Radio Systems Corporation is a Delaware corporation with its principle place of business in Knoxville, Tennessee. It manufactures several pet related products, including a patented electronic pet access door (the “SmartDoor”), which unlocks in response to a transmitter worn by the pet.

Starting in November 2006, Mr. Sullivan approached Radio System on various occasions regarding licensing and marketing of the Widget. These attempts were received with little or no response from Radio Systems. In 2007, Radio Systems applied for a patent on its SmartDoor device. In February of 2009, Radio Systems agreed to meet with Mr. Sullivan to view a demonstration of the Widget. Both parties signed a nondisclosure agreement prior to the meeting. Mr. Sullivan travelled to Tennessee to demonstrate the Widget to a Radio Systems’ representative. Following the meeting, Mr. Sullivan sent several more emails to Radio Systems, but Radio Systems expressed neither interest in the marketing proposal nor in licensing the Widget.

In June of 2009, the PTO issued a notice of allowance for Radio Systems’ SmartDoor device. On August 2009, Accession retained legal counsel and alerted the PTO examiner for SmartDoor to the existence of Accession’s ‘141 patent. The PTO examiner then withdrew the notice of allowance issued for SmartDoor. Accession’s counsel then notified Radio Systems’ counsel stating that SmartDoor infringed the ‘141 patent and that interference proceedings would be warranted between the ‘141 patent and SmartDoor application. In September of 2009, Accession counsel sent letters to Radio Systems outlining Accession’s infringement allegations and suggesting the dispute be settled through a licensing agreement.

On November 5, 2009, Radio Systems filed a complaint in the United States District court for the Eastern District of Tennessee seeking a declaratory judgment of noninfringement and invalidity with respect to the ‘141 patent. Radio Systems justified suit in this forum based on specific jurisdiction – arising out of events related to the instant dispute – and not general jurisdiction – arising from continuous and systematic general business contacts. Accession moved to dismiss the action for lack of personal jurisdiction, or in the alternative, to transfer the case to the United States District Court for the District of New Jersey. The Tennessee district court granted Accession’s motion to dismiss. Shortly after Accession filed an infringement action in the District of New Jersey, where the suit was stayed pending Federal Circuit appeal.

On appeal, the Federal Circuit explained that an action for a declaratory judgment “arises out of or relates to the activities of the defendant patentee in enforcing the patent or patents in suit,” and that the relevant inquiry for specific jurisdiction is “to what extent… the defendant patentee purposefully directed such enforcement activities at residents of the forum and the extent to which the declaratory judgment claim arises out of or relates to those activities.” Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1332 (Fed. Cir. 2008). Only the activities of the patentee which relate to the enforcement or defense of the patent can give rise to specific personal jurisdiction. Relying on Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998), the Federal Circuit noted that ordinary cease-and-desist notices sent by a patentee to an alleged infringing party in a different state are not sufficient to subject the patentee to specific jurisdiction in that state. Relying on Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1019 (Fed. Cir. 2009), the Federal Circuit held that cease-and-desist notices must be taken in conjunction with other enforcement actions to support specific jurisdiction in a foreign forum.

In applying this precedent, the Federal Circuit rejected Radio Systems’ argument that Accession’s communications regarding marketing strategies, licensing proposals and commercialization efforts establishes personal jurisdiction over Accession in Tennessee. Specifically, the Federal Circuit held that these commercialization efforts were not enforcement or defense efforts related to the ‘141 patent, and it is only the enforcement or defense efforts rather than the patentee’s own commercialization efforts which are to be considered for establishing specific personal jurisdiction in a declaratory judgment action against the patentee. Thus Accession’s marketing, licensing and commercialization communications were insufficient to find specific jurisdiction since they were not part of the enforcement or defense of the ‘141 patent.

Radio Systems next argued that infringement threats delivered by Accession’s counsel along with Accession’s communications with the USPTO give rise to a more extensive enforcement effort and thus specific jurisdiction over Accession. The Federal Circuit noted that warnings and threats of infringement suites are typical and not enforcement or defense correspondence. In contrast, the Federal Circuit in Campbell Pet Co. v. Miale, 542 F.3d 879 (Fed.Cir. 2008) did find specific jurisdiction as there were extrajudicial enforcement activities in the forum state in the form of contacts at trade shows in the forum state as a form of self help enforcement. As such, the Federal Circuit found the communications between Accession’s counsel and the USPTO in Virginia were insufficient to establish specific personal jurisdiction because the attempts were neither made in the forum state fo Tennessee nor were they enforcement or defense efforts.

Lastly, the Federal Circuit also held that though the 2009 nondisclosure agreement contained a forum clause naming the Eastern District of Tennessee, the clause only pertained to confidential information. In patenting the Widget, Accession disclosed the information to the public such that anything in the ‘141 patent was not confidential. Moreover, since the SmartDoor had been in the marketplace since August 2007, it was not confidential information under the 2009 nondisclosure agreement as it was information independently owned by Radio Systems prior to the nondisclosure agreement. Therefore, the nondisclosure agreement had no bearing on establishing personal jurisdiction in this action for declaratory judgment, which related to the ‘141 patent. As such, the Federal Circuit affirmed the dismissal for lack of personal jurisdiction.

Among other features, the Examiner indicated that Kalnitsky disclosed “a first well-charge-well [sic] controller (340) operably coupled with said first charge pump (see Col. 5, lines 37-39 and Col. 6, lines 38-44, 64-66)” which corresponded to the recited first well-charge-level controller. Jung responded by providing a block quote from Kalnitsky, and arguing that the “‘well-charge-level controller’ recitations of [amended] Claim 1 are different from the ‘controller 340’ recitations of [Kalnitsky], and thus controller 340 of [Kalnitsky] does not match the ‘well-charge-level controller’ of herein-amended Independent Claim 1.” No further explanation was provided.

After the Examiner again rejected the claims, Jung appealed to the Board of Patent Appeals and Interferences. On appeal, Jung argued that Kalnitsky’s controller 340 is a reset controller which does not “continuously adjust the control signal inputs” as does the recited well-charge-level controller. The Board rejected this argument, noting that the argument relies upon a feature not recited in the claims and finding that the broadest construction of the reset controller performs a function encompassed by the recited well-charge-level controller. Jung filed a Request for Rehearing on the grounds that the Board had not addressed Jung’s argument that the Examiner had not made a prime facie case for invalidity under 35 U.S.C. §102, and thus the rejection was procedurally improper under 35 U.S.C. §132. On rehearing, the Board found that the prima facie case requirement is merely a procedural mechanism for allocating burden, and that the anticipation case was adequately addressed in the original Board decision.

On appeal from the Board, the Federal Circuit outlined how the prima facie case burden is met and its purpose. Specifically, the Federal Circuit quoted Hyatt v. Dudas, 492 F.3d 1365, 1369 (Fed. Cir. 2007) for the proposition that “the prima facie case is merely a procedural device that enables an appropriate shift of the burden of production.” The Federal Circuit stated that this burden is met by “adequately explain[ing] the shortcomings it perceives so that the applicant is properly notified and able to respond.” Id, at 1370. It is only “when a rejection is so uninformative that it prevents the applicant from recognizing and seeking to counter the grounds for rejection” that the prima facie burden has not been met and the rejection violates the minimal requirements of 35 U.S.C. §132. Chester v. Miller, 906 F.2d 1574, 1578 (Fed. Cir. 1990).

In applying this standard to the instant application, the Federal Circuit declined to require that the prima facie case requires that the Examiner provide an explanation as to the broadest reasonable interpretation of each claim term, as well as evidence “bridging the facial differences between that reasonable claim construction and the purported anticipatory reference” as argued by Jung. Instead, the Federal Circuit found that the Examiner sufficiently notified Jung by identifying the specific element which anticipated the claim feature (i.e., the reset controller 340), as well as the column and line number explaining the functioning of the reset controller 340 as pertains to the claim feature. In this manner, the Examiner gave sufficient notice to Jung as to allow Jung the opportunity to respond. The Federal Circuit then noted that evidence that this notice was sufficient since Jung was able to reply and did not otherwise argue that the correlation between the controller 340 and the well-charge-level controller was not understood. The Federal Circuit noted that there was no reason to further require the Examiner to fill any gaps between the disclosed feature and the recited feature using evidence since, once the notice requirement of 35 U.S.C. §132 is met, the burden has properly shifted to the applicant. As such, the Federal Circuit held that “the identification of where each limitation of the rejected claims is shown in the prior art reference by specific column and line number was more than sufficient to meet this burden.”

Arlington Industries filed suit against Bridgeport Whipper-Snap in the Middle District of Pennsylvania alleging one set of products infringe claim 8 of the ’050 patent (herein after “Arlington I”). Arlington Industries later filed a second suit against Bridgeport Whipper-Snap in the Middle District of Pennsylvania alleging another set of products infringed claim 8 of the ’050 patent and claim 1 of the ‘831 patent (hereinafter “Arlington II”). In its claim construction, the District Court in Arlington I found that the recited spring metal adaptor of claim 8 did not require the ring to be split but instead be made of a spring metal. In contrast, the District Court in Arlington II found that the recited spring metal adaptor of claim 8 of the ‘050 patent as well as the spring steel adapter of claim 1 of the ‘831 patent both required that the adapter be split. Based upon this claim construction, Bridgeport moved for summary judgment in Arlington II since the allegedly infringing products did not include a split. The District Court in Arlington II granted the motion.

While neither Arlington I nor Arlington II were combined, the District Court in Arlington I agreed to stay the Arlington I proceedings while the Arlington II was on appeal.

On appeal, the Federal Circuit began by noting that “the claims of a patent define the invention to which the patentee is entitled the right to exclude.’” Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc). Moreover, the Federal Circuit held that the recited “spring metal adaptor” of claim 8 of the ‘050 patent has an ordinary and customary meaning which is consistent with the specification: the adaptor is made of spring metal. The specification specifically refers to adapter as being formed of spring metal. As such, the Federal Circuit found that the “spring metal adaptor” of claim 8 must be made of a spring metal.

In supporting the Arlington II District Court’s claim construction, Bridgeport indicated that the term “spring” required that the metal adapter perform a springing function, which would require a split. Bridgeport pointed to the drawings of the ‘050 patent, all of which include the metal adapter having a split. In declining to adopt this interpretation, the Federal Circuit again noted that the specification defined the metal adapted as being made of a spring metal, such that the term “spring metal adapter” would refer to the material of the adapter. Moreover, the Federal Circuit noted that the drawings to a single embodiment do not represent a limitation which is imported into the claim.

Importantly, the Federal Circuit held that allowing such an interpretation would go against the ordinary meaning as well as the findings of the Arlington I court. Specifically, the Federal Circuit quoted Finisar Corp. v. DirecTV Group, Inc., 523 F.3d 1323, 1329 (Fed. Cir. 2008) for the proposition that, “[i]n the interest of uniformity and correctness, this court consults the claim analysis of different district courts on the identical terms in the context of the same patent.” Thus, the Federal Circuit rejected the notion that the spring limitation meant a springing function as being contrary to both the ordinary meaning as understood from the specification as well as contrary to a predecessor court decision.

Alternately, Bridgeport indicated that the split was implicitly required even if the term “spring metal adapter” was limited to an adapter made of a spring metal. However, the Federal Circuit declined to implicitly require the spring metal adapter having the split. Specifically, the Federal Circuit noted that, while one embodiment shown in the drawings had a split, three other embodiments did not. Also, the Federal Circuit noted that other claims expressly recite a split such that implicitly requiring the split would run contrary to the doctrine of claim differentiation. Moreover, the Federal Circuit noted that in a rejection of a claim in the parent application for the ‘050 patent, the applicants specifically amended a claim by including a split feature which was evidence in the prosecution history that the recited spring metal adapter did not necessarily include a split. While acknowledging that there is a fine line between reading a claim in light of the specification and importing a feature into a claim using the specification, the Federal Circuit determined that the overall facts indicated that there was no intent to implicitly require that the split metal adapter always require the split. As such, the Federal Circuit found that neither claim 1 of the ‘831 patent nor claim 8 of the ‘050 patent required a split, and reversed the District Court.

Qwest has a billing system which includes a back office system and a front end client application installed on a user computer. The billing system allows the user to obtain automatic delivery of billing information to the user computer, or a user computer can request billing information on demand. Centillion accused Qwest of infringing the ‘270 patent through its billing system, and filed suit in the Southern District of Indiana. Qwest made a motion for non-infringement based upon whether it was possible for Qwest to infringe the system claims when all parties acknowledge that the back office system maintained by Qwest did not infringe the ‘270 patent alone. The District Court granted this motion since no single party used each element of the claims as both the backend office system and front end client application are independently owned. Therefore, neither Qwest nor the customers are using the eentire patented system.

On appeal, the Federal Circuit analyzed what “use” means in the context of a system claim under 35 U.S.C. §271(a). Specifically, as defined in NTP, Inc. v. Research in Motion, Ltd., 418 F.3d 1282 (Fed. Cir. 2005), “use” is “put[ting] the system into service, i.e., . . . exercis[ing] control over, and benefit[ting] from, the system’s application.” The Federal Circuit first noted that the issue in NTP was more narrowly drawn since the system included elements located outside of the United States, whereas 35 U.S.C. §271(a) requires use within the United States. Thus, NTP focused on the location of the infringement, which is in contrast to the broad interpretation otherwise afforded “use” when the situs of the infringing elements is not in dispute. In this case, the Federal Circuit noted that a infringing use of a system occurs where a party has “the right to put into service any invention.” NTP, 418 F.3d at 1316-17 citing to Bauer & Cie v. O’Donnell, 229 U.S. 1 (1913). In analyzing these standards, the Federal Circuit adopted the NTP standard as the more recent analysis of system claim uses, and held that, for a party to use a system for purpose of infringement, that party “must put the invention into service, i.e., control the system as a whole and obtain benefit from it”. NTP, 418 F.3d at 1317.

At the same time, the term “control” does not require a party to exercise physical or direct control over each system element. Instead, a party controls the entire system by having “the ability to place the system has a whole into service.” Thus, in NTP, a customer put the system into service by transmitting a message, even though the customer did not have physical or direct control over each system element.

In applying the facts to this test, the Federal Circuit first looked at whether the end user was using the billing system for purposes of 35 U.S.C. §271(a). The Federal Circuit noted that when a customer requests an on demand billing report, the end user is putting the billing system Qwest’s back office system into service, and thus may be infringing since the customer is controlling the system the front end client application. Similarly, where the billing information and reports are automatically generated within Qwest’s back end office system and merely made available for download by the end user through the front end client application, there is still “use” of the billing system since the Qwest back end office system only creates these reports at the request of the front end client application such that the end user still maintains control over the system for multiple generations of reports as opposed to the single report created in the on demand option. Thus, the Federal Circuit reversed the District Court’s summary judgment as to the issue of end user “use” of the accused system.

Next, the Federal Circuit reviewed whether Qwest also was using the billing system for purposes of 35 U.S.C. §271(a). The Federal Circuit that, while Qwest maintains the back end office system which performs most of the calculations (i.e., features 1) through 3)), the back end office system does not put the entire billing system into service alone. Further, the mere supplying of the software for the user computer to create the front end client application does not create the infringing system since the mere supply of software does not place the entire system into service without the affirmative actions of the end user. Thus, as there was no evidence that the end user was acting as an agent for Qwest such that Qwest is vicariously liable, the mere providing of software which an end user voluntarily and independently installs on the end user computer does not expose Qwest to direct infringement liability. Therefore, the Federal Circuit upheld the District Court’s grant of summary judgment as to Qwest for not using the system.

Lastly, the Federal Circuit addressed whether Qwest could be liable for making the entire system. Specifically, since Qwest manufactured both the front and back end software, Centillion argued that Qwest “made” the system for purposes of 35 U.S.C. §271(a). In rejecting this argument, the Federal Circuit held that, since the claims require a “personal computer data processing means” having the front end software, the mere manufacture of the software was not enough to make the entire system. Instead, the system was not made until at the front end software was installed on an end user computer. Thus, the Federal Circuit also upheld the District Court’s grant of summary judgment as to Qwest for not making the system.

Uniloc sued Microsoft in the District of Rhode Island alleging that the Product Activation feature infringed the ‘216 patent. After a first remand from the Federal Circuit rejecting the District Court’s initial claim construction, the jury found that Microsoft had infringed the ‘216 patent, that the infringement was willful, and awarded damages of $388 million based in part on testimony from a damages expert using a “25% rule” as a basis for determining a reasonable royalty. Microsoft filed six post trial motions including motions JMOL for invalidity, non-infringement, and no willfulness, as well as a motion for a new trial on the issue of damages for improper use of the 25% rule. The District Court denied the motion JMOL on the issue of invalidity, granted the motion JMOL of non-infringement as well as no willfulness, and granted the motion JMOL new trial on the issue of damages.

On appeal, the Federal Circuit reversed the District Court grant of the JMOL motion of noninfringement and sustained the denial of the JMOL motion on the issue of invalidity, thus sustaining the jury verdict on the issue of infringement of a valid claim. The Federal Circuit also upheld the District Court grant of JMOL on the issue of no willfulness, noting that the District Court was correct in finding that Uniloc had not presented any evidence of subjective or objective recklessness, especially as the claims involved complex issues relating to equivalencies. As such, the Federal Circuit found no need for a new trial on the issue of willfulness such that the issues of infringement and willfulness were resolved.

On the next issue of damages, the Federal Circuit also upheld the District Court’s grant of a new trial on the issue of damages. In order to arrive at the $388 million dollar award, the jury evaluated the testimony of Uniloc’s expert, Dr. Gemini. As summarized by the Federal Circuit, Dr. Gemini testified that damages should be $564,946,803, which is based upon a hypothetical negotiation using the factors outlined in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970).

As a starting point, Dr. Gemini noted that a Court-accepted methodology used a 25% “rule of thumb”, whereby 25% of the value of a product would go to the patent owner. In this case, Dr. Gemini valued each Product Activation feature as being worth $10 to Microsoft given the importance of preventing piracy, such that the rule of thumb began with a royalty rate of $2.50 per Product Activation. From this, Dr. Gemini arrived at a reasonable royalty of $564,946,803.

As a check to ensure that this royalty rate was within industry standards, Dr. Gemini testified that this resulted in a royalty rate of 2.9% relative to the $19 billion gross revenue for Windows XP and related software. In comparison, Dr. Gemini indicated the industry rate was above 10%. Based upon this analysis as well as the comparison of the resulting award against the gross revenue, the jury awarded the $388 billion in damages.

The Federal Circuit, in upholding the District Court’s grant of the motion JMOL to reverse the award and allow a new trial on damages, reviewed the history and use of the 25% rule of thumb utilized by Dr. Gemini. The Federal Circuit noted that 35 U.S.C. § 284 allows a damages in the amount of a reasonable royalty, which is determined according to a hypothetical negotiation between the parties. Wang Labs Inc. v. Toshiba Corp., 993 F.2d 858, 869-70 (Fed. Cir. 1993). The Federal Circuit noted that legal scholars have reasoned that the 25% rule of thumb approximates the reasonable royalty by leaving the infringer with sufficient remaining profits (75%) to reward the infringer for the risk of developing and marketing the product. Robert Goldscheider, John Jarosz and Carla Mulhern, Use Of The 25 Per Cent Rule in Valuing IP, 37 les Nouvelles 123 (Dec. 2002). While enjoying widespread acceptance as a starting point, others have criticized the rule as not correlating to the relative importance of the patent to the product, or any unique relationship between the parties. Gregory K. Leonard and Lauren J. Stiroh, Economic Approaches to Intellectual Property Policy, Litigation, and Management, 949 PLI/Pat 425, 454-55 (Sept.-Nov. 2008); Richard S. Toikka, Patent Licensing Under Competitive and Non-Competitive Conditions, 82 J. Pat. & Trademark Off. Soc’y 279, 292-93 (Apr. 2000); Ted Hagelin, Valuation of Patent Licenses, Tex. Intell. Prop. L.J. 423, 425-26 (Spring 2004). The Federal Circuit then noted that, while never formally approved, the Federal Circuit, has nevertheless “passively tolerated” its use since the issue was never squarely before the court.

As the issue was now squarely before the court, the Federal Circuit now held “as a matter of Federal Circuit law that the 25 percent rule of thumb is a fundamentally flawed tool for determining a baseline royalty rate in a hypothetical negotiation.” Importantly, the Federal Circuit went so far as to hold that any use of evidence related to the rule is “inadmissible under Daubert and the Federal Rules of Evidence, because it fails to tie a reasonable royalty base to the facts of the case at issue.” Specifically, the Federal Circuit noted that the Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 589 (1993) interpreted Federal Rule of Evidence 702 as requiring that expert testimony be based on a firm scientific or technical grounding. Daubert, 509 U.S. at 589-90.” Where the testimony does not tie a general rule well to the specific facts of a case, the evidence and testimony is inadmissible.

The Federal Circuit further noted that it has, in the past declared that licenses which were radically different from the facts of a given case were similarly inadmissible in attempting to find a reasonable royalty since these can result in damages in excess of the statutory award. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 869 (Fed. Cir. 2010); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009); Wordtech Systems, Inc. v. Integrated Networks Solutions, Inc., 609 F.3d 1308 (Fed. Cir. 2010). According to the Federal Circuit:

The meaning of these cases is clear: there must be a basis in fact to associate the royalty rates used in prior licenses to the particular hypothetical negotiation at issue in the case. The 25 percent rule of thumb as an abstract and largely theoretical construct fails to satisfy this fundamental requirement.

Since the 25% rule is not even related to a real negotiation as much as the licenses at issue in ResQNet.com, Inc, Lucent Techs., Wordtech Systems, Inc., the Federal Circuit found that the link between this rule of thumb and any hypothetical negotiations was even more attenuated.

The Federal Circuit further noted that, while the 25% rule was only a starting point, it was a starting point that neither reflected the parties and industries involved, nor the importance of the patents to the infringed products. As noted by the Federal Circuit, “[b]eginning from a fundamentally flawed premise and adjusting it based on legitimate considerations specific to the facts of the case nevertheless results in a fundamentally flawed conclusion.” Moreover, the Federal Circuit noted that Dr. Gemini had only used the 25% rule as a starting point once in his non-litigation negotiations. As such, the Federal Circuit found that Microsoft should be allowed a new trial on the issue of damages.

In addition, the Federal Circuit took issue with Dr. Gemini’s use of the $19 billion gross sales figure as the entire market in order to “check” whether the royalty rate of 2.9% was reasonable in the industry. The Federal Circuit noted that the use of the entire market is only appropriate where the patented feature is the “‘basis for customer demand’ or ‘substantially create[s] the value of the component parts.’ Lucent Techs., 580 F.3d at 1336; Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1549-50 (Fed. Cir. 1995).” As such, the Supreme Court has allowed the entire market to be the basis for a reasonable royalty where there is evidence that the patented feature is what gives value to the entire machine. Garretson v. Clark, 111 U.S. 120, 121 (1884). The Federal Circuit next noted that it was undisputed that the Product Activation feature did not create the consumer demand for Windows XP and the accompanying software. Thus, the $19 billion gross sales figure was irrelevant as a check as to whether the calculated damages were within industry norms for licensing royalty rates. As such, the Federal Circuit agreed with the District Court that the comparison of the entire market for Windows XP and the accompanying software as a check for whether the award was reasonable in the industry was an inappropriate use of the entire market rule and a new trial was an appropriate remedy.

RCT sued Microsoft asserting that Microsoft infringed the six patents. After a first remand from the Federal Circuit, the District Court found that the claims of the ’310 and the ’228 patents were not directed to patentable inventions under 35 U.S.C. § 101 as being too abstract.

On its second appeal, the Federal Circuit began its analysis by noting that 35 U.S.C. §§ 100 & 101 define a process as a “process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material”, and what is patentable is “any” such process. The Federal Circuit noted that the Supreme Court noted the significance of the word “any” in Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010) as being that what constitutes a patentable inventions should be broadly defined. That being said, the Supreme Court also confirmed that patentable processes are limited by three exceptions: laws of nature, physical phenomena, and abstract ideas.

Relying on Bilski, the Federal Circuit noted that laws of nature and physical phenomena are not patentable as they relate to “the basic tools of scientific and technological work.” Gottschalk v. Benson, 409 U.S. 63, 67 (1972). Moreover, abstractness as a concept for invalidity is also “a disclosure problem addressed in the Patent Act in section 112”. Lastly, the Federal Circuit noted that patentability under 35 U.S.C. §101 is at most a threshold problem, with the Supreme Court rejecting the “machine or transformation” since “section 101 eligibility should not become a substitute for a patentability analysis related to prior art, adequate disclosure, or the other conditions and requirements of Title 35.” Thus, the Federal Circuit determined that unless a process is determined to fit within these three exceptions, the process should be compliant with 35 U.S.C. § 101 regardless of any considerations of disclosure or obviousness.

Turning to the claims at issue in the ‘310 patent, the Federal Circuit first noted that the recited method is a process as defined by 35 U.S.C. § 101, and therefore the inquiry turns as to whether one of the three exceptions apply. As the parties did not dispute that the recited method was not a law of nature or a natural phenomenon, the Federal Circuit reviewed whether the claims violated 35 U.S.C. § 101 by being too abstract.

In reviewing these factors as opposed to applying a bright line test, the Federal Circuit then noted that, as there was no good rigid test for determining abstractness, the Supreme Court in Bilski invited the Federal Circuit “to develop ‘other limiting criteria that further the purposes of the Patent Act and are not inconsistent with its text.’” 130 S. Ct. at 3231.

The Federal Circuit first noted that when an invention is abstract as to not fit within the confines of 35 U.S.C. §101, “this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.” In reviewing the claims for this manifestation, the Federal Circuit noted that invention has “palpable applications in the field of computer technology” and addresses a need in the technology relating to performing half toning. The Federal Circuit supported this conclusion with citations to the specification that discussed the use of digital processors and the recitation in the claims of various computer components in performing the method. In summary, the Federal Circuit found that “this court notes that inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.” As such, the Federal Circuit found that, while the invention utilizes algorithms, the mere use of the algorithms did “not bring this invention even close to abstractness that would override the statutory categories and context.”

The Federal Circuit cautioned that merely passing the abstract test does not mean that a claim has satisfied other statutory requirements. Thus, an invention, which is a patentable process and is not abstract for purposes of 35 U.S.C. §101 can still not be sufficiently described as to be compliant with 35 U.S.C. §112 or be sufficiently nonobviousness to survive 35 U.S.C. §103. Therefore, the Federal Circuit found that the claims were valid under 35 U.S.C. §101 as being drawn to a non-abstract process.

1. Claim 1 recites that the “gas flows from the source, through the tube and exits through the opening at the distal end of the tube at a low flow rate of less than about 1 liter/minute”; and
2. Claim 35 recites that “supplying the inert gas from the source of said gas through the tube to the distal end opening of said tube with such a low flow rate, that gas exiting through said distal end opening is a not directed, non laminar stream but forms an inert gas atmosphere” and has a depending claim 38 which defines that “the stream of gas exits through said distal end opening with a flow rate of less than about one liter per minute.”

ERBE sued Canady Tech. LLC in the United States District Court for the Western District of Pennsylvania for, among other claims, infringing claims 1 and 35. During the Markman Hearing, the District Court relied upon the ERBE’s statements to the Examiner to construe the low flow rate feature of claims 1 and 35 as requiring a rate of less than about 1 liter/minute producing a flow velocity of 19 km/h. Since it was undisputed that Canady Tech. LLC. did not sell probes which produced flow velocities below 19 km/hr, the District Court granted summary judgment for non-infringement of the ‘745 patent. ERBE appealed this construction since the flow velocities and flow rates were not expressly recited in the claims.

On appeal, the Federal Circuit, cited Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc) for proposition that claim terms are generally construed in accordance with the specification and the prosecution history. The Federal Circuit found that, while claim 1 recites a low flow rate as being less than about 1 liter/minute, claim 35 alternately defines a low flow rate as being when “gas exiting through said distal end opening is a not directed, non laminar stream but forms an inert gas atmosphere” without reciting specific speeds. In reviewing the specification, the Federal Circuit found the only example of what is a low flow rate, and found that the example was at less than 1 liter per minute. The specification also indicates that this low flow rate forms the not directed, non-laminar stream that distinguished the invention from the prior art. Thus, the specification did not discuss other flow rates and velocities.

Additionally, the Federal Circuit found that, in distinguishing the recited low flow rate from the prior art during prosecution, the applicant made specific admissions that the term “low flow rate” means less than 1 liter per minute, and specifically noted that the low flow rate of less than 1 liter per minute produces a flow velocity of 19 m/h which avoids the problems in the prior art which have higher flow rates which produce laminar jets. Thus, the Federal Circuit agreed with the District Court that the applicants “clearly and unambiguously disclaimed such flow rates that produced laminar jets and limited the claims to flow velocities less than 19 km/hr to overcome unpatentability.”

In response, ERBE countered that the District Court’s claim interpretation as to claim 35 in requiring the specific low flow rate renders claim 38 superfluous. Specifically, ERBE noted that claim 38, which depends from claim 35, recites a “flow rate of less than about one liter per minute.” As such, ERBE asserted that claim 35 must be broader than claim 38 under the doctrine of claim differentiation. In rejecting this argument, the Federal Circuit quoted Renishaw PLC v. Marposs Societa’ Per Azioni, 158 F.3d 1243, 1248 (Fed. Cir. 1998) for proposition that “no canon of [claim] construction is absolute in its application” and therefore claim differentiation is only “one of many tools used by courts”. As such, since the disclaimer and definition was sufficiently unambiguous, the doctrine of claim differentiation does not override the definition arrived at by the District Court.

On appeal, A123 argued that the license conferred sufficient rights to HQ as to not require the joinder of UT, and further, that Rule 19 of the Federal Rules of Civil Procedure would allow the suit to continue even without UT. On the issue of the license, A123 noted that HQ had held itself as an exclusive licensee having the right to enforce the patents, and had even brought suit against another party, Valence Technology, Inc. as this exclusive licensee. In response, HQ argues that the suit against Valence Technology was within its exclusive field of use, and even arguendo that HQ had made incorrect assertions about its rights, such assertions do not affect UT’s actual rights under the license. The Federal Circuit agreed with HQ, noting testimony confirming that the license allowed UT the right to license in other fields of use, and that HQ’s statements in the other suit were consistent with this interpretation. As such, since HQ did not receive all substantive rights in relation to the technology at issue with A123, A123 could not bring a Declaratory Judgment action against HQ without the participation of UT.

Having decided that UT was a necessary party, the Federal Circuit noted that UT could not be forced to join the Massachusetts action due to the sovereign immunity conferred by the Eleventh Amendment in light of College Savings Bank v. Florida Prepaid Postsecondary Education, 537 U.S. 666 (1999). While A123 had relied upon a market participation theory, the Federal Circuit confirmed that this theory was rejected by the Supreme Court and by Federal Circuit precedent even where the same subject matter was brought by the state in another forum. As such, despite being a necessary party, UT could not be joined in Massachusetts without its consent.

A123 next argued that Rule 19 allows a suit to be maintained despite the non-joinder of a necessary party except where party is indispensible, and that the District Court had not specifically found UT to be indispensible. In reviewing this argument, the Federal Circuit noted that the court is required to review with to allow a suit to proceed without a necessary, but not indispensible, party. Dainippon Screen Mfg. Co., Ltd. v. CFMT, Inc., 142 F.3d 1266, 1272 (Fed. Cir. 1998); Vaupel Textilmaschi-nen KG v. Meccanica Euro Italia SPA, 944 F.2d 870, 876 n.1 (Fed. Cir. 1991). The factors as to whether a party is indispensible are set forth in Rule 19(b) as follows:

[T]he court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed. The factors for the court to consider include:

1. the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties;
2. the extent to which any prejudice could be lessened or avoided . . . ;
3. whether a judgment rendered in the person’s absence would be adequate; and
4. whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder.

The Federal Circuit also reviewed the record and noted that the plaintiff, A123, does have an adequate remedy based upon the Texas action as all defenses available in Massachusetts would also be available in the Texas action to which UT had waived its sovereign immunity. Thus, on balance, the Federal Circuit found that the Rule 19(b) weighed in favor of UT being labeled an indispensible party, and affirmed the dismissal on those grounds.

Princo imports CD-R/RW into the United States, and entered into a block license package. When Princo stopped paying the license fees, Philips filed suit at the ITC under 19 U.S.C. §1337 to prevent Princo from importing CD-R/RWs. In defense, Princo asserted a patent misuse defense due to the block license package including both the Raaymakers patents and the Lagadec patent, which effectively tied a non-essential patent with patents essential to complying with the Orange Book. The administrative judge agreed with Princo that the block license package amounted to tying, which therefore rendered all of the patents included in the block license package unenforceable due to patent misuse.

On request for reconsideration, the Commission upheld the administrative judge since the arrangement “forced licensees to purchase licenses to patents that they did not want or need, and it did not allow them the option of licensing individual patents.”

On appeal, a panel of the Federal Circuit reversed the Commission. Specifically, the Federal Circuit found that there was no impermissible tying of essential and non-essential patents since Philips offered only the option to use the patents, and that the fee was effectively a license to comply with the Orange Book. Therefore, the Federal Circuit held that there was insufficient evidence to find patent misuse under a rule of reason analysis, and remanded the case to the Commission.

On remand, the Commission reviewed additional grounds for the patent misuse not decided on appeal, and rejected Princo’s claim for patent misuse due to price fixing. Specifically, the Commission held that there was evidence that the Lagadec patent was a blocking patent, and therefore was essential for the Orange Book block license package and was not usable in a competing patent pool or block license package for a competing technology. Further, Commission noted that the technology in the Lagadec patent was not a substitute since it did not work well and thus was not an adequate substitute for the Raaymakers patents. As such, there was no defense of patent misuse available due to horizontal price fixing between Sony and Philips.

On a second appeal to the Federal Circuit, Princo argued again that there was impermissible tying under the rule of reason, which was rejected by the Federal Circuit. However, the Federal Circuit ruled against Philips on the issue of whether there was patent misuse through suppression of a competing technology. The theory of suppressions was that the agreement between Sony and Philips was, effectively, an agreement to suppress the competing Lagadec technology. As such, the Commission was directed to consider “whether an agreement that would prevent the development of alternatives [to the licensed technology] would constitute misuse under a theory of elimination”. Princo Corp. v. Int'l Trade Comm'n, 563 F.3d 1301, 1314 (Fed. Cir. 2009).

Philips, Princo, and the Commission all filed petitions for rehearing en banc on the question of whether the block license package was an agreement to suppress a competing technology which would warrant making the patents unenforceable for patent misuse.

In its en banc ruling, the Federal Circuit found that the agreement did not constitute patent misuse. In arriving at this conclusion, the Federal Circuit first noted that “the Supreme Court established the basic rule of patent misuse: that the patentee may exploit his patent but may not ‘use it to acquire a monopoly not embraced in the patent.’ Transparent-Wrap Mach. Corp. v. Stokes & Smith Co., 329 U.S. 637, 643, 67 S. Ct. 610.” As a result, the Federal Circuit found that tying patented and unpatented products was patent misuse, as was requiring continued payment of license fees after the expiration of the patent. As such, the Federal Circuit held that the “key inquiry under the patent misuse doctrine is whether, by imposing the condition in question, the patentee has impermissibly broadened the physical or temporal scope of the patent grant and has done so in a manner that has anticompetitive effects.”

At the same time, the Federal Circuit held that the mere inclusion of a patented product in the context of an agreement which violates antitrust law is not sufficient to find patent misuse. Thus, when attempting to use antitrust law to show patent misuse, there must be evidence that “the conduct in question restricts the use of that patent and does so in one of the specific ways that have been held to be outside the otherwise broad scope of the patent grant.”

The Federal Circuit next noted that, while patent misuse is judicially created, Congress enacted 35 U.S.C. § 271(d) specifically to restrict its application. As such, 35 U.S.C. § 271(d) prohibited the application of patent misuse for “(4) refus[ing] to license or use any rights to the patent” or for “(5) condition[ing] the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned.” The Federal Circuit acknowledged that the behavior in question did not fall within the exceptions of 35 U.S.C. § 271(d), but relied upon this statute as evidence of a need to restrain this judicially-created doctrine.

In view of the above, the Federal Circuit held that as the Lagadec patent was not asserted in the underlying action, there could be no patent misuse based upon an anticompetitive injury due to horizontal price fixing between Sony and Philips. The block license package did not extend the temporal or physical scope of the Raaymakers patents. According to the Federal Circuit, there is no patent misuse merely by offering a license to one patent on condition of not licensing a separate patented invention. As such, in view of precedent and the policies of patent misuse as opposed to antitrust, the Federal Circuit found that showing of an antitrust injury, absent a showing of how such injury relates to the patents being asserted, does not constitute patent misuse rendering the patents unenforceable.

Lastly, the Federal Circuit held that Princo had not shown that anticompetitive effects even occurred due to the alleged suppression of the Lagadec technology. There was no showing that the Lagadec was even a competitive technology, and the Commission specifically found that the technology was not a substitute for the Raaymakers technology. The Federal Circuit further noted that joint ventures, while susceptible to antitrust scrutiny, have precompetitive effects in the context of joint ventures for research and development to bring new products to market. Dep't of Justice & FTC, Antitrust Guidelines for the Licensing of Intellectual Property §§ 5.1, at 24; 5.5, at 28 (Apr. 6, 1995). These pro-competitive effects are enhanced in the standard setting arena. Patrick D. Curran, Comment, Standard-Setting Organizations: Patents, Price Fixing, and Per Se Legality, 70 U. Chi. L. Rev. 983, 985-90 (2003). As such, these agreements are judged under the rule of reason for antitrust purposes. Thus, without relying on hypothetical harms caused by the suppression of the Lagadec technology, the agreement did not have anticompetitive effects which outweighed the precompetitive effects in a manner causing an antitrust injury, or patent misuse stemming from such injury.

The district court dismissed the complaint under Rule 12(b)(1) for lack of standing and under Rule 12(b)(6) for failure to allege an intent to deceive the public with sufficient specificity to meet the pleading requirements for claims of fraud. The district court stated that all plaintiffs must establish (1) that they have suffered an injury in fact (2) that is causally connected to the defendant and (3) that is likely to be redressed by the court. After the decision, the government moved to intervene, and the district court denied the motion to intervene.

The Federal Circuit reversed both the dismissal of the action and the denial of the motion to intervene. In particular, referring to Vermont Agency of Natural Resources v. United States ex rel Stevens, 529, U.S. 765 (2000), the Federal Circuit stated that a qui tam plaintiff can establish standing based on the statutory assignment of the damage claims of the United States to “any person.” Accordingly, in order to have standing under 35 U.S.C. §292, the plaintiff only has to allege that the U.S. has suffered an injury in fact causally connected to the defendant’s conduct. The Federal Circuit further stated that violation of Section 292 inherently constitutes an injury to the United States, since by enacting Section 292, Congress determined that deceptive false patent marking is harmful and should be prohibited. In particular, the Federal Circuit stated that it is not necessary to show that the government suffered a proprietary injury. Instead, a violation of a law by itself constitutes an injury to the sovereignty of the United States and that the government has standing to enforce its own laws. The Federal Circuit stated that since the government would have standing to enforce its own law, Stauffer, as the government’s assignee, would also have standing to enforce section 292. The Federal Circuit emphasized that a standing inquiry is separate and distinct from a consideration of a case on the merits and that standing does not depend on the merits of the case.

The Federal Circuit reversed the district court’s decision that Stauffer did not have standing. The case was remanded to the district court to consider the case on the merits. Moreover, the Federal Circuit reversed the denial of the government’s motion to intervene, since the government has an interest in the enforcement of its laws and under Section 292, would be entitled to half of the damages claimed by Stauffer.

DECL and DECA stopped participating in the lawsuit in May 2005 by presenting no defense against the accusations and by refusing discovery. Consequently, the District Court entered default judgment against DECL and DECA, and awarded $6,956,187 in damages to Funai. DECL and DECA did not appeal the decision, nor did they pay the penalties assessed against them. As such, Funai asserted that DEC and DEAM, which were the successors to DECL and DECA were liable for the judgment.

After pre-trial motions, the District Court held that three of the six patents were not infringed and that the remaining patents (Patent Numbers: 6,021,018; 6,421, 210; and 6,064,538) would be under consideration in the infringement trial. The jury found that Funai’s ‘018 and ‘210 patents were willfully infringed by Daewoo under the doctrine of equivalents and that the ‘538 patent was willfully infringed under either the doctrine of equivalents or was literally infringed and awarded Funai $7,216,698 against DEC and $2,298,590 against DEC and DEAM as well as attorney fees and expenses.

The District Court handled the matter as to whether DEC and DEAM were liable for the judgment against DECL and DECA. The District Court chose to apply the successor liability law of South Korea and found that neither DEC or DEAM were liable for the judgment against DECL and DECA. Daewoo appealed the findings of infringement, claim indefiniteness and damages, and Funai cross-appealed the findings of no enhanced damages and no successor liability.

Holder Gear Limitation
The ‘018 patent is directed towards movement of a cassette in a VCR and attending features that allow such movement while decreasing a size of the VCR and claim 1 recites a “holder drive gear for driving said cassette holder via a gear mechanism so said cassette holder is positioned in the initial position when said slide arm is positioned at a first position, and is positioned in said play position when said slide arm is positioned at a second position.” The District Court granted summary judgment that the “holder driver gear” limitations were not literally infringed, but the jury found infringement of the limitation under the doctrine of equivalents. Funai appealed the decision that claims 1-4 of the ‘018 patent are not literally infringed. With respect to a cassette ejection sequence, the Federal Circuit Court stated, that “[t]he Daewoo ejection sequence is similar, but the actions occur in the reverse order.” The Federal Circuit further noted that the District Court held that Daewoo’s cassette decks could not be literally infringing because they use a slide arm cam, pin and springs to move the cassette holder. Therefore, the Federal Circuit affirmed the District Court’s holding of no literal infringement.

Insulating Material Limitation
The ‘210 patent’s recitation of “insulating material” was also raised as an issue in appeal. The ‘210 patent recites “a motor which is mounted on said deck chassis…said motor being electrically insulated form said deck chassis…said direct driving motor including…a bearing holder…wherein said bearing holder is made of an insulating material.” The District Court found that Daewoo did not literally infringe the ‘210 patent with respect to the insulating material. Funai challenged the finding of no literal infringement and Daewoo challenged the District Court’s definition of “insulating material,” and asserts that prosecution history estoppel bars infringement under the doctrine of equivalents.

On review, the Federal Circuit noted that the District Court interpreted “insulating material” to be “a material with poor electrical conduction.” Daewoo asserted that such an interpretation is fatally flawed because it uses comparative language, in that “poor” is a relative term. Daewoo argued that a numerical value, corresponding to the ‘210 specification, should be used. Funai argued that one of ordinary skill in the art would understand what “poor electrical conduction” means. The Federal Circuit Court stated that “[t]he use of comparative and functional language to construe and explain a claim term is not improper,” and found that “[n]o error can be attributed to this use of comparative and functional explanation in construing these claims.

Funai next appealed the District Court’s judgment that Daewoo’s material was not an insulating material as defined by the District Court. The Federal Circuit Court noted that both the Funai and Daewoo products use Lexan, which is brand name polycarbonate resin. However, Daewoo’s expert testified that Daewoo’s material contained carbon fibers, which increased the thermal and electrical conductivity. Daewoo’s expert also stated, on cross-examination, that the Daewoo polycarbonate is 1 million to 100 million times less conductive than metal. Funai asserted that the cross-examination admission would let a reasonable jury find that Daewoo’s polycarbonate is an insulating material, as recited in the ‘210 patent. The Federal Circuit noted that the District Court stated that Funai “failed to produce any evidence that one of ordinary skill in the art would consider Daewoo’s bearing holders to be made of material with ‘poor electrical conduction,’” and that such a finding by the District Court was supported by the evidence produced in the cross-examination and at other places. The Federal Circuit went on to state that even if summary judgment was improperly granted, infringement was decided with respect to the doctrine of equivalents, and thus, literal infringement was not tried.

No Prosecution History Estoppel Where Claim Made Independent For Reasons Other Than Feature Used for Equivalency
On the issue of infringement under the doctrine of equivalents, the jury found infringement of the ‘210 patent under the doctrine of equivalents. Daewoo appealed this finding because prosecution history estoppel precluded infringement under the doctrine of equivalents. However, because the insulating material was not a ground for rejection during the prosecution of the ‘210 patent, the District Court stated that prosecution history estoppel does not apply and denied summary judgment on this matter.

The Federal Circuit noted that, during the prosecution of the ‘210 patent, the Examiner rejected claims 1-3 and 6 in view of two pieces of prior art viewed in combination, one of which was relied upon to disclose the motor electrically insulated from the deck chassis. The Examiner also stated that claim 4 had allowable subject matter, so the applicant cancelled the rejected claims and rewrote claim 4 to be in independent form, which issued as claim 1. Daewoo, in appeal, asserts that the scope between claims 1 and 2 and 4 was surrendered, and cites Honeywell, 370 F.3d at 1141, which states that “[a] presumption of surrender…arises if rewriting the dependent claims into independent form, along with canceling the original independent claims, constitutes a narrowing amendment.” Funai, in contrast, asserted that cancelling claims 1 and 2 is not a narrowing amendment because there was no rejection with respect to the insulating material. In finding to estoppel, the Federal Circuit noted the insulating material had no bearing on the allowance of claim 4, and thus, the insulating material was “merely tangential.” The Federal Circuit went on to find that “the district court correctly held that the cancellation of claims 1 and 2 did not surrender access to equivalency with respect to the insulating material. The district court appropriately tried the question of equivalency to the jury,” and the Federal Circuit Court affirmed the judgment of the jury.

Series Circuit Feature: Interpretation Which Excludes Embodiments Not Allowed
The ‘538 patent is directed towards an oscillation circuit of magnetic erasing heads used in VCRs. Daewoo appealed the District Court’s claim construction, and asserted that the jury’s finding of infringement is predicated upon such. Specifically, the Federal Circuit noted that Daewoo contests how the District Court construed the claim 1 limitation of “series circuit” with respect to the phrase “through a series junction point.” The District Court’s construction found that the series junction point does not need to be between two heads of the VCR recited in claim 1. The District Court relied upon the specification, which has figures showing the junction point at various locations both between and not between the heads of the VCR.

The Federal Circuit affirmed the District Court’s claim interpretation because Daewoo’s interpretation would exclude embodiments included in the figures of the ‘538 patent. Daewoo also contested the validity of the claims 1, 3 and 4 of the ‘538 patent for failure to meet claim definiteness, an issue that was decided by the District Court as a matter of law if the jury found the claims to be infringed. Daewoo asserts that there are grammatically inconsistent uses of the terms “at least,” “between,” and “one of,” and that such terms, and in particular “at least,” are inconsistent with ordinary use. However, the Federal Circuit found that the District Court “construed the terms to implement their meaning as manifested in the specification and the prosecution history, and correctly rejected Daewoo’s charge of indefiniteness.”

Notice and Damages
The Federal Circuit Court also addressed the damages awarded to Funai. At issue was when Funai gave notice of infringement to Daewoo. Funai claimed that notice was given by a letter on April 3, 2003, naming the six patents, and naming two models of Daewoo’s VCRs as the infringing products. Daewoo disputed that the letter was sufficient notice as per any other Daewoo VCRs, and thus, damages assessed against those other Daewoo VCRs being further limited than from the date of the Funai letter. The Federal Circuit relied upon Gart v. Logitech, Inc., 254 F.3d 1334, 1346 (Fed. Cir. 2001) for proposition that “a letter must be sufficiently specific to support an objective understanding that the recipient may be an infringer.” The Federal Circuit further noted that “[t]he letter must communicate a charge of infringement of specific patents by a specific product or group of products.” Armsted Industries Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 187 (Fed. Cir. 1994). Moreover, the Federal Circuit went on to state that “when the threshold specificity is met, the ensuing discovery of other models and related products may bring those products within the scope of the notice.” The Federal Circuit thus held that a reasonable jury could have considered these factors in the jury’s calculation of damages, as it was instructed to do in this case, and that it has not been shown that the jury’s award does not implement this instruction.

Patent Marking and Damages
Funai asserted that damages should have been awarded from the date of Daewoo’s start of infringement, with respect to the ‘018 patent because it was marked, and thus there was constructive notice. The jury was instructed on marking requirements, and Daewoo did not object to the instructions. On appeal, Daewoo asserted that the marking statute permits no shortcoming in completeness of marking. Funai states that it marked 88%-91% of its retail products, and that the remaining sales were done by Funai’s original equipment manufacturer (OEM).

The Federal Circuit noted that evidence showed that 88% of Funai’s products were retail sales marked with the ‘018 patent in 2003 and that, in 2004, 91% were. Daewoo’s argument for lack of completeness of marking relied upon American Medical Systems, Inc., v. Medical Engineering Corp., 6 F.3d 1523, 1537 (Fed. Cir. 1993), which states that a marking “must be substantially consistent and continuous in order for the party to avail itself of the constructive notice provisions of the statute.” However, the Federal Circuit Court notes that a “rule of reason” is provided by Maxwell, 86 F.3d at 1111-12, which states that the rule is “consistent with the purpose of the constructive notice provision—to encourage patentees to mark their products in order to provide notice to the public of the existence of the patent and to prevent innocent infringement.” The Federal Circuit affirmed the District Court’s finding that “th[e] evidence constitutes substantial evidence from which the jury could find that Funai’s marking of products that incorporated the ‘018 was ‘substantially consistent and continuous.’”

Successor Liability for Awarded Damages
The Federal Circuit addressed the issue of successor liability. As noted above, at the outset of the present lawsuit, Funai brought action against four Daewoo entities, DEC and DEAM, and their respective predecessors, DECL and DECA, and DECL and DECA stopped participating in the lawsuit. The District Court entered a default judgment against DECL and DECA, jointly and severally, for patent infringement between January 1, 2001 and October 25, 2002. Neither DECL nor DECA paid the judgment of $8,066,112. Funai entered a motion that the judgment be assessed against DEC and DEAM. The District Court rejected this motion by applying South Korea law, which does not allow for successor liability unless it is assumed by contract.

Funai appealed the District Court’s decision as South Korean law is not applicable to the successor liability of DECA and DEAM, because they are U.S. companies and because it’s claim against DEAM and DECA is not a contract claim. However, Funai did not challenge the District Court’s decision as to the South Korean companies, DECL and DEC.

The Federal Circuit summarized Funai’s argument as being “Funai stresses that the issue is the liability of a successor to a United States company for the judgment of a United States court for infringement of United States patents by activities in the United States by a United States corporation doing business in the United States,” and that such actions should be governed by U.S. laws and the applicable state law.

As to the application of South Korean law, the District Court held that it applied to the transfer between DECA and DEAM in the U.S. because:

Korea has a strong interest in having its law applied because the Transfer Agreement was a contract entered in Korea between tow Korean corporations, where most of the assets transferred were also in Korea…to the extent that the transfer between DECA and DEAM was an outgrowth of the Transfer Agreement…the same expectation would apply to the issue of successor liability in that context.

The Federal Circuit went on to address which U.S. state law was applicable to DEAM and DECA as per successor liability. The Federal Circuit analyzed the California and New Jersey law as per successor liability, and noted that DEAM is a Florida corporation. The Federal Circuit also noted that neither party of the lawsuit finds there to be a material difference between the successor liability laws of New Jersey, California and Florida, and that Funai argues that New Jersey law should be applied, with the District Court relying upon New Jersey law when comparing U.S. law to South Korean law. The Federal Circuit also chose to apply the law of New Jersey because that state was found to be the principal place of business for DECA and DEAM.

In reviewing DECA’s transfer to DEAM, the Federal Circuit Court stated that “[i]t is not disputed that DECA’s sales activities in the United States continued as DEAM without interruption, at the same corporate headquarters and sales facilities in New Jersey, with substantially the same managers and other employees,” and notes that New Jersey precedent presents a four factor test for successor liability, Woodrick v. Jack J. Burke Real Estate, Inc., 703 A.2d 306, 312:

(i) continuity of management, personnel, physical location, assets, and general business operations; (ii) a cessation of ordinary business and dissolution of the predecessor as soon as practically and legally possible; (iii)assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the predecessor; and (iv) continuity of ownership/shareholders.

The use of barbell-shaped locks and locks on trailer hitch receivers was well known in prior art. Specifically, the prior art had examples of locks with a lock head, a shackle having a stop member, a shank, and a latch. Moreover, the prior art also had examples of barbell-shaped locks being used as a trailer hitch receiver lock.

Wyers’ patents claim improvements to the prior art locks; mainly a removable sleeve to increase the shank’s diameter. The removable sleeve allows adjusting the diameter of the shank which can be used with trailer hitch receivers of different apertures sizes. The patent claims also include an external seal designed to protect the locking mechanism from contaminants.

At the trial level, the two main questions the court asked were “whether the use of the removable sleeve to adjust the operative thickness of a shank would have been obvious;” and “whether Master Lock presented clear and convincing evidence that the use of the external flat flange seal would have been obvious.” JMOL Order, 2009 WL 1309774 at 3 and 5. The district court found held that plaintiff’s patents were not obvious and awarded $5.35 million in damages, $1.1 million in interest, and a 24% royalty for any infringing products Master sold based on Wyers’ patent.

On appeal, the parties agreed that the case turned on whether the claims were obvious based on prior art. The court said that the issues in dispute were, “(1) whether the prior art references are in the same field of endeavor as the patented invention; (2) whether there was sufficient motivation to combine the references; (3) the existence and significance of pertinent secondary considerations.”

In reviewing the first question, the Federal Circuit noted that the test of “whether the art is from the same field of endeavor, regardless of the problem addressed” is “(1) whether the art is from the same field of endeavor, regardless of the problem addressed, and (2) if the reference is not within the field of the inventor’s endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved.” Comaper Corp. v. Antec, Inc., 596 F.3d 1343, 1351 (Fed. Cir. 2010) (quoting In re Clay, 966 F.2d 656, 658-59 (Fed. Cir. 1992)).” The Federal Circuit noted that, whereas the jury at the trial court applied the wrong standard. The correct standard is whether a person of ordinary skill in the field of locksmithing would find this improvement to be obvious, not the standard of a layman on a jury. The appellate court, also said the prior art was relevant because the prior art was within the “same field of endeavor.” The prior art was directed towards trailer-towing applications, as were most of Wyers’ patents.

On the second question as to whether there was motivation to combine the adjustable sleeve with the prior art barbell locks and whether there was motivation to combine the prior art locks with an external sealing mechanism, the Federal Circuit noted that the test is no longer strictly one of express motivations to combine. KSR International Co. v. Teleflex, Inc., 550 U.S. 398 (2007). “Common sense” is one standard when looking for a reason to combine references. Moreover, the Federal Circuit noted that, while the facts supporting obviousness are to be determined by a jury, the ultimate question of whether the facts support “common sense” or reasons to make combinations are susceptible to resolution at summary judgment and motions JMOL.

In applying this standard, the Federal Circuit said that sleeves were used in prior art in a towing arrangement similar to a hitch receiver/tow bar arrangement, and could be combined with a barbell-shaped hitch pin lock in order to address different aperture sizes in standard hitch receivers. In addition, the Federal Circuit noted prior art in the Down patent that “sleeves of different external diameter may be provided for the attachment of trailer towing eyes of different internal diameter. When the sleeve is used, the pin accommodates larger diameter towing eyes; without the sleeve, the pin fits smaller ones.” Thus, a person of ordinary skill in the art of locksmithing would have been likely put these two designs together.

The Federal Circuit concluded that “it was a mater of common sense to combine the Down patent with the prior art barbell locks in order to arrive at the invention claimed in the [Wyers’ patents], and that one of ordinary skill in the art would have had a reasonable expectation of success in doing so.”

Furthermore, the Federal Circuit noted that “it is a matter of common sense that a flat external seal used in the prior art padlocks could be combined with a barbell-shaped hitch pin lock.” This is because prior to Wyers’ filing, the concept of using external or internal seals to protect a lock’s head from contaminants, was widely known.

Lastly, in evaluating the effect of secondary considerations, the Federal Circuit noted that for objective evidence of secondary considerations to be accorded substantial weight, its proponent must establish a nexus between the evidence and the merits of the claimed invention. In re Huang, 100 F.3d 135 (Fed. Cir. 1996); In re GPAC Inc., 57 F.3d 1573 (Fed. Cir. 1995). Here, plaintiff could not prove that Master’s $20 million in sales of the accused product were the result of any of the supposed features of Wyers’ patents. Further, there was no evidence of copying of Wyers’ design. Thus, any secondary considerations here can not overcome a strong prima facie case of obviousness, as was the case here.

In 2006, Ablaise accused Dow Jones & Company, Inc. (Dow) of infringing its ‘737 and ‘530 patents and simultaneously offering Dow a licensing agreement. Dow refused, and sued saying both patents were invalid and not infringed. Abliase counterclaimed for infringement on both patents. The district court rejected Abliase’s motion to dismiss Dow Jones’ invalidity claim against the ‘530 patent and found the ‘737 patent as invalid due to obviousness in view of U.S. Patent No. 5,675,507 (“Bobo”) and the general knowledge in the field.

On appeal, the Federal Circuit first addressed whether a supposed covenant offered by Abliase, in which Abliase agreed not to sue Dow for infringement of the ‘530 patent, was sufficient to divest the district of subject matter jurisdiction over the declaratory judgment of invalidity. The District Court noted that since Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1060 *(Fed. Cir. 1995), a covenant not to sue for patent infringement divests the trial court of subject matter jurisdiction over claims that the patent is invalid, because the covenant eliminates any case or controversy between the parties. Intellectual Prop. Dev., Inc. v. TCI Cablevision of Calif., Inc., 248 F.3d 1333, 1342.

The District Court found the rule in Super Sack Manufacturing Corp. to be inapplicable for “sound prudential reasons,” and for “reasons of the efficient utilization of the litigation resources of both bench and bar.” Dow Jones & Co., Inc. v. Ablaise Ltd., 583 F. Supp. 2d 41, 44 (D.D.C. 2008). The district court held that the two patents were close enough to be part of the same “case or controversy” under 28 U.S.C. 1367. However, the Court of Appeals held that the district courts holding was contrary to jurisprudence, which remained valid after MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Thus, the covenant therefore extinguished any current or future case or controversy between the parties, and divested the district court of subject matter jurisdiction. Thus, the summary judgment for invalidity as to the ‘530 patent was reversed.

The second issue was whether the district court correctly granted Dow’s motion for summary judgment of invalidity on the ‘737 patent on the grounds that the asserted claims were obvious under 35 U.S.C 103.

In finding that ‘737 patent was obvious, the District Court rejected two of Abliase’s main arguments: that the combination of the HTML align image tag and the Bobo reference did not provide the same content in different formats; and that the there was a level of market skepticism with regards to the incorporation of the Bobo and HTML tags.

The District Court found that the ‘737 patent, which involved a modification incorporating location changing HTML tags into the Bobo prior art reference would have been straightforward and obvious to anyone of ordinary skill. Any person of ordinary skill would have been aware that HTML tags affect content location on a Web page. The Federal Circuit affirmed. Specifically, the Federal Circuit noted that Ablaise admitted that “an artisan of ordinary skill would have been aware that HTML tags affect content location on a Web page” and that the incorporation of such into the Bobo reference would have been straightforward. Further, there was evidence of market need to include personalization features such that there was evidence of a reason to make the combination.

With regards to the second argument, the Federal Circuit also affirmed the District Court as none of the evidence that Ablaise provided addressed actual skepticism by outside parties concerning the invention of dynamically generated personalized web pages. Thus, the secondary indicia of nonobviousness relied upon by Ablaise did not overcome the evidence of obviousness relied upon by the District Court in finding the ‘737 patent obvious.

Once the patents expired, the company continued to produce the lids from the molds with the patent numbers still ingrained. Appellant, Matthew A. Pequignot (Pequignot) then brought suit against Solo under U.S.C. § 292 alleging that Solo had falsely marked its products with the expired patent numbers, knowing those patents had expired, for the purpose of deceiving the public.

At trial level, the court granted summary judgment of no liability or the false marking. Pequignot v. Solo Cup Co., 646 F. Supp. 2d 790, 795-800 (E.D. Va. 2009) It also tried to define the definition of “offense” according to “false marking” statute of 35 U.S.C. 292. The statute, in relevant part state:

Whoever marks upon… in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented, for the purpose of deceiving the public. 35 U.S.C. 292 (Emphasis added).

The Appellate court looked at three issues. First, did Solo add patent numbers to an “unpatented article?” The court found that an expired patent is now considered “unpatented,” because the item, whether before the patent is filed or after it expires, is now part of the public domain. Thus, the court found that the plastic lids were falsely marked.

A more difficult question was whether Solo kept the expired number on the lid for the purpose of deceiving the public. Prior to suit, Solo was aware that the numbers on the lids were expired, but had decided (with advice from outside legal counsel) that it would be financially unfeasible, yet legally permissible under 292 to remove the numbers off the metal lids until the molds wore out, afterwards which they would replace with new molds without the numbers. Also around that time, Solo decided (again, on the advice of outside legal counsel) to include on its packaging the following language: “This product may be covered by one or more U.S. or foreign pending or issued patents. For details, contact www.solocup.com.” In particular, Pequignot believed that this statement added after the numbers had expired was indicative of deceptive intent by Solo.

The court noted that the bar for proving deceptive intent is very high here, because false marketing statue is a criminal one, despite having a civil penalty. The court reasoned that having mere knowledge that the marking was false would not be sufficient to prove intent if Solo could prove that it did not consciously desire the result that the public be deceived. From the facts stated above, the appellate court agreed with Solo that it successfully rebutted any presumption of deceptive intent.

The court believed that Solo made a good faith effort in getting specific advice from counsel, and that its true intent in not replacing the molds was to reduce costs and business disruption. This belief was reinforced by Solo’s action of replacing worn out molds with unmarked molds. With regards to the language on the packaging, the court explained that the language was completely true. The contents of some of the package were covered by patents, and the contents of some of the packaging were not covered. Thus, the court highly doubted the statement could be made for the purpose of deceiving the public.

Because Pequignot raised no genuine issue of material fact as to deceptive purpose, the court affirmed the lower court’s decision of summary judgment.

Finally, the court vacated the district court’s definition of “offense” under 292. The court reasoned that although it was likely that Solo committed some violations, defining “offense” was a moot point since Solo had no intent to deceive the public.

Leviton filed patent No. 690,776 (Germain) on October 22, 2003. Six months later, Leviton filed patent No. 827,093, now issued as 6,864,766 (766). Both the 766 and the Germain have many nearly identical claims.

During the prosecution of 766, Leviton did not disclose the Germain application or the fact that certain claims had been copied from Germain into the 766 patent. The PTO then issued a double patent rejection for substantively identical claims. In a suit between Meihao and Leviton, judge found that Leviton had committed inequitable conduct, and awarded over a million dollars in fees in summary judgment.

Here, the Court of Appeals reviewed the district court’s decision to grant summary judgment for inequitable conduct. Summary judgment may only be granted where there are no genuine issues of material fact. Anderson v. Liberty Lobby, Inc., 447 U.S. 242, 248 (1986). Prevailing on inequitable conduct requires two perquisites: the infringer must have made an affirmative misrepresentation of material fact, failed to disclose material information or submitted false material information; and there was intent to deceive the PTO. Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363.

The first issue that the Court of Appeals debated was whether Leviton’s failure to disclose the Germain application was material. Information is considered material if there is a substantial likelihood that a reasonable examiner would consider it important in deciding whether to allow the application to issue as a patent. PerSeptive Biosystems, Inc. v. Pharmacia Biotech, Inc., 225 F.3d 1315, 1312 (Fed. Circ. 2000). Information concealed from the PTO may be material even though it would not invalidate the patent. Larson Mfg. Co. v. Aluminart Prods. Ltd., 559 F.3d 1317, 1327. However, a withheld otherwise material reference is not material if it is merely cumulative to, or less relevant than, information already considered by the examiner. Larson, 559 F.3d at 1327.

The Germain application was material to inventorship. The court suspected that the copying of certain claims from the Germain application with one set of named inventors into the 766 patent application with another set of inventors suggested that the named inventors may not have, in fact invented the claimed subject matter. Even if the examiner might have ultimately concluded that 776 was valid, the nearly identical claims raise substantial inventorship question. Furthermore, the copying of claims is material to the issue of double patenting because the court would want to consider both applications.

The court noted that even though German application is not material to the written description requirement, a reasonable examiner would want to consider the Germain application with respect to inventorship and double patenting.

Nilssen v. Osram Sylvania Inc., 504 F.3d 1223, 1224 (Fed. Circ. 2007) held that the existence of earlier related litigation itself was material information. Furthermore, the MPEP 2006c requires at a minimum, “for the application to make aware the existence and the nature of any allegations relating to validity and/or fraud or inequitable conduct relating to the original patent.” MPEP 2006c. Leviton did not disclose the existence of cases relating to the parent patents of the 766 patent. The Court found that this was another example of another failure of material disclosure.

The second issue was whether there was an intent to deceive by Leviton. Generally, “because direct evidence of deceptive intent is so rarely available, such intent can be inferred from indirect and circumstantial evidence.” Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1364 (Fed. Circ. 2007). During the deposition, one of the inventors of the 766 patent stated that he did not disclose the Germain application because “the Germain is not a prior art reference to the 766 application… the Germain was not prior art to the 766; therefore, the Germain application didn’t come into the picture at all,” The Court of Appeals stated that this failure to disclose was material, however, the court can not be in full agreement that this explanation was unreasonable as a matter of law. The inference that the district court made of fraud, was not the only reasonable conclusion.

Thus, even though there are material issues omitted from the patent application, the issue of fraud doesn’t withstand the standard for summary judgment. Thus, the district court’s holding of summary judgment for inequitable conduct is remanded for a bench trial.

In 2006, Ablaise accused Dow Jones & Company, Inc. (Dow) of infringing its ‘737 and ‘530 patents and simultaneously offering Dow a licensing agreement. Dow refused, and sued saying both patents were invalid and not infringed. Abliase counterclaimed for infringement on both patents. The district court rejected Abliase’s motion to dismiss Dow Jone’s invalidity claim against the ‘530 patent and found the ‘737 patent as invalid due to obviousness in view of U.S. Patent No. 5,675,507 (“Bobo”) and the general knowledge in the field.

On appeal, the Federal Circuit first addressed whether a supposed covenant offered by Abliase, in which Abliase agreed not to sue Dow for infringement of the ‘530 patent, was sufficient to divest the district of subject matter jurisdiction over the declaratory judgment of invalidity. The District Court noted that since Super Sack Manufacturing Corp. v. Chase Packaging Corp., 57 F.3d 1054, 1060 *(Fed. Cir. 1995), a covenant not to sue for patent infringement divests the trial court of subject matter jurisdiction over claims that the patent is invalid, because the covenant eliminates any case or controversy between the parties. Intellectual Prop. Dev., Inc. v. TCI Cablevision of Calif., Inc., 248 F.3d 1333, 1342.

The District Court found the rule in Super Sack Manufacturing Corp. to be inapplicable for “sound prudential reasons,” and for “reasons of the efficient utilization of the litigation resources of both bench and bar.” Dow Jones & Co., Inc. v. Ablaise Ltd., 583 F. Supp. 2d 41, 44 (D.D.C. 2008). The district court held that the two patents were close enough to be part of the same “case or controversy” under 28 U.S.C. 1367. However, the Court of Appeals held that the district courts holding was contrary to jurisprudence, which remained valid after MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007). Thus, the covenant therefore extinguished any current or future case or controversy between the parties, and divested the district court of subject matter jurisdiction. Thus, the summary judgment for invalidity as to the ‘530 patent was reversed.

The second issue was whether the district court correctly granted Dow’s motion for summary judgment of invalidity on the ‘737 patent on the grounds that the asserted claims were obvious under 35 U.S.C 103.

In finding that ‘737patent was obvious, the District Court rejected two of Abliase’s main arguments: that the combination of the HTML align image tag and the Bobo reference did not provide the same content in different formats; and that the there was a level of market skepticism with regards to the incorporation of the Bobo and HTML tags.

The District Court found that the ‘737 patent, which involved a modification incorporating location changing HTML tags into the Bobo prior art reference would have been straightforward and obvious to anyone of ordinary skill. Any person of ordinary skill would have been aware that HTML tags affect content location on a Web page. The Federal Circuit affirmed. Specifically, the Federal Circuit noted that Ablaise admitted that “an artisan of ordinary skill would have been aware that HTML tags affect content location on a Web page” and that the incorporation of such into the Bobo reference would have been straightforward. Further, there was evidence of market need to include personalization features such that there was evidence of a reason to make the combination.

With regards to the second argument, the Federal Circuit also affirmed the District Court as none of the evidence that Ablaise provided addressed actual skepticism by outside parties concerning the invention of dynamically generated personalized web pages. Thus, the secondary indicia of nonobviousness relied upon by Ablaise did not overcome the evidence of obviousness relied upon by the District Court in finding the ‘737 patent obvious.

During prosecution of the ‘655 patent, in order to overcome a rejection of claim 18, the applicant amended the claim to include a limitation that described the needle retracting into the guide means and relied upon the new feature to distinguish over the prior art which had the needle being fixed and the guide moving. Claim 18 later issued with the new limitation.

The ‘347 patent is a continuation-in-part of the ‘655 patent. During prosecution of the ‘347 patent, the applicant also distinguished the claims from the prior art by noting that the prior art has a fixed needle, whereas the claimed invention allowed the needle to be retracted into the barrel which has the effect of making the claimed invention safer to use. The claims were allowed to issue based in part on this representation.

The’772 application is continuation of the ’347 patent. During prosecution, the applicants again relied upon the needle being slidable relative to the barrel as a distinguishing factor over the prior art. While the Examiner eventually allowed the claims, the applicants abandoned the ‘772 application in favor of another application which resulted in the ‘699 patent.

In applying for a reissue application for the ‘699 patent, the applicant indicated as an error that the claims were too narrow in requiring the needle to move, whereas the invention should cover any relative movement between the needle and the barrel. New claims 21-36 included these broadened claims. The reissue application issued with the broadened claims as RE ‘885 patent.

MBO sued a competitor, Becton, Dickinson & Co., claiming that Becton’s SafetyGlideTM hypodermic safety syringes infringed RE ’885 claims. At trial, Becton moved for summary judgment for non-infringement claiming that the broadened claims were invalid for violating the rule against recapture, and that the existing claims did not cover the SafetyGlideTM. The district court granted Becton’s motion for summary judgment as to the issue of recapture, but invalidated all of the claims instead of only the broadened claims.

On appeal, MBO argued that the broadened claims were not invalid as against the rule of recapture, and also on the grounds that the existing claims could not be invalidated under the rule of recapture as they were in the original ‘699 patent.

On the issue of the rule of recapture, the Federal Circuit first noted that the rule prohibiting recapture is based upon the reissue statute, 35 U.S.C. §251. 35 U.S.C. §251 only allows reissue of a patent where the applicant can show an error that arose “through error without any deceptive intent” he claimed “less than he had a right to claim in the [original] patent”. Thus, amendments which are made deliberately are not errors, and therefore subject matter which was deliberately included in an amendment to narrow the amendment cannot be corrected through the reissue process. Medtronic, Inc. v. Guidant Corp., 465 F.3d 1360, 1372–73 (Fed. Cir. 2006) (“[T]he deliberate surrender of a claim to certain subject matter during the original prosecution of the application for a patent ‘made in an effort to overcome a prior art rejection’ is not such ‘error’ as will allow the patentee to recapture that subject matter in a reissue.”). The court also noted that the public is entitled to rely upon any such surrender, and therefore there is an equitable element to the rule against recapture. In sum, the Federal Circuit noted that “[w]ithout a rule against recapture, an unscrupulous attorney could feign error and redraft claims in a reissue patent to cover a competing product, thereafter filing an infringement suit.”

The Federal Circuit than outlined the test for determining whether there has been impermissible recapture:

1. determine in which aspects the reissued claims are broader than the original patent claims;
2. if the reissued claims are broader, whether the broader aspects relate to surrendered subject matter and “whether an objective observer viewing the prosecution history would conclude that the purpose of the patentee’s amendment or argument was to overcome prior art and secure the patent.” Kim v. ConAgra Foods, Inc., 465 F.3d 1312, 1323 (Fed. Cir. 2006).
3. whether the reissued claims were materially narrowed in other aspects such that the reissued claims avoid the recapture rule.

The Federal Circuit further went on to justify its reliance on statements and amendments made in the parent application in finding impermissible recapture in the child cases, such as in the ‘699 patent. While noting that commentators such as Donald S. Chisum, Chisum on Patents (2004) propose a theory that recapture only applies to the patent against which reissue is filed, the Federal Circuit rejected this theory as “erroneous.” As an initial point, the Federal Circuit held that the term original patent in 35 U.S.C. §251 has always been defined to include not only the patent on which the reissue application is made, but also to continuations. As evidence, the Federal Circuit cited to North American Container Inc. v. Plastipak Packaging Inc., 415 F3d 1335, 75 USPQ2d 1545 (Fed. Cir. 2005). The Federal Circuit next traced the origins of the reissue statute starting in 1832, and noted that under the existing and predecessor statutes, the court has never applied the recapture in a doctrine to exclude the possibility that the recapture could occur in a parent application. The Federal Circuit also noted such an interpretation is also consistent with the recapture rule’s “public-reliance rational”, and any more “myopic review” would undercut this rule by allowing in a continuation patent what could not be performed in the parent patent. As such, the Federal Circuit formally held that, in reviewing whether an impermissible recapture has occurred, the entire patent family is reviewed. Thus, the Federal Circuit upheld the district court’s finding of recapture based upon statements and amendments made in the parent applications.

Lastly, the Federal Circuit found that, while recapture invalidated the broadened claims, recapture does not apply to the original patent claims. Therefore, the Federal Circuit reversed the district court’s decision invalidating the original patent claims.

The claims of the ’516 patent that were at issue read as follows (brackets indicate text from the independent claims):

80. [A method for modifying effects of external influences on a eukaryotic cell, which external influences induce NF-?B-mediated intracellular signaling, the method comprising altering NF-?B activity in the cells such that NF-?B -mediated effects of external influences are modified, wherein NF-?B activity in the cell is reduced] wherein reducing NF-?B activity comprises reducing binding of NF-?B to NF-?B recognition sites on genes which are transcriptionally regulated by NF-?B.

95. [A method for reducing, in eukaryotic cells, the level of expression of genes which are activated by extracellular influences which induce NF-?B-mediated intracellular signaling, the method comprising reducing NF-?B activity in the cells such that expression of said genes is reduced], carried out on human cells.

144. [A method for reducing bacterial lipopolysaccharide-induced expression of cytokines in mammalian cells, which method comprises reducing NF-?B activity in the cells so as to reduce bacterial lipopolysaccharide-induced expression of said cytokines in the cells] wherein reducing NF-?B activity comprises reducing binding of NF-?B to NF-?B recognition sites on genes which are transcriptionally regulated by NF-?B.

145. [A method for reducing bacterial lipopolysaccharide-induced expression of cytokines in mammalian cells, which method comprises reducing NF-?B activity in the cells so as to reduce bacterial lipopolysaccharide-induced expression of said cytokines in the cells], carried out on human cells.

These claims were interpreted as being genus claims encompassing the use of all substances that achieve the result of reducing the binding of NF-?B to NF-?B recognition sites on genes or that reduce NF-?B activity in cells. The specification described the desired goal of reducing the binding of NF-?B to NF-?B recognition sites on genes and reducing NF-?B activity in cells and hypothesized three types of molecules having the potential to reduce NF-?B activity in cells: decoy molecules, dominantly interfering molecules and specific inhibitor molecules. The specification did not provide any specific examples of decoy molecules and dominantly interfering molecules, and the only example provided of a specific inhibitor molecules was the naturally occurring inhibitor I?B, which had not yet been isolated.

Ariad brought suit against Eli Lilly & Company (“Lilly”) in the U.S. District Court for the District of Massachusetts, alleging infringement of claims 80, 95, 144 and 145. A jury found infringement and held that the claims were not invalid. The district court denied Lilly’s motion for judgment as a matter of law. A three-judge panel of the Federal Circuit reversed the district court and held that the asserted claims were invalid for lack of written description under 35 U.S.C. §112, first paragraph. Ariad petitioned for a rehearing en banc.

For the rehearing, the Federal Circuit directed the parties to address whether 35 U.S.C. §112, first paragraph, contains a written description requirement separate from the enablement requirement and if so, the scope and purpose of the requirement.

The Federal Circuit first discussed the statute itself to determine the proper interpretation with respect to the written description requirement. 35 U.S.C. §112, first paragraph states:

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention.

Ariad argued that, as a matter of English grammar, the phrases “of the invention,” “of the manner and process of making and using it,” and “in such full, clear, concise and exact terms” all modify the term “written description such that statute requires only that the written description of the invention identify the invention and provide sufficient information for a person skilled in the art to make and use the invention. In other words, Ariad argued that the written description requirement is actually just a part of the enablement requirement, serving to identify what it is that the specification must teach how to make and use. Lilly, on the other hand, argued that the phrase “in such full, clear, concise and exact terms as to enable any person skilled in the art…to make and use the same” modifies the phrase “of the manner and process of making and using it” such that there are two separate description requirements, a written description (i) of the invention and (ii) of the manner and process of making and using the invention. The Federal Circuit agreed with Lilly’s interpretation that the statute contains two separate description requirements. In particular, the Federal Circuit held that the statute does not unambiguously support Ariad’s interpretation and stated that if Congress had intended enablement to be the sole description requirement of 35 U.S.C. §112, first paragraph, the statute would have been worded differently. The Federal Circuit also noted that the requirement of a written description had always been a part of the patent statutes since 1793 and that the Supreme Court had applied the description requirement separate from the enablement requirement, citing O’Reilly v. Morse, 56 U.S. (15 How.) 62 (1853), Schriber-Schroth Co. v. Cleveland Trust Co., 305 U.S. 47 (1938) and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722 (2002).

Ariad further argued that the written description requirement does not apply to original claims, since original claims, as part of the original disclosure, constitute their own written description of the invention. That is, the original claims identify whatever they state. The Federal Circuit disagreed that this is always the case. In particular, the Federal Circuit stated that a generic claim may define the boundaries of a vast genus of chemical compounds and the question may arise as to whether the applicant has described species sufficient to support a claim to the genus. The Federal Circuit noted that this problem is particularly acute with respect to genus claims that use functional language to define the boundaries of the claim, in which case, the functional language may merely describe a desired result without describing any species that produce the result. The Federal Circuit stated that the specification must demonstrate that the applicant has made a generic invention that achieves the claims result and do so by showing that the applicant has invented species sufficient to support a claim to the functionally-defined genus or must describe structural features common to the members of the genus so that one skilled in the art can visualize or recognize the members of the genus.

As examples of recent cases showing a failure of providing sufficient written description to support genus claims, the Federal Circuit discussed Regents of the University of California v. Eli Lilly & Co., 119 F.3d 1559 (Fed. Cir. 1997) and University of Rochester v. G.D. Searle & Co., Inc., 358 F.3d 916 (Fed. Cir. 2004). In particular, in Rochester, the Federal Circuit had invalidated claims directed to a method of selectively inhibiting a particular enzyme by administering a non-steroidal compound that selectively inhibits the enzyme. In the patent at issue, the specification did not describe any specific compound capable of performing the claimed method and the court had found that a skilled artisan would not be able to identify any such compound based on the functional description. The court in that case stated that the claims merely recite a description of the problem to be solved while claiming all solutions to the problem, leaving it to others to complete the unfinished invention.

In summary, the Federal Circuit stated requiring a separate written description limits patent protection to those who actually perform and complete the work of invention, of conceiving the complete and final invention with all its claimed limitations and disclose the fruits of that effort to the public. The Federal Circuit further stated that the written description requirement is part of the quid pro quo of the patent grant to ensure that the public receives a meaningful disclosure in exchange for being excluded from practicing an invention for a period of time.

In the second part of the opinion, the Federal Circuit discussed the application of the written description requirement to the facts of the present case. In particular, the Federal Circuit discussed the sufficiency of disclosure with respect to each of the three classes of molecules, specific inhibitor, dominantly interfering molecules and decoy molecules, hypothesized in the specification of the ’516 patent as being capable of reducing NF-?B activity. In each case, the Federal Circuit found that the specification only described a vague functional description or desired outcome and did not provide a written description of any specific inhibitor, dominantly interfering molecule or decoy molecule. Accordingly, the Federal Circuit concluded that the district court jury lacked substantial evidence for its verdict that the asserted claims were supported by an adequate written description.

Accordingly, the Federal Circuit reversed the district court and held that the asserted claims were invalid for lack of written description under 35 U.S.C. §112, first paragraph.

Artesyn Technologies, Inc. (“Artesyn”) sells a competing power control system, which Power-One assets infringes the ‘125 patent. At trial, the District Court defined the term “POL regulator” to be a “dc/dc switching voltage regulator designed to receive power from a voltage bus on a printed circuit board and adapted to power a portion of the devices on the board and to be placed near the one or more devices being powered as part of a distributed board-level power system.” Based upon this definition, the jury found that the ‘125 patent was a valid patent, and that Artesyn infringed the ‘125 patent.

On appeal, Artesyn contended that the District Court’s definition of the POL regulator was unduly broad and that the term is indefinite. Moreover, Artesyn appealed the District Court’s decision that the ‘125 was non-obvious.

On the issue of whether the District Court’s definition was unduly broad, the Federal Circuit first cited to Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc) for the rule that claim terms are “generally given their ordinary and customary meaning,” which is the meaning “a person of ordinary skill in the art . . . at the time of the invention” would give to a particular claim term. In reviewing the specification, the Federal Circuit noted that the definition of POL regulator was supported by the intrinsic record. Importantly, the Federal Circuit found that the definition adopted by the District Court provided sufficient meaningful guidance to the jury as to be definite and not unduly broad. Specifically, the Federal Circuit has found that the terms “adapted to” and “near” can be definite, and the District Court was entitled to utilize these terms without rendering the resulting definition unduly broad as these terms are understandable in light of the ‘125 patent specification. As noted by the Federal Circuit, “[t]he fact that the claim is not defined using a precise numerical measurement does not render it incapable of providing meaningful guidance to the jury because the claim language, when taken in context of the entire patent, provides a sufficiently reasonable meaning to one skilled in the art of distributed power systems.”

Consistent with this holding , the Federal Circuit also found that the term “POL regulator” was definite for purposes of 35 U.S.C. §112, paragraph 2. In making this determination, the Federal Circuit outlined the test for definiteness as being whether the claim boundaries are discernible to a skilled artisan based on the language of the claim, the specification, and the prosecution history, as well as the artisan’s knowledge of the relevant field of art. See Halliburton Energy Servs., Inc. v. M-1 LLC, 514 F.3d 1244, 1249-51 (Fed. Cir. 2008).” The mere fact that the claim term may be difficult to understand or subject to some disagreement is not enough to find a claim indefinite. Exxon Research & Eng’g Co. v. United States, 265 F.3d 1371, 1373 (Fed. Cir. 2001) (“if the meaning of the claim is discernible, even though the task may be formidable and the conclusions may be one over which reasonable persons will disagree, we have held the claim sufficiently clear to avoid invalidity on indefiniteness grounds.”).

In applying this standard, the Federal Circuit found that the intrinsic record did support the recited term “POL regulator”. Specifically, the Federal Circuit found that the intrinsic record showed that POL regulators are well known devices in the field. Since one of ordinary skill in the art would understand what a POL regulator does and how it operates, the Federal Circuit upheld the District Court’s decision that the term “POL regulator” is definite despite any express definition in the specification.

On the issue of obviousness, the Federal Circuit upheld the District Court’s decision that the ‘125 patent was nonobviousness. During trial, Artesyn asserted that the ‘125 patent was obvious based upon seven pieces of prior art, and testimony of its expert. Power-One provided its own expert, as well as secondary considerations of non-obviousness. The Federal Circuit found that the jury was entitled to credit Power-One’s expert at the expense of Artesyn’s expert on the issue of obviousness.

Further, the Federal Circuit noted that Artesyn’s primary argument was that each of the recited elements were known in the prior art. In rejecting this argument, the Federal Circuit quoted the Supreme Court for the proposition that “a patent composed of several elements is not proved obvious merely by demonstrating that each of its elements is, independently, known in the prior art.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007). As such, to show obviousness, there needs to be evidence as to why the known arguments would have been combined.

Lastly, the Federal Circuit noted that the jury was entitled to take into account secondary considerations. Specifically, Power-One put into evidence that Artesyn had copied Power-One’s patented design, which Artesyn then touted as an advancement in the industry on introduction of its copied product. According to the Federal Circuit, “Artesyn’s contemporaneous reaction to Power-One’s invention, and the industry’s reaction, demonstrate the unobviousness of the invention disclosed in the ’125 patent.” See Allen Archery, Inc. v. Browning Mfg. Co., 819 F.2d 1087, 1092 (Fed. Cir. 1987) (praise in the industry for a patented invention, and specifically praise from a competitor tends to “indicat[e] that the invention was not obvious”). As such, the evidence of copying, as well as Artesyn’s own advertising represented an admission usable as a secondary consideration of nonobviousness.

Pentalpha asserted that the fryer it purchased in Hong Kong was not marked with a patent number. However, the majority of fyers SEB sold in the U.S. were marked with the ‘312 patent.

Pentalpha had obtained a right-to-use study from a U.S. attorney for its fryer. This study indicated that the fryer was not infringing a U.S. patent. Notably, the study did not cover the ‘312 patent, and Pentalpha did not reveal to its counsel that the fryer was copied from a competing product sold by SEB or T-Fal. Pentalpha then provided its fryer free-on-board (fob) to Sunbeam in Hong Kong using Sunbeam’s U.S. brand, and Sunbeam imported the fryer into the U.S.

On learning of the fryer sold by Sunbeam, SEB sued Sunbeam for infringing the ‘312 patent in 1998. Sunbeam settled the suit by agreeing to pay SEB $2 million.

Pentalpha also sold the accused fryer to others, including defendant Montgomery Ward, after Pentalpha learned of the suit against Sunbeam. In these sales, the accused fryers were also branded with trademarks used by defendant Montgomery Ward, and were also delivered fob in Hong Kong or China. Further, the invoices all clearly indicated that the purchasers were in the U.S.

On learning of these additional sales, SEB brought suit against Montgomery Ward and Pentalpha in 1999. The jury found that the accused fryer sold by Montgomery Ward and Pentalpha infringed the ‘312 patent, and found Pentalpha to have infringed the ‘312 patent directly under 35 U.S.C. §281(a), and under a theory of inducement under 35 U.S.C. §271(b).

On appeal, the Federal Circuit confirmed that the accused fryer did infringe the ‘312 patent. However, Pentalpha further argued that it should not be liable for direct or induced infringement under 35 U.S.C. §271(a) or (b) since the sales were fob in Hong Kong, and since there was no evidence that Pentalpha actually knew of the ‘312 patent.

On the issue of whether Pentalpha could be liable for making an offer to sell the infringing fryer, the Federal Circuit noted that it has not precisely defined the extent to which foreign acts can be used to show an offer to sell for purposes of 35 U.S.C. §271(a). Citing to Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1260 (Fed. Cir. 2000), the court noted that prior caselaw appears to hold that infringement under 35 U.S.C. §271(a) is not possible where all acts occur overseas, but there is no clear holding of the such in relation to offers for sale.

However, the Federal Circuit noted that it need not define the extraterritorial effect of 35 U.S.C. §271(a) since the only evidence that the sale occurred overseas was the fob language in the sales. The fob language in the invoices relates only to where the risk of loss occurred and not to the location of the sale itself. The Federal Circuit noted that its caselaw expressly found that fob language does not control the location of a sale for purposes of infringement. Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353, 86 USPQ2d 1753 (Fed. Cir. 2008).

Moreover, while there was a lack of evidence that the sale occurred outside of the United States, the record showed that Pentalpha intended to sell the infringing fryers to U.S. customers, affixed the marks used by the U.S. customers, used electrical fittings used in the U.S., and identified in the invoices the U.S. destination of each shipment. Thus, as there was sufficient evidence in the record to support a finding that the offers for sale were in the United States as opposed to overseas, the Federal Circuit upheld the finding of direct infringement under 35 U.S.C. §281(a).

On the issue of the knowledge requirement for 35 U.S.C. §271(b), the Federal Circuit first noted that the level of intent was recently decided in DSU Med. Corp. v. JMS Co., 471 F.3d 1293, 1304 (Fed. Cir. 2006) (en banc). Under DSU, the intent required for inducement is that the infringer knew or should have known that the infringer’s actions would result in infringement, which would “necessarily” include a requirement that the inducing infringer knew of the patent. In distinguishing from DSU, the Federal Circuit clarified that, in DSU, it was undisputed that the inducing infringer actually knew of the patent. Therefore, DSU does not answer the question of when does the inducing infringer know of the patent

In resolving the question, the Federal Circuit noted that inducement requires a specific intent to cause another’s infringement. Broadcom Corp. v. Qualcomm Inc., 543 F.3d 683, 699 (Fed. Cir. 2008). Further, the Federal Circuit took note that other courts have found in other like contexts that deliberate indifference is the same as specific intent. Thus, “the standard of deliberate indifference of a known risk is not different from actual knowledge, but is a form of actual knowledge.”

In applying this standard, the Federal Circuit found that the evidence supported a finding that Pentalpha “deliberately disregarded a known risk that SEB had a protective patent.” Such evidence included the fact that Pentalpha copied the SEB design; hired outside counsel to perform the right-to-use study without informing the counsel that it copied the design from SEB; and was headed by a President who had detailed knowledge of patent law and had worked on other projects with SEB in which SEB patented the resultant product. There was no evidence that Pentalpha reasonably believed the fryer was not patented. Thus, the Federal Circuit found that Pentalpha exercised deliberate indifference to the existence of a patent, and that this deliberate indifference was sufficient to show inducement to infringe under 35 U.S.C. §271(b).

However, the prior art displayed grids for the inside market that did not move. Thus, if a trader saw a price on the inside market on which they wanted to act, the trader could mistakenly click on the wrong price while a new price in the inside market appeared before they clicked on their intended price. In contrast, TT’s software had a static price column, and thus, the best bid and best ask would move up and down along the price column to reflect the current state of the market. As such, a trader could click on the intended price box and know that a transaction at the clicked price would occur, while not worrying that an accidental order at an incorrect price occurred because the inside market had changed before the order was processed.

TT filed suit in the U.S. District Court for the Northern District of Illinois alleging that eSpeed’s products, which are trading platforms and software for trading commodities on eSpeed’s electronic exchanges, infringed TT’s patents.

The accused eSpeed products include Futures View, Dual Dynamic, and eSpeedometer, with the accused products being the same in all relevant aspects, as the latter products are redesigns of the original product. Also, eSpeed acknowledged that Futures View satisfied all claim limitations of the patents in suit. eSpeed was sold before the ‘132 and ‘304 patents were issued. However, TT and eSpeed disagreed on whether Dual Dynamic and eSpeedometer use a “static display of prices” or a “static price axis,” which are recited by the ‘132 and ‘304 patents, respectively. Dual Dynamic re-centered price levels by either a manual operation by a user or by an automatic operation if the inside market shifted by a predetermined amount, however, the automatic operation could not be disabled by users. eSpeedometer, on the other hand, only had an automatic re-centering operation, wherein the entire market display would adjust after each change in the inside market.

The products were variously sold during the suit, with Futures View being sold before the TT’s patents issued, and replaced with Dual Dynamic in December 2004 before a hearing for a preliminary injunction in the case. eSpeedometer replaced Dual Dynamic after the District Court found that Dual Dynamic likely infringed TT’s patents. After trial, the District Court held that Futures View still infringed asserted claims of the ‘132 patent and the ‘304 patent. The District Court also held that other accused products were not literally infringing TT’s ‘132 and ‘304 patents, and that TT was barred from using doctrine of equivalents to assert infringement. Furthermore, the District Court found there to be no on-sale bar under 35 U.S.C. §102(b) by giving the ‘132 patent and the ‘304 patent filing dates corresponding to a common provisional application. Additionally, the District Court found that there was no indefiniteness with respect to the asserted claims of the ‘132 and ‘304 patents.

Specifically, the District Court found that neither Dual Dynamic nor eSpeedometer literally infringed on the ‘132 or ‘304 patents. As per infringement under the doctrine of equivalents, the District Court held that Dual Dynamic did not infringe under the doctrine of equivalents because finding infringement would obviate the term “static” and that prosecution history estoppel prevented application of doctrine of equivalents to eSpeedometer. As such, the District Court granted summary judgment of non-infringement with respect to Dual Dynamics and eSpeedometer.

With respect to eSpeed’s Future View, the District Court, during a jury trial, granted several of TT’s motions, including barring eSpeed from asserting an on-sale bar defense, and barring expert testimony asserting that the claim construction of “single action of a user input device” was indefinite. The jury found that Futures View willfully infringe the ‘132 and ‘304 patents, however, the District Court vacated the jury’s finding of willful infringement and reduced the damages awarded to TT. Additionally, the District Court found that TT did not engage in inequitable conduct and denied eSpeed’s motions on validity, indefiniteness, priority date, and patent misuse defense. Both TT and eSpeed appealed the District Court’s holding.

On appeal Federal Circuit, while noting that numerous issues were raised by both parties on appeal, stated that TT’s appeal focuses on patent infringement, while eSpeed’s appeal focuses on patent validity. TT appealed the District Court’s claim construction as per “common static price axis” and “ a static display of price,” and argued that Dual Dynamic and eSpeedometer infringe under TT’s claim construction. Additionally, TT asserted that Dual Dynamic infringes under the doctrine of equivalents without obviating the word “static,” and that prosecution history estoppel does not preclude eSpeedometer from infringing the TT patents under the doctrine of equivalents. eSpeed, in the appeal, asserted: (1) that the ‘132 and ‘304 patents should not be dated back to the provisional application dates; (2) that the patents are invalid under the on-sale bar; (3) that the term “single action of a user input device” is indefinite; and (4) that TT engaged in inequitable conduct.

The Federal Circuit reviewed the grant of summary judgment of non-infringement with respect to Dual Dynamic and eSpeedometer with out deference, and reviewed the District Court’s claim construction order under Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996). TT asserted that the District Court’s construction of “static” in the limitations of “static display of prices” and “common static price axis” in the ‘132 and ‘304 patents to be incorrect. The District Court construed “static display of prices” to mean “a display of prices comprising price levels that do not change positions unless a manual re-centering command is received.” Similarly, the District Court construed “common static price axis” to mean “a line comprising price levels that do not change unless a manual re-centering command is received and where the line of prices corresponds to at least one bid value and one ask value,” with the District Court noting that “a static condition – requires permanency” so that “the price axis never changes positions unless by manual re-centering or re-positioning.”

Thus, the Federal Circuit noted that under the District Court’s interpretation, the ‘132 and the ‘304 patent only cover manual re-centering without automatic re-centering. However, the Dual Dynamic and eSpeedometer include automatic re-centering corresponding to changes in the inside market. The specifications of both the ‘132 and ‘304 patents state that “The values in the price column are static; that is, the do not normally change positions unless a re-centering command is received.” The Federal Circuit noted that although the District Court’s construction may seem narrower than the inventor’s definition of “static” because the District Court added that the re-centering command is to be manual, the claims, specification and prosecution history estoppel support the District Court’s definition. Thus, the Federal Circuit agreed with the District Court’s claim construction.

While elaborating on the support for the claim construction found in the specification, the Federal Circuit stated that they recognize that relying on the specification heavily may lead to an improper risk of reading a preferred embodiment into the claim, unless the patentee evinces a clear intention that the preferred embodiment represents the claim. (See Saunders Group, Inc. v. Comfortrac, Inc., 492 F.3d 1326, 1332 (Fed. Cir. 2007)). In reviewing the specification, the Federal Circuit found that the “reference to ‘the present invention’ strongly suggests that the claimed re-centering command requires a manual input, specifically, a mouse click. See Honeywell Int'l, Inc. v. ITT Indus., 452 F.3d 1312, 1318 (Fed. Cir. 2006) (concluding that the invention was limited to a fuel filter because the specification referred to the fuel filter as ‘this invention’ and ‘the present invention’).” The Federal Circuit further noted that the specification did not disclose alternate embodiments, such as automatic re-centering. As such, the Federal Circuit stated that “[t]his court takes some comfort against this risk from the inventors’ use of the term “the present invention” rather than “a preferred embodiment” or just “an embodiment.”

The Federal Circuit went on to detect any contrary intentions as per the embodiment, and noted that all claims of the ‘132 patent include a “wherein” clause stating that “the static display of prices does not move in response to a change in the inside market.” As such, the claims of the ‘132 patent excludes automatic re-centering upon a change in the inside market.

TT further argued that even if the “re-centering command” is interpreted as manual in the ‘132 patent, the District Court cannot limit the claims to only recited elements because the claims use a transitional phrase “comprising.” Thus, TT asserts that the claims also cover features not recited, such as automatic re-centering. The Federal Circuit responded by stating that “automatic re-centering is not an additional feature, but rather negates a claimed requirement that the price level remains static and does not move….Thus, this court construes the claims to require a manual re-centering command.” The Federal Circuit also pointed to the prosecution history in noting that the Examiner initially rejected the claims because “static display” was indefinite. The Federal Circuit stated that the Examiner allowed the claims, in part, based upon the applicant’s explanation that “the values in the price column…do not change (unless a re-centering command is received).” Furthermore, the Federal Circuit also noted that a manual re-centering of the price column may avoid mistakes that may arise from an automatic re-centering of the price column, as found in the prior art. Thus, the Federal Circuit stated that: [t]he invention’s contribution to the prior art, its specification, and its prosecution history show that the static display of prices cannot move without a manual re-centering command from the trader. Accordingly, the District Court correctly construed disputed word “static.”

Thus, the Federal Circuit found that eSpeed’s Dual Dynamic and eSpeedometer do not literally infringe on the ‘132 and ‘304 patents because eSpeed’s products have mandatory re-centering features.

With respect to the doctrine of equivalents, the Federal Circuit noted that, under the all-elements rule, it is required to consider “the totality of circumstances of each case and determine whether the alleged equivalent can be fairly characterized as an insubstantial change from the claimed subject matter without rendering the pertinent litigation meaningless.” Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1359 (Fed. Cir. 2005). As per the claim vitiation if doctrine of equivalents is found, the Federal Circuit stated that claim vitiation “applies when there is a ‘clear, substantial difference or a difference in kind’ between the claim limitation and the accused product. Id. at 1360. It does not apply when there is a ‘subtle difference in degree.’ Id.”

The Federal Circuit stated that occasional automatic re-centering, as may occur with Dual Dynamic, is not an insubstantial difference, and that they must surmise the difference between a price axis that moves only in response to a trader’s command and one that moves without prompting. In noting that Dual Dynamic’s automatic re-centering allows for the problems of the prior art, wherein an inside market price may move while a trader was executing a deal, the automatic re-centering is substantially different than the invention of the ‘132 and ‘304 patents. Therefore, the Federal Circuit affirmed the District Court’s holding that the doctrine of equivalents does not show that Dual Dynamic infringes.

The Federal Circuit also agreed with the District Court’s decision that prosecution history estoppel bars TT from asserting doctrine of equivalents to show that eSpeedometer infringes the patents in suit. The Federal Circuit noted that TT submitted a prior art reference describing a static price display after the USPTO issued a notice of allowance, and requested that the application be withdrawn from issuance. TT amended claims that issues as claim 1 of their respective patents, with similarly recited limitations stating that price displays do not move in response to the inside market changing. TT argued that “do not move” being amended into the claims did narrow the claims because they already recite “static.” However, the Federal Circuit noted that TT’s argument is circular because the District Court has construed “static” to mean not moving, and thus, the claims of the ‘142 and ‘304 patents would still be limited to manual re-centering. Thus, the Federal Circuit found that the inventors surrendered any subject matter that moves automatically during prosecution, and affirmed the District Court’s holding that Dual Dynamic and eSpeedometer don not infringe the ‘132 and ‘304 patents under the doctrine of equivalents.

As per TT’s appeal on the District Court finding no willful infringement, the Federal Circuit noted that they, in In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007), held that “proof of willful infringement permitting enhanced damages requires at least a showing of objective recklessness.” The Federal Circuit went on to note that neither party disputes that eSpeed began redesigning Futures View immediately after TT commenced the infringement suit. The Federal Circuit then stated that “[p]rompt redesign efforts and complete removal of infringing products in a span of a few months suggest that eSpeed was not objectively reckless.” Furthermore, TT could not show that eSpeed sold Future View to new customers, or that they delayed in updating Future View with the non-infringing Dual Dynamic. Thus, the Federal Circuit affirmed the District Court’s grant of JMOL motion on willful infringement that no reasonable jury could have found eSpeed to be willfully infringing the ‘132 and ‘304 patents.

As per the contention on whether the limitation of “single action of a user input device” is indefinite, the Federal Circuit upheld the District Court’s ruling that the term, as construed, is sufficiently definite. The Federal Circuit stated that “[t]he district’s court’s construction correctly sets objective boundaries by distinguishing the invention from multiple-action systems found in the prior art.” The District Court found that “an action” means one user action, even including sub-elements such as two separate clicks of a double-click, if the user views all sub-elements as one action. Additionally, the Federal Circuit stated that one of ordinary skill in the art would find a non-ambiguous difference between singular and multiple user actions, even with the District Court’s construction that a single action be executed in a “short period of time.”

With respect to eSpeed’s contention of the patents in suit having a priority date of the provisional applications filed on March 2, 2000, the Federal Circuit looked to the provisional application as an adequate written description under 35 U.S.C. §112, par. 1. At contention was the fact that all claims recite a “single action of a user input device,” whereas the provisional application only recites “a single click of a computer mouse.” The Federal Circuit states that “[o]n summary judgment, the parties’ experts disagreed that the provisional application showed possession of forms of order entry other than “a single click of a computer mouse”,”…and thus, there was “a dispute of material fact about whether the disclosure of a species, i.e., “one click of a mouse,” was sufficient to show that the inventors possessed the genus, i.e., “single action of a user input device.” Thus, the Federal Circuit held that the District Court did not abuse its discretion in determining there was a dispute of material fact and precluding a grant of summary judgment on the issue.

The Federal Circuit also found that the District Court’s jury instruction was not legally erroneous, and that the District Court did not abuse its discretion by allowing TT’s expert witness to testify generally about the written description requirement. Lastly, the Federal Circuit looked at the merits and found that the jury’s verdict was supported by substantial evidence on record showing that the written description was adequate. The Federal Circuit noted that “the parties’ experts did not dispute that one of ordinary skill in the art would have know about other forms of “single action” such as a double-click or pressing a key,” and thus, “disclosure of a species in this case provides sufficient written description support for a later filed claim directed to a very similar and understandable genus.” Therefore, the Federal Circuit found that the ‘132 and ‘304 patents were entitled to claim priority to the provisional application.

The District Court granted a motion in limine precluding eSpeed from alleging the on-sale bar defense, and eSpeed appealed the decision. eSpeed relied upon the fact that Harris Brumfield, one of the inventors, hired TT to build trading software according to his idea. TT and Brumfield entered into a contract, Individual Consulting Agreement #2 (ICA2), in which TT would build trading software according to Brumfield’s specifications. TT delivered the software to Brumfield in February 1999, and Brumfield paid TT for the custom software on March 2, 1999. The Federal Circuit affirmed the District Court’s de facto decision that ICA2 was not a sales transaction for a product embodying the patented invention, as is required for an on-sale bar under 35 U.S.C. §102(b).

The Federal Circuit stated that the ICA2 was a contract for hourly programming services, and not a computer software license, as eSpeed contended, and that Brumfield did not sell or offer anything for sale that would embody the invention. Additionally, no product was ever sold to Brumfield. Thus, the Federal Circuit stated that “[i]nventors can request another entity’s services in developing products embodying the invention without triggering the on-sale bar,” and that Brumfield’s contract with TT did not constitute a sale under 35 U.S.C. §102(b).

With respect to TT’s alleged inequitable conduct, the Federal Circuit found that the District Court was correct in finding that TT did not engage in such by not disclosing Brumfield’s custom software to the USPTO because the software wasn’t material to the question of patentability. Brumfield used the software after March 2, 1999, however, the Federal Circuit stated that the “District Court did not clearly err by finding that Brumsfield’s software was immaterial given that his use of the software after the priority date would not have changed the examiner’s analysis of the patent.” eSpeed further alleges that TT should have disclosed the “sale” of the software from TT to Brumfield, and Brumfield’s testing of the software to the USPTO. The Federal Circuit noted that the ICA2 contract was not a sale under 35 U.S.C. §102(b) and that Brumfield tested the software for his own personal purposes, confidentially, and that he kept the software secret until he and TT filed the provisional application. Thus, the Federal Circuit found no inequitable conduct on the part of TT.

In summary, the Federal Circuit upheld the District Court on all matters decided by the District Court. Particularly, the Federal Circuit noted that the use of “the present invention” rather than “a preferred embodiment” or just “an embodiment” in the specification can be used to support the Federal Circuit Court’s use of the specification’s embodiment as reflecting the claims. Additionally, the Federal Circuit found that, in the present case, prosecution history estoppel can be used to bar the use of doctrine of equivalents. The Federal Circuit also stated that “disclosure of a species in this case provides sufficient written description support for a later filed claim directed to a very similar and understandable genus,” in finding the provisional application an adequate written description for the ‘132 and ‘402 patents. Also, the Federal Circuit held that “[i]nventors can request another entity’s services in developing products embodying the invention without triggering the on-sale bar.” Therefore, the Federal Circuit found no reversible error and affirmed the District Court’s decision.

As a defense, Bon Tool alleged, among other defense, that the patent was invalid and counterclaimed for damages for false patent marking in violation of 35 U.S.C. §292. At trial, the district court construed the claims in a manner which precluded infringement. Thus, the district court dismissed the infringement claim at a first summary judgment, but found the patent otherwise valid.

In regards to the counterclaim of false marking, the district court found that the stilts were improperly marked for at least stilts manufactured by Forest Group after November 15, 2007. The district court found that since, on November 15, 2007, Forest Group had lost a second summary judgment in another litigation over the ‘515 patent which demonstrated that the ‘515 patent did not cover the stilts produced by the Forest Group, and since this was the second such ruling, Forest Group knew that their stilts were not covered by the ‘515 patent. As Forest Group had knowledge that the stilts no longer were covered by the ‘515 patent as of November 15, 2007, the continued marking of the stilts was contrary to 35 U.S.C. §292. As a penalty, the district court assessed a $500 fine for the single decision to continue marking the stilts. The district court did not assess the fines based upon each manufactured stilt.

On appeal, the Federal Circuit reviewed whether Forest Group had the requisite knowledge needed to find a violation of 35 U.S.C. §292. Specifically, the Federal Circuit noted that, to find a violation under 35 U.S.C. §292, the claimant must show both that the patent number appears on an unpatented article, and there was an intent to deceive the public. The Federal Circuit quoted Clontech Labs. Inc. v. Invitrogen Corp., 406 F.3d 1347, 1352 (Fed. Cir. 2005) in noting that for purposes of 35 U.S.C. §292, “[i]ntent to deceive is a state of mind arising when a party acts with sufficient knowledge that what it is saying is not so and consequently that the recipient of its saying will be misled into thinking that the statement is true.” (citing Seven Cases of Eckman's Alterative v. United States, 239 U.S. 510, 517–18 (1916)).” This evidence needs to be shown by at least a preponderance of the evidence. Further, a bare assertion by an accused party that it did not intend to falsely mark is “worthless as proof” of a lack of intent to deceive.

Under this standard, the Federal Circuit held that there was a lack of intent to deceive before November 15, 2007. Specifically, the court found it credible that the inventors truly believed the stilt was covered by the ‘515 patent, and that the mere first summary judgment finding non-infringement was not sufficient to show intent to deceive by itself. Instead, the Federal Circuit noted that the district court’s decision was supportable given the lack of academic knowledge of the inventors about patents, as well as the fact that their patent was prosecuted by an experienced patent attorney who had a model of the stilt being patented. Thus, it was not until the second summary judgment that the inventors should have been aware that the ‘515 patent did not cover their stilt and that there was no evidence as to why they continued marking the stilts with the ‘515 patent.

The Federal Circuit specifically noted that they are not making a bright line rule that there need to be two adverse summary judgments before finding intent. Instead, the Federal Circuit noted that under the facts of the case, the second summary judgment assuredly put Forest Group on notice that their stilts were not covered by the ‘515 patent and that their continued marking evidenced the requisite intent to deceive.

In regards to the adequacy of the $500 fine, the Federal Circuit turned to the statute to determine whether the $500 fine was per article, or per each decision to mark a batch of articles with the patent number. As noted by the Federal Circuit, 35 U.S.C. §292 “prohibits false marking of ‘any unpatented article,’ and it imposes a fine for ‘every such offense.’” As such, the Federal Circuit found that the statute requires the fine for each article, not merely for each decision to mark multiple articles. While noting that this decision is contrary to London v. Everett H. Dunbar Corp., 179 F. 506 (1st Cir. 1910), the Federal Circuit also noted that the statute has changed since the decision in London and that the Congressional intent is clear in requiring the fine per article.

Further, the Federal Circuit noted that there are strong public policies in deterring false marking that support its interpretation that 35 U.S.C. § 292 imposes the fine per article. In contrast, the Federal Circuit noted that the arguments that the fine should be limited to $500 per decision would eviscerate both the intent of the statute and ignore the statutory language itself. As such, the Federal Circuit remanded the case to the district court to determine the number of falsely marked articles and to reassess the fine accordingly.

Mr. Skvorecz argued that, while the Buff patent discloses a wire leg 48, there is no disclosure that the wire leg 48 had an offset.

While reversing on other issues, the Board of Patent Appeals and Interferences affirmed the rejection of claims 1 and 2, and entered new grounds of rejection for failure to comply with the written description and definiteness requirement of 35 U.S.C. § 112. In rejecting Mr. Skvorecz’s arguments, the Board specifically noted that the wire leg 48 was not a leg, but a transverse member, and that the term “comprising” allowed a situation in which not all legs included an offset. On appeal, the Federal Circuit reversed the rejections.

In regards to the anticipation, rejection, the Federal Circuit first noted that, while claims during examination are to be given their broadest reasonable interpretation, this protocol “does not include giving claims a legally incorrect interpretation” and is not a rule of claim construction. Instead, the Federal Circuit cited to In re Buszard, 504 F.3d 1364, 1366 (Fed. Cir. 2007); In re Cortright, 165 F.3d 1353, 1358 (Fed. Cir. 1999), and MPEP 2111 for the proposition that the protocol is used as an “aid in sharpening and clarifying the claims during the application stage, when claims are readily changed.” The Federal Circuit found that the Board’s use of the term “comprising” was legally incorrect since claim 1 clearly recited that each leg have an offset, and the wire 48 which was a leg did not include the offset. Since the Buff patent did not disclose each feature of claim 1, the Federal Circuit reversed the Board.

On the issue of definiteness, the Board had found that the phrase “welded to said wire legs at the separation” in claim 5 was indefinite under 35 U.S.C. § 112 since there was a lack of antecedent basis for the separation. The Federal Circuit acknowledged Mr. Skvorecz’s argument that claim 5, which was rejected for being indefinite, had already issued in the same form as a patent and had not been found indefinite by the prior Examiner or the Examiner during the reissue process. In reversing the Board’s new rejection on this issue, the Federal Circuit noted that even MPEP 2173.02 acknowledges that the mere failure to provide antecedent basis does not automatically render a claim indefinite if the claim would be understood by one of ordinary skill in the art.

Lastly, in reversing the rejection for purposes of lack of written description, the Federal Circuit noted that compliance with 35 U.S.C. § 112 does not hinge on one factor. Instead, the Federal Circuit quoted its prior decision in Lockwood v. American Airlines, Inc., 107 F.3d 1565, 1572 (Fed. Cir. 1997) that “the applicant may employ “such descriptive means as words, structures, figures, diagrams, formulas, etc., that fully set forth the claimed invention.” The Board had held that the specification did not support the feature of “a plurality of offsets located . . . in said first rim” is not described in the specification, and at best, FIGs. 12 and 13 only show an offset in one rim or in every leg. In rejecting this reasoning, the Federal Circuit noted that FIGs. 12 and 13 were partial views which were described in the specification in relation of the offsets to the rim and legs, and one of ordinary skill in the art would be able to discern how the completed device would be assembled in light of the specification. Thus, the Federal Circuit found that, while no single Figure showed the complete device matching the claimed invention, one of ordinary skill in the art, using the partial views of FIGs. 12 and 13 and the specification, would understand the invention as claimed such that the claims meet the requirements for written description under 35 U.S.C. § 112..

In addition to the copyright obtained on the manuscript, Dr. Lister learned that he should file a patent to further protect his method of playing golf, and he subsequently filed for a patent with the USPTO on August 5, 1996. The patent application had been under prosecution for over 10 years, having been rejected and amended multiple times, as well as being appealed twice to the BPAI. In the final rejection dated January 31, 2003, the Examiner had rejected claims 21-25 under 35 U.S.C. §§102(a) & (b) as being anticipated by the Lister manuscript filed with the Copyright Office.

The BPAI affirmed the rejection under 35 U.S.C. §102(b) but reversed the rejection under 35 U.S.C. §102(a). The rejection under 35 U.S.C. §102(a) was reversed because the BPAI noted that 35 U.S.C. §102(a) bars the patenting of inventions that were described in a printed publication before the applicant’s date of invention. Thus, because the manuscript filed by Lister with the Copyright Office, which is the printed publication describing Lister’s method of playing golf, was used for the rejection under 35 U.S.C. §102(a) and was filed after Lister invented his method of playing golf, the manuscript does not qualify as a valid reference under 35 U.S.C. §102(a). The 35 U.S.C. §102(b) rejection was affirmed because 35 U.S.C. §102(b) bars the patenting of inventions that were described in a printed publication more than one year before the applicant’s date of filing. Lister’s date of filing the patent application was August 5, 1996 while the certificate of registration of the manuscript filed by Lister was issued on July 18, 1994. However, in citing In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004), the BPAI noted that the manuscript must be publicly available in order to qualify as a printed publication.

The BPAI took the date of July 18, 1994, when the Copyright Office issued the certificate of registration, as when the manuscript was publically available because the Copyright Office maintained a searchable database of titles. The BPAI asserted that an interested party could find the manuscript by conducting a title search using the keywords “golf” and “handicap” and that the interested party could view the manuscript at the Copyright Office. Lister counter argued that the difficulty imposed by both travelling to the Copyright Office to view the document, and not being able to obtain a copy of the manuscript, as per the Copyright Office’s rules, rendered the manuscript as not being publically available. Additionally, Lister argued that the BPAI erred in relying on Klopfenstein because In re Hall, 781 F.2d 897 (Fed. Cir. 1986) and In re Cronyn, 890 F.2d 1158 (Fed. Cir. 1989) were more factually relevant and that because there was no evidence that the manuscript was not actually accessed by anyone, the manuscript was not publically available.

The BPAI viewed the inventive concept of the manuscript as being straightforward enough that it could be understood and remembered by merely reading the manuscript, and thus, the interested party would not need to obtain a copy to understand the inventive concept in Lister’s manuscript. Furthermore, the BPAI concluded that actual evidence of a publication being accessed was not a requirement under SRI International, Inc. v. Internet Security Systems, Inc., 511 F.3d 1186, 1197 (Fed. Cir. 2008). Additionally, the BPAI further noted that because Klopfenstein discussed both Cronyn and Hall, Klopfenstein was relevant to library cases. Lister appealed the BPAI’s decision to affirm the rejection of claims 21-25 under 35 U.S.C. §102(b). The U.S. Court of Appeals for the Federal Circuit vacated and remanded the BPAI’s decision.

The Federal Circuit focused on the factual determinations made to assess whether a document qualifies as a ‘printed publication’ under 35 U.S.C. §102. One requirement of qualifying as a ‘printed publication’ is that the document be publically accessible. The Federal Circuit stated that “A reference is considered publicly accessible if it was ‘disseminated or otherwise made available or the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence, can locate it.’ Kyocera Wireless Corp. v. Int’l Trade Comm’n, 545 F.3d 1340, 1350 (2008).” The Federal Circuit Court went on to note that prior cases consider a variety of factors in determining public accessibility, such as research tools directing an interested party to a relevant document and whether a document is cataloged and shelved at a library.

In comparing In re Bayer, 568 F.2d, 1357, 1361 (CCPA 1978), and Hall, the Federal Circuit quoted Cronyn at 1161 for the proposition that “the critical difference between [Bayer and Hall] that explains the different results is that on the critical date in Bayer the thesis was ‘uncatalogued and unshelved’ and therefore not accessible to the public, whereas in Hall the ‘dissertation was accessible’ because it had been indexed, cataloged and shelved.” The Federal Circuit went on to note that in Cronyn, a thesis, stored in an academic department library at Reed College, was listed in a card catalogue containing thesis titles and author names. While the card catalogue was available to the public, the individual cards were filed according to the author’s name rather than by thesis title or subject matter. Thus, in Cronyn, the court found that the theses were not publically accessible because they were not catalogued in a meaningful manner.

However, the Federal Circuit went on to say note that cataloging and indexing are not absolute requirements to show publically accessible. In summarizing several other cases that pointed to factors other than cataloging and indexing, the Federal Circuit stated that all of the surrounding facts and circumstances must be considered to determine “whether an interested researcher would have been sufficiently capable of finding the reference and examining its contents.”

In addressing the specifics of Lister’s appeal and arguments, the Federal Circuit considered two factors: 1) availability for inspection; and 2) existence and adequacy of an index. With respect to the first factor, Lister asserted that the case of Northern Telecom, Inc. v. Datapoint Corp., 908 F.2d 931, 936-937 (Fed. Cir. 1990), was relevant to the facts of Lister’s case. Lister argued that the difficulty in accessing the document, arising from having to travel to the Copyright Office to view the document and the Copyright Office not providing copies of the document, disqualify the document from being considered to be generally available. Lister offered a letter from the Copyright Office, dated September 4, 2004, stating that there had been no requests for inspection of the manual, as evidence of the document’s lack of general availability.

The Federal Circuit noted a critical difference between Northern Telecom and the facts surrounding Lister’s case, that being where the documents were stored. In Northern Telecom, the documents were stored in a Mitre Corp. office library, which was restricted to use by Mitre employees, whereas Lister’s manuscript was accessible to the general public while being stored at the Copyright Office. Additionally, in citing to Hall at 899-900, the Federal Circuit noted that even if significant travel is required to access a document, it may still be considered as publically accessible. Furthermore the Federal Circuit cited several cases and stated that once a document is shown to be accessible, it is not necessary to show that the document was actually accessed. Lastly, the Federal Circuit Court agreed with the BPAI is finding that an interested party would be able to understand and recall the invention disclosed in Lister’s manuscript without having an individual copy. Thus, the Federal Circuit found that an interested person could inspect the Lister manuscript at the Copyright Office.

Next, the Federal Circuit turned to whether an interested person would have been able to access and inspect the Lister manuscript for potential relevance before the critical date of one year prior to Lister’s date of filing his patent application. Lister argued that the catalogs and databases, cited by the BPAI as listing Lister’s manuscript, would not have been adequate to direct an interested party to his manuscript and that, adequacy aside, there was no evidence that the manuscript was listed on the catalogs and databases before the critical date. Three databases: the Copyright Office’s automated catalog, and the commercial databases provided by Westlaw and Dialog, were discussed by the Federal Circuit Court.

Lister argued that none of the databases or catalogs listed the manuscript in a “meaningful way,” as Cronyn requires. The Federal Circuit stated that Lister “asserts that neither searching by author nor the first word in the title (“Advanced”) would guide a researcher interested in his golfing method to the manuscript.” Additionally, in the oral argument of the case, the government conceded that the Copyright Office’s database alone was not sufficient in making the manuscript publically available. However, while the Westlaw and Dialog databases allowed for searching the titles of manuscripts by keywords, Lister argued that the BPAI’s conclusion that an interested party would find the manuscript by searching for “golf” and “handicap” did not account for the fact that such a search would result in hundreds or thousands of irrelevant manuscripts. Additionally, Lister argued that “handicap” was a poor term to describe his invention because it was not used in any of the claims of his patent application.

In response, the Federal Circuit stated that Lister’s arguments impose too rigid of a test as to whether an interested party can find a reference. The Federal Circuit summarized Lister’s test as being “whether an individual, selecting terms from the claim language, could execute a single keyword search that would yield all relevant references including the anticipatory reference.” Rather, the Federal Circuit Court stated that the test is “whether [the anticipatory reference] could be located by “persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence.” Kyocera, 545 F.3d at 1350.” The Federal Circuit went on to note that they agreed with the BPAI that a diligent researcher would be inclined to use the word “handicap” in a keyword title search when researching ways to expedite a game of golf. Thus, the Federal Circuit concluded that the Lister manuscript was publically accessible on the date it was listed in either the Westlaw or Dialog databases.

Lastly, the Federal Circuit Court addressed the issue of whether the Lister manuscript was publically accessible one year prior to Lister’s application filing date, as is required under 35 U.S.C. §102(b) in order to bar patentability. Lister argues that there is no evidence that his manuscript was available before the critical date of August 5, 1996. The Federal Circuit Court goes on to quote MPEP §2128, which states:

“Prior art disclosures on the Internet or on an on-line database are considered to be publicly available as of the date the item was publicly posted. Absent evidence of the date that the disclosure was publicly posted, if the publication itself does not include a publication date (or retrieval date), it cannot be relied upon as prior art under 35 U.S.C. §102(a) or (b).”

The government provided two arguments in response, neither of which the Federal Circuit Court found persuasive.

The first argument relied upon the government’s assumption that Lister’s use of the word “directly” in stating that “[t]he information contained in [the commercial] databases comes directly from the Library of Congress,” means that the manuscript was listed in the commercial databases soon after Lister’s certificate of registration was issued on July 18, 1994. However, the Federal Circuit Court stated that “directly” has no bearing on the timing of commercial database updates. Additionally, the Federal Circuit noted that the government provided no evidence with respect to general practices of database updating for the Copyright Office, Westlaw and Dialog.

The second argument was that, upon the government making a prima facie showing that the manuscript was listed in the commercial databases, the burden then shifted to Lister to show that the manuscript was not in either commercial database before the critical date. However, the Federal Circuit Court stated that “[w]e do not agree that the government has established a prima facie case that warrants shifting the burden to Dr. Lister.” The Federal Circuit went on to state that absent any evidence of the typical time that elapses between copyright registration and the incorporation of the Copyright Office’s catalog in the commercial databases, any presumption on those matters would be pure speculation. Thus, the Federal Circuit rejected both of the government’s arguments and concluded that the BPAI erred in affirming the examiner’s §102(b) rejection, vacated the BPAI’s decision and remanded the case.

In summary, the Federal Circuit Court found that with the commercial databases, which provide keyword title searching, the anticipatory reference could be found by “persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence.” Kyocera, 545 F.3d at 1350. However, because there was no evidence as to the manuscript being listed on the commercial databases before the critical date, it can not be shown that the Lister manuscript was publically accessible before the critical date. Therefore, the Lister manuscript does not qualify as an anticipatory reference under 35 U.S.C. §102(b), under the circumstances on which it was relied upon by the Examiner.

Ozro later defaulted on the agreements, and XACP foreclosed. Meanwhile, the inventor formed a new company, Sky Technologies (the plaintiff), and entered into an agreement in which XACP would attempt to obtain ownership of the patents via the public sale and assign ownership of the patents to Sky Technologies. The attempt was successful: XACP bought the patents at the public sale and executed a written assignment assigning the patents to Sky Technologies. However, at no point during the foreclosure proceedings did Ozro (the prior assignee) execute a written document transferring ownership of the patents to XACP.

A few years after the assignment from XACP, Sky Technologies filed the instant infringement suit against SAP in the Eastern District of Texas. SAP moved to dismiss the suit for lack of standing, arguing that since there was no written assignment between Ozro and XACP as a result of the foreclosure proceedings, the transfer was not effective, and thus the subsequent transfer to Sky was also ineffective. The district court denied the motion, relying upon the recent decision of the Federal Circuit in Akazawa v. New Link New Tech. Int’l, Inc., 86 U.S.P.Q. 2d 1279 (Fed. Cir. 2008). In Akazawa, the Federal Circuit ruled that not all transfers of ownership need to be in writing, and specifically that a transfer of ownership by operation of law (probate in the Akazawa case) does not require a writing.

On appeal, the Federal Circuit noted that Federal law provides that assignments of patents must be in writing. 35 U.S.C. § 261. In the Akazawa decision, the Federal Circuit held that not all transfers of ownership were assignments. Akazawa, 86 U.S.P.Q.2d at 1281. Transfers of ownership other than assignments, such as transfers by operation of law, do not require a writing. Id. at 1281. In the Akazawa case, the inventor (and patent owner) died intestate. According to the agreement of the inventor’s wife and daughter, ownership of the patent was transferred to the inventor’s wife. Id. at 1281. The Federal Circuit held that the transfer of patent owner through intestacy was not a patent assignment and thus did not require a writing. Id.

SAP argued that the wife of the inventor in the Akazawa case was an “heir”, or one of the enumerated classes of persons who can receive ownership of a patent through operation of law. According to SAP, 35 U.S.C. § 154 provides that patents can be owned by one of three classes of individuals: patentees, their heirs, or assigns (assignees). The wife of Akazawa was an “heir” and thus eligible for a transfer of ownership without an assignment. In contrast, SAP argued that Sky Technologies was neither the patentee nor an heir, and thus must be an assignee.

The Federal Circuit rejected this distinction. The Federal Circuit found no restriction of the patent ownership in 35 U.S.C. § 154. Furthermore, the Federal Circuit held that 35 U.S.C. § 261 did not pre-empt state law on the question, because the federal statute was limited only to assignments, and did not address other forms of ownership transfer.

The Federal Circuit then turned to the pertinent state law on the matter, in this case the Massachusetts Uniform Commercial Code (UCC). Under the Massachusetts UCC §§ 9-610 & 617, once a secured party disposes of the collateral after default, the subsequent transferee takes all of the debtor’s rights in the collateral. XACP complied with all of the requirements not only of the security agreement between Ozro and XACP, but also of the Massachusetts UCC. Thus, XACP, being the purchaser of the patent at the public sale, obtained title to the patents by operation of law. The Federal Circuit also found no separate requirement for a writing in Massachusetts law. Although the Massachusetts UCC does permit a written “Transfer of Ownership”, this document is an option, not a requirement.

The Federal Circuit found several policy justifications to support their ruling. If a writing were required for foreclosure of security interests such as those at issue in Sky Technologies, a large number of existing patent titles subject to security interests could be invalidated. Furthermore, patent owners would be limited in their ability to use patents as collateral, thereby reducing the value of patents overall. Finally, in many cases a business may cease to exist following a foreclosure, making a writing difficult or impossible to obtain. Thus, the Federal Circuit upheld the district court’s decision in finding that the transfer was valid and that Sky Technologies was the current owner of the patents.

The BPAI affirmed the Examiner’s rejection and denied McNeil’s request for a rehearing. The date of the Board’s decision was May 30, 2008. The date of mailing, as per the mailing sheet for the order, was June 2, 2008. Further, the online “Transaction History” for the re-examination contains two entries both dated May 30, 2008: "Mail BPAI Decision on Reconsideration – Denied" and "Dec on Reconsideration – Denied." Finally, the image file wrapper (hereinafter “IFW”) lists the “Mail Room Date” of the decision as June 2, 2008. McNeil filed the notice of appeal to this court on August 1, 2008. The Director responded that the appeal was untimely because it was filed more than sixty days after the Board made its final decision on May 30, 2008.

Patent Owner’s Appeal was Timely As Measured from Mailing Date

Before turning to the merits of the case, the Federal Circuit addressed the issue of the timeliness of McNeil’s appeal. The Federal Circuit first stated that it could not grant extensions of time for an appeal (citing In re Reese, 359 F.2d 462, 463 (CCPA 1966) (per curiam)). The Court noted that Congress gave the Director authority to set the timing for an appeal in 35 U.S.C. § 142, allowing the Director to prescribe a time no less than 60 days after the date of decision during which the appellant could appeal the decision of the BPAI. Accordingly, the Director set a time for appeal, if a request of rehearing or reconsideration had been made to the Board, as within two months after action on the request. (37 C.F.R. § 1.304(a)(1)).

The Court held that the issue of timeliness hinged on whether the Date of Decision was the date of decision noted on the Board’s decision, or the date that the decision was mailed to the applicant. The Federal Circuit then opined that there was little information to guide the Court as to whether to attribute meaning to the date of decision appearing on the Board’s written decision. The Court stated that the Director failed to explain the Board’s internal procedures for issuing opinions, or whether the June 2, 2008 mailing date reflects the first time that the decision was released to the public. The Federal Circuit did take into account an unchallenged declaration from a now-retired member of the Board Jeffrey Nase, which was presented by McNeil.

The Federal Circuit summarized Nase’s declaration as follows. Historically, the date that the PTO mailed a document was the date that triggered a response period. Before August 2006, the date decided was hand-stamped on the front of opinions. In August 2006, the Board began to have the decision date typed on the front of opinions. Nase found it to be unclear why the date on the opinion and the mail date differed, unless the mail room was slow or a member of the Board panel had decided to revise or reconsider the opinion over the weekend of May 31 and June 1, 2008. Nase opined that if the PTO had intended this minor formatting change to have substantive effect, there would have been public notice of the change (which there was not).

The Court noted the PTO’s argument that it would be contrary to the language of both 35 U.S.C. § 142 and 37 C.F.R. § 1.304(a)(1) to deem the date of the decision to be the date that the order was mailed. However, the Court dismissed this argument as superficial due to the import of the inner workings of the agency. Rather, the Federal Circuit asserted that, based upon the evidence, only when an opinion is released to the public is it truly decided and safe from possible revision. The Court did note that the PTO’s position was supported by the entries on the “Transaction History” page indicating that the case was decided and opinion mailed May 30, 2008. However, the Court found that the parties do not dispute that the decision was mailed on June 2, 2008, making the “Transaction History” date both inaccurate and moot.

The Federal Circuit also dismissed the PTO’s reliance on an unpublished order, Barbacid v. Brown, 223 F. App'x. 972 (Fed. Cir. 2007). In the opinion, the Federal Circuit held that the PTO’s failure to mail its decision to Barbacid when mailing the opinion to the other party did not abrogate the untimeliness of Barbacid’s appeal. There, the Federal Circuit stated that "[T]he time is not measured from the date of receipt of the Board's decision but from the date of the decision itself." However, this Court noted that the opinion did not specify what “the date of the decision” was. Further, the Federal Circuit noted that Barbacid’s appeal was so late that a few days would not have impacted the timeliness of his appeal.

The Federal Circuit held that the instant appeal was timely for several reasons. First, the Court noted that the “Transaction History” page appeared inaccurate and Nase’s declaration provided the most plausible explanation for the conflicting evidence of the action taken on by the Board in response to McNeil’s request for reconsideration. Further, the IFW entry corroborates the fact that action was taken on June 2, 2008, instead of May 30, 2008. Thus, the Federal Circuit held that the Board decided this case on June 2, 2008, the date of mailing, making McNeil’s appeal timely.

BPAI’s Anticipation and Obviousness Decision Not Supported By Substantial Evidence

Next, the Federal Circuit turned to the merits of the case. The Court stated that the standard of review would be one of substantial evidence to support the Board’s determination. (citing In re Graves, 69 F.3d 1147, 1151 (Fed. Cir. 1995)). The Federal Circuit noted, with added emphasis, that McNeil’s claim 1 (which was chosen as representative of the other claims), was for a tampon for feminine hygiene that comprised an absorbent portion having a “generally cylindrical compressed, solid fibre core from which longitudinal ribs extend radially outward,” where each of the ribs has a proximal end attached to the fibre core, “is compressed less than the fiber core, thereby having a coarser capillary structure than the fibre core,” and is separated from adjacent ribs at the proximal end “by an amount greater than such rib is separated from an adjacent longitudinal rib proximate the distal end.”

The Board had found that Sasaki taught all the limitations of claim 1. Upon review of the Board’s findings, the Federal Circuit was unsure if the Board understood McNeil’s claim. First, the Court observed that the Board equated McNeil’s limitation of a tampon “each of the ribs is compressed less than the fiber core, thereby having a coarser capillary structure than the fibre core" with Sasaki’s Figures 8 and 10, which the Board found to reasonably depict the ribs of a tampon “as being compressed less at their distal ends than at their ends proximal to the drawstring at the center of the drawn fiber strips.” (emphasis added by the Court). The Court noted that the claim required the ribs to be less dense than the core, not the distal ends of the ribs to be less dense than their proximal ends.

The Federal Circuit failed to find any evidence in Sasaki of the relative compression of any portion of Sasaki’s tampon. The Court found that Figure 6, which showed relative compression of the strips of absorbent material, depicted a tampon blank, not a finished tampon. The Court noted that Figures 7 and 8 of Sasaki, which depicted a finished tampon, did not disclose any evidence a core that is denser than the ribs of the tampon. Further, the Federal Circuit stated that the PTO failed to explain how the change in shape from the tampon blank to the finished tampon necessarily made the ribs less dense than the tampon core. The Federal Circuit noted that the Board’s initial decision stated that “compressed masses [are] formed at equal intervals along the axial line direction on the outside circumferential surface of the tampon.” However, the Court found that Sasaki made no comparison between the “compressed masses” and a core. Further, the Court observed that it was not clear that Sasaki even disclosed a “core,” pointing to Sasaki’s Figure 8 to show that Sasaki’s tampon was composed of six ribs and no core. The Court held that there was not substantial evidence (or even any evidence) that Sasaki disclosed ribs "compressed less than the fiber core" or "a generally cylindrical compressed, solid fibre core.” Thus, the Federal Circuit reversed the Board’s rejections based on Sasaki.

The Federal Circuit also dismissed the PTO’s argument that McNeil waived arguments about Sasaki’s lack of a “generally cylindrical compressed, solid fibre core" and "coarser capillary structure than the fibre core.” Specifically, the PTO asserted that it waived arguments regarding Sasaki’s lack of a core because McNeil, in its appeal brief, argued only that two key elements (relative rib compression and spacing from adjacent ribs) were missing from Sasaki. The Federal Circuit disagreed, noting that McNeil included arguments about the core in its brief. Thus, McNeil did not have to explicitly assert that the core was missing from Sasaki, because the brief mentioned in passing that "Sasaki does not disclose, teach, or suggest a tampon, wherein ‘each of the ribs is compressed less than the fiber core, thereby having a coarser capillary structure than the fibre core.’” (emphasis added).

The Court noted that the Sasaki figures also failed to disclose any relative coarseness of different portions. Further, the Court stated that the lack of a core was discussed earlier in the opinion. The Court also observed that Figure 8 showed some spacing between the bottommost ribs, and arguably disclosed spacing between other ribs. However, the Court noted that this disclosure of Sasaki did not overcome the failing of Sasaki to teach the other features of McNeil’s invention. The Court held that it was not clear that Sasaki disclosed “a core nor which portions of Sasaki's tampon the Board considered to be the ribs and which the Board considered to be the core.” The Court stated that there was not substantial evidence to support the Board's determination that Sasaki disclosed ribs separated from each other "at the proximal end by an amount greater than" at "the distal end." Thus, the Court reversed the Board’s rejections of claims 1, 3 and 4 for lack of substantial evidentiary support.

The Federal Circuit held that McNeil’s appeal of his rejection at the BPAI was timely because it was within two months of the date that the decision was mailed to him. Further, the Federal Circuit reversed the Board of Patent Appeals and Interferences’ rejection of claims 1, 3 and 4 of McNeil’s re-examination application for lack of substantial evidentiary support based on the lack of the prior art’s disclosure of a fibre core, which was mentioned but not explicitly disputed by the appellant.

Judge Dyk’s Dissent

The dissent disagreed with the majority’s opinion with regards to timeliness only. Specifically, it observed that the decision of the BPAI clearly stated on its face that it was decided May 30, 2008. The dissent found that because McNeil did not appeal until August 1, 2008, two days after the regulatory period for review from a decision of May 30, 2008, the appeal was untimely filed and should not have been granted jurisdiction. The dissent noted that the jurisdiction of the Federal Circuit is statutorily limited by the timeliness regulations of the PTO, and quoted 35 U.S.C. § 142 to show that an appeal must be filed within such time as prescribed by the Director after the date of the decision from which the appeal is taken. The dissent also cited to the Supreme Court, which stated that statutorily limited times for filing a notice of appeal are “mandatory and jurisdictional.” Bowles v. Russell, 551 U.S. 205, 127 S. Ct. 2360, 2363 (2007).

Next, the dissent noted that 35 U.S.C. § 142 sets forth a time for filing the notice of appeal as within two months after action on the request for rehearing or reconsideration. The dissent asserted that the notice accompanying the promulgation of 35 U.S.C. § 142 characterized the relevant date as the date of “decision on reconsideration.” 54 Fed. Reg. 29,548, 29,550 (July 13, 1989). The dissent then observed that the majority also correctly noted that the term “action on the request” has the same meaning in this context as “date of the decision” and that the issue was what the phrase “date of the decision” means.

The dissent then reviewed the four sources for dates referenced by the parties in the case (the date of decision on the Board’s opinion, the PTO’s online Transaction History, the IFW wrapper entry of the “Mail Room Date”, and a “mailing sheet” attached to the paper copy of the opinion when mailed to McNeil). The first two sources refer to a date of May 30, 2008, while the last two reference June 2, 2008. The dissent notes that the only dispute is about which of these dates represents the “date of decision” as reflected in the statute and regulations.

The dissent held that the majority’s view that the “date of decision” is the date of mailing instead of the date of decision as clearly written on the opinion is contrary to the plain language of the regulation and against precedent interpreting the nearly identical language of 35 U.S.C. § 142’s predecessor rule. It observed that the only reason for the majority to reject May 30, 2008 was its theoretical concern that the Board could change the decision at some point after the “Decided” date was affixed to the decision before the decision was mailed. However, the dissent notes that no evidence of such revision exists. Further, the plain language of the statute and regulation state that the relevant date is the “date of decision,” not the date of mailing. In adopting these regulations and statutes, the dissent notes that both the PTO and Congress rejected the date of mailing as determinative. The dissent then pointed to examples in which the PTO explicitly used and prescribed the mailing date as determinative for setting a time limit for action. (citing 37 C.F.R. § 1.181(f); § 1.97(c); and § 2.105(a)).

The dissent then pointed to precedent that rejected the majority’s approach. Specifically, the dissent cited Burton v. Bentley, 14 App. D.C. 471 (C.A.D.C. 1899), in which the Court of Appeals (a predecessor of the District Court of D.C.) addressed the time for appealing a decision of the PTO when the decision date and mailing date differed. At that time, the prior rule required that appeals from the Patent Office “shall be taken within forty days from the date of the ruling or order appealed from, and not afterward.” (emphasis added). The court in Burton held that the relevant date was the date that the order was made and signed by the deciding official, and that a delay in mailing the order was irrelevant to the date of decision. The Court of Appeals asserted that the terms of the rules must be allowed their “ordinary meaning and import.” The Court held that to allow the time limit to be computed from any other act or event other than the date of the order appealed from would be violative of the rule.

The dissent agreed with the court’s view in Burton, and provided further support for its position from In re Reese. There, the Court of Customs and Patent Appeals (a predecessor of the Federal Circuit) asserted that the “date of the decision appealed from” was the date of the decision on the petition. In re Reese, 359 F.2d 462, 463 (CCPA 1966). The dissent also pointed to Barbacid v. Brown, in which the Federal Circuit held in a non-precedential decision that “the time for filing the appeal to this Court is two months from the date of the decision of the Board. The time is not measured from the date of receipt of the Board’s decision but from the date of the decision itself.” Barbacid v. Brown, 223 F. App’x 972, 973 (Fed. Cir. 2007). The Federal Circuit rejected the mailing date as determinative of the appeal time limit, despite the appellant’s allegation that he had never been mailed a copy of the decision because of an error by the Board.

The dissent then pointed out that the existence of any delay in mailing a decision does not impose an unfair burden on the parties because of the lengthy period for appeal and the Board’s ability to extent the time for appeal in situations where there has been excusable neglect. (citing 37 C.F.R. § 1.304(a)(3)(ii)). The dissent noted no allegations of inadequate time to prepare an appeal by the appellant. Thus, the dissent held that because the date of decision in this case was May 30, 2008, the Federal Circuit did not have jurisdiction to review because of the untimely notice of appeal filed August 1, 2008, and advocated dismissal of this appeal.

The TTAB explained that the word “hotels” “identifies the central focus of the information and reservation services provided on applicant’s website,” and concluded that the term HOTELS.COM, consisting of nothing more than a term that names that central focus of the services, is generic for the services themselves.” The TTAB determined that the addition of the dot-com domain designation does not impart registerability to a generic term.

The Federal Circuit began by noting that it has plenary review to the legal conclusions of the TTAB and reviews the factual findings of the TTAB to determine whether such are “arbitrary, capricious, or unsupported by substantial evidence.” The determination of whether a term is generic, and therefore not registerable, is a question of fact, and the Patent and Trademark Office has the burden of establishing that the proposed mark is generic by clear and convincing evidence. The Federal Circuit further noted that generic terms cannot be registered as a trademark because such terms are incapable of indicating the source of the goods or services. “Whether a term is entitled to trademark status turns on how the mark is understood by the purchasing public.” In re Montrachet S.A., 878 F.2d 375, 376 (Fed. Cir. 1989). “In the generic-descriptive-suggestive-arbitrary-fanciful continuum of words and their usage as marks of trade, there is no fixed boundary separating the categories[.]” Slip at page 5, citing In re K-T Zoe Furniture, Inc., 16 F.3d 390, 393 (Fed. Cir. 1994) “[D]escriptive terms describe a thing, while generic terms name the thing[.]” Id., (quoting 1 McCarthy, S12.05[1] (3d ed. 1992). Descriptive terms may acquire distinctiveness and serve as a trademark, while a generic term may not.

The applicant argued that the TTAB’s approach was fundamentally flawed because the TTAB analyzed the components “hotels” and “.com” instead of the mark in its entirety, HOTELS.COM. The applicant argued that HOTELS.COM is not a generic term for a hotel but is used to indicate an information source and travel agency. The applicant further argued that prospective customers perceive the mark as HOTELS.COM with the dot-com domain name, which is a significant aspect of the mark.

The TTAB responded with various definitions of “hotel,” “temporary lodging”, and “.com” and concluded that “hotels” and “.com” simply name the services provided by the applicant in association with the mark HOTELS.COM. The TTAB further relied on such sites as www.all-hotels.com, www.web-hotels.com, www.dealsonhotels.com, www.123-hotels.com, www.my-discount-hotels.com, www.choicehotels.com, www.hotelstravel.com, and www.hotelres.com to show that such domains are referred to as “hotel information sites” and “hotel reservation sites,” similar to the applicant’s www.hotels.com.

The Federal Circuit found no error with the TTAB’s analysis and stated that “the generic term ‘hotels’ did not lose its generic character by placement in the domain name HOTELS.COM.” Further, the Federal Circuit found that the TTAB’s assertion that the other uses of “hotels” in domain names demonstrate a competitive need for others to use “hotels” in their own domain names and trademarks to further support a prima facie case of genericness. Because the word “hotels” names a key aspect of the applicant’s services, the TTAB concluded that HOTELS.COM is properly viewed in the same way and having the same meaning as the word “hotels” by itself.

In rebuttal, the applicant provided sixty-four declarations from customers, vendors, and competitors, each of whom stated that “the term HOTELS.COM is not the common, generic name of any product, service, or field of study.” Further, the applicant submitted a survey entitled “Survey to Determine Whether Consumers Perceive ‘HOTELS.COM’ as a Brand Name or Generic Name.” The survey was a conducted by a independent party and was a “national probability double blind telephone survey… conducted employing the ‘Teflon’ methodology among 277 males and females age 18 and over in the continental United States who have stayed at a hotel or motel in the past 12 months or plan to in the next 12 months.” The study concluded that 76% of the respondents regarded HOTELS.COM as a brand name for a business that makes hotel reservations and provides information about hotels.

The TTAB gave no weight to the declarations because each included the same words and provided no explanation of the declarants’ conclusions or the declarants’ views on how the term HOTELS.COM is perceived by the public. The Federal Circuit recognized that the total rejection of the declarations appeared unwarranted; but, in the context of the entire record, the declarations do not negate the TTAB’s ultimate conclusion. The TTAB was skeptical of the survey results because they feared that consumers may automatically equate a domain name with a brand name and that the survey design did not adequately reflect the difference between the two.

The Federal Circuit concluded that the TTAB had satisfied its evidentiary burden by demonstrating that the separate terms “hotel” and “.com” in combination have a meaning identical to the common meaning of the separate components; and, the TTAB’s finding that HOTELS.COM was generic was supported by substantial evidence. Therefore, the refusal to register the applicant’s mark was affirmed.

Single login feature

Turning to the first issue, Desire2Learn argued that claims 36-38 do not include a “single login” limitation for the recited method of providing an online education system, and thus were anticipated by two prior art references. The ‘138 patent discloses a system that allows for online management of information relating to individual courses. Of particular benefit is the ability to allow a user to use a single login to access multiple courses with multiple respective roles in those courses (i.e., the “single login” limitation). For example, a graduate student who is a student in a first course and a teacher in a second course could use a single login to access both courses and access materials for both courses according to the corresponding role of the graduate student in the respective course.

Blackboard asserted that the “single login” feature is its patent’s essential improvement over prior art systems, and is recited in every claim including independent claim 36 (from which claims 37 and 38 depend).

Claim 36 recites:

An [sic] method for providing online education… comprising the steps of:

1. establishing that each user is capable of having redefined [sic: “predefined”] characteristics indicative of multiple predetermined roles in the system and each role providing a level of access to and control of a plurality of course files;
2. providing a predetermined level of access and control over the network to the course files to users with an established role as a student user enrolled in the course; and
3. providing a predetermined level of access and control over the network to the course files to users with an established role other than a student user enrolled in the course.

Though claim 36 does not explicitly provide for a single login, Blackboard argued that such a single login is required because the term “user” refers to an electronic user account that is defined by a single user name and password combination. Thus, the user being capable of having multiple roles is an electronic user having a single name and password combination, i.e., a single login. For support, Blackboard pointed to the specification, which sometimes uses the word “user” to ostensibly refer to an electronic representation of a person.

However, the Federal Circuit (Judges Bryson and Moore, and Cudahy by designation) disagreed. Specifically, the Federal Circuit reasoned that the specification typically uses the term “user account” to refer to the electronic representation of the user. Moreover, aside from a few shorthand references, the specification also typically uses the term “user” to refer to a flesh-and-blood person. Also, of the four embodiments described in the specification, only one includes the single login feature. Therefore, the Federal Circuit found that specification does not require that the recited “user” necessarily refers to an electronic user in the context of a single login.

The Federal Circuit further reviewed other claims and noted the relationship between claim 1 of the ‘138 patent and claims 24 and 25 which depend from claim 1. While claim 1 includes the same pertinent language as claim 36, dependent claims 24 and 25 recite the single login limitation. Thus, the Federal Circuit reasoned that as claim 1 cannot be construed to require a single login without making claim 25 redundant, claim 36, too, does not require the single login. Therefore, in its decision, the Federal Circuit affirmed that a dependent claim adding a particular limitation gives rise to the presumption that the limitation is not present in the independent claim.

As a result, the Federal Circuit held that, as there was not recited single login feature, claims 36-38 were invalid for anticipation by prior art systems.

Indefiniteness

Turning now to the 35 U.S.C. 112 issue, Blackboard challenged the district court’s invalidation of claims 1-35 as indefinite. Referring to independent claim 1 as representative (claims 2-35 depend from claim 1), claim 1 includes four means-plus-function clauses, including “means for assigning a level of access to and control of each data file based on a user of the system’s predetermined role in a course.” As the limitation is written in means-plus-function form, it is construed to cover only the structure described in the specification and equivalents thereof, as prescribed by 35 U.S.C. 112, paragraph 6.

Blackboard argued that the structure performing the assigning function is a software feature known as the “access control manager” (ACM), which is described in only one paragraph of the specification:

Access control manager 151 creates an access control list (ACL) for one or more subsystems in response to a request from a subsystem to have its resources protected through adherence to an ACL. Education support system 100 provides multiple levels of access restrictions to enable different types of users to effectively interact with the system (e.g. access web pages, upload or download files, view grade information) while preserving confidentiality of information.

The Federal Circuit upheld the district court’s decision that claims 1-35 are indefinite, because the specification failed to sufficiently describe the means by which the ACM creates an ACL. In particular, the Federal Circuit decided that the lone paragraph describing the ACM does not describe a structure, but merely puts forth an abstraction defined only by a function. That is, “[t]he specification contains no description of the structure or the process that the access control manager uses to perform the ‘assigning’ function. Nor has Blackboard ever suggested that the ‘access control manager’ represents a particular structure defined other than as any structure that performs the recited function.”

Blackboard argued that reference to a general-purpose computer satisfies the requisite structural disclosure for the means-plus-function limitation. Citing Aristocrat Techs. Austl. PTY Ltd. V. Int’l Game Tech., 521 F.3d 1328, 1334 (Fed. Cir. 2008), the Federal Circuit countered that relying on a general structure is equivalent to saying “that the function is performed by a computer that is capable of performing the function.” Moreover, citing Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1367 (Fed. Cir. 2008), the Court further noted that “when a computer is referenced as support for a function in a means-plus-function claim, there must be some explanation of how the computer performs the claimed function.” In other words, the Federal Circuit concluded that the specification only describes the function to be performed, but says nothing about how the ACM performs the function (i.e., how the ACM creates the ACL).

Blackboard also argued that the process of creating an ACL through software is well known to one of ordinary skill in the art. The Federal Circuit was unmoved by this argument, emphasizing that the question before it is not the ability of one of ordinary skill in the art, but whether the specification sufficiently describes a corresponding structure to a claimed means. In particular, the Court asserted that a patentee cannot avoid sufficiently disclosing a structure because someone of ordinary skill in the art could come up with a means to perform a claimed function. “That ordinarily skilled artisans could carry out the recited function in a variety of ways is precisely why claims written in ‘means-plus-function’ form must disclose the particular structure that is used to perform the recited function.”

Thus, in holding claims 1-35 to be indefinite, the Federal Circuit concluded that Blackboard is attempting to capture any possible means for performing the assigning function, in violation of 35 U.S.C. 112, by disclosing the means only as a general structure to perform the function.

In 2004, Saint-Gobain sued Gemtron, seeking a declaratory judgment of non-infringement and invalidity of the 573 and 673 patents. Gemtron counterclaimed for infringement. The only claim at issue in the appeal is claim 23 of the 573 patent, which recites the refrigerator shelf “including a relatively resilient end edge portion which temporarily deflects and subsequently rebounds to snap-secure one of said glass piece front and rear edges in the glass piece edge-receiving channel.” Saint-Gobain admitted that its model SG1, SG2 and SG3 shelves met all of the limitations of claim 23, except the term at issue. The District Court construed the claim term in contention to mean that “the end edge portion is sufficiently resilient that it can temporarily deflect and subsequently rebound when glass is being inserted into the frame.”

The parties moved for partial summary judgment concerning the infringement by the Saint-Gobain shelves, each with expert testimony. Gemtron’s expert testified that when the accused shelves were heated, it was possible to insert the glass panel of each shelf into the frame by snap-securing the panel into the receiving channel of the frame. Saint-Gobain’s expert testified that at room temperature, the frame was not sufficiently flexibly to allow insert of the glass. The District Court did not find any factual dispute from this testimony, given the different conditions for each test. The District Court held that infringement was established by the undisputed evidence that the glass panel could be snap-secured into the frames of the accused shelves during manufacture, when the frames were still warm. Thus, partial summary judgment of infringement of claims 23-30 of the ’573 patent by the SG1, SG2, and SG3 shelves was granted.

After the resolution of a discovery dispute, Gemtron identified additional Saint-Gobain shelves as potentially infringing claim 23. Saint-Gobain’s SG16 shelf was selected as representative of all remaining accused shelves for trial purposes. At trial, Gemtron presented a video showing its expert heating the frame of the SG16 shelf and snap-securing the glass panel into the frame. Gemtron also introduced evidence of Saint-Gobain’s manufacturing process, including instructions for assembling the Sg16 shelf in Saint-Gobain’s Mexico plant. The jury returned a verdict that the patent was not invalid and the SG16 shelf infringed claim 23 of the 573 patent. The District Court denied Saint-Gobain’s post-trial motions for a new trial and JMOL, entered judgment in Gemtron’s favor and granted and stayed a permanent injunction. Saint-Gobain appealed.

Saint-Gobain argues that the district court’s construction of “relatively resilient” was incorrect, and that the district court erred by granting summary judgment of infringement, by denying Saint-Gobain’s motion for judgment as a matter of law on infringement, by denying Saint-Gobain’s motion for judgment as a matter of law on obviousness, and by denying Saint-Gobain’s motion for a new trial.

Claim Construction of “relatively resilient”
The Federal Circuit reviewed the issue of claim construction de novo, to determine the ordinary and customary meaning of the undefined claim term as understood by a person of ordinary skill in the art at the time of the invention. Markman v. Westview Instruments, Inc., 52 F.3d 967, 970-71 (Fed. Cir. 1995) (en banc); Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456 (Fed. Cir. 1998) (en banc). The Court determined the ordinary and customary meaning of undefined claim terms as understood by a person of ordinary skill in the art at the time of the invention, using the methodology in Phillips v. AWH Corp., 415 F.3d 1303, 1312-19 (Fed. Cir. 2005) (en banc). “[T]he court looks to those sources available to the public that show what a person of skill in the art would have understood disputed claim language to mean. Those sources include the words of the claims themselves, the remainder of the specification, the prosecution history, and extrinsic evidence concerning relevant scientific principles, the meaning of technical terms, and the state of the art.” Id. at 1314.

The only claim term at issue was “relatively resilient end edge portion which temporarily deflects and subsequently rebounds to snap-secure.” The district court construed this term to mean that “the end edge portion is sufficiently resilient that it can temporarily deflect and subsequently rebound when glass is being inserted into the frame. (emphasis added). Saint-Gobain argued that the term should have been construed to mean that “the end edge portion is sufficiently flexible to permit the glass in the finished product to be pushed out of the frame and pushed back into the frame.” (emphasis added). Saint-Gobain asserted that “relatively resilient” should specifically not mean “temporarily resilient immediately after cooking in an oven and before any opportunity to cool.” Gemtron agreed with the district court’s construction. Although the parties agreed that the limitation required the frame to be flexible at some point in time, they disagreed about precisely when the frame must be flexible to be “relatively resilient.”

The Federal Circuit found that neither party identified any prosecution history or extrinsic evidence bearing on the claim construction issue. Thus, the Court limited its analysis to the claim language and the specification of the 573 patent. The Court noted that claim 23 itself had no express temporal or temperature limitation requiring that the end edge portion be relatively resilient “always,” or “at all temperatures,” or “when in use in a refrigerator.” Further, the Federal Circuit observed that the claim did not merely claim a frame with an end edge portion that was “relatively resilient.” Rather, the claim recited a frame with a “relatively resilient end edge portion which temporarily deflects and subsequently rebounds to snap-secure one of [the] glass piece front and rear edges in the glass piece edge-receiving channel.” The Court held that the phrase “temporarily deflects and subsequently rebounds to snap-secure” suggested that the claimed resilience of the frame need only be exhibited during assembly because the “snap-secure” interaction of the frame and glass panel, facilitated by the “relatively resilient end edge portion,” was a characteristic of the shelf that was maintained even after assembly in the claimed shelf. Citing to In re Garnero, the Federal Circuit asserted that the characteristic was a structural attribute, even though the claim language ties the “relatively resilient” characteristic of the frame’s edge portion to its function in the assembly of the shelf. In re Garnero, 412 F.2d 276, 279 (CCPA 1969).

The Federal Circuit noted that the specification also focused on the characteristics of the frame that enable snap-secure assembly of the shelf. Specifically, the specification described the structure of prior art shelves in reference to their assembly. Further, the specification characterized all of the prior art as disclosing a shelf assembled using adhesive to bond the edge of the glass to the frame. Further, the specification stressed the advantages in the manufacturing and assembly process of the claimed structure due to its snap-secure assembly. The Court noted that every time the structure of the “relatively resilient” edge portions was mentioned in the specification, it was in the context of how that structure functions while the shelf is assembled. The specification failed to discuss any purpose or value of the “relatively resilient” edge portion of the frame other than in assembly of the shelf. The Court held that the specification indicated that the end edge portions of the frame were “relatively resilient” if they were able to deflect at the time the shelf was assembled, to “snap-secure” the glass panel within the frame. Thus, the Federal Circuit affirmed the District Court’s construction of “relatively resilient” in claim 23 to mean that the end edge portion must be sufficiently resilient that it can temporarily deflect and subsequently rebound when glass is being inserted into the frame.

Saint-Gobain argued that this construction requiring only that the frame deflect during assembly transforms the “relatively resilient” limitation of claim 23 into a product-by-process limitation. The Federal Circuit rejected this argument, asserted that the limitation only required that the glass panel be snap-secured into the frame. The Court held that snap-secure describes the structural relationship between the glass panel and the shelf frame. The Federal Circuit then provided a plethora of parentheticals asserting that if a limitation can be connoted by both structure and process, the default is to construe it as structural if it describes the product more by its structure. 3M Innovative Props. Co. v. Avery Dennison Corp., 350 F.3d 1365, 1371 (Fed. Cir. 2003); Hazani v. U.S. Int’l Trade Comm’n, 126 F.3d 1473, 1479 (Fed. Cir. 1997); In re Garnero, 412 F.2d at 279; Eric P. Mirabel, Product-By-Process Claims: A Practical Perspective, 68 J. Pat. & Trademark Off. Soc’y 3, 4-7 (1986). The Court held that defining a structural component by its function as well as its physical characteristics is different from defining a structure solely by the process by which it is made. Thus, the Federal Circuit’s construction did not transform the “relatively resilient” limitation into a product-by-process limitation. Infringement
The Federal Circuit noted that nowhere at summary judgment or trial did Saint-Gobain dispute that, during the manufacturing process for the accused shelves, when the glass is inserted into its frame, the frame is at a temperature such that it can temporarily deflect and subsequently rebound. At oral argument, Saint-Gobain did claim that its products were assembled using a “heat-shrink process,” and it denied that, during manufacture, the frame is “resiliently flexed to snap over the glass.” However, the Court found that the oral argument was directly contradicted by the video evidence of Saint-Gobain’s manufacturing process admitted at trial, which clearly shows that, during Saint-Gobain’s manufacturing process, while the frame is still warm from the molding process, the frame is pushed and temporarily deflected to accommodate the glass panel, then rebounded to snap-secure the glass in the frame. The Federal Circuit rejected Saint-Gobain’s unsworn attorney argument to the contrary, and citing Laitram Corp. to assert that it was not evidence and could not rebut the video and other admitted evidence about Saint-Gobain’s manufacturing process. Laitram Corp. v. Cambridge Wire Cloth Co., 919 F.2d 1579, 1583 (Fed. Cir. 1990).

Saint-Gobain next argued that the accused shelves could not be infringing because they were manufactured in Mexico. When the shelves were imported into the United States, the frames had cooled and were no longer flexible. Saint-Gobain asserted that the accused shelves as imported and sold in the United States had to be modified, by heating them, to meet the “relatively resilient” limitation. The Federal Circuit rejected this argument. It noted that claim 23 was directed to an apparatus, not a process. The Court held that, under 35 U.S.C. § 271(a), an accused infringer infringes an apparatus claim if it “makes, uses, offers to sell, or sells” the claimed apparatus “within the United States,” or “imports [the apparatus] into the United States.” Thus, the Court held that the infringing act only (making, using, offering to sell, selling, or importing) must be within (or into) the United States. The Court cited In re N. Pigment Co. for the proposition that even if the infringing product was manufactured outside of the U.S., importing the product, or using, offering to sell, or selling the product in the U.S. would constitute infringement. In re N. Pigment Co., 71 F.2d 447, 456 (CCPA 1934).

The Federal Circuit held that the term “relatively resilient” required merely that the frame of the shelf had the structural characteristic of having been temporarily deflected and subsequently rebounded to snap-secure the glass at the time of manufacture. The Court noted that Saint-Gobain did not dispute that it had imported the accused shelves, and used and sold them, in the U.S. The Court stated that the end portions of the frames of those shelves were “relatively resilient,” as that phrase is used in claim 23, and met all of the limitations of claim 23. The Court failed to see any genuine issues as to any material fact as to infringement by the SG1, SG2, and SG3 shelves, and held that Gemtron was entitled to a judgment as a matter of law that those shelves infringed claim 23 of the 573 patent. Further, the Court asserted that substantial, undisputed evidence supported the jury verdict of infringement. Thus, the Federal Circuit affirmed the district court’s grant of summary judgment of infringement, its denial of Saint-Gobain’s motion for judgment of non-infringement as a matter of law, and its denial of Saint-Gobain’s motion for a new trial on infringement. Validity
The Federal Circuit reviewed the denial of judgment as a matter of law de novo, and the denial of Saint-Gobain’s motion for a new trial for abuse of discretion. Voda, 536 F.3d at 1318; Imwalle, 515 F.3d at 543; Morgan, 559 F.3d at 434. The Court asserted that Saint-Gobain's appeal of both motions was based on a single argument that the only evidence of non-obviousness (testimony from Gemtron’s expert) should have been excluded as contrary to the 573 specification. Gemtron’s expert testified that a person of ordinary skill in the art would not have expected that the claimed flexible frame could be used in a shelf that would support food loading.

The Federal Circuit dismissed this argument for two reasons. First, the Court held that Saint-Gobain did not seek to exclude or strike the expert’s testimony at trial, thus waiving the issue on appeal. Curcuru v. Peninsular Elec. Light Co., 258 F. 785, 790 (6th Cir. 1919). Second, the Court asserted that a shelf capable of supporting food loading was not directly contrary to the 573 patent. The Court agreed with Saint-Gobain that the specification of the ’573 patent expressly described the ribs of the refrigerator compartment providing support to the shelf to prevent the frame from bending and allowing the glass to fall out. However, the Court held that the context of the specification allowed for the shelf alone to support food loading, with the ribs provided as additional support to prevent inadvertent distortion of the frame. Thus, the Court found that the specification did not contradict Gemtron’s expert testimony that the shelf of the 573 patent was able to support food loading. The expert testimony thus provided substantial evidence that a person of ordinary skill in the art would not have expected the results of the combination recited in claim 23. The Federal Circuit held that the district court did not err by denying Saint-Gobain’s motion for judgment as a matter of law, nor did it abuse its discretion by denying Saint-Gobain’s motion for a new trial.

The Federal Circuit affirmed the district court’s construction of the claim term “relatively resilient end edge portion” to mean that the end edge portion is sufficiently resilient that it can temporarily deflect and subsequently rebound when glass is being inserted into the frame. Applying this construction, the Federal Circuit further affirmed the district court’s grant of summary judgment, its denial of Saint-Gobain’s post-trial motions as to both infringement and validity, and its grant of a permanent injunction.

While hearing appeals based on summary judgment issues of non-infringement, the Federal Circuit, sua sponte, took en banc the issue of how to construe product-by-process claims for infringement. The Federal Circuit affirmed the lower court’s ruling that product-by-process claims are to be construed under the rule in Atlantic Thermoplastics Co. v. Faytex Corp., 970 F.2d 834 (Fed. Cir. 1992). The Court refused to rely on Scripps Clinic & Research Foundation, which taught that the “correct reading of product-by-process claims is that they are not limited to product prepared by the process set forth in the claims.” Scripps Clinic & Research Foundation v. Genentech, Inc., 927 F.2d 1565, 1583 (Fed. Cir. 1991). In Atlantic Thermoplastics, the patentee asserted that competing, indistinguishable innersoles made by a different process than that outlined in his claim still infringed his patent. The Federal Circuit disagreed and held that product-by-process claims would be limited by the process included in the claim.

To support its decision to rely on Atlantic Thermoplastics, the Federal Circuit relied on numerous Supreme Court cases that noted that “process terms that define the product in a product-by-process claim serve as enforceable limitations.” The Federal Circuit also announced that the U.S. Court of Customs and Patent Appeals and the U.S. Court of Claims agreed with the rule. The Federal Circuit also relied on its sister circuits (the 1st Circuit and 3rd Circuit, as well as a precedential ruling from its predecessor court), to provide support for its decision to utilize Atlantic Thermoplastics. However, the Court merely recited cases, sometimes with parentheticals, without going into the detailed reasoning of the cases to provide a more persuasive argument for its decision.

The Court did provide analysis from Cochrane v. Badische Anilin & Soda Fabrik, (hereinafter “BASF”). Cochrane v. Badische Anilin & Soda Fabrik, 111 U.S. 293 (1884). In BASF, the patentee claimed a product artificial alizarine that was produced by a specific process. The artificial alizarine was already known in its natural form, and varied from that natural form depending upon the proportion of alizarine and anthrapurpine in the product. Thus, both alizarine and artificial alizarine were products known in the art. The Supreme Court held that the claim for artificial alizarine was limited to the products made by the process steps in the claim. The Supreme Court asserted that “[E]very patent for a product or composition of matter must identify it so that it can be recognized aside from the description of the process for making it, or else nothing can be held to infringe the patent which is not made by that process.” 111 U.S. at 310.

The Federal Circuit also cited parentheticals to two other Supreme Court cases that showed support for their position and asserted that the PTO followed a similar line of thinking with regard to product-by-process claims. The Federal Circuit also relied on Warner-Jenkinson, which dealt with the doctrine of equivalency, to shore up its reasoning. Specifically, the Federal Circuit noted that the Supreme Court in Warner-Jenkinson Co. v. Hilton Davis Chemical Co., 520 U.S. 17 (1997) held that “[e]ach element contained in a patent claim is deemed material to defining the scope of the patented invention.” 520 U.S. at 19. The Federal Circuit applied that logic to product-by-process claims to assert that each element (including process terms) was material to defining the scope of the patented invention. Thus, the Federal Circuit held that, to the extent it is inconsistent with Warner-Jenkinson as applied to product-by-process claims, the previous rule of Scripps Clinic & Research Foundation was overturned.

The Federal Circuit then dismissed the concerns of the dissent by declaring that the right the dissent “laments” was one that never existed (“the right to assert a product-by-process claim against a defendant who does not practice the express limitations of the claim.”) The Court then upheld the legitimacy of product-by-process claims, stating that its decision only clarified that such claims are not infringed by products made by processes other than the ones claimed.

The Federal Circuit also dismissed the jurisprudence of the Court of Customs and Patent Appeals by citing to a passage from In re Bridgeford, 357 F.2d 679 (CCPA 1966). Specifically, the Federal Circuit referred to a passage from Bridgeford which noted that product-by-process claims were permitted by the PTO to define a patentable product and have developed with the cognizance that courts differ in the interpretation of the claim, with some courts construing such claims to cover only a product made by the particular process set forth in the claim. In its dismissal of this case and the CCPA’s jurisprudence, the Federal Circuit noted that the Supreme Court and every circuit court to consider the issue, had construed product-by-process claims to cover only the product made by the particular process set forth in the claim.

The Federal Circuit noted the import of retaining the product-by-process claim structure, but cautioned that the scope of an invention would be held to how it was explicitly defined in the claims. Specifically, the Court noted that since the inventor chose to claim the product in terms of its process, the courts cannot simply ignore as verbiage the only definition of the invention supplied by the inventor. The Federal Circuit further expounded that, with a product-by-process claim, the only logical way to determine if that claim has been infringed is to compare both products and both processes. The Court explicitly asserts that “[I]f the basis of infringement is not the similarity of process, it can only be similarity of structure or characteristics, which the inventor has not disclosed.” Thus, according to the Federal Circuit, suggesting a different rule for product-by-process claims with known and unknown structures would be unnecessary and logically unsound.

After ruling en banc on the issue of whether processes provided substantive limitations to product claims during litigation, the Federal Circuit analyzed the claims in the 507 patent. However, the remainder of the Court did not participate in this portion of the opinion. In the instant case, the Federal Circuit also rejected the argument that the language “obtainable by” in the product-by-process claims introduced an optional process, such that the claim is not limited to the explicit process terms included in the claim. In support, the Federal Circuit cited again to BASF. The patentee in BASF included similar broad language in its patent claim, only to have it rejected by the Supreme Court. There, the Supreme Court refused to attach import to those words, instead holding that the only identification of the claimed invention was through the processes described in the claim.

The Federal Circuit likened the instant case to BASF, and ruled that Abbott’s claims “do not furnish any test by which to identify the cefdinir crystals except that they are the result of their respectively claimed processes.” The Court noted that, without the process steps, there would be no differentiation between the product-by-process claims and the product claims of the 507 patent. Further, the Court pointed to the specification of the 507 patent, which explicitly used specific language to describe the two processes utilized in the product-by-process claims. The Federal Circuit noted that the language was not open-ended, nor a mere description of the process. The Court asserted that it could not ignore the choice to include that language as part of the claims because it must enforce the ways and terms by which a party chooses to define its invention.

The Federal Circuit observed that the prosecution history of the 507 patent also does not support the patentee’s contention that “obtainable by” offers an optional set of definitional process conditions. First, the Court pointed to the fact that Abbott Labs cancelled a set of process claims that corresponded to the product-by-process claims, because the PTO held that the process claims were obvious in view of the product-by-process claims. The Court states that the cancellation of the process claims is proof of the acceptance of the PTO’s view that the process elements were critical parts of the product-by-process claims. Second, the Federal Circuit notes that, during prosecution, the product-by-process claims were differentiated from a cited reference because of specific process terms in the claims. The Court asserts that terms considered of import during the patentability analysis cannot be jettisoned for an infringement analysis.

Thus, the Federal Circuit held that the mere use of the word “obtainable by” instead of “obtained by” was not sufficient to broaden the scope of the product-by-process claims or evade the limitations of the process terms in those claims. In summary, the Federal Circuit affirmed the District Court’s rulings that the interpretation of product-by-process claims is governed by Atlantic Thermoplastics, and noted that merely using phrases such as “obtainable by” will not broaden the scope of a product-by-process claim or allow it to evade the limitations of its process terms.

The disputed claims in the Besemer application and the Schembri patent deal with “microarray hybridization,” which is a technique for performing multiple genetic analyses on a small fluid sample. Specifically, claim 20 of the Schembri patent and claim 66 of the Besemer application relate to a method for mixing a fluid sample during hybridization, by providing and moving a bubble in a fluid in a closed chamber. (Schembri Patent col. 10 ll. 33-45, Besemer application at 39).

Agilent filed a motion before the Board challenging the validity of the copied claims in the Besemer application, asserting that the written description was inadequate under 35 U.S.C. §112, ¶ 1, to show actual possession of the bubble-mixing invention. The Board found that the Besemer application showed support for the claimed invention, awarded priority to Affymetrix, and cancelled the contested claims of Agilent’s Schembri patent.

Agilent appealed to the U.S. District Court for the Northern District of California under 35 U.S.C. § 146. The parties submitted new expert reports and testimony from their respective expert witnesses, as well as cross motions for summary judgment on the written description issue. The District Court affirmed the Board and granted Affymetrix’s motion for summary judgment that the Besemer application satisfied the written description requirement. Agilent appealed the District Court’s judgment regarding claim construction and the written description requirement.

First, Agilent took issue with the District Court’s use of the Affymetrix application to construe the claim language. To determine which specification to utilize to construe the claims, the Federal Circuit looked to its prior decisions in In re Spina, 975 F.2d 854 (Fed. Cir. 1992), and Rowe v. Dror, 112 F.3d 473 (Fed. Cir. 1997).

In Spina, the applicant copied a claim from the “Barron” patent to provoke an interference, similar to Affymetrix’s actions. The Board viewed the claim in light of the Barron disclosure, from which the claim had been copied. The Court held that this interpretation was correct. “When an interpretation is required of a claim that is copied for interference purposes, the copied claim is viewed in the context of the patent from which it was copied.” In re Spina, 975 F.2d 854, 856 (Fed. Cir. 1992).

In Rowe v. Dror, Rowe copied several claims from the Dror patent to provoke an interference. Dror filed a motion seeking judgment against Rowe on the ground that a third party anticipated some of Rowe’s claims corresponding to the interference count. On appeal, the Federal Circuit held that Rowe’s specification should be used to interpret Rowe’s claims because the question was one of novelty or non-obviousness. The Court held that the PTO should interpret the claim in light of its host disclosure, just as it would during ex parte prosecution. Rowe v. Dror, 112 F.3d 473, 479 (Fed. Cir. 1987). The Federal Circuit also explicitly distinguished Rowe from Spina due to the different question each case answered. The Court held that the Spina rule was applicable when the question turned on whether the copying party’s specification provided an adequate written description for the copied claims. The Rowe rule would apply when the question of the claim’s validity under 35 U.S.C. 102 or 35 U.S.C. 103 was at issue.

In reviewing these cases, the Federal Circuit held that the Spina rule applied, and reversed the decision of the District Court which used the Affymetrix application to construe the copied claims. The Federal Circuit also rejected Affymetrix’s argument calling for the application of 37 C.F.R. 41.200(b), which calls for the broadest reasonable construction of claim language in light of the specification in which it appears. For support, the Court pointed to it decision in Rowe, which asserted that judicial precedent is as binding on administrative agencies as are statutes. Thus, the Federal Circuit held that Spina would be the applicable rule for this issue, and the Agilent specification would be utilized to construe the contested claims.

The Federal Circuit then concluded that the District Court erroneously interpreted the claim term “a closed chamber” to mean “a system of enclosures.” The District Court based its interpretation on Figure 28 of the Besemer application, to include the cavity 310, containers 2810 and 2820, and associated tubes. The Federal Circuit agreed with Agilent’s interpretation that the term was defined by the claim itself. The claim recites a closed chamber defined by “a first substrate and a second substrate having inner surfaces.” The Court interprets the claim to require that the chamber be bound by a first substrate and second substrate, and thus incapable of ambiguously spanning a “system of enclosures.” Rather, the Court looks to the claim language to construe the closed chamber as being explicitly defined by two surfaces. Further, the Federal Circuit asserts that the Schembri specification is replete with references and support for its interpretation of “closed chamber.” Finally, the Federal Circuit rejected the District Court’s interpretation as frustrating or even completely ignoring claim language requiring that “at least one of said inner surfaces is functionalized…” Under a system definition, the Federal Circuit asserted that the Schembri specification provided no guidance as to which surface would be functionalized. Thus, the Court rejected the District Court’s expansive definition of “closed chamber” and relied instead on the language of the claim and the Schembri specification to define the term.

The Federal Circuit also agreed with Agilent’s contention that the District Court erred in construing a “closed chamber… adapted to retain a quantity of fluid” as a chamber that is “capable of being sealed or set apart from its surroundings to retain a quantity of fluid.” Citing Merck, the Federal Circuit held that “closed” should be given further meaning because a claim construction that gives meanings to all the terms of the claim is preferred to one that does not do so. Merck & Co. v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1372 (Fed. Cir. 2005). The Court also looked to Mangosoft to reject the District Court’s construction that gave no meaning to a term (“closed”) that was not already implicit in the rest of the claim. Mangosoft, Inc. v. Oracle Corp., 525 F.3d 1327, 1330-31 (Fed. Cir. 2008). According to the Federal Circuit, closed was not the same thing as closable because equating the two terms was contrary to the plain language of the claim.

The District Court explicitly recognized that the ordinary meaning of the term “closed” in the context of a fluid retention chamber is “not open” or “sealed,” meaning that the chamber does not allow the fluid to escape. However, the District Court compromised this ordinary meaning to fit its erroneous assumptions that the claims should be construed in light of the Besemer application and that a “closed chamber” can mean a “system of enclosures.” The Schembri disclosure enables the ordinary meaning of the term to be utilized, and provides unambiguous and repeated support for such an interpretation. Specifically, the Schembri disclosure defines both a chamber and a closed chamber, explaining that the chamber becomes a closed chamber with a substrate placed on top of its seal to close it.

Thus, the Federal Circuit reversed the District Court’s construction because it was not grounded in the proper disclosure, and did not honor the customary meaning of the claim language to one of skill in the art. The Federal Circuit averred that the proper meaning of a “closed chamber… adapted to retain a quantity of fluid” is “an enclosed cavity defined by the inner surfaces of the first and second substrates, from which there is no egress of fluid.”

Next, the Federal Circuit examined whether the grant of summary judgment that the Besemer application had adequate possession of the claimed invention at the time of invention was proper. First, the Court cited In re Wright to note that the written description doctrine prohibits new matter from entering into claim amendments, especially during the continuation process. In re Wright, 866 F.2d 422, 424 (Fed. Cir. 1989). The court further observed that the written description requirement is a question of fact that requires that the specification must “convey with reasonable clarity to those skilled in the art that, as of the filing date sought, he or she was in possession of the [claimed] invention.” Conservolite, Inc. v. Widmayer, 21 F.3d 1098, 110 (Fed. Cir. 1994); Vas-Cath, Inc. v. Mahurkar, 935 F.2d 1555, 1563-64 (Fed. Cir. 1991). Finally, the court declared that patent applications do not enjoy a statutory presumption of validity. Rather, Agilent’s burden of proving a lack of written description in the Besemer application is merely a preponderance of the evidence. Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1365 (Fed. Cir. 2004).

Before addressing the substantive merits of the grant of summary judgment, the Federal Circuit agreed with Agilent’s contention that the District Court erred by adopting an incorrect standard of review for new evidence that had not been before the Board. Under 35 U.S.C. 146, a party dissatisfied with the Board’s decision may initiate a civil action in a U.S. District Court to bring forth “further testimony.” Under this section, if the parties present new evidence to the District Court that is in conflict with the record before the Board, the District Court must make de novo factual findings regarding the new evidence.

Agilent initiated an action under Section 146 in response to the Board’s finding that it had not advanced any “meaningful evidence” to show that one of ordinary skill in the art would not have understood Besemer’s application to inherently disclose using bubbles to mix fluid in a closed chamber, as required by the contested claims. The Board specifically told Agilent that, for example, an expert declaration that one of ordinary skill in the art would not have had the requisite knowledge or skills to conclude from the Besemer application that the inventor was in possession of the invention would have been useful. Agilent submitted deposition testimony from Affymetrix’s expert to remedy the evidentiary deficiency. Specifically, Affymetrix’s expert explained that bubbles were not inherently present in the “vortexer” embodiment of Figure 29 of Besemer’s disclosure. Further, in the embodiments of Figures 28 and 30, the chamber was not closed. The parties had already agreed that Figures 28-30 of Besemer’s application were the only embodiments relating to the bubble mixing of the contested claims.

The District court dismissed this evidence, concluding that Agilent had not presented any new evidence concerning the written description issue, and deferentially reviewed the Board’s decision for substantial evidence. The Federal Circuit asserted that this deferential review was legal error because Agilent had submitted new evidence that specifically pertained to filling evidentiary gaps observed by the Board. The Court emphasized that Section 146 allowed a litigant to shore up evidentiary gaps that may have been evident by the end of the inter partes interference procedure. Here, the Court recognized that Agilent was notified of such evidentiary gaps and took measures to fill them. The Federal Circuit asserted that evidence submitted by Agilent in the Section 146 action should have been considered by the District Court. Thus, the Federal Circuit examined Agilent’s evidence without deference to the Board’s finding.

As mentioned above, the record showed, and the parties seemed to agree, that the only embodiments depicting bubble mixing in the Besemer application were those illustrated by Figures 28-30, i.e. the “circulator” and “vortexer” embodiments. Agilent contended that these embodiments of the Besemer application failed to provide written description support for the claims at issue. First, the “circulator” embodiments (as illustrated in Figures 28 and 30 of the Besemer application) failed to describe a method that takes place in a closed chamber. Second, the “vortexer” embodiment (as illustrated in Figure 29 of the Besemer application) failed to describe bubble mixing at all.

Given the Federal Circuit’s interpretation of a “closed chamber… adapted to retain a quantity of fluid,” the Court initially looked to the Besemer specification to disclose such an enclosed cavity from which there is no egress of fluid. Upon close examination of the Besemer disclosure, the Court found that the “circulator” embodiments of Figures 28 and 30 did not disclose a closed chamber that would prevent the escape of fluid. Rather, those embodiments required the circulation of fluid in and out of the cavity to facilitate mixing. Affymetrix’s own expert affirmed that requirement in his deposition to the District Court. Thus, the “circulator” embodiment of Figures 28 and 30 provided no written description support for the bubble mixing of the contested claims.

The Federal Circuit then turned to the “vortexer” embodiment of Figure 29, in which it found a closed chamber. The Court observed that the “vortexer” embodiment allowed the introduction of fluid into a closed reaction chamber from which the fluid did not egress. To fully satisfy the written description requirement, this embodiment must then also describe “providing a bubble in the fluid” and “moving a bubble within the fluid to result in mixing,” as required by the contested claims. However, both mentions of bubbles in the Besemer disclosure relied on by Affymetrix were tied to the “circulator” embodiments, where the bubbles are created by forcing fluid in and out of the chamber. The Court found that this creation of bubbles was inconsistent with the requirement of a “closed chamber.”

The Court further asserted that Affymetrix’s argument that the “vortexer” embodiment inherently produces bubbles was contradicted by Affymetrix’s own expert testimony that bubbles were not necessary generated in the fluid in the system as depicted by Figure 29 (the “vortexer” embodiment). The Federal Circuit cited In re Oelrich to note that inherency requires that one of ordinary skill in the art would recognize that a reference unavoidably teaches the property in question. In re Oelrich, 666 F.2d 578, 581 (C.C.P.A 1981). The mere fact that a certain thing may result from a given set of circumstances would not establish inherency. Hitzeman v. Rutter, 243 F.3d 1345, 1355 (Fed. Cir. 2001). Given Affymetrix’s expert testimony, the Court declared that Affymetrix’s argument that the “vortexer” chamber might include an unmentioned void that might result in bubble creation was insufficient to establish inherency.

Thus, the Federal Circuit failed to find any embodiments in the Besemer application that disclosed bubble mixing in a closed chamber and concluded that the District Court erred in its grant of summary judgment in Affymetrix’s favor. The Federal Circuit stated that Affymetrix copied Agilent’s claims into its continuation application despite having failed to disclose the claimed invention. Therefore, the Court reversed the District Court and granted Agilent’s motion for summary judgment regarding the written description issue.

The Federal Circuit reversed the District Court’s claim construction because it was not grounded in the proper disclosure, and did not honor the customary meaning of the claim language to one of skill in the art. The Federal Circuit stated that the originating disclosure should be controlling for claim construction when determining if the host application has adequately supported the subject matter claimed by both parties. Further, the ordinary meaning of the claim language should be recognized, if supported by the originating disclosure. The Federal Circuit also reversed the grant of summary judgment regarding Affymetrix’s possession of the claimed invention at the time of invention. Here, the Federal Circuit reversed the District Court and considered new evidence submitted by Agilent to the District Court. The Federal Circuit stressed that litigants are given the opportunity through 35 U.S.C. 146 to satisfy evidentiary gaps brought to light at the Board and stated that evidence submitted through a 146 action should be taken into account. In light of that new evidence, and upon close examination of the Besemer disclosure, the Federal Circuit found no evidence that the disclosure supported the invention as claimed.

In a prior appeal, the Federal Circuit Court upheld the District Court’s granting of summary judgment as per Medtronic not literally infringing the ‘678 patent with Medtronic’s Vertex pedicle screws. However, the Federal Circuit Court reversed the District Court’s granting of summary judgment of noninfringement under the doctrine of equivalents. In the prior appeal, the Federal Circuit Court remanded the case because it found a question of fact existed on whether the Vertex screw’s conical shape was insubstantially different from the ‘678 patent’s screw having a limitation in claim 1 of the patent reciting a “spherically-shaped portion. In the remanded case, Medtronic asserted an “ensnarement” defense against the doctrine of equivalents issue, wherein the Medtronic asserted that the scope of equivalency of the ‘678 patent would “ensnare” the prior art.

The District Court, in holding that ensnarement is a legal limitation of the doctrine of equivalents, decided the ensnarement would be decided by the District Court at the end of the infringement proceeding and would not be decided by the jury. Further, the District Court found that the prior art was not ensnared by a hypothetical claim meant to cover the allegedly infringing device.

On appeal, the Federal Circuit stated that ensnarement bars a patentee from asserting a scope of equivalency for the present invention that would encompass or “ensnare” the prior art, citing Wilson Sporting Goods Co. v. David Geoffrey & Assoc., 904 F.2d 677, 683 (Fed. Cir. 1990). In appealing the District Court’s denial of Medtronic’s ensnarement defense, Medtronic asserts that the ensnarement issue should have gone to the jury, rather than being decided by the District Court because the underlying factual issues are to be resolved by the jury, if such is requested.

The Federal Circuit Court stated that ensnarement should be treated, for procedural purposes, the same as prosecution history estoppel, and found that “[u]ltimately, however, ensnarement is a question of law for the court, not the jury, to decide.” The Federal Circuit Court stated that the Supreme Court, in Warner-Jenikson Co., v. Hilton Davis Chem. Co., 520 U.S. 17, 39 n.8 (1997), recognized “various legal limitations on the application of the doctrine of equivalents…,” which “are to be determined by the court either on a pretrial motion for partial summary judgment or on a motion for judgment as a matter of law at the close of the evidence and after the jury verdict.” The Federal Circuit Court goes on to note that, although the Supreme Court did not explicitly recognize ensnarement as one of the various legal limitations on the application of the doctrine of equivalents, the Federal Circuit Court has consistently treated ensnarement as one of the various legal limitations.

In citing Loctite Corp.v. Ultraseal Ltd., 781 F.2d 861, 870 (Fed. Cir. 1985), the Federal Circuit Court stated that “[w]e have called ensnarement and prosecution history estoppel, collectively, “two policy oriented limitations” on the doctrine of equivalents, both of which are “applied as questions of law.”” Furthermore, the Federal Circuit Court went on to say that “[e]nsnarement, like prosecution history estoppel, limits the scope of equivalency that a patentee is allowed to assert. This limitation is imposed even if a jury has found equivalence as to each claim element,” citing Wilson Sporting Goods, 904 F.2d at 683, 687. Consequently, the Federal Circuit Court views ensnarement as a question of law, and reviewed the ensnarement defense asserted by Medtronic de novo.

For ensnarement, the Federal Circuit Court states that “the burden of persuasion is on the patentee to establish…that the asserted scope of equivalency would not ensnare the prior art, Wilson Sporting Goods, 904 F.2d at 685.” However, in resolving ensnarement’s factual issues, the Federal Circuit Court states that “a district court may hear expert testimony and consider other extrinsic evidence regarding: (1) the scope and content of the prior art; (2) the differences between the prior art and the claimed invention; (3) the level of ordinary skill in the art; and (4) any relevant secondary considerations. Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966).” As such, the Federal Circuit Court goes on to say that “[i]f a district court believes that an advisory verdict would be helpful, and that a “hypothetical claim” construct would not unduly confuse the jury as to the equivalence and validity, then one may be obtained under Federal Rule of Civil Procedure 39(c). See, e.g., Interactive Pictures Corp. v Infinite Pictures, Inc. 274 F.3d 1371, 1375 (Fed. Cir. 2001).” The Federal Circuit Court relied upon a hypothetical claim that both parties in the suit agreed as literally covering Medtronic’s Vertex pedicle screw.

In analyzing whether the patentee has carried the burden of persuading the court that the hypothetical claim is patentable over the prior art, the Federal Circuit Court looked at Puno and Anderson, two references introduced by the accused infringer, Medtronic. Both parties agreed that Puno contains all elements of the hypothetical claim except for a “compression member” that presses a screw head against a receiver member. Medtronic asserts that Anderson teaches the compression member missing from Puno, and thus teaches a rigid pedicle screw. However, because Puno “teaches away” from a rigid screw that increases the likelihood that the screw would fail in the human body, DePuy argues, and the District Court found that Puno’s teachings counter the reason for which Medtronic argues would make the combination of Puno and Anderson obvious, i.e. the creation of a rigid pedicle screw.

Medtronic’s argument as per a reason to combine Puno and Anderson relies upon other teachings in the prior art, which Medtronic asserts would have motivated a person of ordinary skill to look past Puno’s warnings regarding a rigid pedicle screw. Medtronic points to a decision of the Federal Circuit Court, wherein the term “operatively” of claim 5 of Puno was interpreted to mean “posterior stabilization of the spine” rather than “micro-motion.” In the present appeal, Medtronic asserted that because of the previous claim construction of Puno claim 5, the pedicle screws of Puno are not limited to “micro” or “limited” motion, and thus, can be rigid. However, the District Court stated that it was not clear that “posterior stabilization” and “micro-motion” were mutually exclusive, and thus rejected Medtronic’s argument, which the Federal Circuit Court affirmed.

Additionally, Medtronic proffered two additional prior art references, Harms (U.S. Patent No. 4,946,458) and Puno (U.S. Patent No. 4,805,602). Harms, which has the same inventors as the ‘678 patent, and discloses a tightening and loosening of fasteners allowing for a stiff connection or dampening movement. However, the Federal Circuit Court notes that the Harms patent does not disclose “why a person of ordinary skill would have “desired” either of these rigidity levels, much less why a rigid connection would have been selected in the face of Puno’s warning against such rigidity.” Puno ‘602, which lists Dr. Rolando Puno as a co-inventor, discloses a screw-and-rod system having an intermediate amount of rigidity as a resolution between the decreasing rigidity of wired systems and the rigidity of plate systems. However, the Federal Circuit Court notes that “Puno ‘602 consistently views low rigidity as an advantage and high rigidity as a disadvantage…[and] thus bolsters, rather than undermines the district court’s finding that the prior art teaches away from rigid pedicle screws.” Thus, with the Federal Circuit Court consistently noting that Puno, in light of the teachings of the considered prior art, teaches away from rigid pedicle screws, the Court found that the District Court was correct to find that a person of ordinary skill would have been discouraged in combining Puno and Anderson for the purpose that Medtronic asserts.

The Federal Circuit Court also looked to secondary considerations, and specifically “failure by others” and “copying” to support the conclusion that Medtronic’s asserted combination of Puno and Anderson would not be obvious to one of ordinary skill in the art at the time of the invention. The Federal Circuit Court notes that the ‘678 patent, which was published in May 1993, had a priority date of ‘1989, and while Medtronic’s engineers were attempting to solve the same problem for which the ‘678 patent is directed towards, namely making the device more rigid, Dr. Kevin Foley of Medtronic viewed a device design with no compression member to be the best solution through April 1993. However, when the ‘678 patent was issued in May 1993, Medtronic’s engineers changed their device design by inserting a compression member into the pedicle screw device, similar to what was disclosed in the ‘678 patent. In the appeal, Medtronic asserted that it attempted avoid infringement by designing around the ‘678 patent’s “spherically-shaped” limitation, however, Medtronic was unsuccessful.

The Federal Circuit Court agreed with the District Court’s finding that secondary considerations indicate nonobviousness, Particularly, Medtronic’s quick adoption of the compression member after the ‘678 patent was issued and because Medtronic argues that such addition of the compression member was obvious despite their initial attempts at making a rigid pedicle screw without the compression member indicate nonobviousness. Thus, the Federal Circuit Court found that the secondary considerations further support the District Court’s holding that the hypothetical claim would not have been obvious in light of the prior art, and that Medtronic’s ensnarement defense was properly denied.

The Federal Circuit Court also addressed whether the Jury’s awarding of lost profits to DePuy, for the amount of $149.1 million as per the pedicle screws and $77.2 million as per “pull-through” products, was proper. In order to establish lost profits, DePuy relied upon the four-factor Panduit test requiring a showing of (1) demand for the patented product, (2) lack of acceptable non-infringing substitutes, (3) manufacturing and marketing capability to meet the demand for the patented product, and (4) the amount of profit that would have been made by sales of the patented product. Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978).

Medtronic contested the sufficiency of DePuy’s showing of the first two factors. As per showing a demand for the patented product, Medtronic argues that DePuy failed to show that demand for DePuy’s ‘678 patent product was due to the “top-loading” feature of the screw. However, the Federal Circuit Court stated that Medtronic’s argument “unnecessarily conflates the first and second Panduit factors,” and that the first factor “does not require any allocation of consumer demand among the various limitations recited in a patent claim.” The Court went on to state that the first factor merely requires a showing of demand for the patented product, which is a product “covered by the patent in suit” or that “directly competes with the infringing device,” and cited Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1548-49 (Fed. Cir. 1995) (en banc) for support. The Federal Circuit Court went on to hold that “the focus on particular features corresponding to individual claim limitations is unnecessary when considering whether demand exists for a patented product under the first Panduit factor.”

As per the second Panduit factor, Medtronic asserted that non-infringing bottom loading screws were available on the market during the time at issue. However, the Federal Circuit Court stated that “because Medtronic did not actually have a noninfringing substitute “on the market” during the relevant accounting period, it was Medtronic that bore the burden of overcoming the inference of unavailability,” citing Grain Processing Corp. v. Am. Maize-Products Co., 185 F.3d 1341, 1353. Medtronic asserted that bottom-loading screws could have been made during 2000-2003, and that it did provide such screws in 2007. However, DePuy introduced evidence showing Medtronic was unsuccessful in designing a bottom-loading screw until 2007. Thus, the Federal Circuit Court held that “a reasonable jury could have concluded…that…the bottom loading design would not have been available or acceptable to consumers before the end of 2003.”

Furthermore, Medtronic asserts that being precluded from introducing the District Court’s 2004 summary judgment ruling that Medtronic’s Vertex screws did not infringe the ‘678 patent was unfair, because the ruling would help the jury to understand why Medtronic did not switch to bottom-loading screws until 2007. The Federal Circuit Court noted that the District Court’s summary judgment didn’t address Medtronic’s failure to design a bottom loading screw until 2007 and overcome technical and regulatory hurdles in introducing a non-infringing design to the market. Additionally, with the likelihood of jury confusion resulting from the District Court having to explain how the summary judgment was overruled in part as per equivalence, but not direct infringement, the Federal Circuit Court held that excluding the summary judgment was not an abuse of the District Court’s discretion. Thus, the Federal Circuit Court affirmed the jury’s award of lost-profits as per DePuy’s pedicle screws.

In addition to the lost-profits of $149.1 million as per the pedicle screws, the jury also awarded DePuy $77.2 million as per “pull-through” products, which included such products as head braces and vests that are not related to the ‘678 patent or spinal surgery. The Federal Circuit Court noted that “these products are related only by virtue of the business relationship that is created when a customer first buys a patented Summit and Mountaineer device.” The Federal Circuit Court went on to note that lost profits are recoverable for unpatented items when they are assembled with or function with the patented item. American Seating Co. v. USSC Group, 514 F.3d 1262, 1268 (Fed. Cir. 2008). However, because the “pull-through” products were only sold due to DePuy’s business relationships with the surgeons buying DePuy’s patented pedicle screws, the Federal Circuit Court reversed the award of lost-profit damages arising from the pull-through products.

On cross-appeal to the Federal Circuit Court, DePuy challenged the District Court’s denial of a motion for a new trial on reasonable royalty damages. In the original trial, DePuy argued for a royalty rate of 15%, whereas Medtronic argued for a rate of 6%. However, the jury awarded a rate of 0%. Although DePuy indicated to the District Court that the jury may have misunderstood the application of the royalty rate shortly after the jury was dismissed, DePuy did not file a motion for a new trial until several weeks later. In denying DePuy’s motion, the District Court stated that any inconsistency in the jury’s verdict should have been addressed before the jury was discharged, citing Wennik v. Polygram Group Distrib., Inc., 304 F.3d 123, 130 (1st Cir. 2002). In addition to the timeliness of DePuy’s motion, the Federal Circuit Court noted that the lost-profits award of $149.1 million exceeded DePuy’s alternate request of $59.2 million in damages arising from royalties. Thus, the Federal Circuit Court affirmed the District Court’s denial of DePuy’s motion for a new trial.

DePuy also cross-appealed the District Court’s granting of Medtronic’s motion for Judgment as a Matter of Law (JMOL) of no willfulness in the infringement of the ‘678 patent. Applying the willfulness standard of In re Seagate Technology, LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc) requires showing “by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent.” The Federal Circuit Court stated that “[w]e agree with Medtronic and the district court that there was no legally sufficient evidentiary basis to find an objectively high likelihood under Seagate’s first prong that the Vertex model…infringed the ‘678 patent.” Accordingly, DePuy’s argument that “knowingly copying a competitor’s patented invention is objectively risky behavior of the highest order,” bears upon the state of mind of the infringer, which corresponds to Seagate’s second prong and is not relevant to the objective inquiry of the first prong of Seagate. Seagate, 497 F.3d at 1371. In the first appeal, the Federal Circuit Court affirmed the District Court’s grant of summary judgment of no literal infringement and overturned the District Court’s granting of summary judgment of noninfrigement under the doctrine of equivalents, and stated that a jury was needed to resolve the remanded question. Even though an accused infringer is not immunized from a finding of willful infringement when the issue of infringement is submitted to a jury, the Federal Circuit Court stated that “the record developed in the infringement proceeding in this case, viewed objectively, indisputably shows that the question of equivalence was a close one, particularly insofar as equivalence “requires an intensely factual inquiry.” Vehicular Tech. Corp. v. Titan Wheel Int’l, Inc., 212 F.3d 1377, 1381 (Fed Cir. 2000).” Thus, Federal Circuit Court held that DePuy failed to meet the requirements of Seagate’s first prong, and thus did not need to address Seagate’s second prong in affirming the District Court’s granting of JMOL of no willfulness.

Lastly, Medtronic appealed the District Court’s granting of $425,375 in attorney’s fees to DePuy and the $10 million sanction levied upon Medtronic based upon the District Court’s finding of litigation misconduct on the part of Medtronic. According to the District Court, Medtronic “fail[ed] to accept the claim construction governing this case,” and in arguing the reverse doctrine of equivalents as a defense to infringement, “served only to confuse the jury.” However, the Federal Circuit Court stated that the District Court incorrectly understood the reverse doctrine of equivalents, which can be applied to individual limitations of a claim. Thus, the Federal Circuit Court held that Medtronic should not be sanctioned for asserting the defense against the infringement of a literal scope of a limitation that did not fall under the District Court’s doctrine of equivalents claim construction. The Federal Circuit Court reversed the District Court’s finding as per the attorney’s fees and the sanction for litigation misconduct because the District Court’s ruling was merely based upon Medtronic’s assertion of the reverse doctrine of equivalents in its infringement defense, rather than the way Medtronic litigated the defense.

In summary, the Federal Circuit affirmed the District Court’s rulings in denying Medtronic’s ensnarement defense. The Federal Circuit Court affirmed the jury’s award of lost-profits as per DePuy’s pedicle screws but reversed the jury’s award of lost-profit damages arising from the pull-through products. Additionally, the Federal Circuit Court affirmed the District Court’s denial of DePuy’s motion for a new trial based on reasonable royalty fees. Lastly, the Federal Circuit Court reversed the District Court’s imposition of $425,375 in attorney’s fees and the $10 million sanction levied upon Medtronic.

Star used third party contractors to manufacture products under the license for its own use. On January 4, 2008, CoreBrace sent Star a letter terminating the license without any prior notice. That same day, CoreBrace also filed suit for breach of the license due to Star’s use of third party contractors and for patent infringement based on Star’s use of patented products under a terminated license. The U.S. District Court for the District of Utah granted Star’s motion to dismiss under Fed. R. Civ. P. 12(b)(6), holding that Star did not breach the license by having third party contractors make the licensed products and that CoreBrace did not properly terminate the license, making patent infringement impossible.

The District Court asserted that the right to “make” an article includes the right to engage others to do work connected with its production. Carey v. United States, 326 F.2d 975 (Ct. Cl. 1964). Further, “have made” rights, or rights to have a licensed product made by a third party contractor, are granted in a license unless expressly prohibited. Advanced Micro Devices v. Intel Corp., 885 P.2d 994 (Cal. 1994). The District Court distinguished this case from situations regarding the licensee’s rights to make a product and sell it under a third party’s name. Intel Corp. v. U.S. Int’l Trade Comm’n, 946 F.2d 821 (Fed. Cir. 1991). Thus, the Court stated that based upon the license, Star had the right to have a third party manufacture the licensed product for it. The District Court also found that CoreBrace failed to follow the license’s termination procedures, and rejected CoreBrace’s arguments that the breach was incurable. The District Court noted that the breach did not frustrate the purpose of the license. Thus, CoreBrace should have followed the termination procedures under the license. Because the license was not terminated, the District Court held Star could not have infringed the patent under which it was licensed. CoreBrace appealed the District Court’s dismissal.

The Federal Circuit first looked at the issue of breach of license. CoreBrace argued that “have made” rights are not inherent in the right to make, use and sell in a license. Further, CoreBrace asserted that the District Court improperly relied on Carey and Advanced Micro and improperly distinguished the Intel case. Finally, CoreBrace contends that the reservation of rights clause in the license precludes an interpretation that the license includes “have made” rights.

As contract law is a matter of state law as opposed to Federal Law. The Federal Circuit looked to the Utah law to determine whether the “have made” right is included in a license to make or use an invention. With regards to the “have made” rights, the Federal Circuit noted that the Utah Supreme Court had not yet addressed whether the scope of the right to “make, use, and sell” a product inherently include the right to have it made by a third party. The Federal Circuit looked to decisions affirming inherency from its predecessor court and the California Supreme Court to conclude that the Utah Supreme Court would likely rule the same way. Specifically, the Federal Circuit looked to Carey and Advanced Micro, which were also discussed by the District Court. The Court of Claims held in Carey that a license to “produce, use, and sell” a product inherently included the right to have it made by a third party. The Court of Claims stated that the license “is not restricted to production by the licensee personally...” but “permits him to employ others to assist him in the production… of the invention.” Carey, 326 F.2d at 979. Further, the California Supreme Court held in Advanced Micro that, unless expressly precluded, have-made rights were included in the contractual right to make and sell a licensed product. Advanced Micro, 885 P.2d 994 (Cal. 1994).

CoreBrace argued that Carey was distinguishable from its case, because the license in Carey was exclusive and included a right to sublicense. The Federal Circuit rejected CoreBrace’s argument, stating that the Court in Carey had based it decision on the right to “produce, use, and sell,” not on exclusivity or the right to sublicense. Although the licenses were not identical, the logic used by the Carey Court was dependent upon rights (to produce, use and sell) included in both the Carey license and the instant license. The Federal Circuit held that “have made” rights are included in the right to make, sell and use the product, regardless of whether the license is exclusive or sublicenses are allowed.

To bolster their argument, the Federal Circuit also pointed to Cyrix Corp., which held that expressly granted “have made” rights were not a sublicense. Cyrix Corp. v. Intel Corp., 77 F.3d 1381, 1387-88 (Fed. Cir. 1996). Thus, a third party contractor used by a licensee could not make or use the licensed product for anyone but the licensee or sell it to third parties.

CoreBrace also argued that the District Court improperly distinguished Intel, which CoreBrace interpreted as holding that “have made” rights were restricted by the reservation of rights clause in the license. Intel Corp. v. U.S. Int’l Trade Comm’n, 946 F.2d 821 (Fed. Cir. 1991). The Federal Circuit distinguished Intel because, in Intel, both parties agreed that Sanyo’s license did not provide “have made” rights, and only argued as to the source of the denial of that right. Further, the case was distinguished due to its subject matter (foundry rights, or rights for the licensee to manufacture the licensed product for a third party to sell under the third party’s name). The administrative law judge of the International Trade Commission held that the denial of “have made” rights was due to the reservation of rights clause. The Federal Circuit asserted that their holding of denial of “have made” rights was due to the entire contract, including the limitation to make, use and sell only “Sanyo” products in the contract. Due to their holding based upon a unique clause in the contract and the difference is subject matter, the Federal Circuit refused to find Intel persuasive or controlling in this case.

CoreBrace also claimed that the reservation of rights clause in the license precludes an interpretation that the license includes “have made” rights. The Federal Circuit rejected this argument based on its conclusion that “have made” rights were inherent in a license providing rights to “make, use, and sell” a product. The Federal Circuit held that there was no express language or intent shown in the contract to exclude the “have made” rights. Further, the Court found other provisions of the license that would reinforce the inclusion of “have made” rights. Specifically, the Federal Circuit pointed to a clause providing that Star would own any improvements to the technology “by a third party whose services have been contracted by” Star. Further, the license requires Star to allow an “audit of its books and records relating to manufacturing… [And] supply contracts.” Thus, the Court held that the parties must have contemplated that third parties might manufacture and supply the licensed products to Star.

Given its conclusion that Star did not breach the license by contracting with third parties for manufacture, the Federal Circuit held that the issue of CoreBrace failing to adequately terminate the license was moot. CoreBrace was not entitled to terminate the license, and thus Star could not have infringed CoreBrace’s patent under which it was licensed.

The Federal Circuit affirmed the District Court of Utah’s ruling that the right to “make, use and sell” includes inherently the right to have licensed products made by a third party, unless expressly precluded by the license.

The Board upheld a rejection of applicants’ claimed invention under 35 U.S.C. § 112, 1st paragraph for lack of written description and a rejection under 35 U.S.C. § 103(a) for obviousness. With respect to the lack of written description, the Board asserted that applicants had not described what domains of their described amino acid sequences were associated with the required binding to CD48, and thus did not describe which of NAIL’s amino acids could be varied and still bind. The Board held that, without correlating the structure of the sequence with function, the specification did not provide adequate written description for claim 73.

The Board also affirmed that claim 73 was non-obvious under 35 U.S.C. § 103(a), under the combined teachings of U.S. Patent No. 5,688,690 (“Valiante”) and 2 Joseph Sambrook et al., Molecular Cloning: A Laboratory Manual 43-84 (2d ed. 1989) (“Sambrook”). The Board found (and Applicants did not dispute) the receptor protein p38 of Valiante to be the same protein as NAIL, existing on the surface of the NK cell and able to activate cytotoxicity. Valiante taught that the DNA and protein sequences for p38 could be obtained by conventional methods (such as those set forth in Sambrook). The Board held that the disclosure of p38, along with a detailed method of isolating its DNA, including disclosure of a specific probe to do so, established Valiante’s possession of p38’s amino acid sequence and provided a reasonable expectation of success in obtaining a polynucleotide encoding p38, within the scope of applicants’ claim 73. Further, the Board asserted that, given the importance of NAIL’s role in human immune response, motivation existed to apply conventional methodologies (like those of Sambrook) to isolate the NAIL cDNA.

On appeal, the Federal Circuit sustained the Board’s factual inquiries underlying the § 103(a) rejection. Specifically, the Applicants argued that there is insubstantial evidence to find that their methodology of isolating NAIL is equivalent to the teachings and methodologies of Valiante and Sambrook. However, the Federal Circuit asserted that the claimed invention is not to the processes used, but rather to the results of those processes. The Court held that the record was sufficient to show that Valiante’s examples would produce the claimed nucleotide.

Further, the Federal Circuit found that substantial evidence existed that the Applicants used conventional techniques as taught by Valiante and Sambrook to isolate the gene sequence for NAIL. The Court rejected the Applicants’ argument that Valiante and Sambrook fail to provide guidance for preparing the cell culture to serve as a useful source of mRNA for the preparation of a cDNA library due to Applicants’ own admissions. Specifically, the argument was rejected because Applicants asserted that the nucleic acid molecule had been derived from DNA or RNA isolated in pure form and in a quantity or concentration that enabled identification, manipulation and recovery of its component nucleotide sequences using standard biochemical methods (such as those provided by Sambrook).

The Federal Circuit further held that prior art showing NAIL’s binding to the CD48 protein was not necessary to assert a finding of obviousness because CD48 binding is a property necessarily present in NAIL. The Federal Circuit noted that discovering new qualities in a product that others had discovered or new functionality in a structure suggested by prior art is not an invention. In re Wiseman, 596 F.2d 1019, 1023 (CCPA 1979); Gen. Elec. Co. v. Jewel Incandescent Lamp Co., 326 US 242, 249 (1945). Since the Board found that Valiante’s p38 was the same protein as applicants’ NAIL protein, Valiante’s teaching to obtain the cDNA encoding of p38 necessarily teaches one to obtain the cDNA of NAIL. P38’s cDNA would necessarily exhibit the CD48 binding property and would fall under the scope of claim 73.

The Federal Circuit next rejected the idea that the “obvious to try” test should only be applied to predictable arts (as opposed to a more unpredictable arena like biotechnology). The Federal Circuit held that patent law does not customize its tests for specific scientific fields. In so doing, the Federal Circuit noted that its prior decision in In re Deuel, 51 F.3d 1552 (Fed. Cir. 1995), which held that obvious to try was inappropriate as an obviousness rationale in the biotechnological arts, was suspect and greatly limited or overruled after the Supreme Court’s decision in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007). Rather, the Supreme Court held in KSR that where there is an identified need or pressure, and a finite number of identified, predictable solutions, a person of ordinary skill has good reason to pursue known options within his or her technical grasp. Solutions of this kind would not be the product of innovation, but rather one of ordinary skill and common sense. Thus, the fact that a combination was obvious to try might show it was obvious under 35 U.S.C. § 103.

After rejecting the analysis in In re Deuel, the Federal Circuit noted that the Supreme Court “actually resurrects this court’s own wisdom in In re O’Farrell [853 F.2d 894, 903 (Fed. Cir. 1988)].“ In re O’Farrell, which predated In re Deuel, noted that obvious to try was a rationale supporting an obviousness rejection. However, the Federal Circuit also noted that the court in In re O’Farrell “cautioned that ‘obvious to try’ is an incantation whose meaning is often misunderstood.” In order to differentiate between obviousness resulting from obvious to try and impermissible hindsight, the court in In re O’Farrell outlined situations (paralleled in KSR) in which passing the “obvious to try” test would be erroneously equated with obviousness.

The first class of cases to which “obvious to try” should not be applied were those where the prior art gave no indication which parameters to vary or which choices were likely to be successful. The second class of cases consisted of those exploring new technologies or a general approach where only general guidance existed as to the particular form of the invention or how to achieve it. However, in contrast to these two cases, an obviousness finding under an “obvious to try” test would be appropriate when the prior art “contained detailed enabling methodology for practicing the claimed invention, a suggestion to modify the prior art to practice the claimed invention, and evidence suggesting that it would be successful.” 853 F.2d at 902 (emphasis added). The prior art did not have to require absolute predictability of success, but merely a reasonable expectation of such.

The Federal Circuit held that the Applicants’ case was dissimilar to either of the erroneous “obvious to try” classes. With regards to claim 73, Valiante and Sambrook, which together teach a protein identical to NAIL, a commercially available monoclonal antibody specifically for NAIL, and explicit instructions for obtaining the DNA sequence for NAIL, gave more than general guidance as to how to achieve the specific form of the invention and provide clear direction as to which methods are likely to be successful. Further, the prior art provided a reasonable expectation of successfully obtaining a polynucleotide of claim 73. Thus, the Federal Circuit held that the “obvious to try” test should be applicable in this case. Further, the Court asserted that use of the test shows that claim 73 was obvious and thus not patentable.

The Federal Circuit affirmed the Board’s ruling that applicants’ claims were obvious as a matter of law under the “obvious to try” test. The prior art provided an identical protein to that claimed by applicants, a commercially available monoclonal antibody for that protein, and explicit instructions for obtaining the DNA for that protein. Thus, the “obvious to try” test was appropriate because the prior art provided clear direction as to which methods were likely to be successful to achieve the invention, and a reasonable expectation of successfully obtaining a polynucleotide under claim 73.

Cordis and Boston Scientific both own patents relating to intravascular stents, which are cylindrical lattice-like scaffolds that are inserted into a blood vessel and expanded in order to hold the vessel open. Cordis owns the 762 and 406 patents, while Boston Scientific owns the 021 patent. The jury returned a verdict that Cordis’ stents did not literally infringe claim 36 of the 021 patent, but that certain stents infringed under the doctrine of equivalents by having an equivalent to the “corners” limitation of claim 36. The jury further found that Boston Scientific did literally infringe claim 23 of the 762 patent, induced literal infringement of claim 1 of the 762 patent, and literally infringed claim 2 of the 406 patent. Both Cordis and Boston Scientific appealed to the Federal Circuit, which affirmed the verdicts of infringement.

Cordis’s appeal of the judgment that it infringes claim 36 of the 021 Patent

The jury found Cordis did not literally infringe claim 36. Further, there was no instruction of whether Cordis’s stents infringed claim 36 under the doctrine of equivalents. Rather, the jury determined whether Cordis’s stents infringed the “corners” limitation of claim 36. The Federal Circuit noted that the judgment must have rested on an agreement between the parties that Cordis’s stent literally infringed all other limitations of claim 36, and that the question of infringement turned solely on the “corners” limitation.

The Federal Circuit first noted that the District Court properly construed the “wherein” clause of claim 36. The “wherein” clause of claim 36 describes how the struts within one expansion column or ring of a stent are connected to the struts of another column or ring. The Federal Circuit held that the District Court properly construed this clause to mean “the first expansion strut in the first column does not share a longitudinal axis with the second expansion strut in the second column,” and properly did not exclude “180 degrees out of phase” stent designs. Cordis asserted that the 180 degrees out of phase designs should have been excluded, meaning that Cordis’ stent would no longer be infringing. Specifically, Cordis argued that the wherein clause appears in both claim 1 and claim 23, that the clauses must have the same meaning, and that the prosecution history shows that the wherein clause excludes 180-degree out of phase designs. Since claim 36 depended from claim 23, such a finding would preclude a finding of infringement.

However, the Federal Circuit noted that claims 1 and 23 use different numbering systems for their expansion struts and expansion columns, making the meaning of the wherein clause distinct for each claim. Thus, the language of claim 1 could exclude 180-degree out of phase designs, while the language of claim 23 could include them. Further, the Federal Circuit stated that the prosecution history did not preclude such an interpretation. The Examiner allowed claims 1 and 23 after the wherein clause was included. However, the Examiner made no reference to 180 degree out of phase designs, and only utilized the numbering system of claim 1 when allowing both claims. The Federal Circuit refused to assume, without some further basis, that the Examiner’s utilization of claim 1’s numbering system when allowing both claims was based on an assumed identity of numbering systems.

The Federal Circuit also refuted Cordis’ attempts to show disclaimer by lack of a figure in the patent that uses 180 degree out of phase design and unclear language in the provisional application, asserting that unclear prosecution history may not be used to limit claims; rather, a disclaimer must be clear and unmistakable. Thus, there was no disclaimer as to the interpretation given claim 23 forcing an interpretation consistent with claim 1.

On the issue of doctrine of equivalents, the Federal Circuit first affirmed that the jury’s determination of infringement based on doctrine of equivalents analysis was supported by substantial evidence. The Court held that sufficient expert testimony existed that Cordis’s stent met the “corners” limitation of claim 36 under the function-way-result test. The Federal Circuit found that the function-way-result analysis under Graver Tank & Manufacturing Co. v. Linde Air Products Co., 339 U.S. 605, 608 (1950), “is still useful under Warner-Jenkinson Co. v. Hilton-Davis Chemical Co., 520 U.S. 17, 39-40 (1997), particularly for mechanical inventions.” Further, Boston Scientific’s expert testified that the “corners” of claim 36 and the circular arcs or rounded corners of Cordis’ stent “both function as actual and potential reference points for joining adjacent stent rings, fulfill this function through their similar locations, and can or do result in offset connections between stent rings.” Thus, the finding was sufficiently supported by evidence and satisfied the function-way-results test for finding equivalency.

Cordis argues that the doctrine of equivalents should not be applied because the jury’s finding of infringement vitiated the “corners” limitation. Cordis noted that such an equivalency meant that the “circular arcs of the BX Velocity stent cannot ‘form an angle’ as required by the district court’s claim construction.” The Federal Circuit affirmed the District Court’s holding that the circular arcs of Cordis’ stent were not antithetical to the “corners” limitation of claim 36, and thus could be held as equivalent. Specifically, the Federal Circuit, without supplying additional analysis, found that the “corners” limitation did not vitiate the angle limitation “because it does not ‘render[ ] the pertinent limitation meaningless,’ Freedman Seating Co. v. Am. Seating Co., 420 F.3d 1350, 1359 (Fed. Cir. 2005), or ‘effectively eliminate that element in its entirety,’ Warner-Jenkinson, 520 U.S. at 29.” Thus, the Federal Circuit affirmed that claim 36 was found infringed under the doctrine of equivalents.

‘021 patent is valid and supported by provisional application
Cordis asserted that the ‘021 patent was invalid in light of a number of prior art patents. On review, the Federal Circuit quoted Johns Hopkins Univ. v. Datascope Corp., 543 F.3d 1342, 1345 (Fed. Cir. 2008) as to the standard of review for obviousness determinations: “We review ‘[the] jury’s conclusions on obviousness, a question of law, without deference, and the underlying findings of fact . . . for substantial evidence.’” (quoting LNP Eng'g Plastics, Inc. v. Miller Waste Mills, Inc., 275 F.3d 1347, 1353 (Fed. Cir. 2001)).

The Federal Circuit noted that the District Court cited uncontradicted testimony from Boston Scientific’s expert that the prior art patents cited by Cordis would be unlikely to be combined to create the connectors of claim 36 of the 021 patent. This uncontradicted testimony further established that these patents taught away from the bottom-to-top connectors of claim 36 by describing them as potentially harmful. Thus, the Federal Court asserted that the District Court properly concluded that substantial evidence existed to show these prior art patents did not render claim 36 obvious.

Cordis further argued that claim 36 of the ‘021 patent was not fully supported by the provisional application to which the ‘021 patent claimed priority. The Federal Circuit noted that the question of compliance with the written description requirement under 35 U.S.C. § 112 is a question of fact, and thus the review of the jury’s finding is whether the jury’s finding is supported by substantial evidence. PIN/NIP, Inc. v. Platte Chem. Co., 304 F.3d 1235, 1243 (Fed. Cir. 2002). The Federal Circuit affirmed the jury’s findings that the written description requirement was met, noting the District Court’s cite to uncontradicted testimony from Boston Scientific’s expert that the provisional application provided a sufficient written description of the limitations of claim 36.

Cordis’ cross-appeal of the judgment on issue of whether documents were printed publications

The Federal Circuit affirmed the District Court’s grant of summary judgment that the claims of the 762 patent were not invalidated by the 1980 and 1983 monographs of Dr. Palmaz, because the monographs were not prior art printed publications under 35 U.S.C. § 102(b). Dr. Palmaz created the monographs and distributed them to his colleagues. Under agreements that did not require confidentiality (one expressly disclaiming liability for confidentiality), Dr. Palmaz also distributed the monographs to two companies while attempting to commercialize the stent technology. Boston Scientific urged that, even if the distribution to colleagues did not make the monographs prior art printed publications, distributions to companies with no legal obligation of confidentiality certain would confer such status on the monographs.

Citing to In re Wyer, 655 F.2d 221, 226 (CCPA 1981) and Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1569 (Fed. Cir. 1988), the Federal Circuit held that a document is publicly accessible for purposes of 35 U.S.C. § 102(b) if it has been made available to the extent that persons interested and ordinarily skilled in the subject matter could locate it and recognize and comprehend therefrom the essentials of the claimed invention. Also, while the widespread distribution of a document may be sufficient to make the document a publication for purposes of 35 U.S.C. §102(b), the Federal Circuit held that a limited distribution does not necessarily do so. Citing to In re Klopfenstein, 380 F.3d 1345, 1347 (Fed. Cir. 2004), the Federal Circuit held that courts have been reluctant to assert that dissemination of work to colleagues is public use, because professional and behavioral norms entitle the author to a reasonable expectation that the information will not be copied or further distributed. Moreover, there is no requirement that there be a confidentiality agreement to prevent distribution, although such an agreement is often in place. Thus, Dr. Palmaz’s distribution of the monographs to his colleagues with the expectation of limited distribution would be protected from the status of public use.

The Federal Circuit found the issue of distribution to interested companies to be murkier, given that confidentiality agreements were not in place and one company expressly disclaimed an obligation to keep the material confidential. However, because evidence existed to support a conclusion that an expectation of confidentiality existed between Dr. Palmaz and the two companies, the Federal Circuit held that the monographs were not prior art “printed publications” within the meaning of 35 U.S.C. § 102(b). Specifically, no evidence existed that the documents became available to the public as a result of disclosure by the companies. The Federal Circuit asserted that the lack of a legal obligation of confidentiality regarding documents did not make place them in the domain of “public use.”

Functional language can operate as a claim limitation to distinguish prior art.
Boston Scientific argued that the 762 patent anticipates claim 2 of the 406 patent. The parties agree that the 762 patent anticipates claim 2, except for the functional language in claim 1 of the 406 patent (upon which claim 2 depends). The functional language recites "such that the links and bands define an expandable structure having axial flexibility in an unexpanded configuration.” Boston Scientific asserted that the “such that” claim language is not a claim limitation that can distinguish the 406 patent over the 762 patent. The Federal Circuit disagreed, citing Microprocessor Enhancement Corp. v. Tex. Instruments Inc., 520 F.3d 1267, 1375, and held that sufficient evidence was presented to the jury to find that the 762 patent did not anticipate claim 2 of the 406 patent.

Conclusion
The Federal Circuit affirmed all of the District Court’s judgments regarding infringement, reversing only a dismissal of claims without prejudice. The Federal Circuit held, among other findings, that the use of the doctrine of equivalents was appropriate as long as it did not render the pertinent claim limitation meaningless, that the mere lack of a legal obligation of confidentiality, without more, when distributing documents is insufficient to place in the domain of “public use,” and functional language can operate as a claim limitation to distinguish prior art.

The plaintiffs sued Vast Resources for patent infringement. Plaintiff offered evidence of commercial success as evidence of nonobviousness, but did not otherwise offer evidence of nonobviousness. The U.S. District Court, Middle District of Florida, found the patent valid and ruled in favor of the plaintiffs. The defendants appealed the decision, challenging the patent’s validity and the plaintiffs cross-appealed on the matter of the amount of relief the District Court granted. The Federal Circuit Court, hearing the appeal, reversed the District Court judgment with instructions to dismiss the suit.

The Federal Circuit Court only considered whether the invention of the ‘924 patent would have been obvious to a person of ordinary skill in the art, as per 35 U.S.C. §103(a). In analyzing the claimed invention of the ‘924 patent, the Federal Circuit looked at the use of and features attributed to borosilicate glass, which in the device of the ’924 patent is substituted for soda-lime glass as compared to the conventional art. Specifically, since it was not contested as to the well known nature of each component in the claimed invention, the Federal Circuit focused on the use and features of the substituted element, the borosilicate glass, and the effect of evidence of commercial success as evidence of nonobviousness when using well known components.

As an initial point, the Federal Circuit interpreted “lubricious” to include borosilicate glass, which is smoother than soda-lime glass, and thus, the borosilicate glass becomes slippery with less lubricant when compared to soda-lime glass. The Federal Circuit noted that the term “appreciable amount,” as recited in the ‘924 patent, while vague, can be interpreted and defined to mean an amount of boron oxide usually found in borosilicate glass. As such, the amount of boron oxide would be known to those of ordinary skill in the art.

Since no other evidence was contested related to obviousness, the Federal Circuit focused on the extent to which commercial success, which was not contested, is useful for showing nonobviousness. In discussing the commercial success of the invention of the ‘924 patent, the Federal Circuit noted that borosilicate glass has been used in glassware for nearly 100 years as Pyrex glassware, manufactured by Corning, Inc. (previously Corning Glass Works). Although Corning now also manufactures Pyrex using tempered soda-lime glass, borosilicate glass has been used in the glassware market since in 1893, when borosilicate glass was invented. The Federal Circuit acknowledged that borosilicate glass has the properties recited in the ‘924 patent, and this fact was not contested on appeal. The Federal Circuit also stated that even if the device is useful due to the recited properties, the invention would not be patentable as it was obvious “to a person having relevant technical skills.”

The Federal Circuit noted that because the device of the ‘924 patent has commercial value, to call the device obvious “may seem the triumph of hindsight over insight.” However, because borosilicate glass has been commercially available and used since 1893 and was otherwise very well known, the Federal Circuit proceeded to weigh whether commercial success was an indicator of nonobviousness as per the ‘924 patent.

The Federal Circuit acknowledged that commercial value is an indicator of nonobviousness (citing Graham v. John Deere, 383 U.S. 1, 17-18 (1966); Simmons Fastener Corp. v. Illinois Tool Works, Inc. 739 F.2d 1573, 1575-76 (Fed. Cir. 1984)). However, this evidence can work both ways. Where an invention with commercial value appears on the market soon after the idea or impetus behind the invention appears, this is evidence of obviousness. In contrast, the delayed appearance of the invention on the market, despite the commercial value, is evidence that an invention was not obvious. Nonetheless, commercial success is considered as a “secondary” indicator of nonobviousness. The Federal Circuit cited Graham v. John Deere Co., supra, 383 U.S. at 18; Richardson-Vicks Inc. v. Upjohn Co., 122 F.3d 1476, 1483-84 (Fed. Cir. 1997)), as per commercial success being a secondary indicator and noted that commercial success is reliant upon many factors unrelated to patentable inventiveness, such as the marketing of a product or invention. Thus, commercial success is not sufficient in and of itself to show nonobviousness.

Also, the Federal Circuit stated that inventions deemed obvious are those that are “modest, routine, everyday, incremental improvements of an existing product or process that confer commercial value…but do not involve sufficient inventiveness to merit patent protection.” The Court went on to state that “[t]his class of inventions in well illustrated by efforts at routine experimentation with different standard grades of a material used in a product—standard in the sense that their properties, composition, and method of creation are well known…This is such a case.” As per the recitation of “an appreciable amount of an oxide of boron,” the Federal Circuit Court noted that the ‘924 patent “does not claim any variant of off-the-shelf borosilicate glass.” Furthermore, the Court stated that because borosilicate glass is a standard product with well known properties, substituting borosilicate glass for ordinary glass, in the device category of the ‘924 patent, “was not a venture into the unknown.”

The Federal Circuit Court went on to state that the present case exemplifies the Supreme Court’s analysis in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), wherein the Supreme Court stated:

“[w]hen a work is available in one field of endeavor, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, §103 likely bars its patentability. For the same reason, if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill.” Id. at 417.

With respect to supporting the Federal Circuit’s statement as per inventions that are “incremental improvements of an existing product or process that confer commercial value…but do not involve sufficient inventiveness to merit patent protection,” the Federal Circuit cited cases involving substitution of one feature or element for another. The cases the Federal Circuit cited include Hotchkiss v. Greenwood, 52 U.S. (11 How.) 248 (1851), Stratoflex, Inc. v. Aeroquip Corp., 713 F.2d 1530, 1535-38 (Fed. Cir. 1983) and Brunswick Corp. v. Champion Spark Plug Co., 689 F.2d 740, 749-750 (7th Cir. 1982), among other cases. Thus, in the case where well known materials are substituted from one another, there needs to be some evidence that the substitution is more than routine in the art.

In summary, the Federal Circuit Court said that commercial value of an invention is an indicator of nonobviousness. However, while an indicator, it is only one secondary consideration and commercial success can be attributed to a variety of factors unrelated to patentable inventiveness, such as successful marketing. Furthermore, the Court stated that the present case exemplifies the Supreme Court’s analysis in KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007), which states that “if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill.” Thus, as no other evidence of nonobviousness was on appeal, the Federal Circuit reversed the District Court’s judgment with instructions to dismiss the suit.

By way of background, Stephen Comiskey filed an application for a method and system of mandatory arbitration. Claim 1, a method claim, includes steps of enrolling a person in a mandatory arbitration system, incorporating arbitration language into a unilateral contract, requiring the complainant to submit a request for arbitration, conducting and providing support for the arbitration, and determining an award or decision in the arbitration. Claims 17 and 42 recite a system having modules to carry out these steps; and depending claims 15, 30, 44, and 58 depend from the system or method and recite that “access to the mandatory arbitration is established through the Internet, intranet, World Wide Web, software applications, telephone, television, cable, video [or radio], magnetic, electronic communication, or other communication means.”

The Examiner rejected all claims as obvious under 35 U.S.C. § 103(a). Throughout the prosecution of the case, the Examiner did not reject the claims on any other grounds. Comiskey appealed the Examiner's rejection to the Board, and the Board affirmed the obviousness rejections. Comiskey appealed to the Federal Circuit.

The Federal Circuit did not reach the Board's obviousness determination. Rather, the Federal Circuit found that the claims were "barred at the threshold by [35 U.S.C.] § 101". In re Comiskey, 89 USPQ2d at 1659. The Federal Circuit held that Comiskey's method claims were not patentable subject matter under 35 U.S.C. § 101, and, in the revised portion of the opinion, remanded to the Board to determine the patentability of the system claims and the method claims explicitly reciting the use of a computer.

In reaching the decision regarding the method claims, the Federal Circuit first reviewed Supreme Court case law regarding algorithms and business methods. Citing a long line of Supreme Court precedent, the Federal Circuit concluded that claims reciting an abstract idea per se are not patentable. However, a claim directed to an abstract idea may be patentable if the claim recites a practical application of the abstract idea. Such a claim is statutory only if, as employed in the process, the idea is embodied in, operates on, transforms, or otherwise involves a class of statutory subject matter. Thus, a mental process standing alone, untied to any other category of statutory subject matter, does not recite patentable subject matter.

The Federal Circuit then turned to Comiskey's method claims, finding that the exceptions to the "abstract idea" rule did not apply to these claims. The claims did not require a machine, as Comiskey conceded. Nor did the claims operate on or transform another class of statutory subject matter: they were not "a process of manufacture" or "a process for the alteration of a composition of matter". The claims merely described the steps of arbitration by a human arbitrator. As such, the claims recited only mental steps, and were therefore not patentable. The Court treated the system claims separately. Unlike the independent method claims, the system claims recited limitations that, in their broadest reasonable interpretation, could be interpreted as requiring the use of a machine. Claim 17 recited, among other limitations, "a registration module", "an arbitration module", and "a means for selecting an arbitrator from an arbitrator database." The system claims would thus be patentable, since they would be "embodied in" another class of statutory subject matter: machines. The Federal Circuit did not, however, rule on this point. Instead, the Federal Circuit remanded the case to the Board to determine, in the first instance, whether the system claims, as well as certain dependent method claims directed toward establishing access to arbitration over the Internet or other media, were patentable under 35 U.S.C. § 101.

The difference between the 2007 opinion and the revised 2009 opinion lies in the treatment of the system claims. In the original 2007 opinion, the Federal Circuit in fact ruled that the system claims recited patentable subject matter because, under the broadest reasonable interpretation, the claims could be directed to a machine. In re Comiskey, 84 U.S.P.Q.2d 1670, 1680 (Fed. Cir. 2007)(withdrawn). The Federal Circuit remanded these claims to the Board not to determine their patentability under 35 U.S.C. § 101, but to determine whether the mere addition of general purpose computers was obvious under 35 U.S.C. § 103(a). In the revised opinion, the Federal Circuit retreated from its prior holding of patentability, instead remanding the case to the Board to determine the § 101 issue in the first instance, without reaching the obviousness issue.

The Federal Circuit justified the limited remand to the Board with respect to the system claims in part because, had the Board relied on 35 U.S.C. § 101 to reject the new claims, Comiskey would have had an opportunity to amend the claims under 37 C.F.R. § 41.50(b). The different treatment of the system claims and the method claims is curious in that Comiskey would have had the same opportunity to amend the method claims had the Board rejected those under 35 U.S.C. § 101. The panel may have felt that the method claims presented a clear case of unpatentable subject matter, while the system claims did not. This position would be consistent with the Federal Circuit's subsequent In re Bilski decision. 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008) (en banc). In In re Bilski, the Federal Circuit limited the issue to "what the term 'process' means", subsequently ruling the method claims at issue to be unpatentable subject matter because the method did not transform an article to a different state or thing or was not tied to a particular machine. Id. at 1389.Federal Circuit Finds Prior Licensing Activity Does Not Per Se Prevent Permanent Injunction

In Acumed v. Stryker Corp., 551 F3d 1323; 89 USPQ2d 1612 (Fed. Cir. 2008), Stryker Corporation, Stryker Sales Corporation, Stryker Orthopedics, and Howmedica Osteonic Corporation (collectively, “Stryker”) appealed the District Court for the District of Oregon’s grant of a permanent injunction in favor of Acumed. Acumed LLC is the assignee of U.S. Patent 5,472,444 (“the ‘444 patent”), which is directed to a proximal humeral nail (“PHN”) used for treatment of fractures of the upper arm bone. Acumed’s PHN is sold under the name Polarus®.

Stryker sold a competing product: the T2 PHN. Acumed sued Stryker in April 2004 for infringement of the ‘444 patent based on the sales of the T2 PHN. Stryker was found to have willfully infringed the ‘444 patent and was granted a reasonable royalty and lost profits. Acumed moved for a permanent injunction. Upon a hearing in February 2006, the district court granted Acumed’s motion for a permanent injunction, applying the old rule that as long as there was not an exception circumstance to justify denial of injunctive relief, an injunction would issue in patent cases if infringement and validity were found. While Stryker’s appeal to this decision was pending, however, the Supreme Court decided eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 394 (2006) which held that the traditional four-factor test for permanent injunctions had to be applied in patent cases just as in other types of cases. On April 12, 2007, the Federal Circuit affirmed the finding of willful infringement, but vacated the permanent injunction and remanded the case to the district court for reconsideration of the four-factor test set forth by the Supreme Court in eBay. Acumed LLC v. Stryker Corp., 483 F.3d 800, 811; 82 USPQ2d 1481 (Fed. Cir. 2007).

On remand, the district court considered the first two prongs of irreparable harm and lack of adequate remedy at law jointly. In finding that Acumed established these first two prongs, the district court noted the prior jury finding of lost profits and sales. It also credited three cases cited by Acumed in which permanent injunctions based on lost market share were granted. Secondly, the district court concluded that the balance of hardships favored Acumed because Acumed was much smaller than Stryker, and the Polarus® was Acumed’s flagship product. In contrast, the T2 PHN was less prominent in Stryker’s offerings, and also noting that Stryker’s decision to use an infringing product instead of a non-infringing substitute was a business decision “that did not tip the balance of hardships in Stryker's favor.” Lastly, the district court concluded that public interest would not be disserved by a permanent injunction because there was not sufficient evidence of a public health issue resulting from the use of Polarus® products, and since there were sufficient non-infringing substitutes that physicians were not forced to use only the Polarus® products. The district court, thus, again entered Acumed’s motion for a permanent injunction.

Upon Stryker’s appeal, the Federal Circuit reviewed the district court’s decision for abuse of discretion.

Irreparable Harm and Lack of Adequate Remedy at Law
Stryker argued that the district court erred in failing to give weight to Acumed’s previous licensing of the ’444 patent to two of its competitors. Stryker asserted that Acumed’s willingness to grant licenses demonstrated that money damages in the form of reasonable royalty were an adequate remedy.

Acumed, on the other hand, argued that the district court had the discretion to decide how much weight to give to a patentee’s prior willingness to grant licenses. It also argued that the lost profits awarded by the jury meant that direct competition existed between Stryker and Acumed, thus showing that there was irreparable harm without adequate legal remedy.

The Federal Circuit found that the district court did not abuse its discretion in concluding that an injunction was necessary. Specifically, the Federal Circuit found that the district court weighed Acumed’s prior licenses in conjunction with several other factors to determine that money damages were adequate compensation only for Stryker’s past infringement and that there was no adequate remedy at law for Stryker’s future infringement. The Federal Circuit conceded that these prongs of the test made it a close case in view of the past license having been granted, but review under the standard of abuse of discretion compelled it to uphold the district court’s decision.

Balance of Hardships
As to the third factor, Stryker argued that the district court failed to realize that enjoining the manufacture, use, sale, offer for sale, or importation of its PHN would create hardships for Stryker, its customers, and patients. Also, Stryker asserted that Acumed would actually benefit from receiving a royalty because many of Stryker’s customers would otherwise be inaccessible to Acumed.

In arguing that the district court properly weighted the evidence concerning the relative size of the companies and commercial effect that the injunction would have on the parties, Acumed pointed out that Stryker was the world’s largest orthopedic implant company, and its T2 PHN represented only a small portion of Stryker’s sales. In fact, Stryker had a non-infringing straight nail design that it could use instead of theT2 PHN. The Polarus®, on the other hand, was one of Acumed’s flagship products.

In agreeing with Acumed that the district court did not abuse its discretion, the Federal Circuit noted that the balance of hardships only considers those of the plaintiff and the defendant. Thus, Stryker’s argument about the effect on customers and patients was irrelevant under this prong. It was Stryker’s conscious business decision not to offer its straight nail design in the United States, so an injunction against the T2 PHN would not prevent Stryker from participating in the humeral nail market.

Public Interest
As to the last factor, Stryker argued that the district court abused its discretion in essentially placing the public interest burden on Stryker, and it asserted that the public interest was important in this case because the T2 PHN was demonstrably safer and superior to the Polarus.

The Federal Circuit held that Acumed had made a prima facie showing as to the effectiveness of the Polarus®. It conceded that this prong was a close call because of the medical testimony and evidence that the accused product was superior and safer than the Polarus®. However, the Federal Circuit noted that the district court was in the best position to review the evidence and noted that there was evidence of bias by the experts called upon by Stryker to establish the problems experienced while using Polarus®. Thus, the Federal Circuit found that the district court did not abuse its discretion in concluding that the public interest was not disserved by an injunction, but did note that such an argument might be persuasive in the right situation involving public health.

As such, the Federal Circuit found that the test set forth by the Supreme Court in eBay had been satisfied, and the Federal Circuit therefore affirmed the decision of the District Court for the District of Oregon to enter a permanent injunction directed to Stryker’s PHN.

Between April and June of 1995, Hyatt filed the twelve patent applications as part of a series of continuation applications. By the time of appeal, the twelve applications included approximately 2,400 claims. The PTO examiner rejected all of the claims on various different grounds, including obviousness and lack of enablement. However, the most common ground for rejection was that the claims lacked written description support under 35 U.S.C. §112, first paragraph. Hyatt appealed the examiner’s rejections to the BPAI, discussing only twenty-one of his claims in the “Summary of the Invention” sections of his appeal briefs. Accordingly, the BPAI selected these twenty-one claims as representative claims, affirmed the examiner’s rejections, and affirmed the rejections of the non-representative claims.

On appeal to the district court, Hyatt argued that the BPAI improperly selected the twenty-one claims as representative of the remaining claims. The PTO, in turn, argued that the claims were properly grouped because each group was rejected under the same statutory provision (35 U.S.C. §112, first paragraph). The district court agreed with Hyatt, holding that the BPAI failed to comply with 37 C.F.R. §1.192(c)(7) when selecting the representative claims. Specifically, the BPAI “should not have grouped claims that have been rejected for lack of a written description unless those claims share a limitation that has been found to have not been disclosed by the specification.”

The PTO raises two issues on appeal to the Federal Circuit. The first issue relates to the meaning of “ground of rejection” in 37 C.F.R. §1.192(c)(7), and whether the BPAI improperly selected claims to be representative of groups of claims that were rejected on different grounds. The second issue is whether the district court’s remand requires the BPAI to consider arguments that Hyatt waived by not raising them on appeal before the BPAI.

As to the first issue, 37 C.F.R. §1.192(c)(7) states:

“Grouping of claims. For each ground of rejection which appellant contests and which applies to a group of two or more claims, the Board shall select a single claim from the group and shall decide the appeal as to the ground of rejection on the basis of that claim alone unless a statement is included that the claims of the group do not stand or fall together and, in the argument under paragraph (c)(8) of this section, appellant explains why the claims of the group are believed to be separately patentable. Merely pointing out differences in what the claims cover is not an argument as to why the claims are separately patentable.”

The PTO argues that a “ground of rejection” is the statutory section under which a claim is rejected. In the present case, then, the ground of rejection is the claims’ failure to satisfy 35 U.S.C. §112, first paragraph, regardless of whether the limitation in the representative claim that lacks written description support is also present in the other claims of the represented group. Conversely, Hyatt argues that the “ground of rejection” includes both the statutory section and the reason why the claim failed to meet that statutory requirement.

The Federal Circuit noted that, in 2002, the Federal Circuit held in In re McDaniel, that 37 C.F.R. §1.192(c)(7) “operates to relieve the [BPAI] from having to review… the myriad of distinctions that might exist among claims, where those distinctions are, in and of themselves, of no patentable consequence to a rejected claim.” 293 F.3d 1379, 1383 (Fed. Cir. 2002). Accordingly, the Federal Circuit cited In re McDaniel in reasoning that a group of claims rejected on the same ground is one in which the differences between the claims is “of no patentable consequence to a contested rejection.” Thus, the Federal Circuit concluded that the PTO’s interpretation of 37 C.F.R. §1.192(c)(7) is erroneous, and that a group of claims rejected under 35 U.S.C. §112, first paragraph do not share a common ground of rejection unless the claims have a common limitation that lacks written description support.

As to the second issue, the PTO argues that if its interpretation of 37 C.F.R. §1.192(c)(7) is rejected, then it will be required, on remand, to consider grounds of rejection that Hyatt failed to contest in his initial appeals to the BPAI. The Federal Circuit, again, disagreed with the PTO, and affirmed that the rules of waiver (37 C.F.R. §1.192(a)) exempt the BPAI from considering grounds of rejection that were not contested on initial appeal. However, while an Applicant can waive appeal of a ground of rejection, the Applicant cannot waive the BPAI’s obligation to select and consider at least one representative claim for each properly defined ground of rejection appealed.

Thus, in the present case, the BPAI must consider all grounds of rejection challenged by Hyatt without selecting a claim to be representative of a group that were rejected on different grounds. However, the BPAI is not obligated to consider any grounds of rejection not challenged by Hyatt in his initial appeals, unless such grounds become relevant on remand.

Claim 1 of the ‘478 patent contains 5 clauses directed towards locating an clamping assembly, with the fifth clause reciting “said assembly characterized by a mechanism for rotating in response to said rectilinear movement of said locating pin for moving said finger radially.” The Federal Circuit states that Welker, with the PTO allowing the claims of the ‘478 patent to issue without any note of rotational movement as a required limitation for allowance of the ‘478 patent, felt invited to file a continuation application having broader claims. The continuation application issued as the '254 patent. As such, claim 1 of the ‘254 patent recites “said assembly characterized by a mechanism for moving said finger along a straight line into and out of said locating pin perpendicular to said axis A in response to said rectilinear movement of said locating pin.”

Welker filed suit in the Eastern District of Michigan claiming that the PHD devices, Clamp I and Clamp II, infringed Welker’s ‘478 and ‘254 patents. However, Welker conceded to the District Court that PHD’s Clamp II does not infringe the ‘478 patent because the Clamp II does not have a rotational mechanism for the clamping fingers. As such, the District Court only looked into Clamp I’s infringement of the ‘478 patent and Clamp II’s infringement of the ‘254 patent.

The District Court construed the language of claim 1 of the ‘254 patent, wherein it stated “mechanism for moving said finger,” to be a means-plus-function limitation, and consequently, requiring a structure in the specification to correspond to the functional language. The only such structure found in the specification was the rotating central post to move the finger in and out of the locating pin, found at Col. 6 of the written description of the ‘254 patent. The District Court found that the record did not show that the Clamp I device was made, used, sold or offered for sale by PHD after the ‘478 patent was issued and thus granted summary judgment of noninfringement. With respect to the ‘254 patent, the District Court granted summary judgment of noninfringement because PHD’s Clamp II did not have a rotating central post. Welker appealed both decisions in the Federal Circuit.

The Federal Circuit, in affirming the District Court’s decision regarding the ‘478 patent, stated that the record did not show that PHD conducted any activity that infringed the ‘478 patent after the ‘478 patent was issued. Prototypes of the Clamp I were made and given to General Motors (GM) in late 2003 or early 2004, but were never produced or used commercially. The '478 patent issued on September 7, 2004. The record also contained no evidence showing PHD sold any of the Clamp I units to GM after this date or even continued to offer the Clamp I unit for sale after the issuance date. Welker asserted that PHD “had an affirmative duty at the point in time the patent issued to take the product off the market,” however, the Federal Circuit stated that “PHD did not have any burden to prove it retracted any putative offer for sale,” because “the burden remains with the patentee to prove infringement, not on the defendant to disprove it.” Thus, the Federal Circuit upheld the District Court ruling finding noninfringement of the ‘478 patent.

Additionally, as the ‘254 patent issued nearly 10 months after the ‘478 patent, the Federal Circuit found that Clamp I cannot infringe the ‘254 patent for the same reasons Clamp I does not infringe the '478 patent

With respect to the ‘254 patent and Clamp II, the Federal Circuit reviewed the District Court’s construal of “mechanism for moving said finger” as being a means-plus-function limitation of claim 1. The Federal Circuit noted that they have “consistently held that “[m]eans-plus-function claiming applies only to purely functional limitations that do not provide the structure that performs the recited function.” Phillips v. AWH Corp., 415 F.3d at 1311 (Fed. Cir. 2005). Moreover, the Federal Circuit noted that “a patentee’s use of the word 'means' in a claim limitation creates a presumption that 35 U.S.C. §112 paragraph 6 applies. TriMed, Inc. v. Stryker Corp., 514 F.3d 1256, 1259 (Fed. Cir. 2008).”

The Federal Circuit noted that, while the ‘254 patent claim language uses the word “mechanism” rather than “means,” 35 U.S.C. 112 paragraph 6 can also apply for the “generic terms ‘mechanism,’ ‘means,’ ‘element,’ and ‘device,’ [which] typically do not connote sufficiently definite structure,” and that “[t]he term ‘mechanism’ standing alone connotes no more structure than the term ‘means.’,” citing Massachusetts Institute of Technology v. Abacus Software, 462 F.3d 1344, 1354 (Fed. Cir. 2006). On the other hand, the Federal Circuit noted that in Greenberg v. Ethicon Endo-Surgery, Inc., 91 F.3d 1580 (Fed. Cir. 1996), where "mechanism" was preceded by the word "detent," they examined several definitions of ‘detent’ and stated that “[b]ecause these definitions connoted adequate structure that was reasonably well understood in the art, this court concluded that 'detent mechanism' was not a mere functional placeholder.”

In applying the above case law to determining the meaning of “mechanism for moving said finger,” the Federal Circuit stated that “[n]o adjective endows the claimed “mechanism” with a physical or structural component. Further, claim 1 provides no structural context for determining the characteristics of the “mechanism” other than to describe its function…one of skill in the art would have no recourse but to turn to the ‘254 patent’s specification to derive the structural connotation for the generically claimed “mechanism for moving said finger.” Consequently, the Federal Circuit found that the District Court was correct in applying the means-plus-function treatment to the noted term of claim 1 of the ‘254 patent.

Next, the Federal Circuit reviewed the District Court’s determination of “the corresponding structure, material, or acts described in the specification and equivalents thereof.” 35 U.S.C. §112, Par. 6. The Federal Circuit noted that, when making such a determination, “a court may not import functional limitations that are not recited in the claim, or structural limitations from the written description that are unnecessary to perform the claimed function.” Wenger Mfg., Inc. v. Coating Mach. Sys., Inc., 293 F.3d 1225, 1233 (Fed. Cir. 2001). The District Court adopted the construction of “mechanism for moving” as proffered by PHD, and which included a “rotating central post.” Welker argues that such construction is wrong because the specification teaches that a “rotating central post” isn’t necessary for the function of “moving said finger along a straight line…” However, the Federal Circuit stated that the specification of the ‘254 patent supports the District Court’s analysis because “[t]he specification repeatedly identifies a rotating central post as the disclosed structure for performing the claimed function of “moving said finger…”,” and such is shown in Fig. 7 of the ‘254 patent.

The Federal Circuit went on to say that other claim construction doctrines, including claim differentiation, ordinary meaning and clear disavowal of claim scope do not change the construction of the noted claim element. As per claim differentiation, with respect to claim 1 of the ‘478 patent reciting a rotating element and claim 1 of the ‘254 patent, which doesn’t recite a rotating element, the Federal Circuit stated that “[t]his difference between claims in different patents does not change the meaning of these means-plus-function limitations…Because both terms share the same specification with the same structure corresponding to the claimed function, this court cannot give these terms any different scope.” As such, the Federal Circuit upheld the District Court’s determination of the corresponding structure of the means-plus-function claim.

In reviewing the District Court’s analysis of the infringement of the means-plus-function claim, the Federal Circuit noted that “[l]iteral infringement…“requires that the relevant structure in the accused device perform the identical function recited in the claim and be identical or equivalent to the corresponding structure in the specification.” Applied Med. Research Corp. v. United States Surgical Corp., 448 F.3d 1324, 1333 (Fed. Cir. 2006).” However, the only embodiment of the structure involved a rotating central post, and "[n]othing in the specification suggests any other structure for moving the claimed fingers." While literal infringement of a means plus function limitation requires analyzing the disclosed structure and equivalents thereof, the Federal Circuit found that "Welker Bearing effectively concedes" that the two structures are not equivalent "by arguing that 'once claim 1 of the '254 patent is construed as not requiring any rotating mechanism, PHD's Clamp II reads on claim 1 of the '254 patent . . . .'" Consequently, PHD’s Clamp II, which moves the clamping fingers using a mechanism that moves linearly, is found to not literally infringe on Welker’s claim, the scope of which is limited to a structure which moves the clamping fingers with a rotating central post or equivalents thereof.

The Federal Circuit goes on to reject Welker’s argument that PHD’s Clamp II might infringe under the doctrine of equivalents, because the case does not present a doctrine of equivalents issue. Specifically, under the given facts, only a structural equivalents issue under §112 par. 6 arises. Though the inquiries under the two doctrines are similar as per analyzing the insubstantiality of differences between a disclosed structure and an accused infringing structure, the two doctrines differ as per the timing of the accused infringing structure. For structural equivalents under §112 par. 6, the equivalent structure “must have been available at the time of the issuance of the claim,” while a “technology developed after the issuance of the patent,” can fall under the doctrine of equivalents. Al-Site Corp. v. VSI Int’l, Inc., 174 F.3d 1308, 1320 (Fed. Cir. 1999). Because PHD’s Clamp II mechanism for driving the finger movement was well know in the art at the time of the invention, the Federal Circuit stated that “it cannot be classified as an after-arising technology” and is only available for equivalency analysis under §112 par. 6. Thus, no doctrine of equivalents analysis is performed and the §112 par. 6 findings arise and subsume a doctrine of equivalents analysis with regard to existing equivalencies. Under such analysis, the Federal Circuit agreed with the District Court ruling in granting summary judgment of noninfringement of the ‘254 patent.

In summary, the Federal Circuit affirmed the District Courts rulings of summary judgment, in favor of PHD, on noninfringement for both the ‘254 and ‘478 patents.

The Federal Circuit's ruling revolved around the meaning of the disputed term "providing a communication link...through equipment of the third party", which was recited in the representative claim 1 of the '739, but which was not used or defined in the specification. Consistent with claim construction principles, the Federal Circuit turned first to the specification for insight as to the meaning of the disputed term.

Netcraft argued that the specification provided no support for the District Court's claim construction. However, the Federal Circuit found ample evidence in the specification to support the District Court's position. Specifically, the specification repeatedly referred to objects of "the present invention" relating to providing Internet access, and summarized that the objects of "the present invention" were achieved by "the provider creates access to the Internet for the customer through the provider's equipment." Additionally, the abstract explicitly stated that "the provider creates access to the Internet for the customer." Netcraft, at 8. The Federal Circuit highlighted the consistent use of the phrase "the present invention" as indicated that the invention, as a whole, required the providing of the communication link.

Netcraft argued that these references to the "present invention" should not be seen as limiting. While acknowledging that the mere "use of the phrase 'the present invention' does not 'automatically' limit the meaning of claim terms in all circumstances, and that such language must be read in the context of the entire specification and prosecution history," the Federal Circuit found that the repeated use of the phrase the "present invention" and the prosecution history supported the District Court's interpretation. In this case, the specification repeatedly conveyed the impression that the invention as a whole relating to providing Internet access as part of the billing method and both being provided by equipment of a third party. The Federal Circuit found no evidence within the specification to indicate that the provider/third party did not provide Internet access or that another party could provide internet access instead of the provider/third party doing the billing method. For example, Figure 2 of the '739 patent disclosed a step labeled "Connect Customer to Internet", while Figure 3 disclosed a step labeled "Customer Connects to Internet". Netcraft argued that the language of Figure 3 supported a conclusion that the third party was not required to provide Internet access. According to the Federal Circuit, however, nothing in the specification foreclosed the District Court's construction; in particular, other elements of the two figures differentiated the two methods shown. Furthermore, the specification specifically referred to equipment as equipment that enabled Internet access.

The Federal Circuit next chided the District Court for failing to take the prosecution history of the asserted patents into account. The Federal Circuit nevertheless concluded that this error was harmless, because the prosecution history did not clearly support Netcraft's argument. In one amendment, the prosecuting attorney indicated an example of a link as being a web site or E-mail address of the vendor. The Federal Circuit, however, could not determine whether the web site and E-mail addresses were examples of a communication link (as argued by Netcraft) or examples of additional features of an Internet access provider (as argued by eBay). Prosecution history proffered by eBay was also found lacking. The ambiguity of the prosecution history did not support either side's position, and the District Court's failure to consider the prosecution history was therefore harmless.

The Joint Video Team (“JVT”) is a standards-setting organization (“SSO”) which was established in late 2001 as a joint project by two parent SSOs to develop a single “technically aligned, fully interoperable” industry standard for video compression technology. In order to avoid “patent hold-up,” the JVT required participants to disclose and/or give up intellectual property rights (“IPR”) covering a standard. In May 2003, the JVT adopted and published the official H.264 standard. Qualcomm was a member of the JVT during the development of the H.264 standard, but did not disclose the existence of the ‘104 and ‘767 patents as required by the SSOs.

On October 14, 2005, Qualcomm filed a lawsuit against Broadcom in the United States District Court for the Southern District of California, claiming that Broadcom infringed the ‘104 and ‘767 patents by making products compliant with the H.264 video compression standard. The District Court concluded that Qualcomm breached its duty to disclose the ‘104 and ‘767 patents to the JVT, where these determinations of a duty to disclose were based upon the written JVP IPR policies and the JVT participants’ treatment of the JVT IPR policies. As a remedy, the District Court ordered the ‘104 and ‘767 patents unenforceable against the world, and on both Qualcomm’s JVT misconduct and its litigation misconduct by failing to turn over relevant emails during discovery, the court determined that this was an exceptional case and awarded Broadcom its attorney fees. Qualcomm appealed the District Court’s decision that it breached its duty to disclose the ‘104 patent and the ‘767 patent to the JVT.

In reviewing the District Court’s judgment, the Federal Circuit addressed whether (1) Qualcomm, as a participant in the JVT, had a duty to disclose patents to the JVT prior to the release of the H.264 standard in May 2003; (2) if so, what was the scope of its disclosure duty; (3) whether Qualcomm breached its disclosure duty by failing to disclose the ‘104 and ‘767 patents; and (4) if so, whether it was within the District Court’s equitable authority to enter an unenforceability remedy based on the equitable defense of waiver in the SSO context.

(1) Existence of a Disclosure Duty
First, as the District Court noted, the Federal Circuit found that the JVT IPR policies identify IPR by JVT participants as critical to the development of an effective industry standard. While the language of the JVT IPR policies may not have expressly required disclosure by all participants in all circumstances, it at least incorporated a best efforts standard for such disclosure. And as Qualcomm admitted, it did not present evidence of any efforts to disclose patents associated with the standardization proposal to the JVT prior to the release of the H.264 standard.

Besides the disclosure obligations provided in the JVT IPR policies, the Federal Circuit agreed with the District Court that Qualcomm also had disclosure obligations under the rules of the JVT parent organizations. Thus, the Federal Circuit held that even if the written IPR policies did not unambiguously require by themselves the disclosure obligations, the language of the JVT IPR policies coupled with the District Court’s findings and conclusions as to the JVT participants’ understanding of the policies further established that the policies imposed disclosure duties on participants. The Federal Circuit accepted the factual findings of the District Court, noting that the District Court was in the best position to determine the significance and implications of the record testimony in the first instance and that the cited testimony provided sufficient evidentiary support for its findings. (2) Scope of Disclosure Duty
The District Court, relying on Rambus, Inc. v. Infineon Technologies AG, 318 F.3d 1081 (Fed. Cir. 2003), found that Qualcomm was required to disclose any patent that "reasonably might be necessary" to practice the standard. Qualcomm argued that this standard was too broad, and that a patent must actually be necessary to practice the H.264 standard in order to trigger the disclosure duty. However, the Federal Circuit found that this interpretation was contrary to the plain language used in Rambus.

Furthermore, in Rambus, The Federal Circuit noted that it explained the “reasonably might be necessary” standard by stating that “the disclosure duty operates when a reasonable competitor would not expect to practice the standard without a license under the undisclosed claims” and clarified that the standard is objective and “does not depend on a member’s subjective belief that its patents do or do not read on the proposed standard.” Id. at 1100-01, 1104. Thus, the Federal Circuit agreed with the District Court’s determination that the language required JVT participants to disclose patents that “reasonably might be necessary” to practice the H.264 standard. (3) Breach of Disclosure Duty
It was undisputed that Qualcomm did not disclose the ‘104 and ‘767 patents to the JVT prior to the release of the H.264 standard, so Qualcomm breached its disclosure duty if the ’104 and ‘767 patents “reasonably might be necessary” to practice the H.264 standard. The Federal Circuit found that the District Court did not err in finding clear and convincing evidence that the ‘104 and ‘767 patents fell within the “reasonably might be necessary” standard and thus properly determined that Qualcomm breached its disclosure duty by failing to disclose the ‘104 and ‘767 patents to the JVT prior to the release of the H.264 standard in May 2003. (4) Equitable Remedies
The District Court analyzed the consequence of Qualcomm’s failure to disclose the ‘104 and ‘767 patents under the framework of waiver as a consequence of silence in the face of a duty to speak. Under the waiver doctrine, the failure to disclose the ‘104 and ‘767 patents rendered the patents unenforceable since the actions waived the right to enforce the ‘104 and ‘767 patents. The parties disagreed as to whether waiver was the appropriate equitable framework and whether the scope of the unenforceability remedy was within the District Court’s equitable authority. Qualcomm argued that the District Court’s findings did not constitute waiver as a matter of law, arguing that “true waiver” requires a voluntary or intentional relinquishment of a known right.

Specifically, Qualcomm claimed that the District Court’s findings in this case ran directly contrary to any claim that Qualcomm intended to voluntarily waive its patent rights. The Federal Circuit agreed with Qualcomm on this point because the District Court’s findings demonstrated that Qualcomm, rather than relinquishing its rights, intentionally organized a plan to shield its patents from consideration by the JVT, intending to later obtain royalties from H.264 compliant products. For this reason, it appeared that “true waiver” was not the appropriate framework.

However, the Federal Circuit also reviewed whether an implied waiver had occurred. As to implied waiver, Qualcomm argued that, “even if Broadcom had proven an intentional breach of the JVT disclosure duty, waiver could be inferred only if Qualcomm knew that nondisclosure alone would (with no detrimental reliance by any party) necessarily result in the loss of those rights.” The Federal Circuit again noted that Qualcomm knew JVT participants treated the JVT policies as imposing a duty, that it knew the asserted patents “reasonably might be necessary” to practice the H.264 standard and that it intentionally shielded the patents from consideration by the JVT, which demonstrated that Qualcomm had sufficient awareness of the relevant circumstances. The Federal Circuit found that the District Court’s findings were sufficient to support the application of an implied waiver defense.

Qualcomm argued that equitable estoppel, rather than waiver, in appropriate circumstances is the proper remedy for breach of SSO disclosure duties but because Broadcom chose not to pursue equitable estoppel at trial, it was foreclosed from raising equitable estoppel on appeal because it did not cross-appeal the preclusion of that defense. In actuality, the equitable estoppel defense had not been permitted due to Qualcomm’s false factual assertions in opposition to Broadcom’s equitable estoppel defense and its withholding of evidence of its JVT participation for which Qualcomm had been sanctioned by the District Court.

The Federal Circuit, therefore, noted that the deficiencies in Broadcom’s pleadings were caused, in significant measure, by Qualcomm’s failure to disclose its participation in the H.264 standard-setting process, and under these circumstances, deficiencies in Broadcom’s pleadings should not permit Qualcomm to escape the consequences of its malfeasance. Furthermore, a cross-appeal would have been improper here because the alternative doctrine of equitable estoppel would not enlarge the judgment relative to the doctrine of waiver relied upon by the District Court. The Federal Circuit concluded that Broadcom properly raised equitable estoppel as an alternative ground to uphold the judgment, rather than a cross-appeal.

Qualcomm also argued that the remedy of unenforceability entered on Broadcom’s defense of waiver was contrary to law, arguing that because waiver was pled as an affirmative defense, it could not result in a judgment of unenforceability. The Federal Circuit disagreed, finding it entirely appropriate for the District Court to address the defense of waiver after the jury returned a non-infringement verdict.

Qualcomm was correct that patent misuse does not render a patent unenforceable for all time, but the limited scope of unenforceability does not necessarily mean that an unenforceability remedy is unavailable in the waiver context in this case. In appropriate circumstances, the District Court may order patents unenforceable as a result of silence in the face of an SSO disclosure duty, as long as the scope of the District Court’s unenforceability remedy is properly limited in relation to the underlying breach. The Federal Circuit vacated the unenforceability remedy and remanded with instructions to enter an unenforceability remedy limited in scope to any H.264-compliant products.

Finally, Qualcomm argued that the District Court should not have awarded Broadcom attorney fees under the “exceptional cases” standard of 35 U.S.C. § 285 because the determination was based in part on Qualcomm’s JVT-related activities. The Federal Circuit, however, found that Qualcomm’s arguments did not show that the District Court’s findings were clear error. The litigation misconduct findings were sufficient standing alone to support the exceptional case determination here, and in the circumstances of the present case, it was not error for the District Court to additionally consider the related JVT misconduct, which was an important in understanding and evaluating the litigation misconduct.

On June 7, 2007, the PTO initiated a Director-ordered reexamination for all claims based on double patenting in view of two expired patents issued to Natta, U.S. Patents 3,256,235 and 3,403,139. During the course of reexamination, the Examiner added double patenting rejections based on two other expired patents issued to Natta, including U.S. Patent 3,582,987 (“the ‘987 patent”). On March 30, 2005, the Board affirmed the double patenting rejections. The Board determined that the patentees were entitled only to a one-way test for double patenting because the patentees “significantly controlled the rate of prosecution throughout the chain of ancestor applications.” The Board also upheld the Examiner’s double patenting rejections on each ground.

In a second appeal, on March 29, 2007, the Board finalized all of the obviousness-type double patenting rejections. The Board also affirmed additional rejections based on a Vandenberg (U.S. Patent 3,058,963), but the Federal Circuit did not address this issue.

On appeal, Basell argues that the Board erred in rejecting the claims for obviousness-type double patenting in view of the ‘987 patent. Basell first asserted that the Board erred by failing to apply a two-way test for double patenting. In determining double patenting, a one-way test is normally applied, in which “the examiner asks whether the application claims are obvious over the patent claims.” In re Berg, 140 F.3d 1428, 1432 (Fed. Cir. 1998). Only in unusual circumstances, in which an applicant has been unable to issue its first-filed application because “the PTO [wa]s solely responsible for the delay in causing [a] second–filed application to issue prior to [a] first,” may a two-way test apply. In those cases that are a narrow exception to the general rule of the one-way test, “the examiner also asks whether the patent claims are obvious over the application claims.” Id. Here, however, the record showed that Natta’s actions had a direct effect on the prosecution, and, thus, the PTO was not solely responsible for the prosecution delays. The Federal Circuit, therefore, agreed with the Board that the two-way test for double patenting did not apply.

Basell’s second argument was that the ‘987 patent was considered during original prosecution of the ‘687 patent and thus cannot be considered during reexamination under the previous version of 35 U.S.C. § 303(a). The ‘987 patent was cited during the prosecution of a different patent application, which was ultimately abandoned, and the claims of that application differed from the claims of the ‘687 patent in that the recited catalyst contained a titanium chloride limitation, whereas the ‘687 patent encompasses catalysts that generally encompass the generic titanium halides. Because the earlier rejection based on the ‘987 patent involved different claims than those at issue, the Federal Circuit agreed with the Director that the Board was not precluded from relying on the ‘987 patent in its double patenting rejection.

The main issue before the Federal Circuit was then whether the claims of the ‘687 patent defined an obvious variation of the claims of the ‘987 patent. The Federal Circuit noted that both the claims of the ‘987 patent and the ‘687 patent cover alpha olefins of C4 to C6, and the ‘987 patent covers genuses that include the other elements of claim 1 of the ‘687 patent. The Federal Circuit noted that, "[w]hile it is true that a generic expression does not render obvious all of the species that it encompasses, these claims are both generic and specific to each other in interchangeable ways, involving the same groups of species." For this reason, the Federal Circuit agreed with the Board’s conclusion that the claims of the ‘687 patent were not patentably distinct from claim 1 of the ‘987 patent.

The Board and the Federal Circuit also looked at statements from the two patents’ specifications as evidence of what was intended to fall within the meaning of the claims. Relying on In re Kaplan, 789 F.2d 1574 (Fed. Cir. 1986), Basell asserted that the rejection had to be reversed because the Board improperly used the ‘987 patent specification to narrow the scope of the '987 patent claims in determining that the claims were not patentably distinct. The Federal Circuit pointed out, however, that In re Vogel, 422 F.2d 438 (CCPA), which reaffirmed the holding in Kaplan, held that while not usable as evidence of prior art, a patent’s specification may be used to determine whether an application claim is merely an obvious variation of an invention claimed in a patent by using it to learn the meaning of terms and to “interpret the coverage of [a] claim.” Thus, the use of the specification for purposes of definition was permissible, whereas the use of the specification for evidence of prior art is not. Since the Board opinion referred to the specification solely for purposes of defining the claim terms and not as prior art itself, the Federal Circuit found that the references to the specification in the Board opinion were not improper.

Basell’s last major assertion was that the double patenting rejection should have been reversed because the Board failed to expressly conduct an analysis under Graham v. John Deere Co., 383 U.S. 1 (1966), as of the earliest filing date claimed in the ‘687 patent. The Federal Circuit, however, found that the Board carefully considered claim 1 of the ‘987 patent and the claims of the ‘687 patent and determined that a person of ordinary skill in the art would have found the ‘687 patent claims to have been obvious. Moreover, the Federal Circuit noted that obviousness for purposes of obviousness-type double patenting is "similar to, but not necessarily the same as, that undertaken under 35 U.S.C. § 103 in determining the propriety of a rejection for double patenting." quoting In re Braat, 937 F.2d 589, 592-93; 19 USPQ2d 1289, 1292 (Fed. Cir. 1991). Thus, the Federal Circuit found no basis for reversing the Board’s decision merely because the Board failed to expressly set forth each of the Graham factors in its analysis.

In total, the Federal Circuit found that the Board did not err in concluding that the pending claims of the ‘687 patent were barred under the doctrine of obviousness-type double patenting, and, thus, affirmed the Board’s decision.

As background, Bernard L. Bilski and Rand A. Warsaw (hereinafter, “the Applicants”) filed the ‘892 application on April 10, 1997. Claim 1 of the ‘892 application reads:

A method for managing the consumption risk costs of a commodity sold by a commodity provider at a fixed price comprising the steps of:

1. initiating a series of transactions between said commodity provider and consumers of said commodity wherein said consumers purchase said commodity at a fixed rate based upon historical averages, said fixed rate corresponding to a risk position of said consumer;
2. identifying market participants for said commodity having a counter-risk position to said consumers; and
3. initiating a series of transactions between said commodity provider and said market participants at a second fixed rate such that said series of market participant transactions balances the risk position of said series of consumer transactions.

In response, the Applicants appealed to the Federal Circuit on the question of whether the claims are drawn to statutory subject matter under §101. The Federal Circuit decided sua sponte to hear the case en banc in order to decide a standard to determine whether a given claim recites a “new and useful” process so as to be statutory subject matter under 35 U.S.C. §101.

The Federal Circuit noted that 35 U.S.C. §101 reads as follows:

“Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”

In order to determine this standard, the Federal Circuit contrasted Diehr and Benson. The Federal Circuit noted that the Supreme Court held in Diehr that an automated process of curing rubber using an algorithm was patentable as it did not preempt all uses of that particular algorithm since the claim was tied to a specific application and process and could be used for other substances or with other process steps. In contrast, in Benson, a binary conversion technique using an algorithm could only be used on a computer and therefore allowing the claimed process would preempt all uses of that algorithm. Thus, the Federal Circuit held that the Supreme Court requires that, for a process to be patentable, the process must be directed to an application of a principle, but cannot be directed to all applications of the principle which would pre-empt substantially all uses of the principle.

The Federal Circuit further found that the Supreme Court, in Parker v. Flook, 437 U.S. 584, 589 n. 9 (1978), additionally held that processes which are tied to a particular apparatus are also patentable since it does not preempt substantially all uses of the principle behind the claimed process.

After reviewing these cases, the Federal Circuit held that such a test had been collectively articulated by the Supreme Court in Benson, 409 U.S. at 70, Diehr, 450 U.S. at 192, and Parker, 437 U.S. at 589 n. 9. The Federal Circuit named this test the machine-or-transformation test, which is as follows:

“A claimed process is surely patent-eligible under §101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.”

For the second corollary, the Federal Circuit stated that insignificant post-solution activity does not render a non-statutory process claim compliant with 35 U.S.C. §101. Diehr at 191-92. The Federal Circuit thus stated that even in situations where a process is nominally tied to a specific machine or transformation, if such a tie is insignificant, the process remains non-statutory.

Relying on this analysis, the Federal Circuit held that whether a process is statutory is now exclusively determined by the machine-or-transformation test, and found that its prior tests were incorrect. Thus, in addition to establishing the machine-or-transformation test, the Federal Circuit dismissed its prior tests: the Walter-Abele test and the State Street test.

Specifically, the Federal Circuit found that the Walter-Abele test has two steps: (1) determining whether a claim recites an algorithm, then (2) determining whether the algorithm is applied in any manner to physical elements or process steps. In re Walter, 618 F.2d 758 (CCPA 1980) and In re Abele, 684 F.2d 902 (CCPA 1982). Citing other cases that had already recognized a claim’s patentability despite failing that test (In re Grams, 888 F.2d 835 (Fed. Cir. 1989)), the Federal Circuit held the Walter-Abele test inadequate.

Under State Street, a method claim is found patentable if it produces a “useful, concrete, and tangible result.” While recognizing that this test may provide guidance in determining whether a claim is drawn to a fundamental principle or a practical application thereof, the Federal Circuit unequivocally found this test to be “insufficient,” “inadequate,” and “never intended to supplant the Supreme Court’s test” (i.e., the machine-or-transformation test). However, the court did evoke State Street’s rejection of categorical exclusions beyond fundamental principles to reaffirm that all process claims (including business method claims) are subject to the same legal requirements (i.e., the machine-or-transformation test), and specifically declined in footnote 23 to extend such a categorical exclusion to software claims.

In applying the machine-or-transformation test to claim 1 at issue, rather than provide guidance, the Federal Circuit noted that there was no machine at issue and claim 1 did not attempt to be tied to a particular machine. Instead, the Federal Circuit specifically held that they "leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.” Thus, as claim 1 was not tied to a machine, it could only be patentable if the recited process was compliant with the transformation prong of the machine-or-transformation test.

In applying the transformation prong, the Federal Circuit addressed the types of things that constitute an “article” such that their transformation is sufficient to be compliant with 35 U.S.C. §101. The Federal Circuit held that chemicals and physical objects and substances are articles for purposes of the machine-or-transformation test. On the more difficult questions of electronic signals and electronically-manipulated data, the court turned to prior case law to convey some benchmarks.

The Federal Circuit began by noting that electronic signals and electronically-manipulated data are the "raw material-age processes." Thus, data and signals can be transformed by a process for purposes of statutory process claims. Specifically, where a claim does not specify a particular type or nature of data, or how or from where the data is obtained, such data is not an article for purposes of transformation. Abele, 684 F.2d at 909. However, where data clearly represents physical and tangible objects (for example, X-ray attenuation data represents the structure of bones, organs, and other body tissues), the data is an article. Id. at 908-909. Accordingly, an electronic transformation of said data into a visual form does constitute a transformation and there is no requirement that the underlying physical objects be transformed.

In contrast, a data-gathering step added to an algorithm does not convert that algorithm into a patent eligible process. In re Grams, 888 F.2d 835, 840 (Fed. Cir. 1989). That is, gathering data (for example, by performing a clinical test) does not constitute a transformation of an article. Moreover, such operations may be inherently required in the recited process such that the extra step does not restrict the scope of the claim and preempts substantially all uses of the fundamental principle of the recited algorithm. The court, though, did indicate that by specifying how the data is gathered or on what medium data is recorded after a process is performed on the gathered information, some relevance may be imputed onto such data gathering or recording such that it is not an insignificant extra-solution activity.

On the facts of the case at hand, the court dismissed the Applicants’ reliance on the State Street test, and asserted the machine-or-transformation test as exclusively dispositive. Applying this test, the court holds that the ‘892 application seeks to “claim a non-transformative process that encompasses a purely mental process of performing requisite mathematical calculations without the aid of a computer or any other device, mentally identifying those transactions that the calculations have revealed would hedge each other’s risks, and performing the post-solution step of consummating those transactions” (emphasis added). Thus, because the claimed process does not involve transforming an article into a different state or thing and, as admitted by the Applicants, does not involve a machine implementation, the ‘892 claims are not drawn to patent-eligible subject matter under 35 U.S.C. §101.

Swisa filed a motion for summary judgment of noninfringement, which the District Court granted Swisa stating that a “plaintiff in a design case must prove both (1) that the accused device is ‘substantially similar’ to the claimed design under what is referred to as the ‘ordinary observer’ test, and (2) that the accused device contains ‘substantially the same points of novelty that distinguished the patented design from the prior art.’” The District Court held that the Swisa product did not incorporate the “point of novelty” of the ‘389 patent. In determining that the “fourth, bare side to the buffer” was the point of novelty, the District Court looked to Nailco’s U.S. Design Patent No. 416,648 (the Nailco patent) and the Falley Buffer Block as the closest prior art. The Nailco patent discloses a nail buffer with an open and hollow body, raised rectangular pads, and open corners having a triangular cross-section. The Falley Buffer Block has a solid, rectangular cross-section with slightly raised buffers on all sides. Because the accused Swisa product did not include the fourth side without a buffer surface, the District Court concluded that the Swisa product did not incorporate the point of novelty of the ‘389 patent; thus, the Swisa product did not infringe. The four buffer blocks are illustrated as follows:

EGI argued that the ordinary observer test is able to accomplish the purposes for which the point of novelty test was designed but less confusingly. Swisa disagreed and argued that the Federal Circuit may not and should not abandon the point of novelty test as such test was adopted and required by the Supreme Court in Smith v. Whitman Saddle Co., 148 U.S. 674 (1893). Swisa argued that Whitman Saddle dictates that the point of novelty is a second and distinct test for design patent infringement. The Federal Circuit, however, disagreed with Swisa and determined that the point of novelty test was actually developed relatively recently.

Upon a review of the case law, the Federal Circuit concluded that “the point of novelty test, as a second and free-standing requirement for proof of design patent infringement, is inconsistent with the ordinary observer test…, is not mandated by Whitman Saddle…, and is not needed to protect against unduly broad assertions of design patent rights.” The Federal Circuit interpreted Whitman Saddle to mean “that, viewed in light of the similarities between the prior art and the patented design, the accused design did not contain the single feature that would have made it appear distinctively similar to the patented design rather than like the numerous prior art designs,” and as such, did not infringe. Slip at page 13. More importantly, Whitman Saddle indicated that the ordinary observer test should be applied in light of the prior art. The Court analyzed several cases illustrating the development of the ordinary observer test in light of the prior art. See Bevin Brothers Manufacturing Co. V. Starr Brothers Bell Co., 114 F. 362 (C.C.D. Conn. 1902) (for the proposition that no point of novelty test was applied but that the “ordinary observer test in which the observer was comparing the patented and accused designs in the context of similar designs found in the prior art.”); see Zidell v. Dexter, 262 F. 145 (9th Cir. 1920) (emphasizing the importance of similar prior art designs to the determination of infringement under the ordinary observer test); and see Applied Arts Corp. v. Grand Rapids Metalcraft Corp., 67 F.2d 428 (6th Cir. 1933) (in which the ordinary observer test was applied in light of similar objects found in the prior art).

The Court then noted the precedent developed to be applied in Sears, Roebuck & Co. v. Talge, 140 F.2d 395 (8th Cir. 1944), in which the Eight Circuit stated that the test for infringement involves two elements: (1) the sameness of effect as a whole upon the eye of an ordinary purchaser must be such as to deceive him, inducing her to purchase one, supposing it for the other, and (2) the accused device must appropriate the novelty in the patented device which distinguishes it from the prior art. The Federal Circuit saw that Sears, Roebuck & Co. and Applied Arts became the principal precedents relied upon in Litton Systems. Despite the Federal Circuit applying Litton Systems for the proposition that “the point of novelty test is separate from the ordinary observer test and requires the patentee to point out the point of novelty in the claimed design that has been appropriated by the accused design,” the Federal Circuit now interprets such cases as being more properly read as “applying a version of the ordinary observer test in which the ordinary observer is deemed to view the differences between the patented design and the accused product in the context of the prior art.”

“[W]e hold that the “ordinary observer” test should be the sole test for determining whether a design paten has been infringed. Under that test, as this court has sometimes described it, infringement will not be found unless the accused article embodies the patented design or any colorable imitation thereof.” Slip opinion at page 21 (internal quotes and citations omitted). However, the ordinary observer is to be applied in light of the prior art. See slip at pages 17-21. Further, the accused infringer will retain the burden of production as to comparison prior art, and the patentee retains the burden of proof to demonstrate infringement by a preponderance of the evidence. Slip opinion at pages 22-23.

In applying the ordinary observer test, the Federal Circuit demonstrated that the application of the ordinary observer test in light of multiple features of multiple prior art references. “Where the frame of reference consists of numerous similar prior art designs, those designs can highlight the distinctions between the claimed design and the accused design as viewed by the ordinary observer.” Slip at page 19. The distinction as indicated by the Court is that the ordinary observer informed of the prior art may focus her attention on the proper inquiry, “whether the accused design has appropriate the claimed design as a whole,” as opposed to the inquiry of the point of novelty test, whether the accused design has appropriated a single specified feature of the claimed design. Id.

As an example, the Court indicated that when more points of novelty are identified in the patented design, the accused infringer has more room to argue that the accused product does not infringe because the accused design does not copy all of the points of novelty, even though the accused design may copy most of the points of novelty and even though the accused design may give the overall appearance of being identical to the patented design. In such case, the test that asks how the ordinary observer having knowledge of the prior art would view the differences between the two designs will produce results congruent with the purposes of design patent protection.

The Federal Circuit also noted that it has held that trial courts have a duty to conduct claim construction in design patents. However, the Federal Circuit clarified that the Court has not prescribed any particular form that the construction must take place. Given that the illustration in the drawing views is its own best description and the perceived difficulties of attempting to describe such with words, “the preferable course ordinarily will be for a district court not to attempt to “construe” a design patent claim by providing a detailed verbal description of the claimed design.” Slip at page 24. Thus, it is within the court’s discretion as to whether to provide a verbal elaboration of the claimed design, and such court’s decision will not be reversible error without a showing of prejudice. Id.

The Court turned to the analysis of the facts of the case given the newly-minted standard and determined the question to be: “whether an ordinary observer, familiar with the prior art Falley and Nailco designs, would be deceived into believing the Swisa buffer is the same as the patented buffer.” Slip at page 27. As shown above, the Falley nail buffer has a solid, rectangular cross-section with slightly raised buffers on all sides, and the Nailco patent has a hollow, triangular cross-section with raised buffers on all sides. Further, the ‘389 patent has a hollow, square cross-section with raised buffers on three of four sides, while the Swisa buffer has a hollow, square cross-section with raised buffers on all four sides, one on each side.

EGI argued that the ordinary observer would not find the addition of the fourth buffer to greatly alter the ornamental effect and appearance of the whole design of the accused design to the whole patented design. However, Swisa argued that, in light of the close prior art buffers, including a number having square cross-sections, an ordinary observer would notice the differences between the two products. Swisa emphasized that the number of sides having abrasive surfaces thereon would be important to purchasers, i.e., a “three way buffer” versus a “four way buffer.”

The Court took exception with EGI’s argument in that it did not address that the only difference between the accused design and the Nailco prior art design was that the accused design had four sides instead of three. The Court stated that nothing “explains why an ordinary observer would regard the accused design as being closer to the [patented] design than to the Nailco prior art patent.” Slip at page 29. As such, the Court concluded that no reasonable fact-finder could find that EGI met its burden of showing that an ordinary observer, taking into account the prior art, would believe that the accused design was the same as the patented design.

Polaris Industries (“Polaris”) is a manufacturer of ATV’s and a purchaser of Mink’s electrical components since about 1970. In 1996, Polaris engaged Minks in discussions regarding the ‘080 patent and its ability to purchase reverse speed limiters from different manufacturers. Minks responded by informing Polaris that reverse speed limiters based on engine speed and a DC input were covered by the ‘080 patent. Polaris then began implementing a new speedometer in its ATVs that had an integrated reverse speed limiter that sensed engine speed, and when Minks confirmed that the new Polaris ATV infringed the ’080 patent, he sent Polaris a letter to this effect on November 23, 2004.

When Minks did not get a positive response to the November 23, 2004 letter, Minks then filed suit against Polaris on December 22, 2005, alleging that Polaris infringed apparatus claim 2 of the ‘080 patent. After a trial, the jury found that Polaris infringed the '080 patent. Moreover, the jury found that since Polaris received actual notice of infringement for purposes of 35 U.S.C. §287(a) on November 23, 2004 such that all damage calculations are relative to November 23, 2004. The jury also found that Polaris willfully infringed claim 2 of the ‘080 patent, and that Minks was entitled to $1,294,620.91 in royalty damages.

The jury did not find that the discussions prior to November 23, 2004 were sufficient to find notice had been given prior to this date. Specifically, the District Court instructed the jury on actual notice that “[t]he date notice was given is the date on which Minks communicated to Polaris a specific charge that one of its products may infringe claim two of the ’080 patent.” The jury found that Minks’ November 23, 2004 letter to Polaris satisfied 35 U.S.C. §287(a)’s notice requirement.

Additionally, Polaris filed a JMOL motion for noninfringement, contenting that claim 2 included a means plus function element for which there was no corresponding part in Polaris' speed limited. However, the District Court denied the motion because Figure 2 in the ‘080 patent is the only structure linked or associated with the functions required by claim 2. Thus, the District Court concluded that “the means-plus-function limitations of claim 2 are limited to the structures set forth in Figure 2 (and their equivalents).” Based on this, the District Court denied Polaris’ JMOL motion of noninfringement, ruling that “to one skilled in the art of circuit design/electrical engineering, [the amplitude and the frequency of the AC voltage] are equivalent for purposes of determining speed.” Therefore, the jury “could reasonably conclude that the methods employed in the ‘080 Patent and in the accused devices were equivalent or interchangeable.”

The District Court judge did, however, grant Polaris’ Motion for a Reduction in Damages and came to a final award of $117,316.50. The District Court judge further reduced the damages award as a matter of law under Federal Rule of Civil Procedure 50 without offering Minks a new trial on damages.

As for enhanced damages and attorney fees under 35 U.S.C. § 285, the District Court determined that a “reasonable fee” would be $234,633.00 after all deductions. However, the District Court only awarded half this amount as it found Minks to have wasted a great deal of trial time with his “economic nonsense” damages theory.

The court denied Minks’ motion for reconsideration, so Minks filed a notice of appeal on July 25, 2007, challenging (1) the District Court’s reduction of the damages award, (2) the amount of attorney fees awarded, and (3) the jury instruction on actual notice.

Reduction of Compensatory Damages Without New Trial
The first issue on appeal before the Federal Circuit was whether the Seventh Amendment required the District Court to offer Minks the option of a new trial in lieu of accepting the reduced damages award. The Reexamination Clause of the Seventh Amendment states that “no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.” The Supreme Court’s interpretation history of the Seventh Amendment has required that the exercise of a District Court’s discretion to set aside an excessive jury award be accompanied by an offer of a new trial. See e.g., Kennon v. Gilmer, 131 U.S. 22, 29 (1889), Hetzel v. Prince William County, 523 U.S. 208, 211 (1998). However, the Eleventh Circuit held in Johansen that when a jury’s award is premised on “legal error,” a court may reduce the award and enter an absolute judgment in an amount sufficient to correct the legal error without offering the plaintiff the option of a new trial in two situations—“where a portion of a verdict is for an identifiable amount that is not permitted by law” or when the award “enter[s] that ‘zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment.’” N.Y., L.E. & W.R. Co. v. Estill, 147 U.S. 591 2007-1490, -1491 (1893), Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320, 1330-31 (11th Cir. 1999).

The District Court examined the evidence in the record with respect to the components of a reasonable royalty—number of infringing sales, royalty base, and royalty rate—and found that the evidence could not support the jury’s damages award. However, in determining a reasonable jury award, the Federal Circuit found that the District Court necessarily engaged in an independent review of the evidence and substituted its conclusion for that of the jury on the factual issue of compensatory damages. The District Court’s decision amounted to an exercise of discretion subject to Hetzel’s requirement that Minks be offered a new trial. Thus, the Federal Circuit vacated the District Court’s order reducing the jury’s compensatory damages award and remanded for a new trial on damages.

Reduction of Enhanced Damages
In the second issue on appeal, the Federal Circuit discussed the District Court’s award of enhanced damages and attorney fees to Minks under 35 U.S.C. § 285. The Federal Circuit detected no abuse of discretion in the District Court’s reduced award of attorney fees seeing as even on appeal, Minks did not articulate a coherent damages theory. The Federal Circuit, therefore, affirmed the award of attorney fees but noted that the trial judge could exercise discretion to modify the award if it warranted further consideration on remand.

Actual Notice under 35 U.S.C. §287
In the third issue on appeal, the Federal Circuit addressed the jury instruction on the issue of notice. Under 35 U.S.C. § 287(a), where a patentee has failed to mark its patented product, “no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.” Minks Engineering did not mark its products, so damages recoverable by Minks were limited by the date that Polaris received notice satisfying the requirements of 35 U.S.C. § 287(a).

Minks argued that the District Court’s jury instruction on actual notice was inadequate because a patentee can provide sufficiently specific notice to an accused infringer before the patentee discovers the actual infringement by the accused. Thus, a patent owner can give notice both by a positive charge of infringement as well as by a qualified charge of infringement. The Federal Circuit agreed with Minks that the given instruction did not fairly and correctly state the issues and the law, and that the jury should have been more clearly instructed that it was permitted to find notice prior to the date Minks discovered Polaris’ infringement. Minks made a qualified charge of infringement when he informed Polaris that reverse speed limiters that sensed engine speed and a DC input infringe the ‘080 patent, and as a long time customer of Minks, Polaris knew of the ‘080 patent. Moreover, as early as 1997, Minks specifically communicated his belief that reverse speed limiters sensing engine speed and a DC input infringed the ‘080 patent. Therefore, the Federal Circuit found that the District Court’s instruction to the jury should have more clearly articulated that in this context, knowledge of a specific infringing device was not a legal prerequisite to a finding of actual notice. Thus, the Federal Circuit also required a new trial on this issue.

Infringement of Means Plus Function Element
Additionally, Polaris cross-appealed from the District Court’s denial of its JMOL motion on noninfringement. On appeal, the Federal Circuit noted that claim 2 is a means plus function claim whose bounds are construed by identifying the claim’s function then identifying the corresponding structure in the written description necessary to perform that function. Texas Digital Sys., Inc. v. Telegenix, Inc., 308 F.3d 1193, 1208 (Fed. Cir. 2002). It is undisputed that the circuitry of the accused devices differs and has different components than that taught by Figure 2 of the ‘080 patent. However, based on expert testimony and the teachings of the ‘080 patent, the Federal Circuit found that the functions of the accused device and the claim were identical, that the two devices had equivalent structures (noting that difference in physical structure alone is not determinative of § 112 ¶ 6 equivalence), and that the structures performed in substantially the same way. The Federal Circuit, therefore, agreed with the District Court that the jury’s verdict of infringement was supported by substantial evidence that the accused devices met claim 2 of the ‘080 patent and affirmed that the District Court’s denial of Polaris’ JMOL motion.

Willfulness
Lastly, the Federal Circuit addressed Polaris’ second cross appeal that the jury instruction on willful infringement constituted plain error based on the Federal Circuit’s decision in In re Seagate Technology, LLC, 174 F.3d 1360 (Fed. Cir. 2007) (en banc). The Federal Circuit did not decide this issue because Polaris made no argument and cited no evidence to establish two of the elements for plain error as outlined by In re Seagate. Furthermore, because in the order granting Minks’ request for enhanced damages the trial court concluded that “it is fairly clear” that Polaris deliberately copied Minks’ patented reverse speed limiter “and the case was not close,” the Federal Circuit said it appeared that error in the jury instruction was not prejudicial because the jury probably would have arrived at the same result nevertheless. The Federal Circuit found that Polaris did not demonstrate plain error in the jury instruction on willfulness and affirmed the jury’s finding of willful infringement.

Praxair filed suit on December 22, 2003 in the U.S. District Court for the District of Delaware, asserting that several claims of each of the above-noted patents are infringed by ATMI. ATMI responded by asserting an affirmative defense of invalidity of the Praxair patents and asserted counterclaims for a declaratory judgment of noninfringement and invalidity with regards to the ‘115, ‘609 and ‘895 patents.

Additionally, ATMI filed an amended answer adding the affirmative defense of unenforceability due to inequitable conduct as per the three Praxair patents. For the inequitable conduct affirmative defense argument, ATMI alleged that applicants for the above three patents withheld information from the United States Patent and Trademark Office (USPTO). The purportedly withheld references were U.S. Patent No. 5,409, 526 (the Zheng patent) and information on restricted flow orifices (RFOs) as existing devices in the prior art.

The District Court, in a bench trial, first analyzed whether such information was material to Praxair’s patents. As per the ‘115 and ‘609 patents, the District Court determined that the Zheng patent and the RFOs were material to the ‘115 and ‘609 patents. The District Court also ruled that the attorney who prosecuted the ‘115 and ‘609 patents, John Tolomei, had knowledge of the Zheng patent and the RFOs, but credited Tolomei's claim that he had a good faith basis for not disclosing the Zheng patent. Thus, there was no intent to deceive the USPTO as per not disclosing the Zheng patent.

However, as per the RFOs, the District Court found that Tolomei knew about the RFOs, which were widely used in the art prior to the application for the ‘115 and the ‘609 patent. In particular, the District Court relied upon four statements, made by the patent applicants in the prosecution of the ‘115 and ‘609 patents, that the District Court believed could not have been made had the material prior art been in front of the USPTO. Additionally, with a lack of testimony explaining why there was a failure to disclose the prior art, the District Court found that “the level of materiality of the RFO art is sufficiently high so at to support an ultimate finding of inequitable conduct.” Additionally, the court stated that conclusory statement effectively stating that the applicant had no intention to deceive the USPTO did not merit consideration.

On appeal, the Federal Circuit reiterated the standard set forth in 37 C.F.R. §1.56(a) in regards to the duty of disclosure as follows: “Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the [PTO], which includes a duty to disclose to the [PTO] all information know to that individual to be material to patentability…” Furthermore, the Federal Circuit found that a breach of the above duty can be shown by:

“clear and convincing evidence that the applicant (1) made an affirmative misrepresentation of material fact, failed to disclose material information, or submitted false material information, and (2) intended to deceive the [PTO].” Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed. Cir. 2007).

The Federal Circuit noted that showings of materiality and intent are distinct and thus, showing materiality itself does not result in showing of intent. However, intent to deceive can be inferred when “(1) highly material information is withheld; (2) the applicant knew of the information [and]…knew or should have known of the materiality of the information; and (3) the applicant has not provided a credible explanation for the withholding,” citing Ferring B.V. v. Barr Labs, Inc., 437 F.3d 1181, 1191 (Fed. Cir. 2006).

Materiality Based Upon Statements in Prosecution History
With respect to the ‘115 patent, the Federal Circuit affirmed the District Court’s finding that RFOs are material such that the first prong of the test was satisfied. Specifically, the Federal Circuit dismissed Praxair’s counterargument that RFOs were cumulative because other references in front of the examiner disclosed devices similar to RFOs. In dismissing the argument, the Federal Circuit acknowledged that when information is considered to be cumulative, it specifically is not material.

However, because Praxair failed to raise the cumulative argument before the District Court, the Federal Circuit held that the argument is waived on appeal.

Intent to Deceive Inferred
With respect to intent to deceive and the ‘115 patent, the Federal Circuit, citing Pfizer, Inc. v. Teva Pharms USA, Inc., 518 F.3d 1353, 1367, stated that where evidence of intent is not available and the prior art is highly material, intent can be inferred from three findings:

1. that the art was highly material;
2. that applicants knew of RFO art and knew or should have known of its materiality; and
3. that patentee failed to produce a credible good faith explanation of why there was a failure to disclose information to the PTO.

The District Court found the RFOs to be highly material not based upon the RFOs themselves. Instead, the District Court found materiality based upon four statements made during prosecution of the ‘115 patent. The Federal Circuit sustained this ruling because Praxair offered no coherent argument as to why the RFOs were not highly material in the context of the statements made in the ‘115 prosecution. Thus, for purposes of inferring intent, the RFOs were highly material.

With regards to the knowledge element for inferring intent, the District Court found that Tolomei, the prosecuting attorney, and LeFebre, an inventor, knew of the RFO art that was not disclosed to the USPTO. This finding was based upon testimony that Tolomei and LeFebre provided during the bench trial. Praxair doesn’t dispute the testimony, but argues that testimony provided by a Praxair employee, Furhop, was relied upon improperly by the District Court in proving Tolomei’s and LeFebre’s knowledge. However, the Federal Circuit noted that the District Court recognized that there was no allegation of inequitable conduct on the part of a Praxair employee, and as such only used Furhop’s testimony to show widespread commercial use of RFOs. As such, the Federal Circuit sustained the District Court's findings of knowledge for purpose of inferring intent, stating that “there is no question that Tolomei and LeFebre “knew of information” withheld from the USPTO.

The Federal Circuit sustained the District Court decision that no good faith explanation was proffered by those who knew of the information withheld from the USPTO for the failure to disclose known material information. Furthermore, the Federal Circuit stated that conclusory statements, such as Tolomei’s claim that he never intentionally misled the USPTO, garner no weight as per an explanation. Tolomei additionally testified that unspecified references before the USPTO were cumulative of the RFO art. The Federal Circuit stated that such testimony fails to provide a good faith explanation for three reasons:

1. the testimony does not suggest that Tolomei believed that disclose of the RFO would have been cumulative at the time of the ‘115 prosecution;
2. Tolomei did not say that cumulativeness was the reason he did not disclose the RFO art to the PTO; and
3. Tolomei failed to identify a particular reference making the RFOs cumulative.

As such, the Federal Circuit stated that:

“Hindsight construction of reasons why a reference might have been withheld cannot suffice as a credible explanation of why, at the time, the reference was not submitted to the USPTO.”

Therefore, for the three reasons discussed above, the Federal Circuit found that the District Court properly inferred intent to deceive the USPTO on the part of the applicants in failing to disclose the RFO art to the USPTO. As such, the Federal Circuit affirmed the District Court's ruling that the failure to disclose the existence of RFO prior art devices rendered the ‘115 patent unenforceable due to inequitable conduct.

In discussing the ‘609 patent, the Federal Circuit found that the District Court was correct to find the existence of RFO devices in the prior art to be material to the ‘609 patent, but the District Court was incorrect in inferring an intent to deceive on the part of the applicants. The Federal Circuit noted that statements, on the part of the applicants, used to show the materiality of RFOs, were made with respect to the prosecution of the ‘115 patent and were not made in the prosecution of the ‘609 patent. In fact, the statements made in the ‘115 prosecution were made at a time when the ‘609 patent had a notice of allowability for all claims to be issued. For this reason, the Federal Circuit reversed the District Court’s finding of inequitable conduct as per the ‘609 patent. However, the Federal Circuit remanded for reconsideration of the issue of infringement of the '609 patent in view of revised findings of claim interpretation.

As per the remaining ‘895 patent, the District Court found to be invalid for indefiniteness. The Federal Circuit reversed the District Court’s finding that a specific term in the ‘895 patent, “port body,” is indefinite. Specifically, the Federal Circuit found that a port body was disclosed in a Summary of the Invention, and is also depicted in a drawing. Thus, the Federal Circuit found that, while the specification "may not be a model of clarity, the specification adequately explains that the port body is a housing that sealingly engages the outlet of the cylinder and defines the fluid discharge path" for purposes of 35 U.S.C. §112. Issues regarding the ‘895 patent were thus remanded to the District Court.

 

Federal Circuit Defines Substantial New Question of Patentability For Purpose of Reexamination to be an Issue Not Considered by USPTO
In In re Swanson, 540 F3d 1368; 88 USPQ2d 1196 (Fed. Cir. 2008), ¬¬¬Surmodics, Inc. (“Surmodics”) appealed the Federal Circuit for the United States Patent and Trademark Office’s (“PTO”) Board of Patent Appeals and Inferences (“Board”), which upheld the examiner’s rejection of claims 22-25 of U.S. Patent No. 5,073,484 (“the ‘484 patent”) in a reexamination proceeding. The Federal Circuit affirmed.

Background
On February 23, 1983, Melvin Swanson and Patrick Guire filed the ‘484 patent. The '484 patent discloses a method of quantitatively analyzing small amounts of biological fluids (e.g., milk, blood, urine, etc.) to detect the presence of a particular substance (the analyte). The method discloses one or more “reaction zones” that contain a bound reactant and are spaced out on a test strip made of a liquid-permeable solid. When a test solution is applied to the test strip, it moves along a flow path to sequentially encounter the reactant-containing zones. When a solution containing the requisite analyte reaches each of the reaction zones, selected detectors in the reaction zones indicate, preferably by a change of color, the presence of analyte, reactant, or predetermined product. The specification does not limit the invention to a certain type of detection and suggests that the analyte can be “substantially all chemical substances that are reactive with a reactant to form a product.”

The independent claim at issue, claim 22, claims a method of detection in which the analyte and reactant form a ligand-antiligand binding pair. Claims 23, 24, and 25 are dependent claims. Claim 23 limits the detection of the ligand-antiligand pair via a chemical moiety, and claims 24 and 25 further limit this chemical moiety to include an enzyme and to be a radioisotope, respectively.

The prior art at issue in this appeal is U.S. Patent No. 4,094,647 (“Deutsch”), which also discloses a method of detecting ligand-antiligand binding pairs in order to determine the presence of a ligand (the analyte) in a biological fluid sample. Deutsch claims a detectable product that may be labeled with “any chemical substance or moiety having a detectable characteristic including radioactivity.” Further, U.S. Patent No. 3,641,235 (“Weiss”) teaches a similar immunoassay method for visually detecting the presence of an analyte in biological fluid. Finally, U.S. Patent No. 3.466,241 (“Tom”) discloses another immunoassay method, in which of the reagents comprises “a signal creating system” that includes “radioactive substances, enzymes and chromogenic substances.”

In the ‘484 patent’s initial examination, the examiner rejected all the claims in the application that resulted in the ‘484 patent as obvious under 35 U.S.C. § 103 in light of various combinations of references, and used Deutsch as a secondary reference for purposes of immunoreactions examples. The claims were amended, and on December 17, 1991, the ‘484 patent was granted. The '484 patent was subsequently assigned to Surmodics, who exclusively licensed the patent to Abbott Laboratories (“Abbott”).

On December 30, 1998, Abbott sued Syntron Bioresearch, Inc. (“Syntron”) for infringement of the ‘484 patent. Syntron counterclaimed that the patent was invalid because, inter alia, claims 22 and 23 were invalid in light of Deutsch. On October 4, 2001, the jury returned a special verdict finding that the ‘484 patent was not infringed and that Syntron had failed to prove by clear and convincing evidence that the claims were anticipated, obvious, or otherwise invalid. The District Court entered judgment accordingly.

Abbott appealed, and Syntron cross-appealed to the Federal Circuit, which affirmed-in-part and remanded-in-part the judgment of noninfringement of the ‘484 patent and affirmed the judgment of validity on all asserted claims of the ‘484 patent. In particular, the Federal Circuit sustained the judgment that Deutsch did not anticipate the asserted claims, noting that “the burden having been on Syntron to prove by clear and convincing evidence that the claims were anticipated, [the Federal Circuit could not] conclude that the jury verdict on anticipation was not supported by substantial evidence.” The Federal Circuit explained that the only issue regarding anticipation was whether Deutsch taught “flowing said solution along the medium,” and it agreed that the jury reasonably could have found it did not.

Following appeal, Syntron filed a request for an ex parte reexamination of the ‘484 patent, claiming that there was a substantial new question of patentability, and in part, asserted that certain claims were anticipated or made obvious in light of Deutsch. The examiner granted the request and after reviewing the claims in light of prior art, rejected claims 22, 23, and 25 as anticipated by Deutsch, claims 22 and 23 as anticipated by U.S. Patent No. 3,641,235 (Weiss) under 35 U.S.C. § 102(b), and claim 24 as obvious under 35 U.S.C. § 103 in light of Deutsch and a secondary reference, U.S. Patent No. 3,466,241 (Tom).

Board of Patent Appeals and Interferences
The Board affirmed the examiner’s rejections of claims 22, 23, and 25 of the ‘484 patent. First, the Board rejected Surmodics’s argument that Weiss lacked detection “in the reaction zone” and agreed with the examiner that, “detection may occur in a ‘reaction zone’ by determining whether dye has been displaced from the particle or not." Second, the Board affirmed the examiner’s finding that Deutsch anticipated claims 22, 23, and 25, rejecting Surmodics’s argument that Deutsch could not anticipate the claims because it uses a developing fluid to provide the required flow through the test medium. The Board agreed with the examiner that “the claim is open to additional steps as it uses the term ‘comprising.’”

Last, the Board rejected Surmodics’s claim that reexamination was improper as to Deutsch because Deutsch did not raise “a substantial new question of patentability” as required by 35 U.S.C. § 303. The Board found that the reference did raise a substantial new question of patentability despite having been cited in the original prosecution because it was not cited in regard to the presently rejected claims, and it was not relied upon for the same reason the examiner now relied upon it. Moreover, the Board dismissed Surmodics’s argument that because a jury had affirmed a finding of validity over the reference and the Federal Circuit had affirmed, Deutsch could not raise a substantial new question of patentability for purposes of 35 U.S.C. §303.

Federal Circuit
On appeal, the Federal Circuit noted that the civil courts and PTO have different standards of proof for determining invalidity. In civil litigation, a challenger who attacks the validity of patent claims must overcome the presumption of validity with clear and convincing evidence that the patent is invalid. 35 U.S.C. § 282. If the statutory burden is not met, it simply means that patent challenger did not carry his or her burden of establishing invalidity, not that the patent is valid. On the other hand, the Federal Circuit noted that during examinations and reexaminations, the standard of proof is a preponderance of the evidence, which is substantially lower than in a civil case. In re Caveney, 761 F.2d 671, 674 (Fed. Cir. 1985). Also, for the USPTO there is no presumption of validity, and the Federal Circuit noted that “examiner is not attacking the validity of the patent but is conducting a subjective examination of the claims in light of prior art.” In re Etter, 756 F.2d 852, 856-58 (Fed. Cir. 1985). Unlike in District Courts, in reexamination proceedings, “[c]laims are given ‘their broadest reasonable interpretation, consistent with the specification….’” Trans Tex. Holdings, 498 F.3d at 1298 (quoting In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984)). Therefore, based on the differences outlined above, the Federal Circuit noted that considering an issue at the District Court is not equivalent to the USPTO having had the opportunity to consider it such that a finding of validity over a reference by a District Court does not preclude the USPTO from rejecting the claims over the same reference.

Next, the Federal Circuit addressed Surmodics' argument that the District Court's decision in light of Deutsch precludes the use of Deutsch during reexamination due to 35 U.S.C. §303. In 2002, 35 U.S.C. § 303(a) was amended to state that the USPTO may only grant a reexamination request if “[t]he existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office.” The statute does not define what constitutes a “substantial new question of patentability.” As such, the scope of the “substantial new question of patentability” requirement had not yet been evaluated since the 2002 amendment, so the Federal Circuit had the duty of first impression in this case.

In reviewing the provision, the amended statute specifically discusses references “previously cited by the Office or considered by the Office,” 35 U.S.C. § 303(a) (2002) (emphasis added), but does not address any prior citation or consideration by the courts. The 2002 amendment removed the focus of the inquiry from whether the reference was previously considered, and returned it to whether the particular question of patentability presented by the reference in reexamination was previously evaluated by the USPTO. It remained unchanged pre- or post-amendment that an “argument already decided by the Office, whether during the original examination or an earlier reexamination” cannot raise a new question of patentability. H.R. Rep. No. 96-1307; see also H.R. Rep. No. 107-120, at 3. Likewise, the legislative history for both the original and amended reexamination statute suggest that Congress was concerned only with the consideration of issues in prior USPTO examinations, not prior civil litigation. As such, the Federal Circuit found that the only issues precluded by 35 U.S.C. §303(a) are those raised and resolved by the USPTO during the initial examination, not those raised and resolved by a District Court during litigation.

Moreover, in regards to issues resolved outside of the USPTO in District Court, the Federal Circuit found that 35 U.S.C. §303 did not preclude raising such issues again during a reexamination. The Federal Circuit relied upon the language of 35 U.S.C. §303 language and legislative history, and further relied upon the differences between the two proceedings, all of which suggested that Congress did not intend a prior court judgment upholding the validity of a claim to prevent the USPTO from finding a substantial new question of validity regarding an issue that had never been considered by the USPTO.

Surmodics argued that this reading of the statute—allowing an executive agency to find patent claims invalid after an Article III court had upheld their validity—violated the constitutionally mandated separation of powers. The Federal Circuit disagreed. The court’s final judgment and the examiner’s rejection were not duplicative, and the examiner’s rejection of claims in the ‘484 patent pursuant to reexamination did not disturb the court’s earlier holding that Syntron had not met its burden of proving that the ‘484 patent was invalid. The examiner instead evaluated the ‘484 patent claims in light of prior art, some of which Syntron had presented at trial, and found there was a preponderance of evidence supporting invalidity. Cf. Stevenson, 713 F.2d at 710. There is no Article III issue created when a reexamination considers the same issue of validity as a prior District Court proceeding. Therefore, the Federal Circuit concluded that the Board did not err in holding that the prior District Court litigation did not prevent the Deutsch reference from raising a “substantial new question of patentability” under § 303(a). As properly interpreted, a “substantial new question of patentability” referred to a question that had never been considered by the USPTO; thus, a substantial new question can exist even if a federal court previously considered the question.

Surmodics also argued that Deutsch did not raise “a substantial new question of patentability” because Deutsch was also considered by the USPTO during the initial examination and relied on as a secondary reference for rejecting various dependent claims as obvious. It urged the Federal Circuit to adopt a bright-line rule that “would preclude rejections in reexaminations based solely on references used in a rejection of claims in the original patent prosecution.” The Federal Circuit declined this invitation, finding that such a rule would be inconsistent with the clear text of the amendment.

Instead, the Federal Circuit found that, to decide whether a reference that was previously considered by the USPTO creates a substantial new question of patentability, the USPTO should evaluate the context in which the reference was previously considered, the scope of the prior consideration, and determine whether the reference is now being considered for a substantially different purpose. See H.R. Rep. No. 107-120, at 3. The Federal Circuit agreed with the Board that whether Deutsch anticipated claims 22-24 raised a substantial new question of patentability under the amended § 303(a) since Deutsch had not previously been relied upon for purposes of anticipation, but had instead only been relied upon for purposes of an example of an immunoreactions. Substantial evidence supported the Board’s conclusion that in the initial examination, “Deutsch was relied upon, as a secondary reference,” for the limited purpose of “teaching immunoreactions in general, and not for the specific method steps claimed.” The independent claims were found obvious without any reliance on Deutsch, and Deutsch was cited only to reject the dependent claims that limited the analyte-reactant pair used in the method to a ligand-antiligand pair. Nowhere in its decision did the examiner consider the particular analytical method disclosed by Deutsch. In light of the extremely limited purpose for which the examiner considered Deutsch in the initial examination, the Board is correct that the issue of whether Deutsch anticipated the method disclosed in claims 22, 23, and 25 was a substantial new question of patentability, never before addressed by the USPTO.

In conclusion, the Federal Circuit held that under 35 U.S.C. § 303(a), as amended in 2002, despite consideration of the Deutsch patent in the initial examination and the Federal Circuit’s prior decision, there was a substantial new question of patentability regarding whether Deutsch anticipated and made obvious claims 22-25 that made reexamination warranted. As Surmodics did not raise additional objections to the Board’s rejections over Deutsch, the Board’s finding that claims 22-25 of the ‘484 patent were anticipated and would have been obvious in light of Deutsch was affirmed.

 

Federal Circuit Finds Clinical Trials Are Not Public Use Where There Was Insufficient Evidence That the Drug Was Ready For Patenting At the Time Of Use
In In Re Omeprazole Patent Litigation, 536 F3d 1361; 87 USPQ2d 1865 (Fed. Cir. 2008), Astrazenca AB, et al. (Astra) owns U.S. Patent No. 4,786,505 (‘505 patent) and U.S. Patent No. 4,853,230 (‘230 Patent) which are directed to omeprazole. Omeprazole is the active ingredient of Prilosec® and is intended to treat gastrointestinal disorders by inhibiting secretion of gastric acid. Omeprazole degrades in acid-reacting and neutral media and is also unstable when exposed to moisture and organic solvents. To overcome the issues facing omeprazole, an enteric coating can be used to cover the drug core to protect omeprazole from gastric acid. However, enteric coatings contain acidic compounds that will degrade the drug while in storage. To increase drug stability in storage, the '505 and '230 Patents add an Alkaline Reacting Compound (“ARC”) to the drug core.

Impax, on Dec. 31, 1999, sought Food & Drug Administration (FDA) approval to sell 10 and 20 mg generic versions of Prilosec®. Astra filed an infringement suit for the ‘505 and the ‘230 patent under 35 U.S.C. §271(e)(2)(A), and filed a second action when Impax amended its application to include a 40-mg version. The FDA granted final approval to Impax in September 2004 to market 10 and 20 mg versions of generic omeprazole, upon which Astra amended their complaint to include damages under 35 U.S.C. §271(a)-(c).

Impax filed a response to Astra’s complaints and asserted counter claims including fraud and sham litigation, a declaration of unenforceability to the patents, and noninfringement and invalidity as to the claims of the two patents and additionally demanded a jury trial. The District Court held a 42-day bench trial after stipulation by Astra to dismiss demand for damages against Impax. After the trial, but before the court’s decision was issued, both of the patents expired. However, Astra held a 6 month market exclusivity grant from the FDA after the expiration of the ‘505 and the ‘230 patents. The District Court held that Astra’s ‘505 and ‘230 patents were valid and were infringed by Impax.

Impax appealed the decision, arguing that the District Court should not have denied Impax’s demand for a jury trial and should not have denied Impax’s motion to dismiss Astra’s claims as moot, as well as challenging the sufficiency of evidence for infringement and that the claims of the patent should be invalid under the public use bar, 35 U.S.C. §102(b).

On appeal, the Federal Circuit agreed with the District Court that, while the ‘505 and the ‘230 Patents expired on April 20, 2007, the District Court retained the authority to enforce Astra’s right to market exclusivity under 35 U.S.C. §271(e)(4)(A). Specifically, the Federal Circuit found that the District Court retained jurisdiction under the court's general equitable authority.

Impax also challenged the District Court’s finding regarding the public use bar of section 35 U.S.C. §102(b). The ‘505 and ‘230 patent applications were filed on April 20, 1987, making their one year critical date April 20, 1986. Before the critical date, Astra had ordered four large clinical studies on the safety and effectiveness of it’s drugs in order to obtain FDA approval. Impax argued that these clinical studies were a public use of Astra’s claimed formulation for purposes of 35 U.S.C. §102(b). The District Court ruled against Impax’s assertions on two grounds: 1) the studies constituted experimental uses, and therefore not public uses; and 2) the patented drug was not ready for patenting until after completion of the clinical studies.

On appeal, the Federal Circuit found the District Court to be in error regarding the determination that an experimental use exception serves to negate the public-use bar 102(b). Relying upon Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1371 n.10 (Fed. Cir. 2007); Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1354 (Fed. Cir. 2002); New Railhead Mfg.,

LLC v. Vermeer Mfg. Co., 298 F.3d 1290, 1299 (Fed. Cir. 2002); EZ Dock, Inc. v. Schafer Sys., Inc., 276 F.3d 1347, 1357 (Fed. Cir. 2002); Zacharin v. United States, 213 F.3d 1366, 1369 (Fed. Cir. 2000); and Baxter Int’l, Inc. v. COBE Labs, Inc., 88 F.3d 1054, 1060 (Fed. Cir. 1996), the Federal Circuit stated that “it is clear from this court’s case law that experimental use cannot negate a public use when it is shown that the invention was reduced to practice before the experimental use.” As such, merely because a use is deemed a clinical trial does not prevent the clinical trial from being a public use, and instead, the inquiry centers on whether the use occurred after the invention was ready for patenting.

Even though the District Court misapplied the experimental use exception to public use, the Federal Circuit affirmed the District Court’s decision that the claims were not invalid under 35 U.S.C. § 102(b) as they were not ready for patenting. Relying upon Invitrogen Corp. v. Boicrest Mfg., L.P., 424 F.3d 1374, 1380 (Fed. Cir. 2005) and Pfaff v. Wells Electronics, Inc., 525 U.S. 52, 67 (1998), there was insufficient evidence that the patented formulation was not ready for patenting until after completion of the clinical studies. The Federal Circuit noted that, in Pfaff, the Supreme Court detailed two ways to show that an invention was ready for patenting before the critical date for purposes of 35 U.S.C. §102(b): 1) proving reduction to practice before the critical date; or 2) proving that the inventor had prepared drawings or descriptions prior to the critical date that were sufficient for a person skilled in the art to practice the invention.

Citing z4 Techs., Inc. v. Microsoft Corp., 507 F.3d 1340, 1352 (Fed. Cir. 2007), the Federal Circuit noted that there needs to be evidence that, in addition to actually building the invention meeting all the claimed limitations, but also evidence that the inventors “determined that the invention would work for its intended purpose.”

In applying the test for actual reduction to practice for purposes of 35 U.S.C. §102(b), the Federal Circuit rejected Impax's challenge of the District Court’s finding with the assertion that the use of the formulation used in Phase III trials shows that Astra’s scientists had conceived and produced the formulation. Specifically, the Federal Circuit stated that “[i]t is not disputed that the Phase III formulation had been produced before clinical trials. The existence of the formulation, however, does not establish that the Astra scientists had determined that the invention would work for its intended purpose.” Id at 20.

Impax went on to argue that the Astra scientists knew in 1979, the year of the first patent application, that omeprazole could be safe and effective for treatment purposes. However, the Federal Circuit found no clear error with the District Court’s finding since “Impax’s argument misses the point…Impax has not demonstrated that, without conducting the Phase III clinical tests, the inventors knew that…it would be effective as a treatment for gastrointestinal disease.” As such, the Federal Circuit affirmed the District Court's finding that the claims were valid as there was insufficient evidence that the inventors appreciated that the drug formulation would work for its intended purpose during the clinical trials.

The Federal Circuit also rejected Apotex’s arguments that the ‘505 and ‘230 Patents claims would be anticipated under 35 U.S.C. §102 and/or obvious under 35 U.S.C. §103 in light of 15 other prior art publications. Specifically, the Federal Circuit found that the primary references applied for anticipation purposes for the '230 patent, U.S. Patent No. 2,991,226 (“the ’226 patent”), U.S. Patent No. 4,470,980 (“the ’980 patent”), and European Patent Application No. EP 122,815 A1 (“the ’815 European application”), lacked an “acid labile pharmaceutically active substance” as in the claimed invention and affirmed the District Court's finding that the claims in the '230 patent were not anticipated by these primary references.

Further, the Federal Circuit affirmed the District Court's decision that the claimed invention of the '230 and '505 Patents was not obvious under 35 U.S.C. §103 in view of these primary references and various combinations of secondary references. Specifically, while testimony existed as to references and how one of ordinary skill in the art would have understood the teachings of each, there was sufficient evidence from the testimony that one of ordinary skill in the art would not have combined the references in a manner which read on the claimed invention. The Federal Circuit also found that two of such were not printed publications since there was insufficient evidence that such publications were available to the public in a manner required for 35 U.S.C. §102, and thus were not available for purposes of 35 U.S.C. §103.

In dismissing the challenges brought by Apotex and Impax, the Federal Circuit affirmed the District Court decision that Astra’s patents were enforceable and not invalid and that they were infringed by Apotex and Impax.

 

Federal Circuit Finds Breach of Open Source License Creates Copyright Cause of Action
In Jacobsen v. Katzer, 535 F3d 1373; 87 USPQ2d 1836 (Fed. Cir. 2008), Robert Jacobsen holds a copyright to computer programming code that he makes available for free public download upon acceptance of the terms of an Artistic license (an “open source” or public license).

Matthew Katzer and Kamind Associates, Inc. (collectively “Katzer”) developed competing commercial software products, components of which Jacobsen accused Katzer of copying. Jacobsen alleged that Katzer copied these materials from his website and incorporated them into one of Katzer’s software packages without following the terms of the Artistic License. In particular, Katzer’s allegedly infringing software did not include (1) the authors’ names, (2) the open source software group’s copyright notices, (3) references to Jacobsen’s original copying file, (4) an identification of the open source software group or its parent site as the original source of the definition files, and (5) a description of how the files or computer code had been changed from the original source code. Jacobsen brought an action in the District Court for the Northern District of California for copyright infringement and moved for a preliminary injunction.

The District Court held that the open source Artistic License created an “intentionally broad” nonexclusive license that was unlimited in scope because it provided that a user could copy the files verbatim or could otherwise modify the material in any way, including as part of a larger, possibly commercial software distribution. The District Court found that the Artistic License did not create liability for copyright infringement and that Jacobsen, thus, had a cause of action only for breach of contract, rather than an action for copyright infringement based on a breach of the conditions of the Artistic License. Because a breach of contract creates no presumption of irreparable harm, the District Court also denied the motion for a preliminary injunction.

Jacobsen appealed to the Federal Circuit regarding the finding that he did not have a cause of action for copyright infringement. The Federal Circuit accepted jurisdiction due to the presence of patent infringement issues not in issue on the instant appeal from the denial of a preliminary injunction.

On appeal, the Federal Circuit found a prima facie showing of copyright infringement because the parties did not dispute that Jacobsen was the holder of a copyright for certain materials distributed through his website, and Katzer admitted that portions of the DecoderPro software were copied, modified, and distributed as part of the Decoder Commander software. Katzer argued that it could not be liable for copyright infringement because it had a license to use the material. The issue before the Federal Circuit was therefore whether Katzer’s use was outside the scope of the license.

The Federal Circuit noted that open source licensing enables collaboration and advancement of the arts and sciences with great ease and speed by enabling global computer programmers to view software code and make changes and improvements. In return, a copyright holder can ensure that recipients of the redistributed computer code know the identity of the owner as well as the scope of the license granted by the original owner by requiring that users copy and restate the license and attribution information. Jacobsen’s Artistic License, in particular, also required that changes to the computer code be tracked so that downstream users know what part of the computer code is the original code created by the copyright holder and what part has been newly added or altered by another collaborator.

The argument on appeal centered on whether the terms of the Artistic License were conditions of, or merely covenants to, the copyright license. Citing Graham v. James, 144 F.3d 229, 236 (2d Cir. 1998), the Federal Circuit noted that, if the alleged violated terms of the Artistic License were both covenants and conditions, they could serve to limit the scope of the license and would be governed by copyright law. In contrast, if the alleged violated terms were merely covenants, they would be governed by contract law and the relief would be limited to breach of contract remedies.

Jacobsen asserted that the terms of the Artistic License defined the scope of the license and that any use outside those restrictions was copyright infringement. Katzer argued that these terms did not limit the scope of the license and were nothing more than covenants that provided contractual terms for the use of the materials. In rejecting Katzer's argument, the Federal Circuit noted that the Artistic License stated on its face that the document created conditions, and it used traditional language of conditions under California law. Further, the conditions the Artistic License set forth were vital to enable the copyright holder to retain the ability to benefit from the work of downstream users. Thus, the Federal Circuit held that the District Court incorrectly interpreted the Artistic License to permit a user to “modify the material in any way” and did not find that any of the “provided that” limitations in the Artistic License served to limit this grant. The Federal Circuit found that this interpretation of the conditions of the Artistic License did not credit the explicit restrictions in the license that govern a downloader’s right to modify and distribute the copyrighted work.

Katzer’s argument was also based on the assumption that Jacobsen’s copyright gave him no economic rights because he made his computer code available to the public at no charge, and Katzer argues that copyright law does not recognize a cause of action for non-economic rights. The Federal Circuit, however, found the restrictions of the Artistic License both clear and necessary to accomplish the objectives of the open source licensing collaboration, including economic benefit. As recognized by the Federal Circuit, the basic idea is that copyright holders who engage in open source licensing have the right to control the modification and distribution of copyrighted material. A copyright holder can grant the right to make certain modifications, yet retain his right to prevent other modifications. The “unauthorized editing of the underlying work, if proven, would constitute an infringement of the copyright in that work similar to any other use of a work that exceeded the license granted by the proprietor of the copyright.” Gilliam v. ABC, 538 F.2d 14, 21 (2d Cir. 1976).

As such, the Federal Circuit vacated and remanded since, although Katzer conceded that it did not comply with the conditions of the Artistic License, the District Court did not make factual findings on the likelihood of success on the merits in proving that Katzer violated the conditions of the Artistic License. Because the Federal Circuit determined that the conditions of the Artistic License were enforceable copyright conditions, it remanded to the District Court to determine whether Jacobsen is entitled to a preliminary injunction under these standards

 

Federal Circuit Finds Information Discovered After The Filing of an Application Must Be Material To Form Grounds of Inequitable Conduct
In Research Corporation Technologies, Inc. v. Microsoft Corporation, 87 USPQ2d 1519 (Fed. Cir. 2008), Research Corporation Technologies, Inc. (“RCT”) appealed the Federal Circuit for the District Court for the District of Arizona’s holding of RCT’s patents unenforceable due to inequitable conduct and its grant of summary judgment of invalidity and noninfringement in favor of Microsoft Corporation (“Microsoft”). The Federal Circuit reversed, vacated, and remanded the case to the District Court with instructions to reassign the case.

Background
Halftoning technology is used in computers and printers. A halftone is an image that simulates a continuous tone image, but is actually an arrangement of individual dots. The particular spacing between the dots gives the viewer the illusion of a continuous picture consisting of varying shades of gray in the image. One method of halftoning is thresholding, which uses a grid-like array, or mask, to carry the threshold to initiate pixels for a particular pattern. Due to the difficulty and poor quality of the thresholding method of halftoning, two of RCT’s scientists, Dr. Kevin J. Parker and Dr. Theophano Mitsa, invented and applied for patents for a Blue Noise Mask that was quick, used very little computer memory, and produced high quality halftone images. These resulted in U.S. Patent Nos. 5,111,310 ('310); 5,341,228 ('228); 5,477,305 ('305); 5,543,941 ('941); 5,708,518 ('518); and 5,726,772 ('772).