Patent Law Blog (Patently-O)

CAFC Reverses After Lower Court Denies Patentee the Opportunity to Present a New Infringement Argument on Remand

Central Admixture Pharmacy Services v. Advanced Cardiac Solutions (Fed. Cir. 2008) (Non-precedential)

Most non-precedential opinions affirm the lower court. In fact, this decision is the first non-precedential reversal of 2008 (according to a Lexis search). In the prior decision, the CAFC voided a certificate of correction that had attempted to change a claim limitation from osmolarity to osmolality.

The final line of the original opinion reads as follows: “On remand, CAPS [the patentee] may pursue its allegations of infringement of the uncorrected ‘osmolarity’ version of the ’515 patent claims.” However, after the remand the district court refused to allow CAPS to prove infringement based on the uncorrected version of the patent.  Its reasoning was that CAPS had previously stated that it would not pursue that theory of infringement.

On appeal the second time, the CAFC reversed and remanded — holding that its prior order was “clear: on remand, the district court was to decide the merits of CAPS’s infringement claim under the pre-[Certificate of Correction] claims.  The district court was not at liberty to ‘determine’ the issue on procedural grounds, as it did.”

Reversed and remanded for consideration of the patentee’s infringement arguments.

Notes:

• This panel included Judges Schall, Clevenger, and Gajarsa. 
• The original panel included Judges Schall, Gajarsa, and Prost. Opinion by Gajarsa [LINK]
• The patent at issue (No. 4,988,515) covers a solution of glucose and amino acids used to nourish heart tissue during open heart surgery when blood flow is stopped.
• This decision appears quite limited. The patentee is able to present its new infringement argument because the original CAFC opinion specifically ordered the court to allow the new argument. This decision does not require a reversed lower court to allow a party to present arguments that had previously been dropped.

CAFC Affirms Exceptional Case Attorney Fees Based on Multiplicity of Minor Acts of Misconduct

Nilssen v. Osram Sylvania (Fed. Cir. 2008)

In 2007, a unanimous CAFC panel affirmed a district court’s finding that Ole Nilssen’s light bulb patents were unenforceable due to inequitable conduct.  The improper prosecution conduct included failing to disclose a close relationship with a 132 declarant; misleading priority claims; and improper payment of a small entity fee.

Now on appeal is whether Nilssen owes attorney fees under 35 U.S.C. § 285.  As with most civil cases in the US, the general rule in patent cases is that each party pays their own attorney fees.  Section 285 of the patent act provides a limited exception — providing that a district court “in exceptional cases may award reasonable attorney fees to the prevailing party.”  Here, the district court found the case exceptional based on the aforementioned inequitable conduct as well as “litigation misconduct” and the filing of a “frivolous lawsuit.” 

Benign Inequitable Conduct: Nilssen argued that his alleged inequitable conduct had very little real impact — i.e., that it was benign.  The CAFC rejected that argument — finding that inequitable conduct is never benign. “In fact, it is a contradiction to call inequitable conduct benign.”

Building a Mountain from Pebbles: Nilssen makes a good argument that none his individual acts of misconduct appear bad enough to call the case ‘exceptional.’ 

These acts of misconduct include late production of documents, disavowal of a prior interrogatory response (and never filing a formal correction), attempting to exclude interrogatories that were never signed; informally withdrawing patents from suit, but waiting until only a few months before trial to formally withdraw the patents; and waiving attorney client privilege without providing formal notice to Osram.

Each of these actions can rather easily be explained as “either harmless oversight or permissibly rough litigation tactics.”  This is perhaps especially true when you consider that the K&E firm – well known for its relentless bull dog litigation style — represented Osram.

To the CAFC panel, however, the “multiplicity” of these individual elements were sufficient to warrant the exceptional case finding — even without an individual smoking gun.

In dissent, Judge Newman did not see an exceptional case:

The statutory authority to award attorney fees was intended to “prevent gross injustice,” not to shift the economic balance against the unsuccessful plaintiff.

Notes:

• The first line of the case reads: “Nilssen is the owner and principal inventor of over 200 patents...”  What does the court mean by “principal inventor” and is there any legal significance associated with that designation?
  

 

 

District Court Must Provide Underlying Reasoning For "Exceptional Case" Determination

Innovation Technologies v. Splash! Medical Devices (Fed. Cir. 2008)

Innovation holds a patent for washing flesh wounds (U.S. Pat. No. 5,830,197) and sued Splash for infringement. In the midst of discovery (but before a Markman hearing) Innovation decided to end the litigation and executed a covenant not to sue Splash. Before dismissing the case, the district court awarded $140k in attorney fees to the accused infringer — finding the case “exceptional” because Innovation knew or should have known “that its infringement claims were baseless.”  Innovation left the district court with the impression that “the lawsuit was filed solely for the purpose of harassing a small competitor.”

In its decision, the district court provided only three sentences of legal conclusion without listing the factual basis for finding the case exceptional. [District Court Decision]

On appeal, the CAFC vacated in an opinion that reads like a reprimand. Quoting extensively from earlier opinions, the appellate panel demanded that lower court spell out the particular reasons why a case should be found exceptional:

‘“A district court must provide reasoning for its determination that a case is exceptional for us to provide meaningful review. Further, an exceptional case finding is not to be based on speculation or conjecture but upon clear and convincing evidence.” Stephens v. Tech Int’l, Inc., 393 F.3d 1269, 1276 (Fed. Cir. 2004) (citations omitted). . . .

This court could itself comb the record and answer those questions. That is not the normal appellate function, however, and we conclude that the proper practice here is for the district court initially to make the necessary findings on these issues. “[W]hen findings are required on the exceptional case issue such finding must initially be the province of the district court.” Consol. Aluminum Corp., v. Foseco Int’l Ltd., 910 F.2d 804, 814 (Fed. Cir. 1990). . .

Accordingly, the district court’s determination that this is an exceptional case and its award of attorneys fees are vacated, and the case is remanded to that court to make additional findings in accordance with this opinion. . . . If the court again concludes that this is an exceptional case and that it should award attorneys fees, it should also explain the reasons for the latter conclusion.

Vacated and Remanded.

Obvious to Try? BIO Challenges Ex Parte Kubin

In re Kubin (Fed. Cir. 2008)

Immunex (a subsidiary of Amgen) is hoping to patent its a DNA sequence coding for a NK (Natural Killer) cell regulator protein. The BPAI rejected the “nucleic acid molecule” claim — finding it obvious over the prior art. [BPAI Decision]. This decision is one of only three precedential BPAI decisions in 2007.

Just looking at the claimed sequence, it would not seem obvious — its structure is not overly similar to other regulator proteins, and the unpredictable nature of protein folding makes it virtually impossible to predict whether a particular sequence would code for an appropriate protein.

Despite the structural uniqueness, the BPAI found the claim obvious because it could have been isolated and verified simply by following conventional laboratory techniques — thus, making it obvious to try.

Although the CAFC has previously warned the BPAI away from using “obvious to try” analysis in its 1995 In re Deuel case. There, the appellate court held that obviousness analysis of a structure should focus on the structure itself as compared to prior art structures.

In Kubin, the BPAI rejected Deuel as limited by the Supreme Court’s KSR decision. That case focused on combination claims, but included the stray quote that “the fact that a combination was obvious to try might show that it was obvious under Section 103.”

Here, the BPAI argued, the inventor wanted to isolate the NK Regulator and simply used known methods to do so. “Thus, isolating NAIL cDNA was ‘the product not of innovation but of ordinary skill and common sense.’” (again quoting KSR).

The case is now on appeal at the the CAFC. On June 10, the Biotechnology Industry Organization filed an amicus brief asking the court to cabin in the scope of KSR and hold that its obvious to try dicta does not abrogate the Deuel standard. Briefing is ongoing and a decision is not expected until the end of the year.

• Download kubin.amicus.pdf
• The PTO's Obviousness Guidelines have the following rules for making an obviousness rejection based on the obvious to try reasoning:
  • (1) a finding that at the time of the invention, there had been a recognized problem or need in the art, which may include a design need or market pressure to solve a problem;
  • (2) a finding that there had been a finite number of identified, predictable potential solutions to the recognized need or problem;
  • (3) a finding that one of ordinary skill in the art could have pursued the known potential solutions with a reasonable expectation of success; and
  • (4) whatever additional findings based on the Graham factual inquiries may be necessary, in view of the facts of the case under consideration, to explain a conclusion of obviousness.The BPAI decision is notable for a few reasons, including the following two: (1) It was written by Nancy Linck, former PTO Solicitor, Newman law clerk, & PhD Chemist. Soon after authoring the decision, Linck left the firm to join the Rothwell Figg firm. (2) It is a unanimous opinion.
• Thanks to Hal Wegner for providing a copy of the brief which his firm filed on behalf of BIO.

Formalism at the CAFC: Equitable Plea for Revival is Rejected

Burandt v. Dudas (Fed. Cir. 2008)

Burandt’s patent expired in 1994 for failure to pay the maintenance fee. His former employer held legal title to the patent — although Bruandt arguably held an equitable interest in the title.  At that time, Bruandt was also mentally disabled. It was not until December 2001 (seven years later) that Bruandt learned of the expiration.

Burandt took several years to obtain legal title to the patent and then file a petition asking the PTO to accept an unavoidably delayed payment of the maintenance fee. (37 C.F.R. 1.378(b)). The PTO rejected his plea as did the U.S. District Court. Burandt argues that the PTO’s refusal to revive the patent was “arbitrary, capricicious, [and] an abuse of discretion” and consequently, a violation of the Administrative Procedures Act (APA). 

On appeal, the CAFC panel sided with the PTO — finding that the Patent Act (Section 41(c)(1)) gives the PTO director discretion to accept late maintenance fees “if the delay is shown to the satisfaction of the Director to have been unavoidable.”

“While it may well have been the intent of Congress to permit patentees to avoid the inequitable loss of patent rights, Congress gave the Director the responsibility of determining the circumstances under which a late payment may be waived.”

In this caes, Burandt’s former employer – as legal title holder – was responsible for taking reasonable care to pay the maintenance fees. Here, the court distinquished between the legal title holder and an equitable title holder:

“[I]t is the actions of the party responsible for making payments of the maintenance fees, the legal title owner, that must be considered when evaluating unavoidable delay under 35 U.S.C. § 41(c).”

In the court’s view, the legal owner is the “owner of record.” Thus, because the former employer was still “the owner of record [it had] the legal responsibility of paying the maintenance fees.”

In the somewhat similar case of Futures Technology v. Quigg (E.D.Va 1988), the district court allowed an equitable title holder to revive an application that had been abandoned by the owner of record. The CAFC formally distinguished this case as (1) not binding precedent and (2) dealing with a pending application rather than an issued patent. In addition, the court noted that in Futures Technology, the equitable title holder had asked the owner of record about the patent application on a more regular basis and the legal title holder had made misrepresentations to the equitable owner.

Expired patent remains expired.

Notes:

• Hunton & Williams apparently handled the case pro bono on Burandt’s behalf.

Appellate Court Affirms that Generic Omeprazole does not Infringe Prilosec Patent

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

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

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

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

Non-infringement affirmed.

Subsidiary's Lost Profits Do Not Translate to Lost Profit Damages for Parent Patent Holder

Mars, Inc. v. Coin Acceptors, Inc. (CoinCo) (Fed. Cir. 2008)

Way back in 1990, Mars sued CoinCo for patent infringement — asserting two patents covering technology for authenticating coins inserted into a vending machine. Eighteen years later, the parties are still battling over damages.

Lost Profits: In this decision, the CAFC affirmed that the Mars corporate structure (designed to avoid certain taxes) eliminated the company’s ability to recover damages under a “lost profits” theory.  Usually, lost profits are only available when a patentee is a market competitor. Mars itself has never made vending machine coin changers. However, its wholly owned subsidiary, MEI, did operate vending machines and licensed the patents on a non-exclusive per-use basis.  Although it was a wholly owned subsidiary, the court found that MEI’s provable lost profits due to the CoinCo infringement did not translate to lost profits for the patentee itself (Mars).  Of particular importance was the license structure between MEI and Mars that called for a straight per use license rather than a license based on a measure of profits.  Rather, lost profits require a showing that the patent holder itself had lost profits.

This decision can be seen as a continuation of the 2004 Poly-America case where the court held that the patentee could not recover lost profits for damages felt by a sister corporation. Lost profits damages are usually preferred to damages calculated as a reasonable royalty because the lost profit calculation typically results in a larger number.

Standing: The court also ruled on standing issues. (1) Prior to 1996, MEI had no standing to sue for itself because it was only a non-exclusive licensee. (2) In 1996 Mars transferred ownership to MEI — thus, at that point Mars had no standing to sue for any subsequent infringement.

Curing standing: In patent cases, standing is typically determined at the point that a claim is filed. Here, we have a seeming loss of standing. In the 2005 Schreiber decision, the CAFC held that a “temporary loss of standing during patent litigation can be cured before judgment.” Despite a half-hearted attempt, the court found that Mars had not properly cured its standing because MEI did not transfer complete ownership back to Mars.

Cornell wins $184 Million in Damages for Past Infringement by HP

Federal Circuit Judge Randall Rader has been sitting by designation as a district court judge in the Northern District of New York.  His case is an epic patent battle between Cornell University and Hewlett-Packard (HP), and the jury trial recently concluded with an $184 million calculated as 0.8% of HP’s $23 Billion in sales.

The patent — No. 4,807,115 — issued in 1989 and expired during the seven years of litigation. It is directed toward an internal computer messaging mechanism that boosts the function of multi-processor computers.

Interestingly, Cornell and HP had discussed a licensing agreement as early as 1988 (even before the patent issued). In 1997, Intel licensed the ‘115 patent for use in its Pentium Pro chips.

Unpublished Thesis: In a pre-trial decision, Judge Rader denied Cornell’s motion in limine and allowed HP to show the jury an unpublished masters degree thesis as 102(b) prior art.  The court found the thesis publicly accessible because the thesis had been cited in a later article that was in the same area of technology as the issued patent (analogous art.).

“After weighing all the circumstances of accessibility, this court views as vitally important the citation of this scholarly work in the Tjaden-Flynn article.”

Inventor Rewards: Unlike most companies, universities generally offer a percentage royalty cut for its employee-inventors. Professor Torng, the inventor of the ‘115 patent, will reportedly receive 25% of the award (if it is ever paid). Torng has announced that he’ll only keep a few million and donate the rest (perhaps over $30 million) to charity.

The post-trial decisions and eventual appeal should be interesting.

• [Reuters][Patent Hawk]

The Multi-Factor Test for Declaratory Judgment Jurisdiction in Patent Cases

Cat Tech LLC v. TubeMaster, Inc. (Fed. Cir. 2008)

Cat sued TubeMaster — alleging infringement of its patent covering a method of using a catalyst loading devices to simultaneously load thousands of tube reactors.  Cat’s infringement allegations were focused on one particular TubeMaster commercial configuration. During the litigation, TubeMaster filed a counterclaim for declaratory relief that its other three configurations did not infringe. On appeal, the CAFC first looked to see whether the district court had proper jurisdiction over the declaratory relief counterclaims.

In MedImmune, the Supreme Court rejected the Federal Circuit’s “rigid” two prong test for DJ jurisdiction that required that the DJ plaintiff (1) have a reasonable apprehension that the patentee will file suit and (2) conduct “meaningful preparation” to conduct potentially infringing activity.  The MedImmune decision eliminated the first prong — finding the that the “reasonable apprehension” test excluded at least some actual “cases and controversies” under Article III of the U.S. Constitution. 

New Multi-Factor Test for Declaratory Judgment Jurisdiction: In Cat Tech, the Federal Circuit found that the second prong of “meaningful preparation” is still intact — at least as a factor working to determine whether a dispute is immedate and real.

“[T]he issue of whether there has been meaningful preparation to conduct potentially infringing activity remains an important element in the totality of circumstances which must be considered in determining whether a declaratory judgment is appropriate. . . . If a declaratory judgment plaintiff has not taken significant, concrete steps to conduct infringing activity, the dispute is neither ‘immediate’ nor ‘real’ and the requirements for justiciability have not been met.”

From this decision by Judge Mayer, it appears that the new test for DJ jurisdiction has moved from two prongs to a broader “totality of the circumstances” under the umbrella of a “fundamental inquiry” of “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”  (quoting MedImmune). Meaningful preparation toward potential infringing activity is important (but perhaps not a required element) in this fundamental inquiry because actual steps taken toward infringement are indicators of both “immediacy and reality.”

On the facts of this case, the CAFC found “meaningful preparation” toward each product was sufficiently shown by “AutoCAD drawings for each of its four configurations”; successful manufacture of one of the configurations; being ready to deliver products under any configuration “within a normal delivery schedule” after receiving an order; and because the company “does not expect to make substantial modifications to its loading device designs once production begins.”

Finally, although also a factor in the analysis, the fact that TubeMaster had not created any sales literature or begun advertising its alternate configurations did not negate the immediacy and reality of the controversy.

Affirmed.

Federal Circuit Contract Interpretation

Lawler Mfg. v. Bradley Corp. (Fed. Cir. 2008)(nonprecedential)

In 2001, Lawler and Bradley settled a patent infringement lawsuit and entered into a contractual license agreement. Bradley was given the right to practice Lawler’s plumbing valve patents in exchange for a 10% royalty.  The license included a combination royalty provision. The royalty licensed parts sold in combination would be charged at a separate (likely lower) royalty rate. 

The dispute on appeal was whether a set of example combinations included in the contract limited the “combination” royalty rate to only a limited set. The particular contract provision read as follows:

“If a Licensed Unit is invoiced or shipped in combination in another product such as an emergency shower or eyewash, [then the combination rate applies.]”

De Novo Construction: Looking much like a claim construction opinion, the CAFC reviewed the contract language de novo (following Indiana law) and reversed the lower court interpretation. In particular, the court found that the “such as” language of the contract limited the combination royalty to only a limited set of combinations. The CAFC found its interpretation necessary to give meaning to the such as clause. As with Federal Circuit claim construction law, Indiana contract law has a preference for giving meaning and effect to all written terms.

“The question before us is whether that term, read in the context of the agreement, is restrictive, as Lawler urges, or merely explanatory, as the court found. We find that it is restrictive. “Such as” refers to items similar to what are recited rather than indicating that the recited items are just examples of what is covered by that provision. . . . The parties’ inclusion of the “such as” phrase … must either have been intended to provide some guidance as to the limited types of combinations that the parties contemplated … or to provide meaningless surplusage. Indiana law constrains us from finding the latter.”

Reversed and remanded.

In dissent, Judge Mayer saw the “such as” language as merely providing examples in much the same way that embodiments provide example implementations of an invention. “[E]mergency eyewashes and showers are examples of combination products, but they are not the only combination products covered by section 3.1 of the licensing agreement.”

First Sale Doctrine: Copyright & Patent

In some ways, the Supreme Court case of Quanta v. LGE is a symbol of the ongoing struggle between property law and contract law.  With concepts like the first sale doctrine (and the rule against perpetuities), property law has typically operated to limit dead hand and downstream control over property rights.  These limiting doctrines are largely ignored in a freedom of contract regime.

Vernor v. Autodesk (W.D. WA 2008)

A federal copyright case last week landed on the side of property & the first sale doctrine.  The court denied summary judgment to Autodesk — finding instead that Vernor may well have a legitimate right to re-sell his copies of AutoCAD. Autodesk argues that he only holds a contractual license to use the software (via shrink-wrap license) and does not actually hold full property interests in the programs.

“[T]he transfer of AutoCAD packages from Autodesk to CTA was a sale with contractual restrictions on use and transfer of the software. Mr. Vernor may thus invoke the first sale doctrine, and his resale of the AutoCAD packages is not a copyright violation.”

In copyright law, the first sale doctrine is codified in statute — allowing the owner of a particular copy to resell that copy even if the owner had contractually agreed not to do so. 

“[T]he owner of a particular copy or phonorecord lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.” 17 USC 109.

In patent law, the first sale doctrine – also known as patent exhaustion – has no statutory support. Rather, like the doctrine of equivalents, patent exhaustion is grounded in common law principles.  The Quanta case is fairly technical and could result in a narrow low-impact opinion. However, it is also quite possible that the Supreme Court will re-solidify the property concepts.  Expect a decision within the next few weeks.

Notes:

• Patry and InternetCases have more details on the Autodesk case.
• More on Quanta v. LGE.
• Comment on Chain of Title: M. Slonecker: “For the sake of factual accuracy, AutoDesk "sold" the software to CTA. At a later date CTA auctioned off its assets, and Mr. Vernor was the winning bidder for the software program discs. With copies in hand, Mr. Vernor placed the discs he purchased at the auction on sale at eBay. Apparently AutoDesk is not pleased with this state of affairs and has been engaged in a running battle with Mr. Vernor about his eBay activities.”

... and See What Sticks: Claim Construction Appeals

Rattler Tools v. Bilco Tools (Fed. Cir. 2008) (nonprecedential)

Rattler sued Bilco in the Eastern District of Louisiana -- alleging that Bilco's magnetic scrapper (used to clean out oil wells) infringed several patents. After a bench trial, the district court found the patents completely non-infringed. In particular,the district court held that the "accused products and methods did not meet any of the thirteen limitations ofthe ten asserted claims."

Rattler appealed -- asking for a new claim construction for each of those thirteen limitations.  Without any detail analysis, the CAFC politely showed Rattler the door.  "We have considered all of Rattler’s arguments. Having done so, we see no reason to disturb the careful and thorough post-trial decision of the district court."

This case is unremarkable in its short analysis, but does serve as a reminder of the current state of patent appeals.  The conventional wisdom that the CAFC re-writes a large percentage of claim construction decisions leads most losing parties to appeal on claim construction.  At the same time, appellants are also including more claim construction arguments in each appeal. 

CAFC: Failing to Submit Invention Inspiration OK; Failing to Submit Product Code of Preferred Input Not OK.

TALtech v. Esquel Apparel (Fed. Cir. 2008) (nonprecedential)

Summary: (1) An applicant need not disclose its own prior work or inspiration for invention if merely cumulative of other references cited; (2) Failing to identify the brand of adhesive tape used in the invention was a best mode violation — resulting in claim invalidation; (3) There is no presumptive order of the steps in a process claim – unless the claim language “requires an ordering of steps” either implicitly or explicitly.

One of TAL’s employees – John Wong – was inspired by TAL’s use of heat-fusible adhesive tape in manufacture raincoats. Over a long process of trial and error, Wong figured out how to use a particular variety of adhesive tape to create a dress shirt that does not pucker after washing. 

After receiving a US utility patent, TAL became embroiled an patent litigation with another Hong-Kong based manufacturer – Esquel Apparel. In that litigation, the district court found TAL’s patent unenforceable due to inequitable conduct during prosecution and invalid for failing to submit fulfill the “best mode” requirement of 35 U.S.C. 112 (inter alia).  Based on the inequitable conduct, the court also awarded attorney fees to Esquel.

Inequitable Conduct: “In this case, the district court found TAL liable for inequitable conduct because inventor John Wong had not disclosed the raincoat seam that inspired his invention to the PTO.” On appeal, the CAFC first dispelled any notion that a patent applicant is required to disclose the inspiration for the invention. Although not stated by the court, 35 U.S.C. 103(a) arguably indicates that the inspiration is not relevant to the patentability inquiry: “Patentability shall not be negatived by the manner in which the invention was made.”

Here, the CAFC noted that TAL’s raincoat may well have been “merely cumulative” to a German patent application that was submitted during prosecution. “If the undisclosed raincoat seam was merely cumulative to [the German application], then no inequitable conduct lies in its nondisclosure.”

Best Mode: At the time of filing, Wong had settled upon a particular type of adhesive tape – known as Vilene SL33 – as the best way to form the seams.  The patent application did not, however, disclose Vilene SL33.  A patent may be invalidated for failing to submit a “best mode” if (1) the inventor possessed a best mode at the time of filing; and (2) the written description fails to disclose the best mode in a way to allow one reasonably skilled in the art to practice that mode.

Possession of the Best Mode: The evidence clearly showed that Wong “experimented with many adhesives but settled on a preference for one.” Thus, the court agreed that the first prong was met — the inventor did possess a best mode at the time of filing – i.e., Vilene SL33.

On the second prong the CAFC disregarded the applicant’s argument that the PTO “prefers the use of generic names of products” and that there is no evidence that the Vilene brand products are actually better quality than other brands.  Instead, the court honed-in on the result of the first prong – that Vilene SL33 was the best mode known to the inventor – and agreed that the best mode had not been disclosed. “TAL has not explained how the written description teaches one having reasonable skill in the art the way to practice the best mode as found in the analysis of the first prong – the use of Vilene SL33.”

Process Order: “Generally, there is no presumption of order, and so a claim with many steps can be infringed by an accused process performing the claimed steps in any order. However, we will find that the claim requires an ordering of steps when the claim language, as a matter of logic or grammar, requires that the steps be performed in the order written, or the specification directly or implicitly requires such a narrow construction.”

In this case, the claimed process implicitly requires a particular ordering. In particular, the bonding adhesive must be presented before a folding step because the folding step requires that the garment abut the bonding element.

Conclusion: The asserted claims were found invalid and not infringed. The remand appears only necessary to determine inequitable conduct and consequently potential attorney fees.

Lower Court MUST Construe All Disputed Terms

O2 Micro v. Beyond Innovation, et. al (Fed. Cir. 2008)

A jury found O2 Micro’s DC/AC converter patents willfully infringed and not invalid. The Eastern District of Texas court (Judge Ward) then issued a permanent injunction.

Waiver of Claim Construction Appeal: During a Markman hearing, the parties sparred over the definition of the term “ONLY IF”. Rather than issuing a claim construction decision, the district court decided that the common phrase needed no explanatory construction. After having lost to the jury, the defendants appealed the lower court’s failure to construe the ONLY IF phrase.  However, because the defendants did not specifically object to the jury instructions, O2 Micro argued that the the defendants has waived their right to appeal. 

The issue of waiver of claim construction has been raised before, and the CAFC dismissed it again — this time by quoting the CAFC’s own 2004 Cardiac Pacemakers opinion:

“When the claim construction is resolved pre-trial, and the patentee presented the same position in the Markman proceeding as is now pressed, a further objection to the district court’s pre-trial ruling may indeed have been not only futile but unnecessary.”

Thus, if disputed at a Markman hearing, claim construction appeal issues are not waived by failure to object to jury instructions. Furthermore, the CAFC will also allow new arguments to be presented on appeal justifying the previously proposed construction.

Construing all the terms: Although the meaning of the phrase “ONLY IF” was disputed by the parties, the district court failed to construe the term. In its decision, the CAFC vacated — finding that the disputed phrase should have been construed. By failing to define the term, the court essentially passed the construction dispute to the jury.

“When the parties raise an actual dispute regarding the proper scope of these claims, the court, not the jury, must resolve that dispute. . . . When the parties present a fundamental dispute regarding the scope of a claim term, it is the court’s duty to resolve it.”

In deciding this issue, the CAFC indicated that claim construction requires determining both the meaning of the words in the claim and the scope encompassed by the claim. Further, even ordinary terms need construed when they are susceptible to multiple interpretations.

Overburdening: Over the past decade, the number of terms being construed (and appealed) has risen dramatically. In its decision, the CAFC at least waived its hands at the problem — recognizing “that district courts are not (and should not be) required to construe every limitation present in a patent’s asserted claims.” (Emphasis in original). No, the court only needs to construe those claim terms that are disputed, subject to alternative theories, that could be helped by clarification, and when otherwise necessary to describe the claim coverage.

Meaning and Scope: This case is quite important because it shifts even more power and importance onto the issue of claim construction and away from a jury’s factual determination of infringement and novelty.