Patent Law Blog (Patently-O)

Public & Experimental Use: Reduction to Practice Requires Knowledge that Invention Works for Intended Purpose

In re Omeprazole Patent Litigation (Fed. Cir. 2008)

The CAFC has affirmed a lower court trial finding that AstraZeneca's Prilosec (omeprazole with an enteric coating and a subcoating) patents are infringed by the ANDA filings of Apotex, Torpharm, and Impax. (See U.S. Patent Nos. 4,786,505 and 4,853,230). This complex consolidated case has been handled by Judge Jones of the Southern District of New York. The case includes several important procedural issues, but here I focus on public use.

Public Use of a Pharmaceutical Formulation: Under 35 U.S.C. § 102(b), a patent will be considered invalid if the invention was "in public use" more than one year before the filing date. (i.e., before the "critical date"). The use in question was Astra's large clinical trials used to test its omeprazole formulation. The district court ruled for Astra on two separate grounds: First that the clinical trials were an "experimental use" and therefore cannot qualify as public uses and second that the formulation was not yet ready for patenting until after the trials were completed.

Experimental Use and Reduction to Practice: In a series of cases over the past decade, the Federal Circuit has made clear that the experimental use defense "cannot negate a public use" that occurs after the invention is reduced to practice. At the same time, public use now requires proof that an invention is "ready for patenting" which generally requires reduction to practice (or at least being enabled to practice). For the most part, this rather new interpretation of public use subsumes the experimental use defense.

Here, the pills had been manufactured and were being used by clinical subjects. However, there were not "reduced to practice" because RTP requires knowledge "that the invention would work for its intended purpose." On appeal, the Federal Circuit refused to overturn the lower court's factual findings – instead agreeing the formulation was not reduced to practice because the company lacked experience of how it would perform clinically:

[Astra's expert witness] testified that as of May 1983 the Astra scientists did not have enough information to satisfy themselves that the Phase III formulation would work for its intended purpose. Instead, he testified that the Astra scientists thought the Phase III formulation "had a good possibility to be used as a marketing drug" but that the team did not have long-term stability data and had "no experience of how it performed in clinical studies."

….

The Astra scientists had long understood that omeprazole could provide a safe and effective treatment for certain gastrointestinal diseases. The challenge they faced was developing a formulation to deliver omeprazole to the small intestine, a challenge that was made difficult by omeprazole's sensitivity to acidic environments, such as the stomach. Impax has not demonstrated that, without conducting the Phase III clinical tests, the inventors knew that the Phase III formulation would achieve the goals of long-term stability and in vivo stability such that it would be effective as a treatment for gastrointestinal disease.

Because the efficacy of the formulation was not reduced to practice, its use could not be a public use.

Notes:

• Of interest here is the idea that reduction to practice requires knowledge that the invention will work for its "intended purposes." The specification of these patents detail the need for stability, so that purpose is clear. Because "purposes of the invention" have been used to limit claim scope, many modern patent applications don't include such information. In those cases, will the purpose be found in extrinsic evidence?
• The court here focused on reduction to practice to fulfill the "ready for patenting" prong of the public use analysis. Seemingly, the defendants may have had a better shot trying to show ready for patenting based on evidence that "prior to the critical date the inventor had prepared drawings or other descriptions of the invention that were sufficiently specific to enable a person skilled in the art to practice the invention."

Patent Assignment Must be in Writing; But Some Transfers are not Assignments

Akira Akazawa v. Link New Tech (Fed. Cir. 2008).

Yasumasa Akazawa was the inventor and owner of a patent covering a new way to change engine coolant. When he died intestate in 2001, his wife and daughters inhereted his entire estate. The daughters then transferred their interest to the mother, and the mother assigned the patent to Akira Akazawa. Akira Akazawa then sued New Link for infringement.

The question on appeal is whether Akira Akazawa properly holds title (because of the non-written intestate transfer).

35 USC §261 has been interpreted to require that patent assignments be in writing. “Applications for patent, patents, or any interest therein, shall be assignable in law by an instrument in writing.”  Thus, New Link questions whether the intestate transfer of rights satisfies the writing requirements of Section 261.

The CAFC rejected this argument — holding that although ASSIGNMENTS must be in writing, there are other means of transfering patent ownership that need not be in writing. In particular, transfer through “operation of law” need not be in writing under the statute.

On remand, the district court must determine whether, under Japanese intestate law, the title to the patent properly transferred as an operation of law – or whether an assignment was necessary.

If the district court concludes that the ‘716 patent was transferred to [the heirs] upon Yasumasa’s death, then the subsequent transfers between [the heirs] and Akira conveyed ownership of the ‘716 patent to Akira. If, however, the district court concludes that under Japanese law the ‘716 patent was transferred to the estate of Yasumasa which then fell under the control of an administrator or executor, a written assignment in accordance with § 261 may then be necessary to convey the patent from the estate to Yasumasa’s heirs.

Vacated and remanded.

 

CAFC Reaffirms that Doctrine of Equivalents Applies to Ranges

US Philips v. Iwasaki (Fed. Cir. 2007)

Philips sued Iwasaki for infringement of its patents covering mercury-tungsten halogen light. The district court awarded summary judgment of non-infringement to Iwasaki.

Vitiation and the Doctrine of Equivalents: The asserted patent claims a target concentration of 1.6 ± 0.4 × 10-4 µmol/mm3. Based on that claim language, the district court ruled that the claim was “intended to establish the demarcation of boundaries [with] the type of precision that is closely analogous to the metes and bounds of a deed of real property.”  Thus, according to the court, allowing the claim to cover any concentration outside of the clearly claimed limits would vitiate the limitation.

On appeal, the CAFC rejected the notion that an expanded numerical range would vitiate the claim language.

“A reasonable juror could make a finding that a quantity of halogen outside that range is insubstantially different from a quantity within that range without “ignore[ing] a material limitation” of the patent claim.”

This decision conforms to prior decisions that allow equivalents for numerical ranges, but not for other limits (such as a claimed “majority.” Moore).

Notice of Infringement: 35 U.S.C. § 287(a) provides that damages for patent infringement only begin to accrue once the infringer was “notified of the infringement.” (Marking constitutes constructive notice). Notice requires a charge of infringement directed to a specific product, device, or action. The notice must also normally include the patentee’s identity. Here, the infringement letter (sent by “Mr. Rolfes”) did not specifically indicate that Philips was the assignee, but the court found notice sufficient because (1) Philips was correctly listed as the assignee of the patent and (2) Philips had granted the sending party the “responsibility for licensing and enforcing” the patent. Thus, Philips may collect damages from the date of receipt of the letter.

Notes:

• Rounding in Claim Construction: “‘1.0’ may be said to have more significant digits than ‘1’ with no decimal point. Because [the claimed] ‘10-6’ and ‘10-4’ are simply the numbers 0.000001 and 0.0001 expressed as powers of ten, the claim language provides no basis for inferring any level of precision beyond the single digit ‘1.’ The way that power-of-ten quantities are used in the specification, discussed supra, confirms that the quantities of halogen described by the claims are not intended to be more precise.” — Why does this matter — Less precision means that the accused product may still literally infringe due to rounding.
• Approximately: “[T]erms like ‘approximately’ serve only to expand the scope of literal infringement, not to enable application of the doctrine of equivalents.”

Bayh-Dole Act is Not a "Patent Law" Sufficient to Create CAFC Jurisdiction

WARF v. Xenon Pharmaceuticals (Fed. Cir. 2007) (nonprecedential opinion).

In 2006, WARF won a $1 million verdict in a breach of contract case against Xenon. Although contracts are normally issues of state law, WARF’s original complaint also raised technology transfer issues under the Bayh-Dole Act. (35 U.S.C. §§ 200, et seq.).

On appeal, the CAFC found that it lacked subject matter jurisdiction over the appeal because it did not arise under the patent laws. In this vein, the court first concludes that Bayh-Dole’s inclusion in Title 35 does not necessarily indicate that it is a “patent law.” Rather, the general rule is that contract or licensing disputes do not implicate patent laws unless they require some determination of patent issues such as validity or infringement.

“[M]ere inclusion in Title 35 of the United States Code does not make a statute a patent law under which a claim may arise. At its heart, the Bayh-Dole Act concerns government funding agreements – contracts in the language of 35 U.S.C. § 201 – an area that is outside our section 1295(a) jurisdiction.”

Of course, if Title 35 contains non-patent laws, it makes sense that there may also be patent laws not found in Title 35.

Even if Bayh-Dole was a “patent law,” the appellate panel found that it would still not have jurisdiction over the case because the provisions of Bayh-Dole (1) did not create WARF’s cause of action and (2) are not necessary to determine any other rights of relief.

Case transferred to the Seventh Circuit Court of Appeals.

Enablement: Claimed "surfactant" not enabled by three working examples

Par Pharmaceuticals v. Roxane Labs (Fed. Cir. 2007) (Nonprecedential)

Par’s megestrol acetate suspension is prescribed to people who lose their appetites — often during treatment for cancer or AIDS. Interestingly, the company created this popular drug while attempting to design around a megestrol patent owned by BMS.

After obtaining patent protection, Par sued Roxane for infringement. The district court, however, granted summary judgment of invalidity under 35 USC 112 ¶ 1 — finding that “Par is not entitled to the broad claims it asserts.”

Enablement analysis begins with the presumptions that an issued claim is enabled and that a challenge to enablement requires clear and convincing evidence.  Unlike its close analog written description, enablement is reviewed by the CAFC on a de novo basis.

A claim is enabled when a PHOSITA can make and use the claim without undue experimentation. Broader claims, of course, require broader disclosure to ensure that their “full scope” is enabled. The unpredictable nature of an area of technology often serves patentees well as they argue non-obviousness. (It cannot be obvious if the results could not have been predicted). However, the enablement requirement demands more disclosure for unpredictable arts.

Broad Claims: Here, Par’s claim includes the following elements: “(a) megestrol acetate; … and (c) a surfactant.”  The CAFC finds this claim very broad because it would “allow the choice of any surfactant in any concentration.” (emphasis in original). In its disclosure, Par described three working examples and only one new surfactant. As a matter of law, the CAFC found that “these three working examples do not provide an enabling disclosure commensurate with the entire scope of the claims.”

Notes:

• This opinion, drafted by Judge Moore may begin to provide some indication of her style.
• Does this make sense: Because the applicant broadly claimed “a surfactant,” the specification must enable various types of surfactants. If, the claim had been written even more broadly — by eliminating that limitation — there would have been no need to include a description of various types of surfactants.

CAFC Continues to Support Strong State Immunity from Patent Infringement

BPMC v. California Department of Health (Fed. Cir. 2007).

There is a reason why states generally support strong patent rights: States are increasingly major patent holders – based on inventions developed through federal grants. At the same time, states are generally immune from being sued for infringement. In this case, the CAFC allows the State of California to assert immunity based essentially on a case-numbering technicality.

The facts are simple: Kaiser filed a declaratory judgment action against the patent holder BPMC back in 1997. The California DOH intervened in that case — an action generally considered a waiver of immunity. That case was dismissed for improper venue. In 2006, BPMC filed an identical (mirror image) infringement action against the DOH asserting the identical patent and issues and in the same venue as the 1997 action. The issue here is whether the waiver in the original case of California’s 11th Amendment immunity applies also to the new case. 

Here, the CAFC narrowly construed the state’s waiver of immunity to be strictly limited to the same action. The court noted precedent that the waiver would apply if BPMC had been able to file its case as a revival of the original action an “numbered as that cause of action.”

The appellate panel also rejected BPMC’s argument that the DOH should be judicially estopped from changing its position in this litigation. According to the court, the about-face was excusable because of an intervening change in the law of immunity. (Florida Prepaid). 

Expect that this case will receive a petition for certiorari.

Notes:

• Regular Blog Commenter Andrew Dhuey is counsel for BPMC
• Vas-Cath v. University of Missouri (Fed. Cir. 2006).
• Tegic v. U.Texas (Fed. Cir. 2006)
• Pennington Seed v. Produce Exchange No. 299 and Univ. of Arkansas (Fed. Cir. 2006).

Important Unenforceability Case - CAFC Affirms Multiple Counts of Misconduct

Nilssen v. Osram Sylvania (Fed. Cir. 2007)

In a unanimous panel opinion, the CAFC has affirmed a district court finding that Ole Nilssen’s patents are unenforceable due to inequitable conduct. Although Nilssen prosecuted his own patents pro se, the CAFC cut him no slack since he was smart enough to “cite the [MPEP], patent statutes and regulations, and case law during prosecution.”

Unenforceability of Non-Asserted Patents: In a related family of patents, misconduct during prosecution of one of the patents can lead to the whole family being found unenforceable. Reversing that theory, the CAFC agreed that the lower court properly found several of Nilssen’s non-asserted patents to be unenforceable. (Although the court did not create any strict limit on the potential bleed-through, it should be noted that Nilssen originally asserted infringement of those patents, but later dropped those claims.)

Expert Testimony: Following Ferring, the CAFC agreed that Nilssen’s failure to disclose a close relationship with his 132 declarant constituted inequitable conduct.

Small Entity Fees: Although not during prosecution, pretending to be a small entity when paying maintenance fees can also lead to unenforceability. Here, the court found that payment of the small entity fee after licensing to Philips demonstrated an “obvious intent to mislead.”

Priority Claims: Misleading priority claims can also constitute inequitable conduct.

Notes:

• Patently-O Discussion of the District Court Case

CAFC: No Sua Sponte Summary Judgment; No Baseless Suit Without Claim Construction

EON-Net v. Flagstar Bancorp (Fed. Cir. 07-1132) (non-precedential)

In 2006, the Washington State district court granted summary judgment of non-infringement in Flagstar’s favor. The court also applied sanctions against the patentee’s attorneys – a NYC class action boutique — for filing the “baseless” litigation. [link]

Sua Sponte Summary Judgment: A summary judgment motion for non-infringement must at least point to “specific ways in which the accused system [does] not meet the claim limitations.” (Exigent Technology). Without at least that threshold level of information, the court must reject such a motion. 

Here, the court issued its summary judgment decision on sua sponte grounds (i.e., using grounds that had not been particularly raised in the SJ motion). Because EON did not have an opportunity to respond, the CAFC vacated and remanded.

“The district court should have given Eon-Net an opportunity to fully present its arguments on these issues, even if the district court ultimately would have reached the same conclusion. We have previously held that where a district court construes a patent without following the necessary steps, we should remand the matter for further proceedings so that the district court can follow the appropriate steps.”

Sanctions: Normally, an attorney is required to perform a “reasonable pre-filing inquiry” that includes an infringement analysis prior to filing a patent infringement complaint. Here, the district court sanctioned Eon’s counsel for not performing such an inquiry.

In a major exception to the inquiry requirement, however, “an attorney may not be sanctioned solely for failing to conduct a reasonable inquiry as long as the complaint is well-founded.” Of course, in patent cases, a patent claim can rarely be deemed unfounded prior to claim construction.

“[W]ithout a full claim construction analysis it is impossible to assess whether Eon-Net’s claim construction was unrealistic.”

Furthermore, the “mere fact” that EON sent identical complaints to dozens of other companies is insufficient to establish that the complaint was filed for a sanctionable “improper purpose.”

Ford Design Patents Block Import of Repair Parts - Infringers Call for Patent Reform

In re Certain Automotive Parts, 2007 WL 2021234 (ITC 2007)

Ford Motor Company owns dozens of design patents covering various aspects of its vehicle designs. D496,890, for example, covers a vehicle grille; D493,552 covers a vehicle head lamp; D503,135 covers a bumper lower valance; and D496,615 covers a side view mirror. In 2005, Ford initiated a Section 337 action before the International Trade Commission (ITC) asking for an exclusion order against various auto parts importers whose imports violated the Ford design patents. For the most part, the accused parts are used to repair post-crash vehicles.

An administrative law judge (ALJ) found that the majority of the asserted patents were valid and infringed, although some patents were invalid.  The ITC then issued an order to exclude importation of the unlicensed repair parts.

Repair doctrine: Over the years, courts have created a non-statutory doctrine of permissible repair. Under the doctrine, post-sale repairs made to a patented object are not considered actionable. On the other hand, reconstruction of the patented object will be actionable as an unlicensed “making” of the invention.

Although interesting, the repair doctrine does not apply here. The accused infringers are not repairing anything — rather, they are importing replacement parts that on their own are infringing.

Calls for Patent Reform: After losing on the merits, the would-be importers have jumped on the patent reform bandwagon asking for a “repair parts” exception to the design patent laws. [Quality Parts Coalition]. Car manufacturers would like to go the other way — adding vehicle hull design protection to the Copyright Act. [See Boat Hull statute]

Appeal: The case, captioned as Ford v. ITC, 07–1357, is now on appeal at the CAFC — A decision is expected summer 2008.  The critical question for Ford — will the patents pass the CAFC’s dreaded points-of-novelty test?

Supreme Court to Decide Patent Exhaustion Case

Quanta v. LG Electronics (Supreme Court 2007)

The Korean chaebol LG licensed a set of patents to Intel.  The license expressly excludes Intel's customers and similarly does not cover any customer product made by combining an Intel product with a non-Intel product.

When LG sued a host of Intel chip-based computer manufacturers for infringement, they complained of attempted double-dipping.  According to the defendants (including Quanta), their use of licensed Intel chips implicated the first sale doctrine of patent exhaustion.

Now the Supreme Court has granted certiorari to determine whether LG’s narrow license terms avoid exhaustion.

Question presented: “Whether the Federal Circuit erred by holding, in conflict with decisions of this Court and other courts of appeals, that respondent’s patent rights were not exhausted by its license agreement with Intel Corporation, and Intel’s subsequent sale of products under the license to petitioners.”

Exhaustion – also known as the first sale doctrine – serves as a default rule in both patent and copyright laws. Under the principle, a license fee is only be charged one time per object. Thus, a rights holder controls the first sale of a protected object, but does not control subsequent sales. The copyright rule is codified in Section 109. The patent rule, however, is only based on case law.

Lower Court Ruling: The lower court found that Intel’s "unrestricted" license and Intel's sale of its chips under the license exhausted LG's rights to any additional patent recovery.

CAFC Ruling: On appeal, the Court of Appeals for the Federal Circuit (CAFC) reversed, finding that when restrictions are placed on a license, "it is more reasonable to infer that the parties negotiated a price that reflects only the value of the ‘use’ rights conferred by the patentee." The appellate panel found that there was no exhaustion because of express conditions on the use of Intel's licensed products -- specifically that the products could not be combined with non-Intel parts.

Quanta's argument is quite simple:

• Intel sold chipsets to the petitioners;
• Those sales were fully authorized under the LG license and were made without restriction;
• Therefore, LG's patent rights are exhausted.

Quanta goes on to say that under Supreme Court jurisprudence, a sale cannot be conditional. (No improper restraints on alienation).  And, without citing Arizona Cartridge, the petition lists a set of upcoming problems if conditions for sale are allowed for patented items:

[T]he Federal Circuit's new jurisprudence threatens to kick off a new era of "notices" attached to sold goods.  Obvious candidates include "single use only," "no use outside of Massachusetts," "no repair," "no resale," or "no resale for less than the price of purchase."

On the other side, LG points-out that Intel made a business decision not to cover its customers.  Because of that decision, Intel received a cheaper license, but now the customers must make-up the difference.

[When there are no patent misuse or notice concerns,] parceling out of the exclusivity rights is simply a matter for negotiation in the marketplace, not for a legal override of commercially fashioned terms.

An amicus on behalf of Dell, HP and others identifies the origin of the current CAFC precedent: Mallinckrodt.

Mallinckrodt held that a restriction on the post-sale use and enjoyment of a patented article is enforceable under the patent laws as long as it does not “venture[] beyond the patent grant and into behavior having an anticompetitive effect not justifiable under the rule of reason.”

According to the Amicus (and Quanta), the Mallinckrodt decision and its progeny do not follow Supreme Court precedent as stated in Univis Lens.

Univis Lens ... held that the authorized sale of an article manufactured “under the patent” exhausts all patent claims in the article regardless of any purported limitation on the subsequent use and enjoyment of the article. . . Univis Lens held that a condition on the post-sale use and enjoyment of a patented device violated the antitrust laws because it was not enforce-able under the patent laws, and thus was not protected against antitrust scrutiny. See 316 U.S. at 252 (“[t]he price fixing features of appellees’ licensing system, which are not within the protection of the patent law, violate the Sherman Act”).United States v. Univis Lens Co., 316 U.S. 241 (1942)

Notes

• It turns out that the patents were originally issued to Wang Labs and are indeed quite broad. U.S. Patent Nos. 4,918,645; 5,077,733; 4,939,641; 5,379,379; and 5,892,509
• Mallinckrodt, Inc. v. Medipart, Inc., 976 F.2d 700 (Fed. Cir. 1992)
• Jazz Photo v. ITC, 264 F.3d 1094 (Fed. Cir. 2001), cert. denied, 536 U.S. 950 (2002)("United States patent rights are not exhausted by products of foreign provenance. To invoke the protection of the first sale doctrine, the authorized first sale must have occurred under the United States patent.").
• Arizona Cartridge Remanufacturers Association Inc. v Lexmark International Inc, 421 F.3d 981 (9th Cir. 2005)
• United States v. Univis Lens Co., 316 U.S. 241 (1942)
• Birdwell, ''Exhaustion of Rights and Patent Licensing Market Restrictions,'' 60 J. Pat. Off. Soc'y 203 (1978)

Threatening Letters to Infringer's Clients Are Not Actionable Unless "Objectively Baseless" (Although They Will Create DJ Jurisdiction)

GP Industries v. Eran (Fed. Cir. 2007)

Eran makes “leakproof” rain gutter covers. Several Eran employees were fired during the summer of 2005.  Those individuals reorganized as GPI — a potential competitor to Eran. As a preemptive strike, Eran mailed letters to its distributors and contractors noting that GPI’s planned to sell a competitive product that infringed Eran’s patent.

After GPI filed for declaratory judgment, the district court (Nebraska) granted GPI’s motion for a preliminary injunction — stopping Eran from “(1) seeking to prevent GPI from making and selling its gutter products during the pendency of this litigation and (2) making vague and unspecified allegations of infringement against GPI in the marketplace.”

On appeal, the CAFC reversed — finding that the preliminary injunction had been improperly granted.

The party seeking a preliminary injunction has the burden of showing: “(1) a reasonable likelihood of success on the merits; (2) irreparable harm; (3) a balance of hardships in its favor; and (4) public interest in favor of the injunction.” Once granted, a preliminary injunction will only be vacated for clear error.

Injunction against Communications: Based on First Amendment rights and 35 U.S.C. § 287 (notice), injunctions relating to communications must pass a higher hurdle. In particular, “bad faith” is required in order to bar communications.

“One has a right to inform others of his or her patent rights. See 35 U.S.C. § 287. Thus, an injunction against communication is strong medicine that must be used with care and only in exceptional circumstances.”

In Globetrotter Software, the CAFC held that “bad faith” communications require “objectively baseless claims.”  Notably, these determinations are based on federal law that preempt any state laws that may be less strict.

Here, the CAFC found that Eran’s statements could not be “objectively baseless” since the lower court had noted the real potential that Eran would eventually succeed on the merits of the case.

Preliminary Injunction Reversed

Notes:

• Hovey Williams of Kansas City, Missouri represented the patentee, Eran.
• Kirton & McConkie of Salt Lake City, Utah represented the accused infringer.

CAFC Denies Joint Infringement Claim and Maps Out Infringement Avoidance Schemes

BMC v. Paymentech (Fed. Cir. 2007)

BMC’s patents cover a method for processing a debit transaction without using a PIN. The payment industry is divided so that there is no single party that infringes an entire claim. However, when combined, the effort of a payee’s agent, an ATM network, and a financial institution

The usual rule is that direct infringement occurs only when a single actor performs “each and every element” of an asserted claim. Likewise, inducement requires proof of underlying single-actor direct infringement.  Under a doctrine akin to agency, all actions ‘controlled’ by the single actor are considered to be performed by the single actor.  Thus, courts have long held that you cannot avoid liability by simply “having someone else carry out one or more of the steps” on your behalf. 

Here, BMC acts for an extension of the law in cases where parties are cooperating in a manner that infringes the patent – even though no single party controls the others. The CAFC, however, refused to extend the law — even while admitting that its decision paves a clear pathway for would-be infringers to avoid liability:

“This court acknowledges that the standard requiring control or direction for a finding of joint infringement may in some circumstances allow parties to enter into arms-length agreements to avoid infringement.”

The CAFC’s concern, of course is that allowing this type of joint infringement would greatly increase potential liability of many many companies. For instance, here, BMC would like to hold ATM networks liable even though their actions do not involve any novel part of BMC’s invention. Without any controlling party, BMC’s claim of infringement fails.

As part of its justification, the court cited Mark Lemley’s divided infringement article. In that article, Lemley argues that patent drafters can avoid most potential joint infringement problems by drafting claims that focus on one party at a time.

Notes:

• The doctrine of control is certainly not as strict as typical agency doctrine.  And, in this opinion the court gives some positive language to capture bad behavior. For instance, the court noted approvingly that district courts have held parties liable for who ‘mastermind’ a scheme of contracting-out steps of a patented process.  As a strict liability claim, the CAFC is correct to avoid undue expansion of the class of potential defendants. However, the hole created by the CAFC is potentially quite large — I have proposed a new cause of action for conspiratorial infringement that would not require a single controlling entity, but would require a mens rea requirement similar to that of inducement.  
• Related Material:
• Fromson v. Advance Offset Plate, Inc., 720 F.2d 1565, 1568 (Fed. Cir. 1985) (finding no direct infringement by manufacturer who performed the first step of a process claim even where its customer performed the other step of the claim)
• Cross Medical Products, 424 F.3d at 1311 (rejecting patentees’ efforts to combine the acts of surgeons with those of a medical device manufacturer to find direct infringement of an apparatus claim).
• An expanded joint infringement notion is supported by the CAFC's recent On Demand decision where the court noted that "[i]t is not necessary for the acts that constitute infringement to be performed by one person or entity."
• In PharmaStem, the CAFC did not decide the issue, but noted that the “viability and scope of [the theory of joint infringement] liability is a subject of considerable debate.”
• Applied Interact, LLC v. Vermont Teddy Bear Co., Inc.  2005 WL 2133416 (S.D.N.Y.,2005), the district court noted that infringement by separate entities requires “some connection” between the entities.
• Free Standing Stuffer, Inc. v. Holly Dev. Co., 187 U.S.P.Q. 323 (N.D. Ill. 1974), requires a “sufficient connection to, or control over” third party entities performing some of the elements.
• Cordis Corp. v. Medtronic AVE, Inc., 194 F. Supp. 2d 323 (D. Del. 2002) (requiring close relationship between defendant and the doctors performing part of the patented process).
• Shields v. Halliburton Co., 493 F.Supp. 1376 (W.D. La. 1980) (finding defendants liable for infringement based on the combined actions of two entities).
• Wegner well thought viewpoint from 2001
• Sriranga Veeraraghavan, Joint Infringement of Patent Claims: Advice for Patentees, 23 Santa Clara Computer & High Tech L.J. 211 (2006).
  

 

Minimal Patent Infringement Complaint

McZeal v. Sprint Nextel (Fed. Cir. 2007).

McZeal’s pro se patent infringement complaint was dismissed for failure to state a claim. On appeal, the CAFC reversed – finding that the complaint was sufficient.

In particular, the court found that the complaint is not required to specifically describe where each element of the asserted claim is found in the accused device. Those specifics regarding infringement “is something to be determined through discovery.”

Design Patents: Corporate Parts Buyer as Ordinary Observer

Arminak v. Saint-Gobain Calmer (Fed. Cir. 2007).

In yet another serious blow to design patent protection the Federal Circuit has affirmed a lower court ruling that Arminak's spray nozzle design is not infringed by Calmer.

Design patent infringement is defined both in 35 U.S.C. 271 and 289.  According to Section 289, a design patent is infringed by unauthorized commercial manufacture, use, or sale of the design or a "colorable imitation."

Whoever during the term of a patent for a design, without license of the owner, (1) applies the patented design, or any colorable imitation thereof, to any article of manufacture for the purpose of sale, or (2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit, but not less than $250, recoverable in any United States district court having jurisdiction of the parties. 35 U.S.C. 289.

Infringement: Overshadowing the statutory guidelines is the CAFC's judicially created infringement jurisprudence. According to the CAFC, infringement requires satisfaction of two distinct tests: First, in the eyes of an "ordinary observer," the accused design as a whole must be deceivingly similar to the patented design. Second, the accused design must appropriate one or more points-of-novelty that distinguish the design from the prior art.

Ordinary Observer: Like the PHOSITA in utility patent cases, the ordinary observer is a mythical being. However, instead of being 'skilled in the art,' the ordinary observer is aware of the patented design, but is not an expert in the art.

Arminak manufactures and sells spray nozzles. However, Arminak does not sell on a retail level.  Rather, the nozzles are purchased by other manufacturers who join them with bottles full of product.

The corporate nozzle buyers can distinguish between Arminak & Calmer nozzles without much trouble. Once assembled, retail customers have difficulty in distinguishing between the nozzles once assembled.  The case then turns on whether the ordinary observer is defined as the corporate buyer of the nozzle or a retail customer of the fully assembled product.

Sitting by designation, Judge Holderman determined that the ordinary observer should be defined by the patentee’s corporate structure. Because Arminak’s products pass through a middle-man for further processing, it cannot count the downstream retail purchasers as ordinary observers who “buy and use” the sprayer. Rather, the ordinary observer is the corporate nozzle buyer.  (Thus, eventual customer confusion regarding the final product makes no difference).

It was undisputed that a corporate buyer would not be deceived by overall similarities between the accused and patented designs — thus no infringement.

Point of Novelty: The panel also found that the accused design did not appropriate any “points of novelty” of the patented invention. In doing so, the court found that a side-by-side detailed comparison between the accused product and the patent design drawings was appropriate.

To establish infringement in a design patent case, the district court is required to compare the patented design with the accused design. Without comparing the patented design with the accused design, there was no way for the district court to determine whether an ordinary observer would find the accused design deceptively similar and whether the accused design appropriated points of novelty.

For utility patent experts, this type of analysis is second nature. However, for over 100 years prior to founding the CAFC, the rule has been that design patent infringement jurisprudence does not allow for such “side by side” examination. See Gorham Manufacturing Co. v. White, 81 U.S. 511 (1871) (rejecting a side-by-side comparison as leading to an ‘expert’ result rather than that of an ‘ordinary observer’).

Inducement Requires Proof of Underlying Direct Infringement

ACCO v. ABA Locks and Belkin (Fed. Cir. 2007).

ACCO’s patent covers a method for locking a computer. Belkin’s lock can be used in an infringing manner (as well as in a non-infringing manner). At trial Belkin and ABA were found liable for willfully inducing infringement.

Inducement requires an underlying direct infringement; some action to encourage the direct infringement; and specific intent to encourage the infringement. Direct infringement requires either evidence of “specific instances of direct infringement” or proof that using accused device “necessarily infringes.”

Here, ACCO provided no evidence that any customer (apart from the expert witness) ever used the lock in an infringing manner. And, although the arguably “most natural” way of using the lock would infringe, there were other non-infringing ways of using the lock. (Belkin described a non-infringing use in its instruction manual).

• The court suggested that a customer survey or other customer testimony would have been appropriate.

Based on ACCO’s failure to prove direct infringement, the CAFC reversed — finding no infringement.

Notes:

• This decision is a reminder to litigators, not anything new.

Invention Obvious in Part Because Inventors Were Experts

Daiichi Sankyo v. Apotex (Fed. Cir. 2007).

Apotex filed an ANDA to begin making a generic version of Daiichi’s patented ear infection medication method – FLOXIN Otic. Daiichi sued and won a bench trial. On appeal, the CAFC reversed — finding the patented invention obvious.

Level of Skill: The nonobvousness doctrine requires an examination of what would be available to a person having ordinary skill in the art (PHOSITA). That inquiry is premised on a definition of the mythical PHOSITA.  The general theory is that highly educated and trained PHOSITA know more and tend to think more inventions are obvious. On the other hand, a PHOSITA with little education or training would have more difficulty in making connections and finding obviousness.

The 1983 Orthopedic Equipment decision outlines factors for determining a PHOSITA – including education level of the inventor.

Here, the CAFC found that the lower court erred by picking a pediatrician as the PHOSITA in creation of compounds to treat ear infections without damaging a patient’s hearing. Rather, the skill level should be an otologist who is engaged in developing pharmaceutical formulations. The court primarily based its PHOSITA Skill Level on the inventors’ skill level and the skill level of their peers (which, almost by definition will be the same).

Obviousness: Based on the high level of skill in the art, the CAFC concluded that an otologist would have found the patented method obvious.

Reversed — Patented Invention is Obvious

DDC Comment: Although the education level of the inventor appears to be relevant to determining the PHOSITA skill level, there are a few reasons why that data point should be excluded from the list of factors. The common major mistake here is to search for a PHOSITA capable of making the invention rather than simply searching for the level of a skilled worker in the area. The PHOSITA skill level inquiry is not a search for what it takes to be a successful inventor. Rather, the PHOSITA is merely a skilled worker.  The inventor’s biographical information may be indicative of a skill level for invention, but that is not the PHOSITA inquiry. 

Under 35 USC 103(a), patentability of an invention “shall not be negatived by the manner in which the invention was made.” Of course, the process of inventing is intimately tied-in with the inventor’s skill and education level. In essence, use of the inventor’s biographical information in determing the PHOSITA skill level allows the court to ask whether the invention would have been obvious to someone standing in the shoes of the inventor. That methodology nothing more than a backdoor approach to asking whether any steps that the inventor took included non-obvous leaps — a legally impermissible question.

Notes:

• This case was originally decided in July 2007, but was recently republished as a precedential decision. The OrangeBookBlog covered the original release.

Examiner's Oral Promise Does Not Bind PTO

In re Milton (Patent Petition 2007, App. No. 09/938,465)

During a telephone conversation, the Patent Examiner stated that a replacement office action would be forthcoming. Relying on that statement, the applicant did not respond to the already pending office action. Unfortunately, the Examiner did not issue the new office action and the case went abandoned.

37 C.F.R. 1.2 makes clear that an applicant should not rely on any oral promise from a patent Examiner. Applying this rule, the director of petitions rejected Milton’s petition for revival.

The oral promise could have immediately been memorialized in an interview summary — something that was not done in this case until after the abandonment.

At the time of Petitioner's reliance, the understanding was a mere oral promise. This section of the C.F.R. expressly prohibits Petitioner's reliance on the oral understanding, and withdrawal of the holding of the abandonment based on an action which is in contravention to a regulation would be improper.

Petition denied.

Notes:

• Thanks to Hal Wegner for providing information on this case.
• The real party here is HP.

KSR Extended to Obviate Component Purified from Known Mixture

Aventis Pharma & King Pharma v. Lupin Ltd. (Fed. Cir. 2007).

Altace is the King/Aventis brand of ramipril – a top-selling ACE inhibitor.  The patent claims ramipril formulated “substantially free of other isomers.” The district court found the patent not invalid, but only by a slim margin. On appeal the CAFC reversed – finding the patent invalid as obvious.

Prior Art: One reference (‘944 patent) was filed as a continuation-in-part of an already abandoned patent application. That application was eventually revived, but Aventis argued on appeal that the ‘944 patent should not be awarded the filing date of the parent.  The CAFC found this a potentially interesting argument, but refused to hear the argument because Aventis had failed to make the argument at the district court level.

The appellate panel also agreed that the experimental results of a Shering Doctor constituted 102(g)/103(a) prior art because the Doctor had not abandoned, suppressed, or concealed her prior invention.

Obviousness of a Purified Form: The district court, ruling pre-KSR, found the patent nonobvious. On appeal, the CAFC took a different view – finding that the purified form of a known mixture is prima facie obvious if a PHOSITA would have some reason to believe that the mixture derives properties from particular components.

However, if it is known that some desirable property of a mixture derives in whole or in part from a particular one of its components, or if the prior art would provide a person of ordinary skill in the art with reason to believe that this is so, the purified compound is prima facie obvious over the mixture even without an explicit teaching that the ingredient should be concentrated or purified.

The prima facie case of obviousness is especially difficult to rebut where, as here, the potency of the mixture varies directly with the amount of isomer in the mixture.

The court implicitly distinguished this case from Forest Labs — noting that obviousness may be rebutted by showing difficulty in purifying the mixture.

[A] purified compound is not always prima facie obvious over the mixture; for example, it may not be known that the purified compound is present in or an active ingredient of the mixture, or the state of the art may be such that discovering how to perform the purification is an invention of patentable

Reversed, Patent Invalid as Obvious

Gillespie v. DWIDAG: Prosecution Arguments Limit Claim Scope

Gillespie v. DWIDAG Systems (Fed. Cir. 2007)

During prosecution, Gillespie argued around a cited prior art mine roof bolt reference — arguing that the collar of the bolt ‘appears to be cylindrical on the outside, thus impractical…’ Reviewing claim construction de novo, the appellate panel led by Judge Newman limited the claim scope to only cover non-cylindrical collars. (Following the maxim that a “patentee is held to what he declares during the prosecution of his patent.”).

Gillespie argued that the claims should not be limited by his statements because the non-cylindrical collar shape did not turn out to be material to allowance. (The Examiner provided alternative reasons for allowance). The CAFC rejected that potential loophole – finding that Gillespie’s argument was sufficient regardless of its importance in the prosecution process.

DWIDAG’s bolts were thus found to not infringe this new construction.

Notes:

• The court appears to have been careful not to use the term disclaimer. 

 

Extending Liebel-Flarsheim: "distinctly different" embodiment of claim elements must be enabled

Automotive Technologies International v. BMW, et al. (Fed. Cir. 2007).

ATI’s patent claims are directed to an automotive side impact crash sensor used to trigger an airbag and include the following means-plus-function limitation:

“means responsive to the motion of said mass upon acceleration of said housing in excess of a predetermined threshold value, for initiating an occupant protection apparatus”

Following ATI’s suggestion, the district court construed the means limitation to include both mechanical and electronic sensor structures. Then, based on this interpretation, the district court ruled the patent invalid for lack of enablement. (summary judgment).  

On appeal, the CAFC affirmed the ruling — finding that the specification did not enable the full scope of the claimed invention.

The specification describes the mechanical sensor in detail with multiple figures. The electronic sensor, however, is only shown in a sparse “conceptual” Figure 11 (see image at right) and described in broad terms as potentially operating “through variety of technologies using, for example, optics, resistance change, capacitance change or magnetic reluctance change.”

Enabling One Embodiment Is Insufficient: Following on the heels of Liebel-Flarsheim v. Medrad, this case reaffirms the principle that the full scope of a claim must be enabled. Enablement of a single embodiment is not sufficient. Thus, the patent’s enablement of one mode of practicing the invention (the mechanical sensor) was not sufficient to satisfy the enablement requirement.

Looking back, Liebel-Flarsheim discussed “full scope” enablement as being “at least reasonable enablement of the scope of the [claim] range.” Here, the CAFC further defines that principle by noting that electronic sensors must be particularly enabled because they are “distinctly different” from the enabled mechanical sensor.

Novel Aspects Must Be Enabled: ATI also argued that Figure 11 and its accompanying text were enabling — especially when coupled with the knowledge of one having ordinary skill in the art. This argument was rejected based on the CAFC’s combined measure of law and fact. As a matter of law, enablement of the novel aspects of an invention must be enabled by the specification even if implementation would have been within the PHOSITA’s skill level. As a matter of fact, the CAFC concluded that sensor mechanism must be a novel aspect based on statements in the specification that side impact sensing is a “new field” and that the only available side-impact switch was a crush sensor.

Notes:

• Its unclear how the enablement doctrine will work in conjunction with the doctrine of equivalents.
• The summary judgment was reviewed de novo for clear and convincing evidence of non-enablement sufficient to overcome the patent’s presumption of validity.
• Disclaimer: My former firm, McDonnell Boehnen Hulbert & Berghoff LLP, handled this appeal on behalf of the plaintiff. Although I have not worked on the case, MBHB took-over the case while I was of counsel last year.

Prosecution Disclaimer Narrows SOME of the claims

Ormco v. Align Technology (CAFC 2007, 06–1240)

Here, prosecution disclaimer narrowed Ormco’s patent claim scope, but only for some of the claims.

Ormco’s invention relates to computer-aided design of orthodontics.  During prosecution Ormco distinguished its invention based on its automated calculation of final tooth position even though the claims do not explicitly require fully automated calculations.  Although finding the disclaimer clear, the CAFC required some relation between the disclaimer and any affected claim before narrowing claim scope. As a consequence, the scope disclaimer only applies to claims directed at finish tooth positions and not to other claims — such as those directed to preliminary organization of tooth data.

Dissent: Dissenting from the majority opinion, Judge Kathleen O’Malley (N.D.Ohio, sitting by designation) criticized both the majority and the lower court for their procedural sloppiness.  Judge O’Malley would have remanded to wait for a more developed opinion from the district court.

Notes:

• In passing, the court reminds us that the existence of prosecution disclaimer is determined within the claim construction phase – and thus reviewed de novo.
• The patents at issue are quite hefty for this type of technology – 97 pdf pages.

In re Seagate Technology:

In a rare unanimous en banc opinion, the CAFC has overruled its prior precedent — holding that willful infringement enhanced damages now requires “at least a showing of objective recklessness.”

Accordingly, to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. 

This eliminates the “affirmative duty of due care” that has historically been created by notice of infringement.

Attorney Client Privilege and Work Product: When asserting an opinion of counsel in defense to a willful infringement claim, any waiver of privilege or work product materials does not (normally) extend to trial counsel.

Read the opinion

Patent Plaintiffs Continue to Push for Expanded notion of Joint Infringement.

AdvanceME v. RapidPay (E.D. Tex. 2007).

Traditionally, direct patent infringement requires a single actor that causes infringement of each element of the asserted patent claim. An agency doctrine allows for multiple actors acting under control of a single entity. However, the common law of patents has long resisted calls for liability for any looser form of "joint infringement."

In AdvanceME, the Texas court provided additional dicta expanding our notion of circumstances where two separate entities can combine to infringe a patent even when neither entity infringes all claim elements. Here, the court finds that multi-actor infringement requires (1) that all elements of the claim be performed and (2) that there be a “sufficient connection” between the accused actors. “A showing of ‘agency’ or ‘working in concert’ is not required.” The sufficient connection could instead “be shown through a contractual relationship.”

According to the court, joint infringement is easier to prove when a patent claim includes steps performed by two entities. The patent at issue here involves claims that move money from a customer to a merchant then to a merchant processor which is directly infringed by the merchant and merchant processor.

The infringement finding is, however, moot as the patent was also found invalid as anticipated and obvious.

Notes:

• Read the case


• The issue of joint infringement is “squarely raised” in another case – BMC v. PaymenTech. [See Divided Infringement]. Oral arguments were held in that case in April, and a decision is expected by October.


• The expanded joint infringement notion is supported by the CAFC's recent On Demand decision where the court noted that "[i]t is not necessary for the acts that constitute infringement to be performed by one person or entity."


• See Cross Medical (“However, if anyone makes the claimed apparatus, it is the surgeons, who are, as far as we can tell, not agents of Medtronic. Because Medtronic does not itself make an apparatus with the “interface” portion in contact with bone, Medtronic does not directly infringe.”)


• In PharmaStem, the CAFC did not decide the issue, but noted that the “viability and scope of [the theory of joint infringement] liability is a subject of considerable debate.”


• Applied Interact, LLC v. Vermont Teddy Bear Co., Inc.  2005 WL 2133416 (S.D.N.Y.,2005), the district court noted that infringement by separate entities requires “some connection” between the entities.


• Free Standing Stuffer, Inc. v. Holly Dev. Co., 187 U.S.P.Q. 323 (N.D. Ill. 1974), requires a “sufficient connection to, or control over” third party entities performing some of the elements.


• Cordis Corp. v. Medtronic AVE, Inc., 194 F. Supp. 2d 323 (D. Del. 2002) (requiring close relationship between defendant and the doctors performing part of the patented process).


• Shields v. Halliburton Co., 493 F.Supp. 1376 (W.D. La. 1980) (finding defendants liable for infringement based on the combined actions of two entities).


• Sriranga Veeraraghavan, Joint Infringement of Patent Claims: Advice for Patentees, 23 Santa Clara Computer & High Tech L.J. 211 (2006),

CAFC: Patent Attorney Has No Right to Defend Himself Against Charges of Inequitable Conduct

Nisus Corp. v. Perma-Chink Sys. v. Michael Teschner (Fed. Cir. 2007).

Nisus Corp’s patent relates to a method of putting Boron in a tree to kill termites and prevent forest fires. After a bench trial, the patent was found unenforceable due to inequitable conduct.  Apparently, Nisus had failed to disclose material documents from a prior lawsuit involving closely related patents.  The court specifically mentioned Nisus’s former patent attorney, Michael Teschner, as one cause of the inequitable conduct.

Teschner sued to intervene in the case and clear his name, but the district court denied him the opportunity. On appeal, the CAFC likewise found Teschner without standing.

Appeal by Nonparty: Usually, a nonparty has no standing to appeal. However, an attorney that is formally reprimanded may appeal to the CAFC.  However, other (informal) “judicial criticisms of lawyers’ actions are not reviewable.”  The court’s comments regarding Teschner here do not rise to a formal reprimand, and thus offer no standing for appeal.

To allow appeals by attorneys, or others concerned about their professional or public reputations, merely because a court criticized them or characterized their conduct in an unfavorable way would invite an appeal by any nonparty who feels aggrieved by some critical statement made by the court in an opinion or from the bench. Treating such critical comments by a court as final decisions in collateral proceedings would not only stretch the concept of collateral proceedings into unrecognizable form, but would potentially result in a multiplicity of appeals from attorneys, witnesses, and others whose conduct may have been relevant to the court’s disposition of the case but who were not parties to the underlying dispute. Nor would it be appropriate to limit such appeals to attorneys, while forbidding others from appealing from critical court comments, as such a limitation would smack of special treatment for members of the bar and would be difficult to justify as a matter of principle.

Thus, a finding of inequitable conduct does not create any standing for an aggrieved prosecuting attorney to appeal.

Postscript: Mr. Teschner declined my offer for an interview, noting that the matter is still pending at the PTO. His lone statement is that he is “glad that the Federal Circuit found merit in [his] argument.”

Priority to Foreign Application Requires "Inventor's Knowledge or Consent" at the Time the Foreign Application was Filed

Boston Scientific SciMed v. Medtronic Vascular (Fed. Cir. 2007).

SciMed’s patent application was originally filed by a European company (MinTec) in February 1994 as an European Patent Application. At that time, however, the inventors (Cragg & Dake) had not yet assigned rights to MinTec. Cragg assigned his rights a few months later. Dake did not assign his rights until 1996.

Medtronic has a US priority filing date of June 1994 on the same invention. In the interference, the question is whether a US patent applicant claim priority to a foreign application filed by an entity that was not acting on behalf of the US applicant at the time of filing? CAFC Answer: No priority unless foreign application was filed on behalf of the US applicant.

Under the court’s ruling here, 35 USC 119(a) provides a personal right to the inventor. Consequently, there must be a “nexus…between the inventor and the foreign applicant at the time the foreign application was filed.” That nexus requires at least “knowledge or consent” of the inventor.

“Indeed, as a matter of pure logic, an entity could not have filed a foreign application “on behalf of” an inventor without the inventor’s knowledge or consent; that the foreign application may have been filed in accordance with the laws of the country in which it was filed has no bearing here.”

Holding:

“[A] foreign application may only form the basis for priority under section 119(a) if that application was filed by either the U.S. applicant himself, or by someone acting on his behalf at the time the foreign application was filed.” (emphasis in original)

Notes:

• This decision [LINK]: Scimed Life Sys., Inc. v. Medtronic Vascular, Inc., — F.3d — (Fed. Cir. 2007).
• Final BPAI Decision: Patent Interference No. 104,192, Paper No. 187, 2001 WL 1339890 (B.P.A.I. July 21, 2001).
• Trial Court Decision: Scimed Life Sys., Inc. v. Medtronic Vascular, Inc., 486 F. Supp. 2d 60 (D.D.C. 2006).

 

V-Chip Declaratory Judgment Patent Case Reinstated by CAFC

Sony Electronics v. Guardian Media (Fed. Cir. 2007).

Guardian holds several patents for blocking naughty TV shows based on program classification codes. In 1999, Guardian sent a “notice of patent infringement” to Sony asserting that its V-Chip products “infringe the claims,” and later followed-up with a claim chart. Four years later, Guardian sent another letter offering to license its patents. After unsuccessful negotiations, Sony filed a declaratory judgment action in the Southern District of California — alleging non-infringement, invalidity, and unenforceability.

On motion, the district court dismissed the suit for lack of declaratory judgment jurisdiction — finding no actual controversy as required by the Constitution. In particular, the court noted that Guardian had not threatened to sue and the circumstances did not imply a threat of immediate suit. The court then went on to hold that even if jurisdiction existed it would use its discretion to decline hearing the case because (1) the question of jurisdiction is “close” and (2) it appears that the DJ plaintiffs are using the case as a negotiation tool rather than as a means to settle the dispute.

Particular Adverse Positions => DJ Jurisdiction: On appeal, the CAFC determined that an actual controversy certainly existed between Sony and Guardian at the time of the complaint. The parties had taken particular adverse positions regarding infringement and validity (associating particular claims with particular products; requesting a particular amount of money; arguing whether particular prior art references demonstrated particular claim elements). The facts of this dispute make it “manifestly susceptible of judicial determination.” (quoting 300 US 227 (1939)).

In short, because Guardian asserts that it is owed royalties based on specific past and ongoing activities by Sony, and because Sony contends that it has a right to engage in those activities without a license, there is an actual controversy between the parties within the meaning of the Declaratory Judgment Act.

Discretionary Dismissal: The Declaratory Judgment Act allows a court “substantial discretion” not to hear cases even when there exists an actual controversy. However, here, the CAFC found that the lower court’s two reasons for declining to hear the case were arbitrary and thus insufficient. Specifically, the question of jurisdiction is not a close call as the lower court had determined — rather it was only close because of an error of law. Additionally, the CAFC could not discern any “affirmative evidence” of plaintiffs’ nefarious reasons for filing suit.

Vacated and remanded to determine whether there may be other reasons for discretionary dismissal.

Notes:

• Four other DJ plaintiffs had similar experiences and are discussed in the decision.

Summary Judgment of Non-Infringement: Downward Force <> Upward Force

SafeTCare v. Tele-Made (Fed. Cir. 2007).

SafeTCare’s patent covers a bariatric hospital bed designed for obese patients. On summary judgment, the district court found that the Tele-Made beds do not infringe. Other defendants and counterclaims are still pending.

Jurisdiction: On appeal, the CAFC sua sponte questioned jurisdiction. Because the judgment was not complete as to all parties and the judge had not issued a Rule 54(b) order of appealability (See Bashman), the CAFC did not have jurisdiction at the time of oral arguments. However, the CAFC allowed the parties time to ask for such an order from the district court before dismissing the appeal. (This pragmatism is perhaps due to Judge Robinson’s place on the panel).

Upward Force: SafeTCare’s patent requires a plurality of motors exerting a pushing or upward force on the bed.  Tele-Made’s motors are essentially attached to one end of a lever, and by pulling down, cause an upward force on the other end of the lever. However, because SafeTCare’s specification implied a direct link between the motor and the bed, the levered approach was non-infringing. Prosecution history estoppel blocks DOE coverage.

Non-infringement affirmed.

Reasonable Pertinence may be Sufficient to Combine References in Obviousness Rejection

In re Icon Health and Fitness (Fed. Cir. 2007).

ICON has been a party in more than 50 patent infringement lawsuits and has asserted its treadmill patent (5,676,624) against at least six defendants.  In the midst of litigation, ICON also filed for reexamination, and now appeals the PTO’s final rejection of its patent to the CAFC.

ICON admits that all but one of the claimed elements are disclosed in a Danmark International advertisement.  The remaining element, a gas stabilizing spring, is found in Teague where it is used to assist in opening and closing of a Murphy style bed.

Reasonably Pertinent Art: To be used in an obviousness rejection, prior art must be “reasonably pertinent to the problem addressed” by the patent applicant. Usually this is satisfied by references in the same field of technology or that address the same problem. Here, the CAFC saw enough similarity to find the bed art pertinent:

“Nothing about Icon’s folding mechanism requires any particular focus on treadmills; it generally addresses problems of supporting the weight of such a mechanism and providing a stable resting position. Analogous art to Icon’s application, when considering the folding mechanism and gas spring limitation, may come from any area describing hinges, springs, latches, counterweights, or other similar mechanisms—such as the folding bed in Teague.”

Although the patent applicant lost this argument, this portion of the case is good news for applicants – because of what the opinion did not say. Specifically, the court could have begun with the announcement that “In KSR, the Supreme Court expanded the notion of pertinent obviousness-type prior art when it announced that ‘patent examiners should look [beyond] the problem the patentee was trying to solve.’ . . .”  Instead, the CAFC decided to stick to its narrower jurisprudence.

All elements = Obvious: Under KSR, once the elements are shown in reasonably pertinent art, then an obviousness determination is as simple as connecting the dots. The court says as much:

[W]hile perhaps not dispositive of the issue, the finding that Teague, by addressing a similar problem, provides analogous art to Icon’s application goes a long way towards demonstrating a reason to combine the two references.

Here, the Court explained a connection be tween Teague and the claimed invention by showing that both used the spring in similar ways.

Notes:

• A report from Steve Sereboff indicates that the PTO has already taken this decision to heart in its new examiner training: “Basically, the examiners can make a prima facie case of obviousness simply by showing that all of the elements in the claim were known.”

Nonpracticing Entity (CSIRO) Gets Injunction

CSIRO v. Buffalo Technology (E.D.Tex. 2007)

CSIRO operates as a technology licensing arm of the Australian Government. CSIRO does not practice its inventions, but has asserted its wireless LAN patent against a number of accused infringers, including Intel, Microsoft, Marvell, and Buffalo. The patent is broad enough to cover all 802.11a/g wireless technology and has a 1992 priority date.

In the case against Buffalo, CSIRO won a slam-dunk summary judgment of validity and infringement. The court then considered whether to award a permanent injunction in favor of the non-practicing entity (NPE).

Procedure: Expert Testimony Deserves Weight on Summary Judgment

Omegaflex v. Parker-Hannifin Corp (Fed. Cir. 2007) (nonprecedential)

On summary judgment, the Massachusetts District Court found the Omegaflex pipe-fitting patents novel, nonobvious and infringed. Parker appealed.

Respect the Expert: On several points of contention, the district court gave no probative weight to Parker’s expert’s testimony.  On summary judgment, the evidence should be weighed in the “light most favorable” to the non-movant (Parker). Because the expert testimony creates issues of material fact, the CAFC reversed and remanded.

In dicta, the three-member panel (Judges Michel, Dyk, and Garbis) probed the Supreme Court’s recent KSR decision — noting that it will continue to look for some reason to combine prior art references in an obviousness rejection.

Quoting KSR: “a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art.”

Reversed and remanded.

No Appellate Jurisdiction For Appeal of Preliminary Injunction Contempt Order

Entegris (Mykrolis) v. Pall Corporation (Fed. Cir. 2007).

Mykrolis sued Pall -- accusing its competitor of infringing patents related to high-quality liquid filters used in the semiconductor industry. After claim construction, the district court issued a preliminary injunction, but Pall continued to sell a 'modified' design.  During a contempt proceeding, the court held Pall in contempt for its continued sales, but also dissolved the preliminary injunction based on new evidence of invalidity. Both sides appealed.

Jurisdiction for appeal of contempt order: The CAFC has interlocutory jurisdiction over preliminary injunction issues such as the issuance, modification, or dissolution of a preliminary injunction. However, the CAFC here held that there is no interlocutory jurisdiction for an appeal of a contempt finding that does not itself modify the injunction. In addition, even though Pall must pay the contempt fine immediately, under Supreme Court precedent, a contempt decision is not considered an appealable final judgment. Finally, interlocutory appeals do not generally provide supplemental jurisdiction unless issues are inextricably intertwined. The contempt appeal was thus dismissed.

Preliminary Injunction: The burden of proving validity is shifted at the preliminary injunction stage where the patentee must show "a likelihood of success on the merits" with respect to both validity and infringement.  A defendant who raises a "substantial question" of invalidity will defeat a preliminary injunction unless it "lacks substantial merit." 

It is often difficult for a plaintiff to win an appeal after dissolution or denial of a preliminary injunction because the lower court's decision is based on a loose set of factors that are reviewed only for clear error. Here, Mykrolis failed to show clear error in the lower court's finding of a substantial question of invalidity.

Affirmed.

Notes:

• Interlocutory jurisdiction: Power to hear an appeal before the lower court issues a final judgment. Interlocutory jurisdiction is generally quite limited and narrowly granted.
• Hamilton Brooks cooperated with Ropes & Gray in representing the plaintiff Entegris.
• Leydig Voit represented the defendant Pall Corp.

Monsanto v. McFarling: CAFC Affirms "Reasonable Royalty" of 140% of Purchase Price

Monsanto v. McFarling (Fed. Cir. 2007).

Monsanto is one of the few patentees that sues individuals for patent infringement.  In Monsanto’s case, the infringers are farmers who allegedly save & replant Monsanto’s patented genetically modified seeds violation of their “Technology Agreement”. When McFarling was found liable, the Missouri jury assessed damages of $40 per seed-bag and the court issued an injunction.

Monsanto customarily requires a royalty payment of $6.50 per seed-bag in addition to $22 per bag for the soybean seeds themselves.  On appeal the CAFC focused on the proper royalty measure.  McFarling argued that $6.50 was the “established” royalty while Monsanto argued that the actual royalty rate is much greater.

The Court agreed with Monsanto that the nominal designation of $6.50 as a royalty was not the entire sum of the damages:

Picking $6.50 as the upper limit for the reasonable royalty would create a windfall for infringers like McFarling. Such infringers would have a huge advantage over other farmers who took the standard Monsanto license and were required to comply with the provisions of the license, including the purchase-of-seed and non-replanting provisions. The evidence at trial showed that Monsanto would not agree to an unconditional license in exchange for a payment of $6.50, and the explanation—that Monsanto would lose all the benefits it gets from having the cooperation of seed companies in promoting Monsanto’s product and controlling its distribution—is a reasonable commercial strategy.

In fact, the CAFC found that the royalty rate can easily be calculated as something above the total $28 dollars per bag paid.

[I]t would be improper to hold that Monsanto’s reasonable royalty damages are limited to $25.50 to $28.50 per bag.

The damage amount, instead of being based on the amount usually paid by farmers, legitimately includes (a) the harm being felt by Monsanto because of the infrinement as well as (b) the additional benefits garnered by McFarling. In particular, these include: reputational harm due to rogue planters, potential lapses in monsanto’s database of planting techniques; bargaining power; as well as McFarling’s increased yeald of $31 – $61 per acre.

Based on those advantages alone, it was reasonable for the jury to suppose that, in a hypothetical negotiation, a purchaser would pay a royalty of $40 per bag for the Roundup Ready seed.

Under CAFC law, a jury’s damage award will be affirmed unless “grossly excessive or monsrous, clearly not supported by the evidence o rbased only on speculation or guesswork.” Here the court found sufficient reasons for the verdict and affirmed.

Established Royalty: Typically, an “established royalty” is the best measure of reasonable royalty damages when “the patentee has consistently licensed others to engage in conduct comparable to the defendant’s.” The rule of established royalty rate does not apply here, however, because Monsanto apparently never allows for replanting — Thus, there are no “comparable” replanting licenses.

Blacklist: The court also noted that Monsanto may blacklist Mr. McFarling from buying its seeds. 

Notes:

• Mark Lemley of Stanford argued on behalf of the Farmer, McFarling.
• Several other issues are included in the decision.
• Read the case.

 

CAFC Affirms Disqualification of Defendant's Attorneys

In re Hyundai Motor Am., 185 Fed. Appx. 940 (Fed. Cir. 2006)

Orion IP has accused dozens of companies of infringement of its business method patents ("computer-assisted sales").  At one point, Orion worked with the Orrick firm on some matters and Orrick made a pitch to handle Orion's litigation and patent strategy work. Orion demurred.  Once litigation began, Orrick got back in the game by agreeing to represent several of the accused infringers directly adverse to Orion.

The Texas district court noted a conflict-of-interest and disqualified Orrick.  On writ of mandamus, the CAFC affirmed -- finding no error.

The parties apparently presented diverging evidence as to the subject-matter of early meetings between Orrick and Orion and the type of documents exchanged.  The CAFC noted that these were purely factual questions that the lower court "resolved in Orion's favor" without any clear error.

In order to prevail, Hyundai must clearly and indisputably show clear error in the district court's findings of fact and application of the facts to the law. Hyundai has not carried its burden. This is essentially a factual dispute, which the district court resolved in Orion's favor. The district court held a hearing, considered the competing declarations, and reviewed the pertinent documents. We do not find a basis for overturning those findings.

Disqualification affirmed.

Claim Transitions: "Comprising The Steps Of"

Dippin’ Dots v. Mosey and Dots of Fun (Fed. Cir. 2007). [CORRECTED VERSION]

Everyone should remember their first experience with Dippin’ Dots. I was in Branson at Silver Dollar City. DD owns a patent covering its method of freezing, storing, and serving beads of delicious ice cream. 

Several of DD’s distributors decided to go a cheaper route.  They cancelled their orders with DD and found an alternative source. DD sued for patent infringement. The defendants counterclaimed with Walker Process antitrust claims based on DD’s enforcement of a “fraudulently acquired patent.”  The antitrust claim was based on the inventor’s pre-filing use of the invention that had not been disclosed to the PTO.

The patent was found obvious and DD, the patentee, was held liable for antitrust violations.

Comprising the steps of: The accused products included a diversity of shapes of ice cream pellets — some spherical and others irregular. DD made two infringement arguments based on its claim language of “comprising the steps of . . . beads . . .” DD’s first argument, that all the pellets, regardless of shape, are beads was shot-down by the appellate panel who decided beads must be “spherical” based on limitations explicitly written in the specification. (In this case, the addition of silly wiggle language would have likely saved the day — especially since the drawing being described did not show spherical beads.) 

DD’s second argument, that the “comprising” transition allows for infringement based on the accused spherical beads regardless of the existence of irregular pellets was also shot-down.  

“As to DDI’s second argument, we acknowledge that the term "comprising" raises a presumption that the list of elements is nonexclusive. See Genentech (Fed. Cir. 1997). However, "‘[c]omprising’ is not a weasel word with which to abrogate claim limitations." Spectrum (Fed. Cir. 1998). "Comprising" appears at the beginning of the claim—"comprising the steps of"—and indicates here that an infringing process could practice other steps in addition to the ones mentioned. Those six enumerated steps must, however, all be practiced as recited in the claim for a process to infringe. The presumption raised by the term "comprising" does not reach into each of the six steps to render every word and phrase therein open-ended—especially where, as here, the patentee has narrowly defined the claim term it now seeks to have broadened.”

Thus, the claimed step of [(3)] freezing said dripping alimentary composition into beads, could not be interepted to as "freezing the alimentary composition into both beads and irregular pellets."

At first glance, this case seems odd, but the underlying decision rests on a common sense approach to the claim language.  The court essentially found that "freezing said dripping alimentary composition into beads" meant that all of the dripping alimentary composition was frozen into beads. If the step was performed properly there would not be any 'dripping alimentary compisition' remaining to form the irregular pellets.

Microsoft v. AT&T: Transnational patent Law

Microsoft v. AT&T (Supreme Court 2007).

Section 271(f) of the Patent Act expands the territorial scope of US patent protection by creating liability for exporting one or more “components” of a patented invention so that the whole invention may be practiced abroad. The statute is divided into parts one and two dealing with inducement and contributory activity respectively.

The case at hand involves Microsoft’s infringement of AT&T’s speech coding technology patent. Microsoft has conceded that its software (once installed on a computer) infringes the patent in the US. However, Microsoft has fought against paying patent royalties for sale of the same software abroad.  Microsoft’s argument, spelled out in its brief, is two-fold: (1) Software cannot be a ‘component’ as required by the statute because software code is intangible; and (2) Software copies made abroad cannot be considered ‘supplied’ from the US as required by the statute because no physical particle that Microsoft exported actually became part of the finished product.  I have previously labeled these arguments as the tangibility requirement and the molecular conservation requirement. [Link]

Now, AT&T and its supporters has filed their briefs that explain why 271(f) should encompass foreign copies of software shipped from the US. [Petitioner and Gov’t briefs are discussed here]

AT&T’s Brief on the Merits:

Tangibility: AT&T attacks the tangibility requirement head-on, arguing that there is no such requirement.

[The software] is plainly a component of [the patented] device, just as a unique collection of intangible words is a component of any book bearing the title Moby-Dick, even though those words, too, must be combined with ink and paper before the book can be read.

Of course AT&T is correct — the statute does not spell-out any tangibility requirement, and Microsoft’s statutory argument is, at best implicit. AT&T’s arguments are supported by business practice as well. Software and hardware are developed and sold separately, and each side can easily be though of as providing components of the whole.

Molecular Conservation Requirement: AT&T takes a different view of the statutory requirement that the components be “supplied” from the US. In AT&T’s story, “supplied” means satisfying a need or furnishing.  Using a but-for analysis, AT&T makes clear that without Microsoft’s shipment of the code abroad, it would not have ended-up in the foreign computers.

Here, the Windows object code is present in the foreign made computers only because Microsoft “provided” or “furnished”—in a word, supplied—it from the United States, via golden master disk or electronic transmission.

As it stands, the AT&T brief is well written and convincing on its own — the major problem being that it leads with a petty argument for dismissal.

Philips Corporation also filed a brief in support of AT&T.  Philips makes several arguments, two of which I discuss here:

1. In today’s market, software and hardware companies do compete head-to-head.  A finding that software export is noninfringing would be at the expense of electronics companies because hardware exports would continue to be considered infringing.  Thus, awarding the win to Microsoft here may free the software industry, but will even further damage the hardware export industry.
2. In many ways, this case is about the size of damages. Microsoft hopes that copies made abroad will not be seen as infringing because those copies were not literally shipped from the US.  Philips points out under the rules of consequential damage calculations, Microsoft would owe damages for sales of all copies even if 271(f) only covered the initial master disk shipment.

WARF, California, and RCTech filed a joint brief in support of AT&T. These holders of strong bio-related patents see the potential that this case could narrow the scope of their protection. WARF points-out how Microsoft comes to the table with unclean hands:

When it suits its interests, even Microsoft acknowledges that the number of units it supplies is not limited by the number of golden masters it sends abroad. In Microsoft Corp. v. Comm’r of Internal Revenue, Microsoft argued that it was entitled to tax deductions . . . for all foreign sales of software replicated from Microsoft’s golden master abroad, claiming that such copies were "export property" under the statute. The Ninth Circuit . . . agreed with Microsoft that all copies created from the golden master were export property, thereby providing Microsoft with another $31 million in claimed deductions for 1990 and 1991.

BAYHDOLE25.inc is an educational NGO that supports, as you might guess, the Bayh Dole act (at its 25th anniversary).  In a brief supporting AT&T, BD25 argues for the protection of intangible assets — especially assets that are replicable and intended to be replicated.  These include software code, cell lines, patented seeds, DNA, etc. Replicable assets are important and should be protectable.

Documents:

• On the Merits
• In Support of Microsoft
• Petitioner: Microsoft Brief;
• Amicus: US Government;
• Amicus: Law Professors (Lemley & Duffy);
• Amicus: Amazon;
• Amicus: SIIA (Industry Org.);
• Amicus: SFLC (Moglen & Ravicher);
• Amicus: Shell Oil (Method Claims);
• Amicus: Intel;
• Amicus: AIPLA;
• Amicus: Eli Lilly;
• Amicus FICPI;
• Amicus Autodesk
• Amicus BSA (Industry will be destroyed if AT&T wins);
• Amicus Yahoo!.
• In Support of AT&T
• Respondent: AT&T;
• Amicus: BayhDole25.inc;
• Amicus: US Philips;
• Amicus: UC WARF RCTech.
• In Support of Neither Party
• Amicus: Professor Edward Lee.
• Reply Brief:
• Petitioner: Microsoft Reply Brief.
• On Petition for Certiorari
  • Petitioner: Microsoft Petition
  • Petitioner: Microsoft Petition Appendix
  • Respondent: AT&T Opposition
  • Petitioner: Microsoft Reply in Support
  • Respondent: AT&T Supplemental Brief
  • Petitioner: Microsoft Supplemental Brief
  • Amicus: Software and Information Industry Association in Support of Microsoft
  • Amicus: Government in Support of Microsoft

Important recent 271(f) cases:

• NTP v. Research in Motion, (271(f) “component” would rarely if ever apply to method claims).
• AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software being sold abroad);
• Union Carbide v. Shell Oil (Fed. Cir. 2005) (271(f) “component” applies to method claims).
• Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software);
• Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
• Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).

Earlier Discussion of this case

• http://www.patentlyo.com/patent/2006/12/microsoft_v_att.html
• I will be discussing this and other extraterritorial issues at Duke University Law School on February 23, 2007. Link.

Text of 35 USC 271(f)

(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Threats Against Customers Lead to Walker Process Antitrust Claim

Hydril v. Grant Prideco (Fed. Cir. 2007).

Grant and Hydril both own patents relating to oil drilling.  Hydril sued Grant for patent infringement and also asserted a Walker Process antitrust claim against Grant. 

Walker Process claims stem from the 1965 Supreme Court case (of the same name) and allow Section 2 Sherman Act antitrust claims for monopolization or attempted monopolization based on enforcement of a fraudulently procured patent.

Here, Grant’s alleged fraud was that it “obtained its patent by knowingly and deliberately concealing from the Patent Office prior art that it knew would have resulted in a denial of its application.” 

At the district court level, Hydril’s complaint was dismissed for failure to state a claim. In particular, the court noted that Hydril had failed to show sufficient enforcement activity. The CAFC disagreed, holding that threatened enforcement against customers could serve as a basis for a Walker Process claim.

Threats of patent litigation against customers, based on a fraudulently-procured patent, with a reasonable likelihood that such threats will cause the customers to cease dealing with their supplier, is the kind of economic coercion that the antitrust laws are intended to prevent. A supplier may be equally injured if it loses its share of the market because its customers stop dealing with it than if its competitor directs its monopolistic endeavors against the supplier itself. Without customers, a supplier has no business.

 

CAFC: "Circuit means" interpreted as means-plus-function

DESA IP v. EML Tech and Costco (Fed. Cir. 2007 – NONPRECEDENTIAL).

DESA owns a patent directed to motion-activated security lights. The lights have a low-level always-on illumination as well as a bright security illumination that is activated when motion is detected by a passive infrared motion sensor. During infringement litigation, the district court construed the claims and consequently entered a stipulated judgment of noninfringement.

The appeal focused on whether the disputed claim phrases — "sensor means," "control circuit means," and "switching means" — should be interpreted as means-plus-function.

The use of the word "means" in the claim language invokes a rebuttable presumption that § 112, ¶ 6 applies; conversely, the failure to use "means" invokes a presumption that § 112, ¶ 6 does not apply. . . . Nonetheless, the presumption that § 112, ¶ 6 applies may be rebutted if the claim recites no function or recites sufficient structure for performing that function.

Distinguishing earlier precedent, the CAFC determined that neither the sensor, control circuit, nor switching pre-means terms recited sufficient structure.

DESA argues that this court has previously stated that "it is clear that the term 'circuit' by itself connotes some structure." In Apex, however, the word "means" was not used, so the reverse presumption—i.e., that § 112, ¶ 6 does not apply—was invoked.

Regarding interpretation of the claims, the CAFC found that the district court had improperly given the terms a narrow construction by focusing on the preferred embodiments and the figures.

CAFC: Construction of Essential Features and Impermissible Recapture

MBO v. Becton Dickinson (Fed. Cir. 2007).

MBO’s patent is directed to a hypodermic syringe that helps avoid needle sticks. After claim construction, the district court awarded summary judgment of noninfringement to BD.

On appeal, the CAFC recited the rules for claim construction sources:

The most relevant source is the patent’s specification, which is "the single best guide to the meaning of a disputed term." Next in importance is the prosecution history, which is also part of the "intrinsic evidence" that directly reflects how the patentee has characterized the invention. Extrinsic evidence—testimony, dictionaries, learned treatises, or other material not part of the public record associated with the patent—may be helpful but is "less significant than the intrinsic record in determining the legally operative meaning of claim language."

Essential Feature: Several of the asserted claims include a preamble precluding needlestick injury “immediately and positively.”  Interpreting the term “immediately,” the CAFC determined that an “essential feature” of the invention is ensure a safe needle immediately “upon removal from the patient.” (rather than immediately after some other event). 

The patentee here has clearly indicated via the specification and the prosecution history that the invention provides, as an essential feature, immediate needle safety upon removal from the patient. It is therefore appropriate to construe the claims so as to ensure that they, too, require that feature.

Interestingly, two of the claims did not include the ‘immediate’ language. For those claims, the court could find no textual hook for inserting the essential feature and thus did not burden those claims with the immediacy requirement.  Between the lines, the court implied that it could have found a textual hook through other claim terms, but stated that it “lack[ed] the power to construe other terms not disputed by the parties.”

Impermissible Recapture: Claim scope which has been surrendered in order to obtain issuance of a patent cannot be later reclaimed through a reissue proceeding.  The district court found that MBO’s patent had improperly expanded the scope of a term and thus construed the terms meaning narrowly.

On appeal, the CAFC held that the recapture rule should not be used to rewrite claim language. Although claim construction should be applied with an eye toward validity, that maxim should only be applied at last resort. Rather, the court should first construe the claims and then later determine if the broadened claims are valid .

Whether those broadened claims are invalidated by the recapture rule is an issue separate from construction.

Affirmed-in-part, reversed-in-part, vacated, and remanded.

CAFC: Meaning of "About"

Ortho-McNeil Pharm. v. Caraco Pharm. (Fed. Cir. 2006).

Ortho’s patent covers a pain-relief combo of tramadol and acetaminophen with a ratio of “about 1:5.” Caraco’s drug has a ratio of 1:8.67.  The lower court construed the claims and found no infringement.

Claim Construction: On appeal, the Federal Circuit construed the term “about 1:5” by first looking at the intrinsic evidence.  In the patent and claims, Ortho had used the term “about” repeatedly: disclosed ratios included about 1:1, about 1:5, about 1:19 to about 1:5, and about 1:1600. 

The court reasoned that the term must have a narrow meaning in this patent because a broad meaning would leave other claimed ratios meaningless. The court also noted that the literal meaning of the term should be narrowly construed because Ortho “could have easily claimed a [broader] range of ratios”

An expert testified that the statistical range should be 1:3.6 to 1:7.1 based on a confidence interval constructed from the data in the patent, and the Federal Circuit agreed. (The patent discussed the importance of 95% CI).

Literal Infringement: The Federal Circuit found that there could be no literal infringement because the upper claimed bound for the ratio was 1:7.1 while Caraco’s ratio was 1:8.67.

Doctrine of Equivalents: No DOE because Ortho cancelled claims with broader range during reissue. Interestingly, the Court made this ruling based on vitiation rather than prosecution history estoppel:

[I]t cancelled the broader "comprising" claims, except for claim 6. In sum, having so distinctly claimed the "about 1:5" ratio, Ortho cannot now argue that the parameter is broad enough to encompass, through the doctrine of equivalents, ratios outside of the confidence intervals expressly identified in the patent. We agree with the district court that to do so would eviscerate the limitation.

Summary judgment of noninfringement affirmed

Collateral Estoppel Does Not Extend to Preliminary Injunction Findings

Abbott Labs v. ANDRX (Fed. Cir. 2007).

The district court granted a preliminary injunction to stop Andrx from selling extended release clarithomycin as a generic version of Biaxin XL. Andrx appealed.

Four factors for preliminary relief: (1) Likelihood of success on the merits; (2) irreparable harm from failing to issue a PI; (3) balance hardships of the parties; and (4) public interest.

Collateral Estoppel: Oddly, the same district court granted Abbott’s PI motion against two other defendants because the patents looked invalid. On appeal Andrx argued that, as in Blonder-Tongue, “Abbott cannot assert patents against one party which have been found to be invalid or unenforceable against another party.”

The CAFC found that collateral estoppel does not apply here because the earlier discussion of validity and enforceability had not been fully and finally litigated in the other cases. (Applying Seventh Circuit law).

Vitiation: Andrx also argued that the PI should not issue because its generic does not infringe — either literally or under the doctrine of equivalents. Under DOE analysis, the Andrx product included a pharmaceutically acceptable glyceryl monostearate rather than the claimed “pharmaceutically acceptable polymer." Andrx argued that a GST equivalent would vitiate the polymer requirement. The CAFC, however, found that the two could be equivalent — falling in-line with the common notion that adjectives are subject to vitiation more often than nouns.

Notes: One thing that is unclear is why the court did not discuss the merits of the invalidity factor of the PI decision rather than focusing solely on the collateral estoppel issue.

ITC: Standing to Appeal

Fuji Photo v. ITC (Fed. Cir. 2007).

In its fifth appellate decision of this 1998 case . . .

Fuji owns the patent on certain disposable cameras. Jazz and others take the discarded cameras, repair them, then sell them. Earlier, the court decided that cameras first sold by Fuji in the US were no longer protectable under the first-sale doctrine. However, the court held that those that the first-sale doctrine did not apply to products originally sold abroad.

Here, Fuji appealed the ITC's calculation of the percentage of already imported cameras that were infringing.  The problem was the difficulty of determining which cameras were originally sold in the US.

Standing: On appeal, the CAFC first determined that Fuji had no right to appeal.  Unlike in normal infringement cases, ITC actions give the patentee no right to collect damages -- rather, any past damages go to the coffers of the US Government.

Private plaintiffs, unlike the Federal Government, may not sue to assess [civil] penalties for wholly past violations. (quoting 528 U.S. 167 (2000).

It is clear here that any violations are wholly in the past because Jazz Photo no longer conducts business and is in the liquidation process.   

Injunction against Officer: Jack Benun, former owner of Jazz, also appealed -- arguing that the ITC had no power to issue an injunction against him personally simply because of Jazz's infringement.

The CAFC agreed with the ITC order -- finding that "the Commission could legitimately issue a cease and desist order against him."  In their decision, the CAFC followed the Supreme Court's 1937 Standard Education case which held that an administrative agency could bind officers of a corporation after issuing an order against the corporation itself.

CAFC Outlines Difference Between Vacating and Reversing

E-Pass v. 3Com (Fed. Cir. 2007)

E-Pass filed its original complaint in 2000 and has been through one round of appeal. The earlier appeal focused on claim construction.  In this appeal, E-Pass argued that the lower court didn't properly follow the CAFC's directions.

Once a case has been decided on appeal, the rule adopted is to be applied, right or wrong, absent exceptional circumstances.

The CAFC had vacated the lower court's summary judgment and remanded for further proceedings.  On remand, the lower court considered the new claim construction handed down, but once again concluded that summary judgment against E-Pass was proper.

On appeal, the CAFC agreed with the lower court -- finding that its earlier decision was not a reversal.  Rather, by vacating the decision the court implied that summary judgment may be proper after further consideration of the facts.

By vacating, we signaled that, although the district court’s prior decision rested upon erroneous grounds, a proper claim construction might support a judgment (summary or otherwise) in favor of either party.

Affirmed.

Why Microsoft Wants Patent Reform

Parker v. Microsoft (Fed. Cir. 2006).

Opinion in full [citations removed]:

Charles W. Parker (“Parker”) appeals a final judgment of the [DC District Court] dismissing his patent infringement action against Microsoft as frivolous. We review a district court’s frivolousness determination for an abuse of discretion. Parker’s allegations that he has patented the “elemental atom” and that Microsoft has infringed his rights by using and improperly claiming inventorship of such an invention are “fanciful,” “fantastic,” and “delusional” contentions supporting the district court’s determination. On appeal, Parker provides us with no persuasive basis to conclude that the district court abused its discretion in dismissing the action. We affirm.

Supreme Court: Licensee in Good Standing May File Declaratory Judgment

MedImmune v. Genentech (Supreme Court 2007).

Declaratory judgment (DJ) actions are often used by potential defendants to obtain a declaration that a patent is invalid, unenforceable, or not infringed.  Under Federal Circuit law, a licensee cannot challenge a patent without first breaching the license.  The CAFC's reasoning was that a licensee in good standing feels no apprehension of suit since the license is essentially a settlement between the parties. Without an apprehension of suit, the DJ action would not rise to an actual controversy as required by the Constitution.

In a broadly worded opinion, the Supreme Court has scrapped the Federal Circuit's "reasonable-apprehension" test on declaratory judgment standing in favor of a rule that allows licensee's in good-standing to file DJ actions.

We hold that petitioner was not required, insofar as Article III is concerned, to break or terminate its 1997 license agreement before seeking a declaratory judgment in federal court that the underlying patent is invalid, unenforceable, or not infringed.

There are several things to note immediately:

Not Limited to Patents: This case at least extends to all licensing issues and likely to most contracts -- whether or not they involve patents or intellectual property.

Suggested Contractual Work-Around: Reading between the lines, the opinion may indicate that a contractual "prohibition against challenging the validity of the patents." may serve to block challenges by licensee's in good standing. Without the clause, however, the Court found no such prohibition:

To begin with, it is not clear where the prohibition against challenging the validity of the patents is to be found. It can hardly be implied from the mere promise to pay royalties on patents

Regarding apprehension of suit, the Opinion's footnote 11 is a complete divergence from common practice -- finding that a licensee who pays royalties either in fear of an injunctions or for fear of treble damages is being coerced in a way that creates an Article III case or controversy.

Links:

• Download MedImmune.pdf
• Briefs filed in MedImmune v. Genentech;
• CAFC Decision in MedImmune v. Genentech;
• CAFC Decision in MedImmune v. Centocor;
• MedImmune Petition Granted;
• Lear v. Adkins;
• Professor Miller’s comments;
• Supreme Court on the March;
• Supreme Court docket sheet.

"Right-to-Sue" Clause Does Not Give Licensee a Right to Sue

Propat v. RPost (Fed. Cir. 2006).

Standing: Only a "patentee" has standing to sue for patent infringement.  In order to qualify as a "patentee" the plaintiff must possess "all substantial rights in the patent."

Propat sued RPost for patent infringement.  The district court, however, dismissed the case for lack of standing -- finding that Propat was merely a licensee and not in possession of sufficient patent. Propat appealed.

By its plain terms, the Propat's license gives the company rights to initiate and enforce license agreements and to sue infringers.  Prior to any lawsuits, however, Propat must "consult and obtain prior approval" from the superior interest-holder.  The license can also be terminated for breach or other reasons. In addition, the license forbids transfer of Propat's rights.

Based on the license agreement, the appellate panel agreed that Propat did not have sufficient rights to bring suit. The court pointed to several elements of the license in its decision:

• An express provision retaining ownership in the superior interest-holder;
• Superior party was required to pay any maintenance fees;
• Superior party continued to enjoy some control over the use of the patent; and
• Superior party held a right to terminate the license under certain circumstances.

In addition, the court reaffirmed that a "right to sue" clause in a license does not actually entitle the licensee to sue.