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).

Specifically, in 1987, Dr. Robert Ulichney published a book about digital halftoning techniques, but he had only the capability to generate blue noise halftone using the complex mathematical process of error diffusion. Recognizing the drawbacks of Dr. Ulichney's method, Dr. Parker and Dr. Mitsa filed patent applications which resulted in the '310, '228, '305, '941, '518, and '772 patents. However, after filing the patent applications and as part of her continuing thesis work, Dr. Mista tested the strictness of Dr. Ulichney’s equation by testing it with different scaling factors (“K factors”). She concluded that the equation could indeed be broadened. Drs. Mista, Parker, and Ulichney then jointly published an article summarizing the test results.

District Court for the District of Arizona
On December 21, 2001, RCT filed suit against Microsoft for infringement of six patents related to digital halftoning. After a Markman hearing, RCT moved for partial summary judgment that certain Microsoft products contained infringing halftoning masks. Microsoft filed a motion for partial summary judgment that RCT’s claims were invalid for anticipation under 35 U.S.C. § 102(b) and lack of written description under 35 U.S.C. § 112 ¶1. The trial court granted RCT’s infringement motion, appointed a special master to consider the additional summary judgment motions, then transferred the case to a different trial judge. At this time, the parties filed additional summary judgment motions. The new district judge reversed the prior judge’s grant of RCT’s summary judgment motion for infringement and also granted Microsoft’s summary judgment motions for noninfringement and on invalidity. This judge additionally granted all of Microsoft’s motions in limine and set a jury trial to commence August 8, 2005. However, upon Microsoft’s request, the new judge cancelled the scheduled jury trial and ordered a trial on inequitable conduct instead. During trial, RCT was barred from presenting expert testimony on materiality, and its case was limited to testimony from the inventors about candor and good faith. On November 23, 2005, the trial court ruled from the bench that the RCT patents were unenforceable due to inequitable conduct. After RCT appealed, Microsoft filed motions with the District Court seeking attorney fees, amplification of the court’s finding, and an extension of the effective date for appeal pending a decision on the first two motions. The trial judge granted the motions on the deadline and attorney fees but did not amplify its findings of fact or conclusions of law on any topic.

Federal Circuit
To find a patent unenforceable for inequitable conduct, there must be clear and convincing evidence both 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 patent office. Cargill, Inc. v. Canbra Foods, Ltd., 476 F.3d 1359, 1363 (Fed. Cir. 2007). The trial court found inequitable conduct because the inventors did not disclose the scientist’s post-filing K factor tests to the USPTO. However, the Federal Circuit found that, even assuming arguendo that there was an intent to deceive, because the work occurred after the scientists had filed the patent application, these K factor experiments were not material to their inventive activity. The Federal Circuit determined that under the circumstances of this case, the inventors had no obligation to report their later tests to the USPTO. For one, these post-filing K factor experiments were basic scientific research, not a verification of the patented technology. Also, the patents did not even mention the K factor, so the K factor research was not necessary to practice the patented invention. Lastly, the inventors published the K factor tests to the scientific community, and publication is an act inconsistent with intent to conceal data from the USPTO.

In support of its argument that the experimental results were material, Microsoft argued that the patents discussed production of pleasing images (or at least not annoying), and the joint publication related explicitly to “visually pleasing” images. Further, Microsoft argued that the joint publication and the fact that Dr. Mista’s K factor experiments disclosed some limitations of the patented technology. However, the Federal Circuit found that Microsoft’s contention, with which the trial court agreed, that the inventors had an obligation to submit the post-filing tests to the USPTO was incorrect. The K factor experiments were not material to the patented technology, which did not refer to or rely upon K factors at all. The Federal Circuit found that the trial court completely ignored the materiality prong and, thus, clearly erred in finding that the inequitable conduct test was satisfied.

In addition to missing the materiality prong, the District Court’s intent analysis was clearly erroneous. The trial court, for example, focused improperly on comments that Dr. Parker made at trial regarding the purposes of the patent system since the inventor's motives in applying for a patent are " generally irrelevant to a proper determination of inequitable conduct." Moreover, the Federal Circuit found that the inclusion of the experimental results in the joint publication was " an act inconsistent with an intent to conceal data from the USPTO." As such, the Federal Circuit also reversed the District Court's finding of an intent to deceive for purposes of inequitable conduct.

The District Court also erred in relying on an email exchange a few days after filing as evidence that Dr. Parker was not in possession of the invention at the time of filing for purposes of 35 U.S.C. §112. The Federal Circuit found that an email from one scientist to another in a competitive field that does not disclose the actual status of research and is hardly dispositive proof that the inventor was not in possession of the invention at the time of filing. Moreover, the Federal Circuit noted that Dr. Parker explicitly stated he did not send the emails earlier since the research was confidential and was not to be revealed to a third party until after the patent applications were filed. Thus, the emails did not establish that the inventors did not have the invention for purposes of 35 U.S.C. §112.

Because the trial court erred in ignoring the materiality prong and in misapplying the intent prong of the inequitable conduct test, the Federal Circuit reversed those findings and conclusions. Further, since the Federal Circuit vacated the trial court’s determination of unenforceability due to inequitable conduct for multiple errors, it also vacated the exceptionality finding and the grant of attorney fees. As the record showed many potential issues of fact that would prevent entry of summary judgment, the Federal Circuit also remanded both matters for a proper determination on the merits. Finally, the Federal Circuit decided that the expressed convictions of the trial court may not be easily and objectively reconsidered and met the “unusual circumstances” required by the Ninth Circuit’s test for request to transfer to a different judge. Accordingly, the Federal Circuit remanded to the Chief Judge of the District Court for the District of Arizona to determine the reassignment of the case for a proper determination of validity and infringement on the merits.

 

Federal Circuit Defines Term Syllabic Elements In View of Consistent Single Usage in Specification And Term Comprising Does Not Automatically Broaden Each Element of the Claim
In Board of Regents of the University of Texas System v. BENQ America Corp., 87 USPQ2d 1437 (Fed. Cir. 2008), the Board of Regents of the University of Texas System (“Board of Regents”) appealed the District Court for the Western District of Texas’s final judgment that BENQ America, Corp., et al. (collectively “BENQ”) did not infringe Board of Regents’ U.S. Patent No. 4,674,112 (“the ‘112 patent”). The Federal Circuit affirmed the District Court's decision.

Background
The ‘112 patent describes an apparatus and method designed to enable “non-verbal entry” and transmission of a word/words using a standard, touch-tone telephone. Because each key on a standard touch-tone telephone represents more than one letter, the user depresses a key one time for any of its corresponding letters, and the method compares this sequence against a vocabulary directory of possible words that the user may be intending to enter. The system minimizes memory requirements and enables an expanded word recognition capability by using a vocabulary of syllabic elements rather than a vocabulary of words.

During prosecution, the examiner rejected the claims as anticipated by the Rabiner article, “Digital Techniques for Computer Voice Response: Implementations and Applications,” Proceedings of the IEEE, vol. 64, No. 4, Apr. 1976, pp. 416-33. The examiner noted that Rabiner taught a system described by the claims, in which a single key is depressed for each letter of a word to be transmitted even though each key corresponds to multiple different letters. In response to the rejection, the Board of Regents amended claim 10 to state “each pre-programmed code being representative of a syllabic element [replacing an alphabetic character string],” and the ‘112 patent, thereafter, issued.

District Court for the Western District of Texas
In March and May of 2005, the Board of Regents filed three separate lawsuits in the Western District of Texas alleging infringement of claim 10 (and its dependent claim 11) of the ‘112 patent by an extensive list of defendants. In October 2005, the District Court consolidated these cases into the present suit. Upon a Markman hearing, the District Court concluded that the claim term “syllabic element” means “a one-syllable letter group that comprises a word or can be combined with other one-syllable letter groups to form a word.” The District Court also concluded that the claim term “one or more pre-programmed codes” did not require construction.

On November 7, 2006, Motorola (defendant) filed a motion for summary judgment of non-infringement, which argued that Motorola’s accused devices did not infringe the matching limitation of claim 10 (i.e. “matching said binary code with one or more pre-programmed codes, each pre-programmed code being representative of a syllabic element”). The District Court granted this motion to all the defendants, concluding that the accused devices did not infringe the matching limitation because none of the accused devices “relie[d] upon a vocabulary of only syllabic elements, even if certain entries in those vocabularies happen[ed] to be one syllable long.”

Federal Circuit
On appeal, the Board of Regents argued (1) that the District Court improperly rejected its intermittent infringement argument and erroneously determined that the accused devices fell outside the scope of the claims, and (2) that the District Court failed to resolve all factual inquiries in favor of the non-movant. It disagreed with the District Court’s claim construction of “syllabic element” and its grant of summary judgment.

(1) The Federal Circuit turned to the specification of the ‘112 patent to construe the term “syllabic element.” The specification repeatedly distinguishes between a “word” and a “syllabic element” and indicates that a word is comprised of syllabic elements, confirming that those terms are not coextensive in scope. Further, the specification contains a sole example of a syllabic element—“con,” a one-syllable letter group that is both a word and is able to be combined to form other words. The District Court found this passage to imply that a syllabic element is limited to a single syllable, whereas the Board of Regents reasoned that because “common letter-groups, suffixes, [and] prefixes” are “referred to as ‘syllabic elements,’” the term “syllabic element” must include every common letter-group, suffix, or prefix. Thus, because some prefixes include more than one syllable, the Board of Regents argued that this passage compels a construction that allows syllabic elements to be more than one syllable. The Federal Circuit, on the other hand, found that just because a “syllabic element” may be a prefix or a suffix does not mean that all prefixes and suffixes are “syllabic elements.” Also, this passage includes “common letter-groups” as possible “syllabic elements,” but even the Board of Regents did not contend that all common letter groups are “syllabic elements.” The Board of Regents added the term “syllabic element” to claim 10 during prosecution of the ‘112 patent. If, as the Board of Regents proposed, “syllabic element” were broadly defined to include letter groups having any number of syllables, then all words would also be syllabic elements. This does not square with the prosecution history, however, as claim 10 was amended and the dependent claim that required matching with words was cancelled. This indicates that the set of “syllabic elements” does not include all words. The Federal Circuit noted that, in construing claims, the prosecution history can be useful, especially as to amended terms used to obtain allowance of a claim. Jansen v. Rexall Sundown, Inc., 342 F.3d 1329, 1333 (Fed. Cir. 2003). In view of the prosecution history, the Federal Circuit concluded that the proper construction of “syllabic element” was a one-syllable letter group that either comprises a word or can be combined with other one-syllable letter groups to form a word. The Federal Circuit saw no error in the District Court’s claim construction.

(2) As to the disagreement over the language, “each pre-programmed code being representative of a syllabic element,” the Board of Regents asserted that the claims simply require matching with one or more syllabic elements based on the theory that infringement occurs whenever a match with a syllabic element occurs, even if matches are also made with non-syllabic elements. BENQ disagrees and asserts that the claim requires that the database be composed solely of syllabic elements. The Federal Circuit found that the fact that claim 10 distinguishes between “each pre-programmed code” and “the matched one or more programmed codes” is significant because different claim terms are presumed to have different meanings. CAE Screenplates Inc. v. Heinrich Fiedler GmbH & Co., 224 F.3d 1308, 1317 (Fed. Cir. 2000). Because “the matched one or more preprogrammed codes” clearly refers to the pre-programmed code(s) that are matched with the binary code in the “matching” step, the Federal Circuit concluded that “each pre-programmed code” must refer to all potential pre-programmed codes in the vocabulary accessed by the method. Because the prosecution history attributed significance to the use of the word “each” in defining the claim over the art, the Federal Circuit concluded that the claim phrase “each pre-programmed code being representative of a syllabic element” means that the vocabulary only includes syllabic elements.

The Board of Regents argued on appeal that the term each does not preclude the possibility of other codes as the use of the term “comprising” in claim 10 should allow an accused device to infringe anytime it satisfies the matching limitation in situations where other pre-programmed codes do not meet the conditions. Thus, according to the Board of Regents, the addition of unrecited steps (such as matching with a pre-programmed code that is not representative of a syllabic element) should not defeat infringement.

In rejecting this argument, the Federal Circuit held that, while the generally correct presumption is that the use of the transitional phrase “comprising” does not exclude additional, the unrecited steps do “not reach into each of the [claimed] steps to render every word and phrase therein open-ended—especially where, as here, the patentee has narrowly defined the claim term it now seeks to have broadened.” Dippin’ Dots, Inc. v. Mosey, 476 F.3d 1337, 1343 (Fed. Cir. 2007). Therefore, the Federal Circuit determined that the Board of Regents could not rely on the word “comprising” to broaden the scope of a claim phrase that was limited during prosecution so as to gain allowance of the patent. See Chimie v. PPG Indus., Inc., 402 F.3d 1371, 1384 (Fed. Cir. 2005); Eckchian v. Home Depot, Inc., 104 F.3d 1299, 1304 (Fed. Cir. 1997).

The Federal Circuit concluded that the District Court correctly granted summary judgment of non-infringement as there was no substantive dispute regarding the relevant issues of fact. A “syllabic element” is a one-syllable letter group that either comprises a word or can be combined with other one-syllable letter groups to form a word (even being as small as a single letter), and “each pre-programmed code being representative of a syllabic element” means that the vocabulary only includes syllabic elements. As the accused devices did not use pre-programmed codes devoted exclusively to syllabic elements, the District Court properly entered judgment that the accused devices do not infringe the asserted claims of the ‘112 patent.

 

Federal Circuit Finds No Subject Matter Jurisdiction For Declaratory Judgment Where No Evidence of Threat and Only Evidence of Notice is a Patent Marking
In Prasco v. Medicis Pharmaceutical Corp. et al., 87 USPQ2d 1675 (Fed. Cir. 2008), Medicis manufactures a benzoyl peroxide cleanser under the name TRIAZ®. The cleanser is marked as being covered by four patents: U.S. Patent Nos. 5,648,389, 5,254,334, 5,409,706, and 5,632,996. The four patents are owned by Medicis and Imaginative Research Associates. Prasco makes a competing generic benzoyl peroxide cleanser: OSCION™. On learning of the four patents, Prasco filed a declaratory judgment action under 28 U.S.C. §2201 in order to declare that OSCION™ does not infringe U.S. Patent Nos. 5,648,389, 5,254,334, 5,409,706, and 5,632,996.

There was no dispute that Medicis was unaware of OSCION™ prior to the filing of the declaratory judgment. Instead, Prasco alleged that the declaratory judgment action was proper for three reasons. First, Medicis’ marking of TRIAZ® products in compliance with 35 U.S.C. § 287 exposed Prasco to damages, thereby brining the possibility of immediate harm. Moreover, due to a prior infringement suit brought by Medicis against Prasco in relation to another product, there was evidence that Medicis was likely to sue Prasco over generic versions of cleanser. Lastly, while Prasco sent a sample of OSCION™ and an ingredient list to Medicis and requested a covenant not to sue under the four patents, Medicis did not sign the covenant not to sue and responded with a single sentence letter advising that they “do not plan to withdraw [their] motion to dismiss the complaint.”

The District Court dismissed the declaratory judgment action for lack of subject matter jurisdiction as there was no case or controversy. Specifically, the District Court found that there was no reasonable apprehension of suit and that there was also "no definite and concrete dispute that touches the legal relations of these parties.” As such, the District Court found that there was insufficient evidence of a case or controversy for there to be maintained a declaratory judgment action even in view of the Supreme Court's decision in MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007).

On appeal, the Federal Circuit first noted that the declaratory judgment act does not provide a separate ground for subject matter jurisdiction. Citing its recent decision in Teva Pharmaceuticals USA, Inc. v. Novartis Pharmaceuticals Corp., 482 F.3d 1330 (Fed. Cir. 2007), the Federal Circuit held that "as long as the suit meets the case or controversy requirement of Article III, a District Court may have jurisdiction over a declaratory judgment action." However, as no bright line rule exists as to when this requirement is met, the Federal Circuit acknowledged that the cases must be decided on the particular facts to determine whether the declaratory judgment was supported by "'a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.'” Quoting MedImmune, 127 S. Ct. at 771. In so doing, the Federal Circuit also held that the reasonable apprehension of suit test, while not an exclusive test, is useful in determining whether this threshold has been met.

In reviewing the facts of the case, the Federal Circuit first noted that the "mere existence of a potentially adverse patent does not cause an injury nor create an imminent risk of an injury; absent action by the patentee, 'a potential competitor . . . is legally free to market its product in the face of an adversely-held patent.'" quoting Novartis, 482 F.3d at 1345. As such, there must be more than the bare existence of a patent in order to create a case or controversy.

In the instant case, while Prasco indicated that the immediate injury to Prasco was due to the "paralyzing uncertainty" that Medicis would sue for infringement, the Federal Circuit noted that Prasco had begun substantial marketing efforts for the OSCION™ cleanser. Moreover, as there was no actual action by Medicis, there was no real and immediate threat being posed by actions of Medicis, leaving the only threat to be a subjective one in the mind of Prasco.

Also, the Federal Circuit noted that, while there was a past infringement action between Prasco and Medicis for an unrelated cleanser, this past action did not amount to a real and immediate threat on this new OSCION™ product. Thus, the past actions provided little evidence of conduct in relation to the four patents for another product.

Further, while Medicis did mark its product in conformance with 35 U.S.C. §251, its marking was prior "to any knowledge of Prasco’s OSCION™ product," and is "irrelevant to the question of whether Medicis’ believes OSCION™ infringes the applicable patents or will attempt to interfere with Prasco’s business on the basis of an allegation of infringement" since marking "provides little, if any, evidence that [Medicis] will ever enforces its patents." Thus, while marking is an action caused by Medicis, the mere marking of a product provides little evidence of a real and immediate harm being threatened by Medicis against Prasco.

Lastly, while Prasco argued that Medicis' failure to sign a covenant not to sue was a sign of impending suit, the Federal Circuit noted that the "patentee has no obligation to spend the time and money to test a competitors’ product nor to make a definitive determination, at the time and place of the competitors’ choosing, that it will never bring an infringement suit." As such, the Federal Circuit held that Prascos sending of samples and the covenant did not create a duty for Medicis to analyze the sample and execute the covenant such that Medicis' failure to respond to the covenant was insufficient to create a case or controversy for purposes of a declaratory judgment action. Therefore, the Federal Circuit affirmed the District Court's decision to dismiss the declaratory judgment action for lack of subject matter jurisdiction.

 

No Waiver of Sovereign Immunity Under DMCA or for Copyright Infringement Where Employee/Author Distributed Copyrighted Material To Coworkers.
In Blueport Co. v. United States, 87 USPQ2d 1512 (Fed. Cir. 2008), Mark Davenport, a Technical Sergeant with the Air Force, worked with the Air Force’s Manpower Data System (MDS). Through working with the MDS, Davenport concluded that the software used to run the MDS program was inefficient and began to seek ways of improving the software. Davenport sought training in computer programming from the Air Force, but was denied. As such, Davenport learned how to program on his own time, and subsequently wrote a new program called “the AUMD” program, also on his own time at his home.

Davenport used the AUMD program at work and began sharing it with coworkers. Based on his experiences using the AUMD program at work, Davenport made changes from time to time to improve the program. At no time did Davenport bring the source code to work or copy it onto Air Force computers.

The AUMD program began to catch on, and Davenport shared it with other colleagues by posting it on a page in the Air Force intranet. He continued to modify the AUMD program, and eventually added an expiration date feature where users had to download a new version of the program whenever the old one expired.

Davenport gave a presentation to senior Air Force personnel and convinced them of the usefulness of the AUMD program. Davenport’s performance evaluations marked him as the go-to guy for troubleshooting with the MDS and recommended an immediate promotion.

The Air Force eventually determined that it was too reliant on Davenport for access to the AUMD program and asked him to turn over the source code. When he refused, his superiors at the Air Force threatened him with a demotion and a pay cut and removed him from the MDS advisory board.

Davenport then assigned his rights in the AUMD program to Blueport, the plaintiff. Blueport attempted to negotiate a license with the Air Force, but was unable to reach an agreement. The Air Force contracted with SAIC to recreate the AUMD program and to modify the existing AUMD program to remove the expiration date.

Blueport brought claims against the Air Force alleging copyright infringement and a violation of the DMCA in the Court of Federal Claims. The Court of Federal Claims dismissed the actions for lack of jurisdiction on the ground that the Government had not waived its sovereign immunity for any of the claims. Blueport appealed to the Federal Circuit.

On appeal, the Federal Circuit considered the scope and application of the Government’s waiver of sovereign immunity for copyright infringement under 28 U.S.C. § 1498(b). The Court also considered whether the Government has waived its sovereign immunity for claims brought under the DMCA. Blueport at 5-6.

In making its determinations, the Federal Circuit kept in mind two lon