Patent Case Summaries
Article Date: Thursday, November 03, 2011
The summaries below summarize patent-related opinions of interest issued by the Court of Appeals for the Federal Circuit from March 2011 through September 2011. These summaries were edited by Kirk Bradley and Mike Connor, partners, and Ross Barton and Michele Glessner, associates, in Alston & Bird's Charlotte office.
Litigation Practice and Procedure: Venue
In re Verizon Business Network Services, Inc., et al., No. 956 (Fed. Cir. (E.D. Tex.) Mar. 23, 2011). Opinion by Linn, joined by Lourie and Gajarsa. In granting a petition for writ of mandamus to transfer the case from the Eastern District of Texas, Marshall Division, to the Northern District of Texas, Dallas Division, the Federal Circuit held that there was no supportable basis for the court's denial of a motion to transfer where many witnesses were within 100 miles of Dallas, none were within 100 miles of Marshall, and the only factor weighing in favor of a denial of a transfer was that the lower court presided over a case involving the same patent five years earlier.
Red River Fiber Optic Corporation brought suit in the Eastern District of Texas, alleging infringement of U.S. Patent No. 5,555,478 ("the '478 patent") by a number of defendants (collectively "Verizon"). Verizon moved to transfer the case to the Northern District of Texas, Dallas Division. The magistrate denied Verizon's motion but agreed that Dallas would likely be more convenient for the parties and the witnesses. Nonetheless, the magistrate found that judicial economy favored maintaining the suit in Marshall, Texas because the court previously presided over a case involving the '478 patent.
Verizon disputed the magistrate's decision to the district court judge, arguing that the length of time between the two cases (over five years) and the recent reexamination of the '478 patent warrant a transfer. The district court, however, agreed with the magistrate that it would be more efficient for the case to remain in Marshall due to the court's knowledge of the '478 patent. Verizon appealed.
On appeal, the Federal Circuit granted Verizon's petition to transfer the case to Dallas, ruling that a trial in Dallas would be more convenient based on the location of the witnesses and parties. The court also rejected the lower court's rationale that a trial in Marshall would be more efficient due to the court's familiarity with the '478 patent and noted that the lapse in time and reexamination meant that the court would have to relearn a "considerable amount." The court concluded that an interpretation of 28 U.S.C. § 1404 to hold that any prior suit involving the same patent can override a compelling showing of a transfer would be inconsistent with the policies underlying § 1404(a).
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-m956%20order.pdf
Natalie Clayton is an Associate in the IP Group of Alston & Bird's New York City office.
Patent Office Procedures: Prosecution Before the Office: Generally
Patent Office Procedures: Reissue: Generally
In re Tanaka, No. 10-1262 (Fed. Cir. (U.S.P.T.O.) Apr. 15, 2011). Opinion by Linn, joined by Bryson. Dissenting opinion by Dyk.In reversing the Board of Patent Appeals and Interferences ("Board"), the Federal Circuit held that a reissue patent under 35 U.S.C. § 251 is proper even if the reissued patent retains all of the original patent claims and adds only narrower claims.
U.S. Patent No. 6,093,991 ("the '991 patent"), which is directed to a particular "alternator pulley," issued with one independent claim and six dependent claims. The patentee, Mr. Tanaka, filed reissue application Serial No. 10/201,948 ("the '948 application") to broaden the scope of the sole independent claim. During prosecution, Tanaka abandoned his attempt to broaden Claim 1 and, instead, presented for reexamination unamended original Claims 1-7 and a new dependent claim. The examiner rejected the claims because the amendments did not broaden or narrow the sole independent claim. The rejection was affirmed by the Board.
On appeal, the Federal Circuit observed that § 251 requires that, for a reissue to be proper, the original patent must be "wholly or partly inoperative or invalid." The Federal Circuit held that adding dependent claims as a hedge against possible invalidity of the originally patented claims is a valid reason for seeking a reissue under § 251. The Federal Circuit explained that the omission of a narrower claim can render a patent inoperative because the claims would otherwise fail to fully protect the disclosed invention.
In a dissenting opinion, Judge Dyk stated that the majority decision was contrary to Supreme Court precedent because a reissue is proper only when the original claims are amended or altered. In Judge Dyk's view, because Tanaka did not amend the existing claims, the reissue was not proper under § 251.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1262.pdf
David Frist is an Associate in the IP Group of Alston & Bird's Atlanta office.
Remedies: Injunctions: Permanent Injunctions
Remedies: Injunctions: Contempt
TiVo Inc. v. EchoStar Corp., et al., No. 09-1374 (Fed. Cir. (E.D. Tex.) Apr. 20, 2011). Opinion by Lourie, joined in full by Newman, Mayer, Bryson, Moore, O'Malley, and Reyna and joined in part by Rader, Gajarsa, Linn, Dyk, and Prost. Dissenting-in-part opinion by Dyk, joined by Rader, Gajarsa, Linn, and Prost.
The Federal Circuit, en banc, partially vacated the district court's finding of contempt of a permanent injunction, holding that the two-step KSM analysis is unsound in contempt cases and clarifying the standards governing contempt proceedings in patent infringement cases. Specifically, the Federal Circuit held that KSM's two-step inquiry in finding a defendant in contempt of an injunction "has been unworkable." Consequently, the court overruled KSM and eliminated the requirement that the district court make a threshold determination as to whether a contempt proceeding is the appropriate setting by comparing the accused product and the adjudged infringing product in order to determine whether there is "more than a colorable difference" between the two. Under KSM, if the differences were more than colorable, contempt proceedings were not appropriate and a new trial would be necessary. Under the new standard, whether contempt proceedings are proper is left to the broad discretion of the trial court.
In 2004, TiVo Inc. ("TiVo") sued EchoStar Corporation, EchoStar DBS Corporation, EchoStar Technologies Corporation, EchoSphere Limited Liability Company, EchoStar Satellite LLC, and Dish Network Corporation (collectively "EchoStar") in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. Patent No. 6,233,389 ("the '389 patent"). The '389 patent is directed to technology that allows television viewers to record and play television broadcasts using a digital video recorder ("DVR"). The jury found that EchoStar's receivers infringed the '389 patent, and the district court issued a permanent injunction, ordering EchoStar (1) to stop making, using, offering to sell, and selling the infringing receivers (the "infringement provision"); and (2) to disable the DVR functionalities in existing receivers already placed or yet to be placed with EchoStar customers (the "disablement provision"). Following the district court's entry of the permanent injunction and the Federal Circuit's affirmance of the infringement verdict, TiVo moved the district court to find EchoStar in contempt of the court's permanent injunction. The district court held that EchoStar was in contempt of both provisions of the injunction. The district court held that EchoStar's modified design-around software on EchoStar's receivers was not more than colorably different from the infringing software, and therefore, EchoStar was in violation of the infringement provision. The district court held that EchoStar was also in contempt of the disablement provision, rejecting EchoStar's argument that the disablement provision only required it to disable the infringing DVR software. The district court held that if EchoStar believed that the infringing receivers in their entirety were not subject to the order or that the order improperly included noninfringing practices, EchoStar should have requested that the district court modify its order or should have challenged the scope of the injunction on appeal.
On appeal, the Federal Circuit revisited its ruling in KSM requiring a two-step inquiry in finding a defendant in contempt of an injunction in patent infringement. KSM required that the court first determine whether a contempt hearing is an appropriate setting in which to adjudge infringement by a redesigned product, which may be done by comparing the accused redesigned product with the adjudged infringing product to determine if there is "more than a colorable difference" between the two products. Under KSM, the district court could only proceed with a contempt hearing in those cases where there was not more than a colorable difference between the two products. Otherwise, a new trial is necessary to determine further infringement. In overturning the KSM holding, the Federal Circuit eliminated the threshold inquiry into the propriety of a contempt proceeding, leaving that question to the broad discretion of the trial court. The Federal Circuit held that "[w]hat is required for a district court to hold a contempt proceeding is a detailed accusation from the injured party setting forth the alleged facts constituting the contempt." The Federal Circuit also held that, "we will only review whether the injunction at issue is both enforceable and violated, and whether the sanctions imposed were proper. Allegations that contempt proceedings were improper in the first instance do not state a defense to contempt."
The Federal Circuit upheld the district court's ruling that a defendant's lack of intent to violate an injunction alone cannot save an infringer from a finding of contempt. The Federal Circuit also reaffirmed that courts should continue to employ the "more than colorable differences" standard in finding contempt and further held that instead of focusing solely on infringement by the newly accused devices, district courts must "focus initially on the differences between the features relied upon to establish infringement and the modified features of the newly accused products." In light of this, the Federal Circuit vacated the district court's finding of contempt for violation of the infringement provision of the injunction for reconsideration under this new guidance, noting that if there are colorable differences between the two devices, EchoStar is entitled to a new infringement proceeding. The Federal Circuit also upheld the finding of contempt of the disablement provision, rejecting EchoStar's arguments that the injunction was vague and overbroad.
In his dissent, Circuit Judge Dyk, joined by Chief Judge Rader and Circuit Judges Gajarsa, Linn, and Prost, stated that the district court's finding of contempt of the disablement provision was improper because the injunction permits the use of noninfringing software in existing products, and even if the injunction was unclear, an unclear injunction should not serve as the basis for a contempt finding.
Further, the dissent stated that the majority's remand to the district court to determine colorable differences and to decide the issue of infringement was improper because it is clear that there are colorable differences between the adjudged infringing products and the newly accused devices. Finally, the dissent disagreed with the majority's affirmance of the sanctions award, despite the fact that the award was based on a finding of contempt that the majority reversed.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1374.pdf
Pamela Holland Councill is an Associate in the IP Group of Alston & Bird's Atlanta office.
Litigation Practice and Procedure: Procedure: Motions to Dismiss
Litigation Practice and Procedure: Jurisdiction: Standing
Juniper Networks, Inc. v. Shipley., No. 10-1327 (Fed. Cir. (N.D. Cal.) Apr. 29, 2011). Opinion by Rader, joined by Newman and Linn. The Federal Circuit affirmed the district court's dismissal of a false marking action for failure to state a claim due to the plaintiff's failure to reasonably allege an "unpatented article," as required by 35 U.S.C. § 292.
Juniper Networks, Inc. ("Juniper") brought a false marking action against Peter Shipley ("Shipley") based on facts learned in an action brought against Juniper by the owner of two of Shipley's patents. Shipley allegedly developed a "Dynamic Firewall" in 1995 and 1996, which was destroyed in a 1999 hard drive crash. Juniper's allegations cited website printouts from after 1999, where Shipley provided information about a Dynamic Firewall with indications of "Patent Pending" and, later, two specific patent numbers. He provided this information in an area on his website described as "current projects and research currently underway by people in the hacker scene in the San Francisco/Bay Area." The district court for the Northern District of California dismissed Juniper's allegations, rejecting them as insufficient to establish an unpatented article in the website, its webpages, or any security or firewall software operating on the website.
On appeal, the Federal Circuit noted that a website could, in theory, constitute an "unpatented article," satisfying the first requirement of a claim under 35 U.S.C. § 292. Nevertheless, because the website described the Dynamic Firewall project as ongoing or under development, the Federal Circuit concluded that the second requirement-that there be an intent to deceive the public-was not satisfied as there was no reasonable indication that the Dynamic Firewall was actually protecting the website. The Court of Appeals also agreed that the district court appropriately denied Juniper leave to amend its complaint because Juniper had previously been granted leave to amend, and no amendments could change the deficiencies of the complaint, as the referenced website excerpts were clear and unambiguous on their face. Finally, the Federal Circuit rejected Shipley's alternative argument that Juniper's claim should have been dismissed for lack of standing, noting that there was standing to assert a qui tam claim because a violation of the statute inherently does injury to the United States.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1327.pdf
Byron Holz 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: Secondary Considerations of Nonobviousness
In re Kao, et al., Nos. 10-1307, -1308 (Fed. Cir. (B.P.A.I.) May 13, 2011). Opinion by Linn, joined by Rader and Moore. The Federal Circuit held that after an examiner establishes obviousness, the burden shifts to the patent applicant to rebut that case. Once the applicant comes forward with rebuttal evidence, the examiner must consider the totality of the evidence to determine whether the obviousness rejection should stand, and if secondary considerations of nonobviousness are presented, it is error for the examiner not to consider them. The secondary considerations, however, must actually result from the merits of the claimed invention. Applying these standards to three pending applications, the Federal Circuit affirmed two decisions from the Board of Patent Appeals and Interferences ("Board") that obviousness was supported by substantial evidence, but remanded the third because the Board's factual findings lacked substantial evidence to support its determination of obviousness.
Endo Pharmaceuticals, Inc. ("Endo") is the assignee of three patent applications, United States Patent Application Nos. 11/680,432 ("the '432 application"), 12/167,859 ("the '859 application"), and 11/766,740 ("the '740 application"), relating to controlled-release tablets containing oxymorphone. The Board affirmed the rejection of all pending claims in each application principally in view of Patent Cooperation Treaty Publication No. WO 01/08661 ("Maloney"), which discloses controlled-release oxycodone formulations.
The '432 application relates to a slow release variation of a drug containing oxymorphone that is advantageous over immediate release formulations. In response to the examiner's rejection that all claims are obvious, Endo submitted declarations explaining that the referenced prior art provided little guidance on the appropriate design of a controlled-release formulation and explained that the controlled-release formula unexpectedly prevented patients from building a tolerance to the medication. Endo also submitted evidence of unexpected results and commercial success to rebut the examiner's prima facie showing of obviousness. The Board affirmed the examiner's rejection, relying on Maloney's disclosure of a controlled-release formulation called "Formula 6." The Board recognized that Maloney disclosed a formulation that contains oxycodone instead of oxymorphone. The Board concluded that Maloney disclosed dissolution data for Formula 6 measured by USP Basket Method and not the claimed USP Paddle Method. Even so, the Board concluded the Formula 6 rendered the '432 application obvious.
The '859 application is directed to a method for treating pain by administering oxymorphone in a controlled-release formulation providing a minimum 12 hours of sustained pain relief and where the bioavailability is higher in certain situations. In affirming the examiner's rejection of the pending independent claims as obvious, the Board found that the prior art reference teaches a controlled-release formulation using oxycodone as disclosed in Maloney. The Board found that Maloney teaches the limitations of the '859 application, noting that merely discovering and claiming a new benefit of an old process cannot render a process patentable.
The '740 application discloses a method to extend pain relief while providing information of the effect of the drug. The applicant, Ahdieh, argued that it would not have been obvious to combine the two references because the correlation between renal impairment and bioavailability of controlled-release formulations was not previously known. The applicant also pointed to secondary considerations such as commercial success and unexpected results in an attempt to support a determination of nonobviousness. The Board nonetheless rejected the claims in the '740 application as obvious in view of Maloney.
On appeal, the Federal Circuit remanded the Board's ruling in the '432 application, and upheld the Board's rulings in the '859 and '740 applications. The Federal Circuit reviewed the Board's determinations of obviousness de novo, and reviewed the Board's fact-findings for substantial evidence. The Federal Circuit remanded the Board's decision regarding the '432 application, stating that its decision was not supported by substantial evidence. In holding that the Board's decision for the '432 application lacked substantial evidence, the Federal Circuit stated that even if it would have been obvious to substitute oxymorphone as claimed in the '432 application for oxycodone as disclosed in Maloney, there was no direct evidence that the dissolution range claimed would actually fall into the dissolution profile as disclosed in Maloney. The Federal Circuit noted that the examiner must first establish obviousness, and then the burden shifts to the applicant to rebut that case. Once the applicant comes forward with rebuttal evidence, the examiner must consider the totality of the evidence to determine whether the obviousness rejection should stand. The Federal Circuit also observed that when secondary considerations of nonobviousness are present, though they are not always dispositive, it is error not to consider them. Evidence must also be shown that an offered secondary consideration actually results from the merits of the claimed invention. For the '432 application, the Board's decision was remanded so that the Board could consider whether, under the proper analysis, the evidence was sufficient to maintain an obviousness rejection. The Federal Circuit determined that the Board ignored the evidence of record and instead improperly relied upon its own conjectures. In reviewing the Board's rejection of the applicant's evidence of commercial success, the Federal Circuit remanded to allow the Board to make a factual determination as to whether the commercial success of the embodying product resulted from the merits of the claimed invention as opposed to the prior art or other extrinsic factors.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1307-1308-1309.pdf
Daniel Huynh is an Associate in the IP Group of Alston & Bird's Atlanta office.
Defenses: Invalidity
Infringement: Literal Infringement
In re Brimonidine, et al., Nos. 10-1102, -1103 (Fed. Cir. (D. Del.) May 19, 2011). Opinion by Bryson, joined by Prost. Concurring and dissenting opinion by Dyk. In reversing in-part and affirming in-part the district court's finding that patents assigned to Allergan, Inc. ("Allergan") were not invalid, the Federal Circuit held that it is not obvious to combine two known solutions if the resulting solution would not have been an anticipated success to one of ordinary skill in the art. In doing so, the Federal Circuit sustained the district court's issuance of an injunction against Apotex, Inc. ("Apotex"), which had stipulated to infringement of Allergan's patents. Additionally, however, the Federal Circuit reversed the district court's finding against Exela Pharmsci ("Exela") and determined that Exela's filing of an Abbreviated New Drug Application ("ANDA") did not constitute infringement of Allergan's patents.
Allergan developed an eyedrop formulation, Alphagan P, which is used to treat glaucoma. Allergan submitted five patents associated with Alphagan P to the Food and Drug Administration ("FDA") for publication. Thereafter, Apotex and Exela each filed an ANDA seeking permission from the FDA to market a generic version of Alphagan P. Allergan then sued Apotex and Exela for infringement based on the ANDA filings. After an eight-day bench trial, the district court found that Allergan's patents were not invalid and that both Apotex and Exela infringed the patents.
On appeal, Apotex argued only that Allergan's patents are invalid due to obviousness, pointing to a number of references. The Federal Circuit agreed with Apotex that U.S. Patent No. 5,424,078 ("the '078 patent") was obvious in view of the teachings of U.S. Patent Nos. 4,499,077 to Stockel and 4,689,215 to Ratcliff. In particular, the court ruled the claims of the '078 patent invalid since the court found it obvious in light of Ratcliff and Stockel "to create an ophthalmic solution adjusted to ocular pH and tonicity and that relied on stabilized chlorine dioxide as the sole preservative agent," which was the court's interpretation of the claims of the '078 patent.
The Federal Circuit, however, rejected Apotex's invalidity contentions with respect to the remaining four patents. In particular, the court rejected some of Apotex's invalidity arguments directed to specific aspects of Allergan's remaining patents, focusing on a lack of supporting evidence. The Federal Circuit also rejected Apotex's obvious to try arguments. Essentially, Apotex argued that all the claims of the remaining patents are directed to a combination of two of Allergan's previously made products, Refresh Tears and Alphagan, and that the combination of these products was obvious to try. When dismissing this argument, the Federal Circuit pointed to the district court's finding that the solutions claimed by Allergan would not have been an anticipated success, and that one of ordinary skill in the art "would not have been expected to disregard those roadblocks."
Exela argued that the district court erred in finding that it infringed Allergan's U.S. Patent No. 6,641,834 ("the '834 patent"). Notably, the claims of the '834 patent require a solution with a pH of 7.0 or greater, and both Allergan and Exela stipulated that the highest pH at which Exela requests permission to manufacture and sell its product is 6.7. Despite this stipulation, Allergan presented evidence to the district court indicating that Exela's formulation will drop 0.5 in pH value over a period of six months. In relying on that evidence, the district court reasoned that Exela would take the 0.5 drop in pH into account when manufacturing the solution such that they would produce a solution with a pH greater than 7.0. The Federal Circuit, however, reversed the district court's ruling. In particular, the Federal Circuit points to the representations made by Exela in the ANDA that the solution will never be manufactured with a pH above 6.7, stating that "we cannot assume that Exela will not act in full compliance with its representations to the FDA."
Judge Dyk dissented on the majority's obvious to try ruling. In his view, the combinations of the Refresh Tears and Alphagan products would have been obvious to one of ordinary skill in the art. In particular, Judge Dyk stated that the standard under obvious to try "does not require absolute predictability of success," and requires only "a reasonable expectation of success." In re Kubin, 561 F.3d 1351, 1360 (Fed. Cir. 2009).
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1102-1103.pdf
Patrick Kartes is an Associate in the IP Group of Alston & Bird's Charlotte office.
Claim Interpretation: Intrinsic Evidence:
Specification, Defenses: Miscellaneous Defenses
Litigation Practice and Procedure: Jurisdiction: § 337 Actions in the ITC
Tessera, Inc. v. International Trade Commission, No. 10-1176 (Fed. Cir. (I.T.C.) May 23, 2011). Opinion by Linn, joined by Lourie and Dyk. In affirming the Final Determination of the International Trade Commission ("ITC" or "Commission") concerning the unexpired patent in the investigation, the Federal Circuit held that the ITC's finding that certain products did not infringe was supported by substantial evidence, and that the ITC was correct in finding that the patent was not anticipated but that it had been exhausted by authorized sales of the patentee's licensee.
Tessera, Inc. ("Tessera") filed a complaint alleging violations of Section 337 of the Tariff Act by eighteen companies (collectively "the respondents") concerning importation of certain semiconductor chips that infringe U.S. Patent No. 5,663,106 ("the '106 patent), as well as two other patents that have now expired. The '106 patent concerns innovations for preventing the contamination of exposed terminals on semiconductor chips during encapsulation. The Administrative Law Judge ("ALJ") issued an Initial Determination holding that the '106 patent was not infringed, that it was not invalid for anticipation, and that it had been exhausted. The Commission partially reversed the ALJ's holding and found that the μBGA products of respondent Elpida infringed the '106 patent, and that the patent was not invalid. However, the Commission affirmed the Initial Determination that the patent rights had been exhausted.
On appeal, Tessera argued that the ITC had impermissibly modified its claim construction midway through proceedings, and that this change constituted an error of law that required de novo review of the ITC's infringement determination. The Federal Circuit rejected Tessera's argument. Instead, the court held that the ITC had merely altered the application of its original construction, and that this was an infringement determination that should be reviewed for support of substantial evidence. The Federal Circuit reached its conclusion based, at least in part, on the fact that the ITC had adopted Tessera's requested construction, since Tessera cannot argue on appeal for a different construction.
On the issue of patent exhaustion, the Federal Circuit rejected the respondents' argument that the court lacked appellate jurisdiction over the issue because Tessera had failed to file a timely notice of appeal from that issue. The court disagreed with respondents' contention that the ITC's initial determination became final, at least with respect to patent exhaustion, upon the issuance of a subsequent notice that the Initial Determination with regard to patent exhaustion would no longer be reviewed. In reaching this conclusion, the Federal Circuit noted that even after issuance of the subsequent notice, it remained an open question "whether Tessera could obtain an exclusion order on the '106 patent." According to the ITC's own regulations, this open question rendered the notice non-final in nature.
The Federal Circuit also rejected Tessera's argument that its patent rights had not been exhausted because sales by its licensees were unauthorized until Tessera received its royalty payments based upon those sales. The court held that Tessera authorized the sales of its licensees by entering into the license agreement itself. According to the Federal Circuit, that some licensees subsequently reneged or fell behind on their royalty payments could not convert once authorized sales into non-authorized sales. Indeed, the court suggested that such would create an "absurd result . . . wholly inconsistent with the fundamental purpose of patent exhaustion - to prohibit post-sale restrictions on the use of a patented article."
Last, the Federal Circuit determined that the portions of the appeal concerning two patents that expired subsequent to the ITC's Final Determination were moot because the ITC's limited statutory mandate concerns only exclusion orders prohibiting future conduct. Thus, the court vacated the portions of the Final Determination concerning the expired patents and remanded the case to the ITC with directions to dismiss the portions of the Complaint concerning those patents.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1176.pdf
Chris Lightner is an Associate in the IP Group of Alston & Bird's Atlanta office.
Defenses: Fraud and Inequitable Conduct:
Materiality, Defenses: Fraud and Inequitable Conduct: Intent to Deceive, Defenses: Fraud and Inequitable Conduct: Effect of Inequitable
Conduct, Defenses: Fraud and Inequitable
Conduct: Burden of Proof
Therasense, Inc., et al. v. Becton, Dickinson & Co., et al., Nos. 08-1511, -1512, -1513, -1514, -1595 (Fed. Cir. (N.D. Cal. May 25, 2011). En banc opinion by Rader, joined in full by Newman, Lourie, Linn, Moore, and Reyna, and joined in part by O'Malley. Opinion concurring in part and dissenting in part by O'Malley. Dissenting opinion by Bryson, joined by Gajarsa, Dyk, and Prost. In vacating and remanding for further proceedings a finding of unenforceability due to inequitable conduct, the Federal Circuit ruled en banc that both knowledge and deliberate action must be proven to establish the specific intent necessary to support a finding of inequitable conduct; established a new "but-for" test for materiality tied to the impact upon claim allowance; identified an exception to the new test where affirmative egregious misconduct exists; and held that lower courts must nevertheless "weigh the equities" when determining whether inequitable conduct warrants a finding of unenforceability.
In 2004, Becton, Dickinson & Co. ("Becton") sued Therasense, Inc., now Abbott Diabetes Care, Inc. (collectively "Abbott"), in the District of Massachusetts to seek a declaration of noninfringement of U.S. Patent No. 5,820,551 ("the '551 patent"). In response, Abbott, owner of the '551 patent, countersued Becton in the Northern District of California ("the district court"), alleging infringement. The district court granted summary judgment in favor of Becton, finding the '551 patent unenforceable for inequitable conduct because Abbott had not disclosed to the U.S. Patent and Trademark Office ("the PTO") its briefs in a related foreign application. On appeal, a panel of the Federal Circuit unanimously upheld the district court's judgment of invalidity, prompting Abbott to petition for rehearing en banc.
Upon a rehearing en banc, the Federal Circuit first ruled that a showing of specific intent to deceive the PTO requires clear and convincing evidence that "the applicant knew of the reference, knew that it was material, and made a deliberate decision to withhold it." In so ruling, the court expressly rejected the previously espoused "sliding scale" theory, in which a weak showing of intent may suffice if coupled with strong evidence of materiality. The court stated instead that separate evidence of both intent and materiality must exist to support a finding of inequitable conduct. Further, the Federal Circuit highlighted that where circumstantial evidence is used to infer intent, inequitable conduct exists only when the intent to deceive is "the single most reasonable inference" based upon the evidence.
Next, the Federal Circuit expressly rejected the existing test for materiality, as outlined in the PTO's existing Rule 56, announcing instead a new "but-for materiality" test. In so doing, the court clarified that prior art may only be "but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art." The Federal Circuit further announced a single exception to its newly announced test for instances of "affirmative egregious misconduct," in which case "but-for materiality" need not be proven to support a finding of inequitable conduct. Recognizing the rigidity of its new test, the court concluded by emphasizing that district courts retain a degree of discretion to weigh the equities when determining whether inequitable conduct warrants a finding of unenforceability.
While the dissenting opinion would have upheld the standard for materiality outlined in the PTO's existing Rule 56, Judge O'Malley stated in her concurring-in-part and dissenting-in-part opinion that both the majority and dissenting opinions involve inquiries that are "black or white, while equity requires judicial consideration of shades of gray."
http://www.cafc.uscourts.gov/images/stories/opinions-orders/08-1511.pdf
Chris Lightner is an Associate in the IP Group of Alston & Bird's Atlanta office.
Patentable Invention: Obviousness: Secondary Considerations of Nonobviousness
Infringement: Willful Infringement
Remedies: Damages: Reasonable Royalty
Remedies: Damages: Attorneys' Fees
Remedies: Damages: Exceptional Case
(Enhanced Damages), Litigation Practice and Procedure: Procedure: JMOL Procedure
Spectralytics, Inc. v. Cordis Corp., et al., Nos. 09-1564, 10-1004 (Fed. Cir. (D. Minn.) June 13, 2011). Opinion by Newman, joined by Clevenger and Bryson. In affirming aspects of the district court's decision while vacating and remanding others, the Federal Circuit observed that the factors for evaluating whether infringement was willful and whether enhanced damages should be awarded are not "coextensive." The court affirmed the U.S. District Court for the District of Minnesota's judgment on validity, and the determination of a reasonable royalty, but vacated the judgment denying enhanced damages and attorneys' fees, and remanded the case for redetermination of these issues.
Spectralytics, Inc. ("Spectralytics") is the owner of U.S. Patent No. 5,852,277 ("the '277 patent"), which is directed to an apparatus for manufacturing an improved stainless steel coronary stent. Spectralytics sued Cordis Corporation and Norman Noble, Inc. (collectively "Cordis"), alleging infringement of the '277 patent. A jury found that the '277 patent was infringed and not invalid, and awarded a 5% running royalty on infringing sales. The district court denied Cordis's motions for a new trial and for a judgment as a matter of law, and denied Spectralytics's motion for enhanced damages and attorneys' fees. Cordis appealed all rulings adverse to it, with the exception of the judgment of infringement, and Spectralytics appealed the district court's denial of its motion for enhanced damages and attorneys' fees.
First, the Federal Circuit held that there was no error in the district court's review of the jury verdict that the patent was not obvious. In reviewing the jury's verdict, the Federal Circuit agreed with the district court that a reasonable jury could have sided with Spectralytics's evidence distinguishing two prior art references. The court also held that the district court correctly applied the law of "teaching away," noting that "'[t]eaching away' does not require that the prior art foresaw the specific invention that was later made, and warned against taking that path." Rather, an implicit finding of teaching away was supported in this case by the fact that the prior art taught away from embracing vibrations to improve cutting accuracy, as claimed in the '277 patent, because the prior art improved cutting accuracy by dampening vibrations. The court ruled that substantial evidence existed upon which the jury could have found copying and commercial success, and could have weighed these factors in favor of nonobviousness.
Next, the Federal Circuit rejected Cordis's argument that there was insufficient evidence to support an award of a five percent running royalty. Specifically, the court held that the award was not unreasonable in light of expert testimony supporting a 20% royalty and that a jury was not required to accept Cordis's position that alternatives were available in light of substantial evidence to the contrary.
Finally, in vacating the district court's judgment denying enhanced damages and attorneys' fees, the Federal Circuit held that the district court improperly applied the law for determining willful infringement to the separate determination of whether to enhance damages. Specifically, the court noted that while a finding of willfulness is a prerequisite for enhanced damages, the test for willfulness is distinct and separate from the factors guiding a district court's discretion regarding enhanced damages. Because the Federal Circuit denied Cordis's motion for attorneys' fees in conjunction with the denial of enhanced damages, the court concluded that reconsideration of the request for attorneys' fees was also warranted.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1564.pdf
Scott Amy is an Associate in the IP Group of Alston & Bird's Atlanta office.
Patentable Invention: Anticipation:
Conception and Reduction to Practice
Infringement: Generally, Defenses: Invalidity
Litigation Practice and Procedure: Procedure: Declaratory Judgment Actions
Creative Compounds, LLC v. Starmark Laboratories, No. 10-1445 (Fed. Cir. (S.D. Fla.) June 24, 2011). Opinion by Linn, joined by Rader and Clevenger. In upholding the district court's grant of summary judgment that a patent was not invalid based on similarity to a competitor's later filed patent application, the Federal Circuit held that clear and convincing evidence was the appropriate standard required to prove patent invalidity unless the action is brought under 35 U.S.C. § 291 or there is evidence of "common claimed subject matter" between the two competing patents. The Federal Circuit also held that evidence of infringement allegations made to a competitor does not give rise to a substantial controversy for purposes of the Declaratory Judgment Act.
Starmark Laboratories ("Starmark") is the owner of U.S. Patent No. 7,109,373 ("the '373 patent"). The '373 patent is directed to creatine salts and a method of making these salts. The '373 patent claims priority to a December 2002 provisional application. Creative Compounds, LLC ("Creative") is the owner of U.S. Patent No. 7,129,273 ("the '273 patent"). The '273 patent is directed to a dicreatine malate compound and methods of administering such a compound. Creative's '273 patent was filed in April 2003.
Creative sued Starmark in the U.S. District Court for the Southern District of Florida, seeking a declaratory judgment that Starmark's '373 patent was invalid and not infringed. Starmark counterclaimed that Creative was infringing the '373 patent and that Creative's '273 patent was invalid. Starmark filed a motion for summary judgment on all counts to which Creative responded by filing a motion to dismiss Starmark's declaratory judgment action for lack of subject matter jurisdiction. The district court granted Starmark's motion for summary judgment on all counts and denied Creative's motion to dismiss.
On appeal, the Federal Circuit upheld the district court's judgment that Starmark's '373 patent was not invalid and infringed. The Federal Circuit, however, reversed the district court's denial of Creative's motion to dismiss Starmark's motion for a declaratory judgment that the '273 patent was invalid, holding that the district court did not have subject matter jurisdiction over that claim. Accordingly, the court proceeded to vacate the district court's decision as to the invalidity of the '273 patent.
Regarding the issue of invalidity of the '373 patent, the Federal Circuit first rejected Creative's argument that it need only prove invalidity by a preponderance of the evidence instead of the usual clear and convincing standard because its invalidity claims were based on Creative's own '273 patent having priority over Starmark's patent. The court held that the standard for invalidity remains clear and convincing evidence unless the action was brought under 35 U.S.C. § 291, related to interference actions, or there is evidence of "common claimed subject matter" between the two patents.
The Federal Circuit then addressed the merits of Creative's invalidity claims, rejecting each in turn based on inadequate evidence. Starting with Creative's § 102(g) claim based on an email that allegedly demonstrated conception of the subject matter of the '373 patent, the court held that there was no evidence in the record that the email demonstrated Creative's possession of the subject matter of the invention or that Creative had shown diligence from the time of the alleged conception until its constructive reduction to practice. The court similarly rejected Creative's arguments under § 102(f) and § 102(e) for lack of evidence.
Regarding Creative's infringement of the '373 patent, Creative conceded infringement of the compound claims, and the court rejected Creative's arguments that Starmark had not proven infringement of the method claims because Starmark did not show evidence that Creative's compound was made according the claims of the patent. Relying on 35 U.S.C. § 295, the Federal Circuit held that because there was a substantial likelihood that Creative's compound was made by the patented process and Starmark made a reasonable effort to determine the actual process that was used, there was a presumption that Creative's compound was made by that process. Because Creative was unable to rebut that presumption, the district court did not err in granting Starmark's motion for summary judgment of infringement.
Finally, the Federal Circuit reversed the district court's denial of Creative's motion to dismiss Starmark's claim for a default judgment of invalidity of the '273 patent. Requiring that there need be a substantial controversy between parties with adverse legal interests, the Federal Circuit held that Creative's letters to Starmark's industry competitors alleging infringement of Creative's '273 patent did not rise to the "substantial controversy" level because these letters were not sent directly to Starmark. The court also held that there was no substantial controversy because there was no evidence in the record that the '273 and '373 patents covered common claimed subject matter.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1445.pdf
Chris McArdle is an Associate in the IP Group of Alston & Bird's New York City office.
Litigation Practice and Procedure: Venue
Remedies: Injunctions:
Preliminary Injunction Licenses
General Protecht Group, Inc., et al. v. Leviton Manufacturing Co., No. 11-1115 (Fed. Cir. (D.N.M.) July 8, 2011). Opinion by Linn, joined by Schall and Dyk. In upholding the district court's grant of a preliminary injunction, the Federal Circuit held that when continuation patents issue from parent patents previously licensed with regard to certain products, those products are impliedly licensed under the continuation patents as well unless the parties clearly manifested a mutual intent to the contrary.
In 2004 and 2005, Leviton Manufacturing Co., Inc. ("Leviton") sued General Protecht Group, Inc. ("GPG") in the District of New Mexico, alleging infringement of U.S. Patent Nos. 6,246,558 and 6,864,766 ("the '558 patent" and "the '766 patent," respectively). In 2007, the parties settled under a confidential settlement agreement, which included a covenant not to sue clause and a forum selection clause indicating the U.S. District Court for the District of New Mexico as the proper forum. In September 2010, Leviton filed a complaint with the International Trade Commission ("ITC"), alleging infringement of U.S. Patent Nos. 7,463,124 and 7,764,151 ("the '124 patent" and "the '151 patent," respectively) by GPG and its U.S. distributors. Leviton also sued the appellees in the U.S. District Court for the Northern District of California, alleging infringement of the '124 and '151 patents. The '124 and '151 patents are continuations of the '588 and '766 patents that issued after execution of the settlement agreement. In response, GPG filed a complaint in the U.S. District Court for the District of New Mexico, seeking a preliminary injunction against Leviton's continuing litigation in other forums, which the district court ultimately granted.
Leviton appealed, arguing the forum selection clause did not apply to cases where the settlement agreement's only relationship to the present dispute is that it possibly provides a defense. Further, Leviton argued that the settlement agreement does not provide an implied license defense in the present case as a matter of law, and that the district court erred in applying three preliminary injunction factors.
Affirming the district court's preliminary injunction, the Federal Circuit ruled that the forum selection clause applies because the case presents a non-frivolous dispute regarding the scope of a patent license and, as such, "relates to or arises out of" the settlement agreement. Further, in applying the law of TransCore v. Electronic Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009), the Federal Circuit held that where continuations issue from parent patents that previously have been licensed as to certain products, a presumption exists that those products are impliedly licensed under the continuations as well. The Federal Circuit disagreed with Leviton's arguments that TransCore was limited to cases where continuation claims were broader than the licensed parent patent's claims, reasoning that TransCore prohibited a patentee from derogating from a right licensed to another after receiving consideration for the license.
In addition, Leviton argued that the preservation of Leviton's right to sue on related patents and GPG's right to rely on past claim constructions in the settlement agreement evidenced mutual intent not to grant an implied license to future patents. The Federal Circuit disagreed, stating that the provisions, while indicating a mutual understanding of possible future litigation, did not address whether the parties intended that continuations could be asserted against those products. In addition, the Federal Circuit ruled that the district court did not err in determining that forcing GPG to defend itself in litigation in the Northern District of California and the ITC would result in irreparable harm to GPG, that the balance of hardships favored GPG, and that the public interest is best served by enforcing a party's previously negotiated obligations of litigating in a specific forum.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/11-1115.pdf
Albert Minn is an Associate in the IP Group of Alston & Bird's Raleigh office.
Infringement: Doctrine of Equivalents:
Prosecution History Estoppel: By Amendment
Duramed Pharmaceuticals, Inc. v. Paddock Laboratories, Inc., No. 10-1419 (Fed. Cir. (S.D.N.Y.) July 21, 2011). Opinion by Lourie, joined by Gajarsa and Dyk. In upholding the U.S. District Court for the Southern District of New York's grant of summary judgment of noninfringement, the Federal Circuit held that foreseeability in connection with prosecution history estoppel requires disclosure in the prior art only at the time of a narrowing amendment.
Duramed Pharmaceuticals, Inc., now known as Teva Women's Health, Inc. ("Duramed"), owns U.S. Patent No. 5,908,638 ("the '638 patent"). The '638 patent is directed to conjugated estrogen pharmaceutical compositions for use in hormone replacement therapies that include a moisture barrier coating ("MBC") comprising ethylcellulose to reduce storage-related degradation. After Paddock Laboratories, Inc. ("Paddock") filed an Abbreviated New Drug Application for a generic version of Duramed's hormone replacement product using a polyvinyl alcohol ("PVA") MBC, Duramed sued Paddock for infringement of the '638 patent, alleging infringement under the doctrine of equivalents of five claims. Paddock filed a motion for summary judgment asserting that amendment-based prosecution history estoppel barred a finding of infringement. In particular, Paddock argued that Duramed's amendment of the only independent claim to require that the MBC comprise "ethylcellulose" precluded a finding that a PVA MBC infringed under the doctrine of equivalents. The district court granted Paddock's motion for summary judgment, noting that Duramed failed to rebut the Festo presumption of estoppel through its arguments that PVA was unforeseeable at the time of the narrowing amendment.
Reviewing the grant of summary judgment de novo, the Federal Circuit agreed with the district court that Duramed failed to rebut the presumption of prosecution history estoppel based on unforeseeability. The court rejected Duramed's argument that PVA MBCs were not foreseeable because the prior art did not disclose its use with conjugated estrogens, noting that because the claim language of the '638 patent began with "a pharmaceutical composition," PVA MBCs "need only have been known in the field of pharmaceutical compositions as of the time of Duramed's narrowing amendment." The Federal Circuit further observed that foreseeability does not require exact suitability and "does not require flawless perfection to create an estoppel." Thus, because the use of PVA as an MBC in the general field of pharmaceutical compounds was known prior to the date of Duramed's narrowing amendment, the presumption of estoppel was not rebutted by a showing of unforeseeability. The Federal Circuit thus affirmed the district court's grant of summary judgment of noninfringement.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1419.pdf
Maritza Schaeffer is an Associate in the IP Group of Alston & Bird's New York City office.
Litigation Practice and Procedure:
Jurisdiction: Standing
Patentable Invention: Utility:
Patentable Subject Matter
The Association for Molecular Pathology, et al. v. United States Patent & Trademark Office, et al., No. 10-1406 (Fed. Cir. (S.D.N.Y.) July 29, 2011). Opinion by Lourie. Opinion concurring in part by Moore. Opinion concurring in part and dissenting in part by Bryson. The Federal Circuit upheld the district court's decision to exercise declaratory judgment jurisdiction because at least one of the Plaintiffs, Dr. Harry Ostrer, had standing to challenge the validity of Myriad Genetics, Inc.'s patents. The Federal Circuit also affirmed-in-part and reversed-in-part the district court's decision granting summary judgment that all of the challenged patent claims are drawn to nonpatentable subject matter under 35 U.S.C. § 101. Specifically, the Federal Circuit agreed with the district court that Myriad's method claims directed to "comparing" or "analyzing" DNA sequences are patent ineligible because those claims include no transformative steps and cover only patent-ineligible abstract mental steps. However, the Federal Circuit reversed the district court's determination that Myriad's composition claims to "isolated" DNA molecules cover patent-ineligible products of nature under 35 U.S.C. § 101 because the molecules as claimed do not exist in nature. Similarly, the Federal Circuit reversed the district court's ruling that Myriad's method claim to screening potential cancer therapeutics via changes in cell growth rates is directed to a patent-ineligible scientific principle.
Certain medical organizations, researchers, genetic counselors, and patients (collectively "Plaintiffs") brought suit against Myriad Genetics, Inc. and the Directors of the University of Utah Research Foundation (collectively "Myriad"), challenging the patentability of certain composition and method claims relating to human genetics covered by seven different patents assigned to Myriad. The challenged composition claims cover two "isolated" human genes, BRCA1 and BRCA2, and certain mutations in these genes associated with a predisposition to breast and ovarian cancers. All but one of the challenged method claims cover methods of "analyzing" or "comparing" a patient's BRCA sequence with the normal sequence to identify the presence of cancer-predisposing mutations.
After the Plaintiffs filed suit, Myriad moved to have the case dismissed, alleging that the Plaintiffs lacked standing to bring a declaratory judgment suit challenging the validity of Myriad's patents. The district court disagreed, concluding that Myriad's actions had placed "the Plaintiffs in precisely the situation that the Declaratory Judgment Act was designed to address: the Plaintiffs have the ability and desire to engage in BRCA1/2 testing as well as the belief that such testing is within their rights, but cannot do so without risking infringement liability." On appeal to the Federal Circuit, Myriad challenged the district court's jurisdictional decision on the grounds that Myriad and the Plaintiffs do not have adverse legal interests and that the Plaintiffs have failed to allege a controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. The Federal Circuit determined that one of the Plaintiffs, Dr. Ostrer, clearly alleged a sufficiently real and imminent injury because he alleged an intention to actually and immediately engage in allegedly infringing BRCA-related activities. Therefore, the Federal Circuit held that Dr. Ostrer had standing to maintain the declaratory judgment action.
However, the court reversed the district court's holding that various Plaintiffs other than Dr. Ostrer had declaratory judgment standing. Having found one Plaintiff with standing, the Federal Circuit proceeded to analyze the merits of Myriad's appeal.
The district court's summary judgment decision held all fifteen challenged composition and method claims invalid under § 101. First, the district court held that composition claims directed to isolated DNA molecules fall within the judicially created "products of nature" exception to § 101 because such isolated DNAs are not "markedly different" from native DNAs. The Federal Circuit reversed this determination.
Analyzing the Supreme Court's decisions in Diamond v. Chakrabarty, 447 U.S. 303 (1980), and Funk Brothers Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), the Federal Circuit held that the distinction between a product of nature and a human-made invention for purposes of § 101 turns on a change in the claimed composition's identity compared with what exists in nature. Applying that test to the isolated DNAs, the Federal Circuit concluded that the relevant claims are drawn to patentable subject matter because the claims cover molecules that "are markedly different-have a distinctive chemical identity and nature-from molecules that exist in nature." Specifically, human intervention in cleaving or synthesizing a portion of a native chromosomal DNA imparts on that isolated DNA a chemical identity distinct from that possessed by native DNA. The Federal Circuit concluded that if the law is to be changed, and DNA inventions are to be excluded from the broad scope of § 101 contrary to the settled expectation of the inventing community, the change must come from Congress and not the courts.
Second, with respect to Myriad's patent claims directed to methods of "comparing" or "analyzing" BRCA sequences, the Federal Circuit affirmed the district court's decision that such claims fall outside the scope of § 101 because they claim only abstract mental processes. According to the Federal Circuit, the claims recite nothing more than the abstract mental steps necessary to compare two different nucleotide sequences. Limiting the comparison to just the BRCA genes or, as in the case of one asserted claim, to just the identification of particular alterations, fails to render the claimed processes patent eligible.
Finally, the Federal Circuit reversed the district court's holding that a claim directed to a method for screening potential cancer therapeutics via changes in cell growth rates is directed to an abstract idea and therefore not patentable. In the Federal Circuit's view, the claim includes transformative steps, which under the machine-or-transformation test is "an 'important clue' that it is drawn to a patent-eligible process." The claim recites more than the abstract mental step of looking at two numbers and "comparing" two host cells' growth rates. The claim includes the steps of "growing" transformed cells in the presence or absence of a potential cancer therapeutic, which is "an inherently transformative step involving the manipulation of the cells and their growth medium." The claim also recites a step of "determining" the cells' growth rates, "a step that also necessarily involves physical manipulation of the cells." The Federal Circuit further determined that "[t]he claim does not cover all cells, all compounds, or all methods of determining the therapeutic effect of a compound." The court thus held that the claim is directed to patentable subject matter under § 101.
Judge Moore joined the majority opinion with respect to standing and the patent-eligibility of the method claims. She wrote a separate concurring opinion, however, concerning her belief "that claims directed to isolated DNA sequences present a different set of issues." In Judge Moore's view, the claimed isolated cDNA sequences are the creation of man, made using biological tools and the naturally occurring mRNA as a template. Thus, the "laws of nature" exception cannot be extended to reach entirely man-made sequences of isolated DNA, even if those sequences are inspired by a natural template. Thus, Judge Moore joined the majority with respect to claims to isolated cDNA sequences, and concurred in the judgment with respect to the remaining sequences.
Judge Bryson concurred with the portions of the majority opinion directed to standing, the patentability of cDNA claims, and the patentability of the method claims. However, he dissented from the court's holding that Myriad's BRCA gene claims and its claims to gene fragments are patent eligible. In Judge Bryson's view, in these claims Myriad is claiming the genes themselves, which appear in nature on the chromosomes of living human beings. The only material change made to those genes from their natural state is the change that is necessarily incidental to the extraction of the genes from the environment in which they are found in nature. The isolated BRCA genes are identical to the BRCA genes found on chromosomes 13 and 17. They have the same sequence, they code for the same proteins, and they represent the same units of heredity. Therefore, Judge Bryson would have held that Myriad's BRCA gene claims are not patent eligible.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1406.pdf
Lance Soderstrom is an Associate in the IP Group of Alston & Bird's New York City office.
The Patent Application: Claims: Indefiniteness
Claim Interpretation: Intrinsic Evidence: Specification
CBT Flint Partners, LLC v. Return Path, Inc., et al., Nos. 10-1202, 1203 (Fed. Cir. (N.D. Ga.) Aug. 10, 2011). Opinion by Lourie, joined by Bryson and Linn. The Federal Circuit overruled the determination by the district court that a claim was invalid as indefinite, holding that the district court could and should have corrected an obvious error in a patent claim.
CBT Flint Partners, LLC ("CBT") sued Cisco Ironport Systems, LLC and Return Path, Inc. (collectively "Cisco") in the Northern District of Georgia for infringement of U.S. Patent No. 6,587,550 ("the '550 patent") and U.S. Patent No. 6,192,114, both relating to methods and systems for charging a fee for sending unsolicited and unwanted e-mail, generally known as spam. The district court issued a claim construction order, noting that an asserted claim of the '550 patent contains a "drafting error," in which the claim recites "the computer being programmed to detect analyze the electronic mail communication." The district court determined that there were at least three reasonable and possible corrections to rectify that drafting error: (1) delete the word "detect"; (2) delete the word "analyze"; or (3) add the word "and" between the words "detect" and "analyze." The district court held that the appropriate correction was subject to reasonable debate. The district court therefore concluded that, under the Federal Circuit's holding in Novo Industries L.P. v. Micro Molds Corp., 350 F.3d 1348, 1354 (Fed. Cir. 2003), it was not authorized to correct the so-called drafting error, thereby rendering the claim invalid for indefiniteness. Following the district court's claim construction, the parties stipulated to noninfringement of all asserted claims, and the district court entered final judgment based on the parties' stipulation.
On appeal, CBT argued that the meaning and scope of the claim at issue remains the same regardless of which correction is adopted and that the only reasonable correction in the context of the claim and specification is the addition of the word "and" between the words "detect" and "analyze." Cisco, on the other hand, argued that the district court correctly concluded that it lacked statutory authority to correct the error due to the fact that at least three possible corrections seemed reasonable and that under Novo Industries only the PTO can change the claim language.
The Federal Circuit agreed with CBT, holding that because there was an obvious and correctable error in the claim at issue, and because the construction of that claim was not subject to reasonable debate, the claim was not indefinite. More specifically, the Federal Circuit stated that it is well-settled law that, in a patent infringement suit, a district court may correct an obvious error in a patent claim. The Federal Circuit further noted that in Novo Industries, the court declined to make the proposed corrections to the claim at issue because those corrections were substantively significant and required guesswork as to what was intended by the patentee in order to make sense of the patent claim. Here, because each of the three proposed reasonable interpretations would result in the same claim scope, requiring that the computer be programmed to "detect and analyze" the email, a person of skill in the art would readily know that the meaning of the claim requires insertion of the word "and" between the words "detect" and "analyze." Accordingly, the Federal Circuit overruled the district court's summary judgment of invalidity for indefiniteness.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1202-1203.pdf
Wes Achey is an Associate in the IP Group of Alston & Bird's Atlanta office.
Patentable Invention: Generally
Patentable Invention: Utility:
Patentable Subject Matter Defenses: Invalidity
CyberSource Corp. v. Retail Decisions, Inc., No. 09-1358 (Fed. Cir. (N.D. Cal.) Aug. 16, 2011). Opinion by Dyk, joined by Bryson and Prost. In affirming the district court's grant of summary judgment of invalidity under 35 U.S.C. § 101, the Federal Circuit held that the claims-at-issue failed to meet the machine-or-transformation test and improperly attempted to capture unpatentable mental processes.
CyberSource Corporation ("CyberSource") sued Retail Decisions, Inc. ("Retail Decisions") in the U.S. District Court for the Northern District of California, alleging infringement of U.S. Patent No. 6,029,154 ("the '154 patent"). The '154 patent is directed to a method for detecting fraud in Internet credit card transactions. Following a stay in the district court proceedings pending an ex parte reexamination, the district court granted summary judgment of invalidity of Claims 2 and 3 of the '154 patent.
On appeal, the Federal Circuit held that Claim 3 of the '154 patent was invalid because it failed to meet either prong of the machine-or-transformation test. Specifically, the court stated that the collection and organization of credit card data and Internet addresses is insufficient to meet the transformation prong of the test, and the plain language of the claim does not require the method to be performed by a machine. Further, looking beyond the machine-or-transformation test under the Supreme Court's precedent in Bilski v. Kappos, 130 S. Ct. 3218 (2010), the court held that Claim 3 also failed to recite patent-eligible subject matter because it was drawn to an unpatentable mental process.
Turning to Claim 2, the court reached a similar conclusion, holding that the method underlying Claim 2 was the same method of fraud detection recited in Claim 3. In particular, the court held that CyberSource failed to meet its burden to demonstrate that Claim 2 was drawn to a specific computer readable medium rather than to the underlying method of credit card fraud detection of Claim 3. Thus, the court held that merely claiming a software implementation of a purely mental process that could be otherwise performed without the use of a computer does not satisfy the machine prong of the machine-or-transformation test.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/09-1358.pdf
Scott Amy is an associate in the IP Group of Alston & Bird's Atlanta office.
Litigation Practice and Procedure:
Declaratory Judgment Actions
Litigation Practice and Procedure:
Jurisdiction: Personal Jurisdiction, Licenses
Patents and Antitrust Law
Delano Farms Co., et al. v. California Table Grape Commission, et al., No. 10-1546 (Fed. Cir. (E.D. Cal.) Aug. 24, 2011). Opinion by Bryson, joined by Schall and Prost. The Federal Circuit reversed the U.S. District Court for the Eastern District of California and held that the Administrative Procedure Act ("APA") waives sovereign immunity for non-monetary claims against federal agencies, and that the sovereign immunity is not limited to "agency action" or "financial agency action," as those terms are defined in the APA.
The U.S. Department of Agriculture ("USDA") is the owner by assignment of three patents issued under the Plant Variety Protection Act for grapevines that produce table grapes. The three patented varieties are known as Sweet Scarlet (U.S. Patent No. PP15,891), Scarlet Royal (U.S. Patent No. PP16,229), and Autumn King (U.S. Patent No. PP16,284). The USDA licensed its rights in the three patents to the California Table Grape Commission ("the Commission"), an agency of the State of California whose mission is to promote that state's table-grape industry. The Commission is funded by a tax levied on each box of table grapes produced in California.
The plaintiffs, Delano Farms Company, Four Star Fruit, Inc., and Gerawan Farming, Inc. (collectively "Delano") are California grape growers who purchased grapevines covered by the patents, signed the Domestic Grower License Agreement, and paid the licensing fee. Delano filed a declaratory judgment action challenging the validity and enforceability of the three patents, as well as the conduct of the Commission and the USDA in licensing and enforcing the patents. Delano also brought claims against the USDA alone, alleging that the USDA acted unlawfully in obtaining the patents and entering into the licensing arrangement with the Commission. Finally, Delano brought an antitrust claim and a related state law unfair competition claim against the Commission based on the Commission's efforts to license the Sweet Scarlet patent.
The USDA and the Commission moved to dismiss Delano's declaratory judgment claims on the basis that the USDA was an indispensible party shielded from joinder by sovereign immunity. The district court agreed, and dismissed the declaratory judgment claims. The district court also dismissed the antitrust claims and the related state law unfair competition claims after holding that Delano had failed to plead a plausible market for the Sweet Scarlet grapes.
On appeal, the Federal Circuit reversed the district court's dismissal of the declaratory judgment claims, holding that a section of the APA allowed Delano to proceed with the declaratory judgment claims because they were not seeking monetary damages against the government. In reaching that conclusion, the Federal Circuit observed that because the license agreement between the Commission and the USDA contained several provisions preserving for the USDA various forms of control over the license and enforcement of the patents, the license agreement did not transfer to the Commission all substantial rights in the patents. For that reason, the court concluded that the USDA was a necessary party to Delano's declaratory judgment claims based on the Patent Act.
Next, the Federal Circuit addressed whether sovereign immunity barred Delano's Patent Act claims against the USDA. After considering whether the waiver of sovereign immunity found in 5 U.S.C. § 702 applies to Delano's request for declaratory relief against the United States on a cause of action arising under the Patent Act, or whether that waiver of sovereign immunity applies only to agency actions for which the APA prescribes a right to judicial review, the Federal Circuit held that § 702 of the APA waives sovereign immunity for non-monetary claims against federal agencies. Accordingly, the Federal Circuit held that the USDA may be joined as a party to the declaratory judgment claims on remand. Finally, the Federal Circuit affirmed the district court's dismissal of Delano's antitrust claims, concluding that Delano failed to point to anything other than the issuance of a patent for Sweet Scarlet grapes that would provide a plausible basis for finding that Sweet Scarlet grapes form a relevant antitrust market.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1546.pdf
Tony Taylor is an associate in the IP Group of Alston & Bird's Charlotte office.
Character of a Patent: Statutory Subject Matter
Defenses: Miscellaneous Defenses
Classen Immunotherapies, Inc. v. Biogen IDEC, et al., Nos. 06-1634, -1649 (Fed. Cir. (D. Md.) Aug. 31, 2011). Opinion by Newman, joined by Rader. Additional views by Rader, joined by Newman. Dissenting opinion by Moore. In remand from the U.S. Supreme Court for further consideration in light of the Court's holding in Bilski v. Kappos, 561 U.S. ___, 130 S. Ct. 3218 (2010), the Federal Circuit held that the subject matter of two of Classen Immunotherapies, Inc.'s ("Classen") three patents are eligible for patentability, and reversed-in-part and affirmed-in-part the district court's grant of summary judgment of invalidity under 35 U.S.C. § 101. Further, the Federal Circuit held that routinely reporting information to the FDA after pre-marketing approval of generic counterparts of patented products has been granted is not protected under the safe-harbor provision of § 271(e)(1). Additionally, the Federal Circuit, in denying to hear an appeal for a denial of a summary judgment motion, remanded the case to the district court for further proceedings.
Classen filed suit against Biogen IDEC ("Biogen"), GlaxoSmithKline ("GSK"), Merck & Co., Inc. ("Merck"), Chiron Corporation, and Kaiser-Permanente, Inc. and a number of affiliated entities, alleging infringement of U.S. Patent Nos. 6,638,739 ("the '739 patent"), 6,420,139 ("the '139 patent"), and 5,723,283 ("the '283 patent"), which all relate to lowering the occurrence of chronic immune-mediated disorders based on immunization schedules that provide lower risk. Specifically, the '739 and '139 patents relate to administrating a vaccination based on comparing immunization schedules for the lower risk of chronic disorders, while the '283 patent omits the immunization step. The U.S. District Court for the District of Maryland found that the patents were invalid because they were directed to an "abstract idea" that a relation exists between infant immunization schedules and the later occurrence of chronic immune-mediated disorders.
On appeal, the Federal Circuit upheld the district court's decision, stating that the Classen methods were not associated with a machine and did not transform matter. The Supreme Court, however, decided in Bilski v. Kappos that the machine-or-transformation test is not the sole standard for determining whether subject matter is patent-eligible. Consequently, the Court vacated and remanded the Federal Circuit's prior Classen decision.
In light of the Court's Bilski decision, the Federal Circuit determined that the '139 and '739 patents cross the eligibility threshold, while the '283 patent does not. Specifically, the Federal Circuit reasoned that the claims of the '139 and the '739 patent are drawn to patent-eligible subject matter because they relate to the specific and tangible application of physically administrating vaccinations based upon the comparison of the immunization schedules. With regard to the '283 patent, however, the Federal Circuit determined that the claims are directed to an abstract scientific principle rather than a tangible application and are not eligible for statutory protection, as the '283 patent does not include a physical implementation of the mental comparison step.
In addition, the Federal Circuit upheld the district court's grant of Merck's motion for summary judgment of noninfringement because Classen failed to provide any evidence to support the allegation that Merck participated in or facilitated a 2001 study conducted by the Centers for Disease Control.
Further, the Federal Circuit reversed the district court's grant of summary judgment of noninfringement to Biogen and GSK, reasoning that Biogen and GSK's actions were not protected activities under § 271(e)(1). Biogen and GSK maintained that their evaluations of vaccinations and the development of Type 1 diabetes and reporting such information to the FDA was protected under § 271(e)(1). The Court of Appeals determined that the legislative history and the cases applying the safe harbor provision of § 271(e)(1) were related to protecting activities undertaken to obtain pre-marketing approval of generic counterparts of patented products prior to the patent's expiration, and thus, Biogen and GSK's actions were not exempt.
In providing additional views, Chief Judge Rader noted that public policy reasons, such as promoting innovation and preventing the shift of technological research to other countries where protection is easier to obtain, should limit placing additional restrictions on subject matter eligibility defined by § 101.
In dissent, Judge Moore disagreed with the majority's reasoning that there was any distinction between the '283 claims and the claims of the '139 and '739 patents. Specifically, Judge Moore believed that all three patents were directed to an abstract idea and that the additional step of immunization in the '139 and '739 patents did not impart patentability under § 101.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/06-1634-1649.pdf
Albert Minn is an Associate in the IP Group of Alston & Bird's Raleigh office.
Patentable Invention: Utility:
Patentable Subject Matter
Ultramercial, LLC, et al. v. Hulu, LLC, et al., No. 10-1544 (Fed. Cir. (C.D. Cal.) Sept. 15, 2011). Opinion by Rader, joined by Lourie and O'Malley. The Federal Circuit reversed and remanded the district court's dismissal of the plaintiff's claim based on the lower court's decision that the patent at issue claimed unpatentable subject matter. The Federal Circuit held that the patent at issue claims a process within the language and meaning of 35 U.S.C. § 101.
Ultramercial, LLC and Ultramercial, Inc. (collectively, "Ultramercial") sued multiple defendants in the U.S. District Court for the Central District of California, alleging infringement of U.S. Patent No. 7,346,545 ("the '545 patent"). The '545 patent claims a method for monetizing and distributing copyrighted products over the Internet. The district court dismissed the case for failure to state a claim, ruling that the '545 patent did not claim patent-eligible subject matter under 35 U.S.C. § 101. Ultramercial appealed.
As an initial matter, the Federal Circuit stated that claim construction is not always required to determine subject matter eligibility. The court observed, however, that claim construction can facilitate the determination by clarifying the basic character of the subject matter of the invention. In the present case, however, the court held that claim construction was not required.
Turning to the question of patentability, the Federal Circuit stated that patentability ultimately depends on sections of the Patent Act other than § 101, and that § 101 is only a threshold check. In other words, the determination of patentability under § 101 is not a substitute for the substantive patentability requirements of § 102, § 103, and § 112. The Federal Circuit identified that only three categories of subject matter have been identified by judicial case law as falling outside the scope of § 101, namely, laws of nature, physical phenomena, and abstract ideas. Regarding abstract ideas, the Federal Circuit recognized that both the Federal Circuit and the Supreme Court have struggled to provide a precise formula or definition for the category of abstractness.
In examining the '545 patent, the Federal Circuit noted that because the patent claims a method, the patent satisfies the definition of a "process" under § 100 and falls within patent-eligible subject matter under § 101. Thus, the Federal Circuit analyzed whether the '545 patent was directed to an abstract idea. Citing Research Corp. Technologies, Inc. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010), the Federal Circuit stated that "inventions with specific applications or improvements to technologies in the marketplace are not so likely to be so abstract that they override the statutory language and framework of the Patent Act." The Federal Circuit then noted that the '545 patent purports to improve existing technology in the marketplace and uses computers and applications of computer technology. The Federal Circuit then compared the '545 patent to the subject matter at issue in Bilski v. Kappos, 130 S. Ct. 3218 (2010), and noted that, unlike in Bilski, many of the steps recited by the '545 patent require an extensive computer interface, intricate and complex computer programming, and specific application to the Internet and a cyber-market environment. The Federal Circuit declined, however, to define the level of programming complexity required for patent-eligibility of a computer-implemented method.
Finally, the Federal Circuit noted that the '545 patent does not claim a mathematical algorithm, a series of purely mental steps, or a similarly abstract concept, but rather requires a controlled interaction with a consumer via an Internet website. Thus, the court reversed and remanded the district court's dismissal of Ultramercial's claim.
http://www.cafc.uscourts.gov/images/stories/opinions-orders/10-1544.pdf
Tom Davison is an Associate in the IP Group of Alston & Bird's Washington, D.C. office.
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