is not permissible, a district court can clarify or defend the original scope of its claim construction. The Federal Circuit affirmed the district court’s JMOL of noninfringement because the district court merely clarified its prior construction. The Federal Circuit then affirmed the grant of JMOL that Claim 25 was not literally infringed under the court’s claim construction and denied as moot Cordis’s appeal of the denial of its motion for JMOL on the issue of application of the reverse doctrine of equivalents.
As to unenforceability, although the appeal related to the unenforceability of the ’370 patent, the Federal Circuit held that the enforceability of the ’312 and ’370 patents were inextricably linked because the enforceability of the ’312 patent was a predicate issue to determining the enforceability of the ’370 patent. Turning to the merits, the Federal Circuit affirmed the district court’s finding that the ’312 and ’370 patents were not unenforceable because the court could not find clear error in the district court’s conclusion that the applicant’s reliance on an attorney’s advice did not unequivocally demonstrate specific intent to deceive.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1311%20-1316.pdf
David Frist is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Jurisdiction: Subject Matter Jurisdiction | Powertech Technology Inc. v. Tessera, Inc., No. 10-1489 (Fed. Cir. (N.D. Cal.) Sept. 30, 2011). Opinion by Dyk, joined by Moore and O’Malley. In reversing the district court’s dismissal for lack of subject matter jurisdiction, the Federal Circuit held that a district court and an International Trade Commission (“ITC”) action in which a company’s customers were accused of infringing a patent involved a case or controversy between the company and the party that brought the action.
Powertech Technology Inc. (“PTI”) filed a declaratory action against Tessera, Inc., seeking declarations of noninfringement and invalidity of U.S. Patent No. 5,663,106 (“the ’106 patent”). The ’106 patent is directed to a method for preventing contamination of exposed chip terminals of a semiconductor chip during encapsulation. PTI entered into a license with Tessera to assemble, use, or sell certain products (wBGA and µBGA products) covered by Tessera patents, including the ’106 patent. The license agreement requires royalties to be paid regardless of whether PTI’s products are covered by the ’106 patent. PTI asserted that it complied with all terms of the license prior to filing the declaratory action.
Prior to PTI’s filing of the declaratory action, Tessera had asserted that 18 defendants infringed the ’106 patent in a district court and an ITC action. PTI claimed that some of the accused companies were direct or indirect purchasers of PTI’s semiconductor chips. The administrative law judge in the ITC action found that the ’106 patent was not invalid or infringed by the accused products and found that Tessera’s patent rights were exhausted with respect to all products sold by its licensees, including PTI. The ITC, however, found that the µBGA did infringe the ’106 patent but did not issue an exclusion order because the chips were all purchased from licensed vendors, including PTI. In a separate appeal from the current opinion (“the Tessera Appeal”), the Federal Circuit affirmed the ITC findings.
The district court dismissed the declaratory action for lack of subject matter jurisdiction because no actual controversy existed and, alternatively, because the interests of judicial efficiency favored hearing the declaratory judgment action with the already pending district court action related to the ’106 patent. On appeal, PTI argued that two controversies existed to support declaratory judgment jurisdiction: (1) Tessera’s allegations against its customers in the district court and ITC created controversy as to whether the wBGA and µBGA products infringe the ’106 patent, and (2) PTI’s continued obligation to pay royalties under the Tessera license agreement.
As to the first contention, the Federal Circuit held that the district court and ITC actions created declaratory judgment jurisdiction, but the Federal Circuit also held that resolution of the controversy that created this jurisdiction was governed by the Federal Circuit’s opinion in the Tessera Appeal. The Federal Circuit thus vacated the dismissal and remanded the action with instructions to apply the Tessera decision in determining the outcome of the action.
As to the second contention, Tessera argued that the obligation to pay royalties did not create an actual controversy until PTI failed to pay. The Federal Circuit disagreed, citing the Supreme Court’s decision in MedImmune and holding that a licensee does not need to repudiate its license agreement to have standing to sue. Finally, the Federal Circuit reviewed the district court’s alternative grounds for dismissal based on judicial efficiency. The Federal Circuit held that the district court abused its discretion by failing to enforce the forum selection clause in the Tessera license agreement.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1489.pdf
David Frist is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Jurisdiction: § 337 Actions in the ITC | John Mezzalingua Associates, Inc. v. International Trade Commission, No. 10-1536 (Fed. Cir. (I.T.C.) Oct. 4, 2011). Opinion by Bryson, joined by Linn. Opinion dissenting in part by Reyna. The Federal Circuit affirmed the International Trade Commission’s (“ITC” or “Commission”) determination that a patentee failed to establish the economic prong of domestic industry for its design patent, where the patentee sought to rely on a combination of (1) prior litigation expenses to enforce the patent, and (2) research expenditures resulting in both the design patent and a related utility patent.
Appellant, referred to as PPC, brought an ITC complaint to enforce patents including a design patent, D440,539 (“the ’539 patent”), and a utility patent, U.S. Patent No. 6,559,194 (“the ’194 patent”). Both patents claim priority to the same utility application and relate to a coaxial cable connector design. PPC sought relief against eight named respondents as well as a general exclusion order. The Commission found PPC’s evidence regarding prior litigation inadequate to meet the economic prong of domestic industry under Section 337(a)(3)(C) because its evidence failed to establish a nexus between the litigation expenses and licensing. The ALJ noted, for example, that the litigation obtained an injunction lasting nearly two years before any license was obtained for the design patent. Regarding PPC’s evidence of research investment, the Commission found that it should be attributed entirely to the structural and functional design, and not the ornamental design of the ’539 patent.
On appeal, the ITC argued that PPC lacked standing, reasoning that since the only product found to infringe the ’539 patent also infringed the ’194 patent, PPC suffered no injury from the Commission’s decision regarding the ’539 patent. The Federal Circuit disagreed, noting that PPC was seeking a general exclusion order that could expand its rights, were it to receive a favorable decision.
The majority affirmed the Commission’s decision of no domestic industry. The court reviewed the factual findings for substantial evidence, and found adequate support. The majority agreed with the Commission that patent litigation expenditures do not automatically constitute evidence of domestic industry, observing that neither party disputed that PPC must demonstrate a nexus between litigation expenses and licensing.
Judge Reyna dissented regarding the economic prong issues, but not standing. He would have (1) required additional fact finding regarding PPC’s research expenditures, and (2) held that the Commission incorrectly interpreted when litigation expenses should meet the economic prong requirement under Section 337(a)(3)(C). The proper application of litigation expenses was, in Judge Reyna’s view, a legal question of first impression that should have received de novo review. Applying what the majority characterized as a per se approach, Judge Reyna argued that litigation to enforce a patent should constitute an investment in exploitation under Section 337(a)(3)(C).
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1536.pdf
Byron Holz is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Patent Office Procedures: Reexamination | In re Stepan Co., No. 10-1261 (Fed. Cir. (B.P.A.I.) Oct. 5, 2011). Opinion by Prost, joined by Dyk. The Federal Circuit vacated the Board of Patent Appeals and Interferences’ (“Board”) decision invalidating a patent in reexamination and remanded with instructions to designate its rejection as a new ground for rejection, allowing the appellant to pursue further prosecution.
Appellant Stepan Company (“Stepan”) is the assignee of U.S. Patent No. 6,359,022, related to using polyol-based resin blends to create closed-cell polyurethane and polyisocyanurate-based foam. In reexamination, the examiner ruled all claims invalid under Section 102(b) in light of WO 97/21764 (“Singh”). The Board sustained the rejection, but did so by concluding that the Singh reference was prior art under Section 102(a), not 102(b). In doing so, the Board determined that a Rule 1.131 declaration from Stepan was insufficient to prevent Singh from qualifying as prior art under 102(a). The examiner had not considered the sufficiency of the declaration, or treated Singh as 102(a) art.
Stepan appealed, arguing that the Board’s rejection was based on a new ground, allowing further prosecution under 37 C.F.R. § 41.50(b). The Federal Circuit agreed, concluding that the Board’s reliance on new fact findings regarding the Section 1.131 declaration constituted a new ground for rejection. The court also rejected the Patent and Trademark Office’s argument that Stepan had failed to exhaust his administrative remedies by not requesting a rehearing. No request for rehearing was needed, the court reasoned, where the Board has not designated its rejection as a new ground for rejection.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1261.pdf
Byron Holz is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Character of a Patent: Generally | Remedies: Injunctions: Permanent Injunction | Robert Bosch LLC v. Pylon Manufacturing Corp., No. 11-1096 (Fed. Cir. (D. Del.) Oct. 13, 2011). Opinion by O’Malley, joined by Reyna. Opinion dissenting in part by Bryson. In reversing the district court’s decision and remanding for entry of an injunction, the Federal Circuit held that the district court had abused its discretion by denying a post-trial motion for entry of a permanent injunction.
In August of 2008, Robert Bosch LLC (“Bosch”) sued Pylon Manufacturing Corp. (“Pylon”) in the District of Delaware for alleged infringement of U.S. Patent Nos. 6,292,974 (“the ’974 patent”); 6,675,434 (“the ’434 patent”); 6,944,905 (“the ’905 patent”); and 6,978,512, which are related to beam-type windshield wiper blades. Ultimately, Bosch prevailed at trial with respect to infringement of one of the claims of both the ’905 and ’434 patents and subsequently moved for entry of a permanent injunction, which the district court denied. According to the district court, Bosch had failed to show that it would suffer irreparable harm because it failed to define a relevant market, because of the “existence of additional competitors,” and because of the “non-core nature of Bosch’s wiper blade business in relation to its business as a whole.”
On appeal, the Federal Circuit stated that although the Supreme Court’s holding in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), abolished the general rule that an injunction normally would issue if a patent was found to be valid and infringed, it did not “swing the pendulum in the opposite direction.” Accordingly, the Federal Circuit held that the district court had erred in its irreparable harm analysis by finding that the presence of additional competitors, without more, cuts against a finding of irreparable harm. The Federal Circuit also disagreed with the district court’s conclusion that because the infringer’s harm affected only a portion of Bosch’s business, this also cut against a finding of irreparable harm. In addition, the Federal Circuit ruled that the district court committed clear error in judgment based on the record before it because there was undisputed evidence of direct competition in each of the market segments identified by the parties, and there was unrebutted evidence with regard to loss of market share, access to potential customers, as well as Pylon’s inability to satisfy a judgment. The district court had not addressed that evidence, and the Federal Circuit held that there was no basis on which the district court rationally could have concluded that Bosch failed to demonstrate irreparable harm. Finally, the Federal Circuit held that remanding the action for an additional hearing prior to entry of injunctive relief would punish the patentee for the district court’s decision and, therefore, the Federal Circuit remanded the case for entry of an appropriate injunction.
In an opinion dissenting in part, Judge Bryson agreed that the district court erred in its application of the eBay factors and that the district court’s ruling should not be affirmed. Judge Bryson disagreed, however, with the majority’s conclusion that the record compelled issuance of an injunction. Judge Bryson stated that he would not direct entry of an injunction, but instead would remand for the district court to decide whether an injunction should issue based on a proper application of the four eBay factors, in particular because of the open questions with regard to competition in the marketplace, price erosion, loss of customers, and loss of access to customers.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1096.pdf
Matt Howell is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Remedies: Damages: Other Damages | Sanofi-Aventis, et al. v. Apotex Inc., et al., No. 11-1048 (Fed. Cir. (S.D.N.Y.) Oct. 18, 2011). Opinion by Moore, joined by Schall. Opinion dissenting in part by Newman. The Federal Circuit affirmed the U.S. District Court for the Southern District of New York’s holding that the defendants were jointly and severally liable for damages for past infringement. However, the Federal Circuit held that the district court erred by awarding prejudgment interest in addition to actual damages as specified in the parties’ settlement agreement.
In 2001, Apotex Inc. and Apotex Corp. (collectively “Apotex”) filed an abbreviated new drug application (“ANDA”) with the United States Food and Drug Administration (“FDA”) seeking approval to manufacture and sell a generic version of clopidogrel bisulfate tablets prior to the expiration of U.S. Patent No. 4,847,265 (“the ’265 patent”). Along with the ANDA, Apotex alleged that the ’265 patent was invalid. Sanofi-Aventis, Sanofi-Synthelabo, Inc., and Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partnership (collectively “Sanofi”) brought an action for infringement of the ’265 patent within the prescribed time period pursuant to 21 U.S.C. § 355(j)(5)(B)(iii), triggering a thirty-month stay of FDA approval for the ANDA. In May 2006, Apotex and Sanofi agreed that if the litigation resulted in a judgment that the ’265 patent was neither invalid nor unenforceable, then Sanofi’s “actual damages” would be “50 percent of Apotex’s net sales.” At the time, the agreement was subject to approval by the Federal Trade Commission and a consortium of state attorneys general, and was not approved because of a dispute over the existence of an additional oral agreement.
After a bench trial that resulted in findings of infringement, no invalidity, and no unenforceability, the district court set damages for infringement at 50 percent of net sales plus interest, reasoning that the parties should be bound by their prior agreement. The district court also awarded an additional amount for prejudgment interest. Apotex appealed, among other things, the district court’s grant of prejudgment interest and its holding that Apotex Inc. and Apotex Corp. were jointly and severally liable.
On appeal, Apotex argued that the interest payment should be included as part of the damage award and that the judgment therefore exceeded the agreed upon 50 percent damage limitation. Citing New York contract law, the Federal Circuit agreed with Apotex and concluded that the phrase “actual damages,” as used in the contract between the parties, “include[s] all damages necessary to compensate Sanofi for Apotex’s infringement.” Because prejudgment interest is a form of compensatory damages, the Federal Circuit held that the district court erred by awarding additional prejudgment interest pursuant to 35 U.S.C. § 284. The court recognized that, in a separate section of the agreement, the parties expressly stated that prejudgment interest should be awarded.
Relying on the fact that the parties had anticipated payment of prejudgment interest, the Federal Circuit held that the language of the agreement defined “actual damages” as the full measure of all compensatory damages, including prejudgment interest. On the issue of liability for damages, the Federal Circuit agreed with the district court that the agreement between the parties governed. Since Apotex Inc. and Apotex Corp. were both parties to the agreement, the Federal Circuit held that Apotex Inc. and Apotex Corp. had agreed to be jointly and severally liable to Sanofi.
Judge Newman dissented, concluding that the language in the agreement does not alter the general rule that prejudgment interest is awarded on damages for patent infringement. In Judge Newman’s view, in order to make an injured party whole, interest must be paid on the monetary loss.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1048.pdf
Dan Huynh is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Patent Office Procedures: Interferences | Litigation Practice and Procedure: Procedure: Generally | Streck, Inc. v. Research & Diagnostic Systems, Inc., No. 11-1045 (Fed. Cir. (D. Neb.) Oct. 20, 2011). Opinion by Newman, joined by O’Malley and Reyna. In affirming the U.S. District Court for the District of Nebraska’s decision to award priority of invention in a 35 U.S.C. § 146 action, the Federal Circuit held that a district court is not required to accept U.S. Patent and Trademark Office (“PTO”) Board of Patent Appeals and Interferences (“Board”) findings even if those findings are supported by substantial evidence.
Plaintiff Streck, Inc. (“Streck”) filed suit, asserting that Research & Diagnostic Systems, Inc. (“R&D”) infringed U.S. Patent Nos. 6,200,500; 6,221,668; and 6,399,388, which are directed at hematology instruments. R&D argued that the patents were invalid because an R&D employee was an earlier inventor of the same inventions. Concurrently, priority of invention was being contested in an interference proceeding before the PTO, which concluded with the Board awarding priority to R&D. During the course of the district court litigation, the issue of priority was decided using the PTO records along with the evidence adduced from the infringement trial. The jury found that R&D did not prove by clear and convincing evidence that the R&D employee was the first to invent and that he did not abandon, suppress, or conceal his invention. The district court thus awarded priority to Streck, and R&D appealed.
On appeal, the Federal Circuit rejected R&D’s argument that the Board’s findings should prevail if supported by substantial evidence, and therefore, the district court’s de novo review of priority was incorrect. The Federal Circuit held that § 146 specifically provided for such de novo determination of the issue of priority because the “judicial process is the final arbiter of the rights and issues administratively assigned to the PTO.” Additionally, the Federal Circuit recognized that while the Board is “fully capable of assessing all matters presented to it, there are inherent limits to its fact finding function that rise from the sterile nature of a proceeding that is limited to documentary and declaration or deposition evidence.” The Federal Circuit thus affirmed the district court’s award of priority.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1045.pdf
Dan Huynh is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Claim Interpretation: Intrinsic Evidence: Specification | Claim Interpretation: Intrinsic Evidence:
Prosecution Disclaimer | Claim Interpretation: Means-Plus-Function | The Patent Application: Claims: Indefiniteness | Typhoon Touch Technologies, Inc., et al. v. Dell, Inc., et al., No. 09-1589 (Fed. Cir. (E.D. Tex.) Nov. 4, 2011). Opinion by Newman, joined by Rader and Prost. In affirming-in-part and reversing-in-part the district court’s judgment of noninfringement and invalidity, the Federal Circuit held that certain functional limitations were properly construed to require that an infringing device actually perform, or be configured or programmed to perform, a recited function. The Court of Appeals also held that an algorithm explained in prose may provide sufficient structure to support a computer-implemented means-plus-function claim term.
Typhoon Touch Technologies, Inc. (“Typhoon”) sued Dell, Inc. and other mobile device manufacturers for infringement of U.S. Patent No. 5,379,057 (“the ’057 patent”) and U.S. Patent No. 5,675,362 (“the ’362 patent”). Both the ’057 patent and the ’362 patent concern portable, keyboardless computers utilizing touch screen displays for data entry. The U.S. District Court for the Eastern District of Texas held that neither patent was infringed in view of that court’s construction of certain claim terms directed to functions of the claimed portable computers. In general, the district court construed the claims at issue as requiring that an infringing device must actually perform, or be configured or programmed to perform, each function recited in the claims. In addition, the district court held that certain claims were invalid for being indefinite under 35 U.S.C. § 112 ¶ 2.
On appeal, the Federal Circuit first affirmed the district court’s construction of certain claim terms at issue. Relying on each patent’s specification and prosecution history for guidance, the court rejected Typhoon’s argument that an infringing device could have the capability of being configured or programmed to perform the recited functions, without actually being so configured. For example, the court affirmed the district court’s construction that the phrase “a memory for storing at least one data collection application configured to determine contents and formats of said inquiries displayed on said screen” requires that the memory is actually programmed or configured to store the data collection application. The court reached analogous conclusions in regard to recited functions of the claimed computer’s processor. In addition, the court agreed with the district court that each patent’s specification shows that the term “keyboardless” means a device without an integrated mechanical keyboard that accepts a touch-screen keyboard or a hooked up peripheral keyboard.
The Court of Appeals reversed the district court’s holding that the claim term “means for cross-referencing responses to said inquiries with possible responses from one of said libraries” was indefinite under § 112 ¶ 2. Rejecting the district court’s conclusion that each patent’s specification did not contain an algorithm adequate to provide structure for the recited function, the court emphasized that any understandable terms, such as prose, flowcharts, or mathematical algorithms, can provide sufficient structure for a computer-implemented means-plus-function term. The Federal Circuit concluded that the patent’s specification included prose properly reciting the algorithm to be implemented by a programmer, and that no evidence was presented that a programmer of ordinary skill in the field would not have understood how to implement the algorithm.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1589.pdf
Chris Kelly is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Claim Interpretation: Intrinsic | Evidence: Specification | Claim Interpretation: Means-Plus-Function | Infringement: Willful Infringement | Defenses: Fraud and Inequitable Conduct: Materiality | Remedies: Damages: Reasonable Royalty | Powell v. The Home Depot U.S.A., Inc., Nos. 10-1409, -1416 (Fed. Cir. (S.D. Fla.) Nov. 14, 2011). Opinion by Prost, joined by Linn. Opinion concurring in part and dissenting in part by Dyk. The Federal Circuit affirmed the claim construction, inequitable conduct, damages, and attorneys’ fees determinations of the U.S. District Court for the Southern District of Florida, holding that (1) a prior art description in a patent’s specification may be relied upon as support for a structural limitation, rather than a means-plus-function limitation; (2) a failure to update a Petition to Make Special that later becomes inaccurate is not material for purposes of inequitable conduct; and (3) juries considering willfulness need only consider defenses involving questions of fact, not questions of law, under the objective prong.
Michael Powell (“Powell”) sued The Home Depot U.S.A., Inc. (“Home Depot”), alleging infringement of U.S. Patent No. 7,044,039 (“the ’039 patent”), which is directed to an improvement for radial saw guard safety equipment. During prosecution of the ’039 patent, Powell filed a Petition to Make Special (“the Petition”), seeking expedited review because he believed that based on his long-term business relationship with Home Depot, he was obligated to manufacture devices embodying the claims being prosecuted. However, before the Petition was granted, negotiations between Powell and Home Depot broke down, and it became clear that Home Depot would use a third party to supply its radial saw guard equipment, and not Powell. Powell, however, never subsequently updated the Petition to indicate that he was no longer obligated to build and supply devices embodying the claims being sought. After a jury verdict of willful infringement, the district court conducted a bench trial, finding no inequitable conduct and awarding enhanced damages and attorneys’ fees.
On appeal, the Federal Circuit first rejected Home Depot’s argument that the district court improperly refused to construe the term “dust collection structure” as a means-plus-function limitation. The court based its ruling on two factors. First, the lack of “means” language within the claim limitation created a presumption against construing the limitation as a means-plus-function term. Second, the presumption against a means-plus-function construction could not be overcome because the term “dust collection structure” is “sufficiently definite” in the context of the claim itself and the patent’s written description. The court held that not only are the details of the “dust collection structure” sufficiently depicted in the patent’s specification, but also the written description further identifies several prior art patents that disclose various types of dust collection structures.
As to the issue of inequitable conduct, the Federal Circuit relied upon its en banc decision in Therasense (which issued subsequent to the district court’s ruling) to reject Home Depot’s argument that Powell’s failure to correct the Petition constitutes inequitable conduct. According to the Federal Circuit, Powell’s conduct “obviously fails the but-for materiality standard” required by Therasense and is not the type of unequivocal act, “such as the filing of an unmistakably false affidavit,” that would rise to the level of “affirmative egregious misconduct,” as required for inequitable conduct.
Turning to the jury’s determination that Home Depot willfully infringed the ’039 patent, the Federal Circuit rejected Home Depot’s argument that the jury should have considered the district court’s previous denial of a preliminary injunction when evaluating the objective prong of willfulness. In so doing, the court clarified that while defenses to willful infringement involving questions of fact should proceed to jury consideration, those involving questions of law should not. In dissenting-in-part, Judge Dyk questioned the finding that Home Depot’s defense was objectively unreasonable and would have set aside the willfulness finding and the enhanced damages award.
Finally, the Federal Circuit addressed an issue regarding a use-based reasonable royalty award. At trial, the jury awarded $15 million, or approximately $7,736 per unit, in damages as a reasonable royalty that Powell would have received from Home Depot for the right to use his invention. Home Depot challenged the jury’s award, arguing that a reasonable royalty cannot exceed lost profits, and further arguing that Home Depot’s net profit margin on the saws at issue should set the upper bound of the reasonable royalty calculation. The Federal Circuit disagreed, noting that (1) neither an infringer’s nor a patentee’s profit expectation sets a cap on the reasonable royalty that the patentee may receive, and (2) the jury’s reasonable royalty determination was supported by substantial evidence.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1409-1416.pdf
Chris Lightner is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Litigation Practice and Procedure: Venue | In re Link_A_Media Devices Corp., No. 11-M990 (Fed. Cir. (D. Del.) Dec. 2, 2011). Per curiam opinion before Rader, Dyk, and O’Malley. The Federal Circuit granted Link_A_Media Devices Corp.’s (“LAMD”) petition for a writ of mandamus and ordered that the case be transferred to the U.S. District Court for the Northern District of California, holding that the U.S. District Court for the District of Delaware had abused its discretion in denying transfer of venue under 28 U.S.C. § 1404(a).
Bermuda-based Marvell International Ltd. (“Marvell”) brought suit against LAMD in the District of Delaware alleging patent infringement. LAMD moved to transfer venue under 28 U.S.C. § 1404(a) to the Northern District of California where it maintains its principal place of business. After the Delaware district court denied LAMD’s motion for a change of venue, LAMD sought mandamus before the Federal Circuit.
In reversing the district court’s denial of LAMD’s motion and granting mandamus, the Federal Circuit pointed to four errors in the district court’s application of various public and private interest factors. First, the Federal Circuit held that the district court gave “far too much weight” to the plaintiff’s choice of forum. The Federal Circuit held that when a plaintiff chooses a forum that is not its home, as was the case here, the plaintiff’s choice is entitled to less weight. Second, the Federal Circuit held that the district court’s heavy reliance on Delaware as LAMD’s place of incorporation as a factor in denying LAMD’s motion was similarly inappropriate. Third, the district court failed to place any weight on the location of LAMD’s employees, books, and records, all of which are located in the Northern District of California. Finally, the court held that the district court erred in its consideration of the various public interest factors. The court noted that aside from LAMD’s incorporation in Delaware, neither party had any ties to the forum. Both LAMD and Marvell’s affiliate that employs the named inventors of the patents in suit are located in the Northern District of California. Moreover, the Northern District of California is readily equipped to address questions of patent law for which there is uniformity nationwide.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-m990%20order.pdf
Chris McArdle is an Associate in the IP Group of Alston & Bird’s New York City office.
Patent Office Procedures: Reexamination | Litigation Practice and Procedure: Prior Adjudication: Generally | In re Construction Equipment Co., No. 10-1507 (Fed. Cir. (B.P.A.I.) Dec. 8, 2011). Opinion by Prost, joined by O’Malley. Dissenting opinion by Newman. The Federal Circuit affirmed the Board of Patent Appeals and Interferences (“Board”), holding that claims of a patent under reexamination before the U.S. Patent and Trademark Office (“USPTO”) were obvious in view of the prior art. In so doing, the majority declined to hold that the reexamination proceedings were unconstitutional or barred by either res judicata or issue preclusion as a result of prior litigation involving the same prior art references.
U.S. Patent No. 5,234,564 (“the ’564 patent”) is directed to a vehicle configured to screen rocks and plant matter based on size. During an ex parte reexamination, the examiner found the claims of the ’564 patent were obvious under 35 U.S.C. § 103 in light of references cited in the reexamination request. The owner of the patent, Construction Equipment Co. (“CEC”), appealed to the Board, which affirmed the examiner’s rejections. CEC requested rehearing, and the Board denied CEC’s request.
On appeal, the Federal Circuit held that every limitation of each claim on appeal is found in one or another of the references cited. Additionally, the Federal Circuit noted that one of ordinary skill in the art would have been able to combine the references in such a manner as to practice the alleged invention as claimed. Accordingly, the Federal Circuit upheld the Board’s rejection.
The majority further stated in a lengthy footnote their disagreement with the dissent’s opinion that the reexamination proceedings in the present case were unconstitutional. The majority found no error in the USPTO’s holding that reexamination is appropriate when a requesting party submits a reference that was previously, but unsuccessfully, asserted as prior art in litigation (i.e., where a district court found the patent at issue not to be invalid over the cited reference).
Judge Newman dissented, taking issue with the majority’s refusal to consider the constitutionality of the reexamination proceeding because the issue was not raised during the proceedings before the Board. In Judge Newman’s view, the Constitution gives judicial power to the courts, and a court’s judgment should not be subject to revision or rejection by an administrative agency after the court’s decision has been rendered. Further, Judge Newman opined that res judicata and issue preclusion barred other forums from adjudicating whether the ’564 patent was obvious.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1507%20corrected.pdf
Albert Minn is an Associate in the IP Group of Alston & Bird’s Research Triangle office.
Litigation Practice and Procedure: Procedure: Exceptional Case (Litigation Misconduct) | MarcTec, LLC v. Johnson & Johnson, et al., No. 10-1285 (Fed. Cir. (S.D. Ill.) Jan. 3, 2012). Opinion by O’Malley, joined by Newman and Prost. The Federal Circuit affirmed a final judgment declaring the case exceptional and awarding both attorneys’ fees under 35 U.S.C. § 285 and expert fees under the district court’s inherent authority. Specifically, the Federal Circuit affirmed the district court’s determinations that MarcTec, LLC (“MarcTec”) had acted in bad faith in filing a baseless infringement action that it continued to pursue despite no evidence of infringement, and had engaged in vexatious and unjustified litigation conduct that unnecessarily prolonged the proceedings and increased the cost of litigation.
MarcTec sued Johnson & Johnson and Cordis Corporation (collectively “Cordis”) for infringement of U.S. Patent Nos. 7,128,753 (“the ’753 patent”) and 7,217,290 (“the ’290 patent”). The patents have identical specifications and are directed to a surgical implant in which a polymeric material is bonded by heat to an expandable implant, where the polymer includes a therapeutic agent such as an antibiotic. The accused Cordis product is a balloon expandable drug-eluting stent onto which a drug/polymer coating is sprayed at room temperature. The coating bonds to the stent at room temperature and not by the application of heat.
During claim construction, the district court construed the term “bonded” to mean bonded by the application of heat, and also construed the terms “surgical device” and “implant” to exclude stents. Cordis moved for summary judgment of noninfringement on the ground that the accused product was a stent on which a coating was applied at room temperature, and not by the application of heat. Although MarcTec offered expert testimony indicating that heat is applied, the district court found the expert testimony untested and unreliable. Thus, the court excluded the evidence under Daubert and granted Cordis’s motion for summary judgment of noninfringement. MarcTec appealed, and in August 2010 the Federal Circuit affirmed the district court’s claim constructions and award of summary judgment. Thereafter, Cordis moved the district court to have the case declared exceptional under 35 U.S.C. § 285, and to be compensated for its attorneys’ fees and expert witness fees. In its motion, Cordis argued that MarcTec had filed a frivolous and baseless lawsuit and had acted in bad faith by pursuing its claims without any evidence of infringement. The district court agreed and awarded Cordis $3,873,865.01 in attorneys’ fees and expenses pursuant to § 285, and awarded Cordis $809,788.02 in expert fees and expenses pursuant to the court’s inherent authority.
On appeal, MarcTec argued that the district court (1) applied the wrong standard in declaring the case exceptional under § 285 because the court did not specifically find that MarcTec acted with subjective bad faith, and (2) abused its discretion in awarding expert witness fees and expenses.
The Federal Circuit rejected both arguments. As for the attorneys’ fees under § 285, although the district court did not explicitly state that MarcTec’s bad faith was subjective, the Federal Circuit ruled that the court’s language and its express findings of fact were consistent with and fully supported a finding of subjective bad faith. The Federal Circuit also determined that the district court’s decision, when taken its in entirety, reflected the conclusion that MarcTec had engaged in litigation misconduct, which provided a second and independent basis for the court’s decision to award attorneys’ fees. Thus, the Federal Circuit affirmed the district court’s determination that MarcTec had “engaged in litigation misconduct when it: (1) misrepresented both the law of claim construction and the constructions ultimately adopted by the court, and (2) introduced and relied on expert testimony that failed to meet even minimal standards of reliability, thereby prolonging the litigation and the expenses attendant thereto.”
The Federal Circuit further concluded that the district court did not abuse its discretion in awarding expert fees to Cordis under its inherent authority. The court observed that “[u]se of this inherent authority is reserved for cases where the district court makes a ‘finding of fraud or bad faith whereby the ‘very temple of justice has been defiled.’’” Here, according to the Appeals Court, MarcTec’s “vexatious conduct and bad faith increased the cost of litigation in ways that are not compensated under § 285.” The court thus affirmed the award of expert fees in addition to the award of attorneys’ fees.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1285.pdf
Shri Abhyankar is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Patentable Invention: Obviousness: Scope and Content of Prior Art | Patentable Invention: Obviousness: Teaching, Suggestion, or Motivation in Prior Art | Claim Interpretation: Generally
Remedies: Injunctions: Preliminary Injunction | Celsis In Vitro, Inc. v. CellzDirect, Inc., et al., No. 10-1547 (Fed. Cir. (N.D. Ill.) Jan. 9, 2012). Opinion by Rader, joined by Prost. Dissenting opinion by Gajarsa. The Federal Circuit held that the district court did not abuse its discretion in granting a motion for preliminary injunction against the defendant.
Celsis In Vitro, Inc. (“Celsis”) is the assignee of U.S. Patent No. 7,604,929 (“the ’929 patent”), which is directed to methods of preparing multi-cryopreserved hepatocytes. In June 2010, Celsis sued CellzDirect, Inc. and Invitrogen Corporation, now Life Technologies Corporation (“LTC”), for infringement of the ’929 patent in the U.S. District Court for the Northern District of Illinois. The district court granted Celsis’s motion for a preliminary injunction, and subsequently denied LTC’s motion for a stay pending appeal.
On appeal, the Federal Circuit upheld the grant of a preliminary injunction because all four of the preliminary injunction factors weighed in favor of Celsis. Specifically, the court held that the district court did not abuse its discretion in finding a likelihood of success on infringement. In doing so, the court rejected LTC’s attempt to read a limitation into the claims to avoid infringement. The Federal Circuit also agreed with the district court’s finding that Celsis had shown a likelihood of success on nonobviousness because the ’929 patent taught away from the steps disclosed in the ’929 patent, and LTC’s experts were not credible.
The Federal Circuit also held that the district court did not abuse its discretion in finding that Celsis would suffer irreparable harm in the form of price erosion, loss of goodwill, damage to reputation, and loss of business opportunities absent a preliminary injunction. In particular, the court found no error in the district court’s reliance on Celsis’s unrebutted expert testimony on irreparable harm. Finally, the court found no error with the district court’s finding that the public interest would favor a preliminary injunction, as the district court had considered and addressed the public’s interest in obtaining an adequate supply of pooled, multi-cryopreserved hepatocytes.
In his dissent, Judge Gajarsa reasoned that LTC had raised a substantial question as to the validity of the ’929 patent, and thus the district court erred by granting the preliminary injunction.
Specifically, Judge Gajarsa stated that the district court erred because it failed to appreciate that, to avoid a preliminary injunction, LTC needed to offer proof only that the ’929 patent was vulnerable as opposed to clear and convincing evidence of invalidity. Judge Gajarsa further noted that the district court erred in concluding that LTC’s obviousness defense did not have merit because two limitations of the asserted claims were not present in the prior art, as obviousness does not require that each element of the invention be present in the prior art.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1547.pdf
Scott Amy is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Character of a Patent: Attributes of Ownership: Employee Obligation to Assign | Litigation Practice and Procedure: Jurisdiction: Standing | Litigation Practice and Procedure: Jurisdiction: Subject Matter Jurisdiction | Abbott Point of Care, Inc. v. Epocal, Inc., No. 11-1024 (Fed. Cir. (N.D. Ala.) Jan. 13, 2012). Opinion by Rader, joined by Lourie. Dissenting opinion by Bryson. In affirming the district court’s dismissal for lack of standing, the Federal Circuit held that the plain language of the inventor’s consulting agreement did not incorporate by reference an assignment-of-invention clause from a prior employment agreement.
Abbott Point of Care, Inc. (“Abbott”) sued Epocal, Inc. (“Epocal”) in the U.S. District Court for the Northern District of Alabama, alleging that Epocal infringed U.S. Patent Nos. 6,845,327 and 6,896,778 (collectively “the patents-in-suit”). The patents-in-suit are directed to systems and devices for testing blood samples. Although Epocal is listed as the assignee of the patents-in-suit, Abbott claimed ownership based on a series of employment agreements between the inventor, Dr. Imants Lauks (“Lauks”), and Abbott’s predecessors. Before founding Epocal, Lauks was an employee of Abbott’s predecessors and executed three contracts: a 1984 Agreement with Integrated Ionics, Inc. that included confidentiality, non-competition, non-solicitation, and an assignment-of-invention clause; a 1992 Agreement with i-Stat Corporation (“i-Stat”) that related to employment duties, compensation, and benefits; and a 1999 Agreement with i-Stat that defines Lauks’s consulting services and that continued the existing agreement regarding confidentiality, non-solicitation, and non-competition.
Epocal filed a motion to dismiss for lack of subject matter jurisdiction and failure to state a claim on the ground that Abbott did not own the patents-in-suit. Abbott opposed the motion, and sought limited jurisdictional discovery if the district court determined that extrinsic evidence was necessary to construe the 1999 Agreement. The district court found that Abbott lacked standing because the 1999 Agreement did not continue the 1984 Agreement’s assignment-of-invention clause, and dismissed Abbott’s claim.
On appeal, the Federal Circuit held that the 1999 Agreement did not contain any obligation that Lauks must assign rights in any invention made during the consulting term. Specifically, the court reasoned that the 1999 Agreement specifically allowed the inventor to pursue other non-conflicting interests, and excluded work on new products regardless of subject matter. Thus, the court concluded that the plain language of the 1999 Agreement was unambiguous and did not continue the assignment-of-invention clause from the 1984 Agreement. Because the 1999 Agreement did not contain any ambiguity, the court also denied Abbott’s request for limited jurisdictional discovery.
In his dissent, Judge Bryson concluded that the language of the 1999 Consulting Agreement was at least ambiguous as to whether it incorporated the assignment-of-invention clause from the 1984 Agreement. In particular, Judge Bryson stated that the references to the 1984 Agreement in the 1999 Consulting Agreement were ambiguous as to whether they incorporated the 1984 Agreement as a whole.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1024.pdf
Scott Amy is an Associate in the IP Group of Alston & Bird’s Atlanta office.
Patentable Invention: Utility: Patentable Subject Matter | The Patent Application: Claims: Indefiniteness | Claim Interpretation: Generally | Claim Interpretation: Means-Plus-Function
Dealertrack, Inc. v. Huber, et al., Nos. 09-1566, -1588 (Fed. Cir. (C.D. Cal.) Jan. 20, 2011). Opinion by Linn, joined by Dyk. Concurring and dissenting opinion by Plager. The Federal Circuit held that the addition of the term “computer-aided” did not sufficiently limit the claims of a patent to a particular application of a broad idea and, therefore, the patent claims were invalid under § 101. The Federal Circuit, reversing the district court’s construction, also held that the term “communications medium” properly included the Internet. The court also held that one of the means-plus-function claims of one of the patents-at-issue was invalid for failure to recite sufficient structure.
Dealertrack, Inc. (“Dealertrack”) is the owner of U.S. Patent No. 6,587,841 (“the ’841 patent”) and U.S. Patent No. 7,181,427 (“the ’427 patent”), which both claim priority to U.S. Patent No. 5,878,403 (collectively “the Asserted Patents”). The Asserted Patents are directed to a computer-aided method and system for processing credit applications over electronic networks. Dealertrack sued David L. Huber and Finance Express, LLC (collectively “Finance Express”) and RouteOne, LLC (“RouteOne”) for infringement in the Central District of California. Finance Express, John Doe Dealers, and RouteOne filed four summary judgment motions, two of which were granted by the district court. Dealertrack appealed and RouteOne cross-appealed.
One of the summary judgment motions at issue involved the construction of the claim term “communications medium” in the ’841 patent. The Federal Circuit held that the district court improperly carved out the Internet from the construction of this term. The Federal Circuit noted that the context made clear that the examples of a “communications medium” given in the specification of the ’841 patent did not limit the definition and that the Internet could be included in the construction of that term. The Federal Circuit also held that while the district court’s construction of certain other disputed claim terms of the ’841 patent were proper, certain other constructions required modification. The court thus remanded the case to the district court to determine infringement under the modified constructions.
Another of the summary judgment motions involved the issue of invalidity of certain claims of the ’841 patent for indefiniteness under 35 U.S.C. § 112, ¶¶ 2 and 6 for failure to disclose adequate structure corresponding to the purported means-plus-function “tracking” limitation. The Federal Circuit held that the district court erred in denying the motion for summary judgment of invalidity for indefiniteness because a means-plus-function term in the claims of the ’841 patent failed to recite sufficient structure to perform its claimed functions.
The Federal Circuit further held that, with respect to the question of whether all asserted claims of the ’427 patent were invalid for failure to claim patent eligible subject matter under 35 U.S.C. § 101, the use of the term “computer-aided” was not sufficient to limit the claims to an application of an idea, where the claims did not require a specific application and were not tied to a particular machine. Further, although the patent claims limited the invention to use only in the car loan application process, the patent claims nonetheless covered a broad idea. Accordingly, the Federal Circuit affirmed the district court’s determination that certain claims of the ’427 patent are patent ineligible abstract ideas under § 101. Because of its disposition of this issue, the court did not need to address the alternative grounds for affirmance concerning the ’427 patent.
Judge Plager concurred with the court’s opinion regarding the ’841 patent, but dissented from the court’s opinion regarding the ’427 patent. Judge Plager opined that the court should initially address patent invalidity issues in infringement suits in terms of the defenses provided in the statute, such as §§ 102, 103, and 112, reserving analyses under § 101 only if “absolutely necessary.” Thus, Judge Plager would have reviewed the summary judgment motion based on § 103, rather than § 101.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1566.pdf
Pamela Holland Councill is an Associate in the IP Group of Alston & Bird’s Atlanta office.
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