Patent Law Blog (Patently-O)

Federal Circuit Affirms that Lucent’s $1.5B Patent Victory is Gone

Lucent v. Gateway, Dell, & Microsoft (Fed. Cir. 2008)

Lucent's two patents cover a compression method for MP3 digital audio files. The case originally resulted in a $1.5 billion jury award for Lucent. The district court, however set aside the jury verdict. That decision is affirmed here on appeal. Lucent's problems stem from (1) joint ownership of its '080 patent and (2) failure to provide even one specific instance when the Microsoft's encoder actually infringed the '457 patent.

"Lucent has failed to provide sufficient evidence to establish that the High Quality encoder actually runs on Windows Media Player and thus it would be too speculative to conclude that Windows Media Player necessarily infringes the '457 patent."

This case provides important lessons for both inventorship and proving infringement. More to come.

CAFC Vacates Validity Holding Based on Agreement by the Parties [UPDATED 2:00pm]

Baychar v. Salomon North America (Fed. Cir. 2008)

As part of a settlement process, parties regularly agree to 'consent decrees' that include admissions that the patent is valid and/or infringed. When signed by a court, those judgments serve important purposes in later direct challenges via res judicata or collateral estoppel. A consent decree may also serve as evidence or a deterrent against other challengers.  It is rare, however, for the Federal Circuit to sign a consent decree on appeal.

Baychar sued Solomon for infringement of its snowboard boot liner patent that apparently teaches a better way for wicking moisture. The district court found the patent (1) not infringed based on an implied license and (2) invalid.  By the time of oral arguments on appeal, the parties had apparently come to an agreement that Baychar would waive its infringement argument if the court would vacate the invalidity finding.  In a short non-precedential opinion, the appellate panel (Judges Mayer, Plager, and Dyk) did just that: affirming that the patent was infringed based on an implied license while vacating the judgment of invalidity.

The business issue here is that Baychar has asserted its patent against multiple defendants, and the invalidity finding would have ruined its chances of success across the board. It was willing to admit defeat in this case as a way to save the patent for another fight.

Notes:

• In its opinion, the CAFC noted that the issue of infringement will be resolved by the appellate court rather soon in Baychar v. Burton.

In a prior opinion in the Salomon case, the CAFC dismissed Baychar's appeal on a procedural issue — its notice of appeal was filed five days late. Federal Circuit rules require a notice of appeal of a patent case be filed within 30 days from the final judgment. [Link] Apparently, the district court issued a second final judgment giving Baychar the opportunity to appeal again.

Appellate Court Affirms that Generic Omeprazole does not Infringe Prilosec Patent

IN RE OMEPRAZOLE PATENT LITIGATION (Fed. Cir. 2008) (nonprecedential)

Omeprazole is the active ingredient in the best-selling drug Prilosec. Mylan and others challenged Astrazeneca’s patents on grounds that their generic formulations do not infringe two Astra’s listed patents. “After a forty-two day bench trial,” a Southern District of New York district court agreed that the generic formulation do not infringe. On appeal was the question of whether the generic versions contained an “alkaline reacting compound” (ARC) as required by the claims.

Using the Specification as Proof of Non-Infringement: Astra argued that the talc used by the generic products included an ARC.  The CAFC agreed that the lower court had properly rejected that argument based in part on language in the specification. Specifically, the nearly identical specifications listed several different ARCs but did not include talc on the list.  “In contrast, the specifications also lists a number of ordinary excipients, among which is talc. . . Thus, the specifications themselves indicate that ARCs do not include talc.”

Defying conventional wisdom at the time, Mylan launched its generic version of Omeprazole in 2003 — despite ongoing patent litigation.

Non-infringement affirmed.