June 2006

CAFC Denies Pro Se Intervenor Rights

Patent, Patent Cases 2006

Motionless Keyboard Co. v. Microsoft Corp., (Fed. Cir. 2006) (non-precedential ruling)

By Tom Loos,

The CAFC upheld a ruling by the Oregon DC denying an individual inventor to intervene in behalf of a corporation. 

Motionless Keyboard Co.(“MKC”) sued Microsoft for patent infringement.  Microsoft prevailed at summary judgment.  Thomas L. Gambaro, inventor of the patents and MKC’s majority share holder, then attempted to intervene under Fed. R. Civ. P. Rule 24. Gambaro argued he needed to appear as “Pro Se to continue to represent the Plaintiff” since “counsel has withdrawn.” 

The CAFC cited 28 U.S.C. § 1654 and Rowland v. Calif. Men’s Colony, 506 U.S. 194 (1993) to state that “a corporation may appear in federal court only if represented by licensed counsel.”  Applying 9th Circuit law, the CAFC held “to allow Gambaro…to intervene rather than hire replacement counsel ‘would eviscerate section 1654’” (quote from United States v. High Country Broad. Co., 3. F.3d 1244, 1245 (9th Cir. 1993)).

After losing summary judgment, MKC transferred its patent rights to Gambaro.  The CAFC held that “Gambaro may have an interest allowing him to bring an infringement action in his own name [based on the patents], but he may not participate in the case filed by MKC as the plaintiff.”

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Patents: Xerox v. 3Com

Patent, ,

GraffitiXerox v. 3Com (Fed. Cir. 2006).

Back in 1997, Xerox sued 3Com for patent infringement — asserting that the PalmPilot’s Graffiti handwriting recognition software infringed a Xerox patent. Xerox’s initial summary judgment win was reversed on appeal (Xerox I), and on remand 3Com subsequently won on summary judgment.  The CAFC has now reversed/vacated once again.

Anticipation and Obviousness: In a showing of their technical forte, the appellate panel reviewed two prior art references in detail to determine the extent that those references anticipate the patent claims.  Their conclusion — that a genuine issue of material fact remains as to whether the references disclose the limitations of the asserted claims. 

Indefiniteness: The last portion of the decision focuses on indefiniteness. The lower court concluded that the claim term “sloppiness space” was ambiguous — leaving the related claims invalid as indefinite. However, in the specification, the patent provides a couple of examples of use of “sloppiness space.” As it has done before, the CAFC strained to find those claims not-ambiguous:

While those descriptions [in the specification] are not rigorously precise, they provide adequate guidance as to the types of symbols that are “well separated from each other in sloppiness space” . . . Thus, in light of the criteria provided in the specification, we hold that claims 9 and 11 are “subject to construction” and are not “insolubly ambiguous.”

The case is remanded to the district court in upstate NY for reconsideration.

A nice pat on the back:

Patent

“Blawgs” — for the uninitiated — are legal blogs, and if you haven’t incorporated them into your daily reading, you are missing out. The most compelling, cutting-edge, honest legal writing being produced in this country today is happening on the Internet, and the crop improves daily. From the fistful of judges (including Richard Posner) who maintain regular blogs, to the vast and growing number of law professors and law students who find the time to post daily, it’s clear that the real bones and guts and sinew of the national conversation is happening online, and not in print.

From American Lawyer (Dahlia Lithwick) tip to Kevin and Matt.

Court Order Dismissing Patent Suit Does Not Trigger 180-Day Exclusivity Period Under Hatch-Waxman

Patent, Patent Cases 2006
GenericChallengeApotex v. FDA, No. 06-5105 (D.C. Cir. June 6, 2006)
By Aaron Barkoff of the Orange Book Blog,
The Court of Appeals for the D.C. Circuit today upheld an FDA rule stating that a district court order dismissing a patent suit for lack of subject matter jurisdiction is not a “court decision” under the Hatch-Waxman Act, and is therefore insufficient to trigger the first ANDA filer’s 180-day exclusivity period.

Apotex had challenged the FDA rule on the basis that it was inconsistent with the D.C. Circuit’s holdings in two prior cases.  In those cases, the court found that FDA’s rationale for the rule–that the FDA has insufficient resources to inquire into the legal effects of settlements, such as estoppel, that lead to dismissals–was not adequately justified.

Now, however, the D.C. Circuit has upheld FDA’s rule–largely because the FDA offered a better justification this time around.  According to the court, “FDA is indisputably correct that equitable estoppel in the patent law context rarely presents pure issues of law amenable to easy resolution.  . . .  We have little doubt that applying this standard would force FDA, an agency lacking patent law expertise, to resolve borderline questions about the estoppel effects of patent-holder declarations.”  The court continued:

As FDA sees it, the uncertainty inherent in an estoppel-based inquiry would lead to two inter-related problems, neither of which relates to the drain-on-resources rationale set forth [previously].  First, FDA believes that the uncertainty would “undermine marketplace certainty and interfere with business planning and investment.”  And second, FDA worries that forcing it to parse court decisions will invite fruitless litigation from generic drug manufacturers seeking to trigger, or to avoid triggering, exclusivity periods.

The D.C. Circuit concluded:  “In our view, these perfectly reasonable propositions adequately support FDA’s position that an estoppel-based approach to the court decision trigger is ill-advised.”

Dennis Crouch’s Comment: I asked Aaron to write this short review of the Apotex case for Patently-O.  He has the primary documents and much more detail at his site, the Orange Book Blog.

Settlement and Stipulated Dismissal (with prejudice) Precludes Later Validity Challenge

Patent

AIPLATalk219Pactiv Corp. v. Dow Chemical Co. (Fed. Cir. 2006)

By Tom Loos,

The Federal Circuit has upheld the NDNY’s ruling that a settlement leading to dismissal of  a complaint with prejudice precludes Pactiv from re-challenging Dow’s patents.

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In 1995, Dow sued Pactiv for infringement of two patents related to manufacturing polyethylene foam. This suit settled in 1998 and Dow’s complaint was consequently dismissed with prejudice.  In 2002, Pactiv stopped paying royalties as required by the agreement.  In late 2003, Pactiv followed up by filing a declaratory judgment action asserting the patents were invalid, unenforceable, and their own non-infringement.   Dow moved for dismissal under Rule 12(b)(6), claiming res judicata.  The district court agreed with Dow that Pactiv’s action was barred by the prior final judgment since the settlement did not explicitly reserve Pactiv’s right to future litigation.

 

The CAFC found that claim preclusion is not specific to patent cases and thus applied the local circuit law to the case. Both the 2nd Circuit and the CAFC agree a dismissal with prejudice is a judgment on the merits for purposes of claim preclusion.  Where there is a settlement, the CAFC found an express reservation to litigate is required for a settling party to relitigate a claim otherwise barred by res judicata. 

 

Pactiv also claimed they were not given a full and fair opportunity to litigate.  Pactiv argued that Dow’s expert’s data “had been fabricated” and that Pactiv would not have settled if it had known the data were false.  The CAFC agreed that failure to receive a full and fair opportunity to litigate would be a valid defense to issue preclusion.  However, the CAFC held that “res judicata was precluded only where there was a denial of due process.”  Since the 1998 dismissal with prejudice met due process, the judgment was upheld.

 

What could Pactiv have done once they learned the circumstances of the expert’s report?  The CAFC suggested they seek relief under Rule 60(b). Rule 60(b) provides one year to reopen final judgments due to mistake, new evidence, fraud, etc.

 

Practice tip for those representing patentees: Condition settlements on receiving a stipulated dismissal of suit with prejudice.

 

Notes:

  • This post was written by Tom Loos, PhD.  Tom is a summer associate at MBHB and a law student at the University of Michigan School of Law.  He plans to graduate in 2007.
  • Dennis Crouch’s Comments: This case takes another step away from the Supreme Court’ 1969 public policy decision in Lear v. Adkins, which held that a licensee did not waive its right to later challenge the validity of a patent.  Lear is also the focus of an upcoming Supreme Court case of MedImmune v. Genentech.  The MedImmune case questions whether a licensee can challenge a patent’s validity while continuing to pay royalties.

Conference: PLI Webcast on eBay v. MercExchange

Conference or CLE, Patent

On June 14, 2006, you might want to take an hour break (1–2pm EDT) to take part in an audio webcast discussing: Permanent Injunctions in Patent Infringement Cases After eBay Inc. v. MercExchange L.L.C. The PLI CLE will be moderated by Professor John Duffy and will feature the two attorneys who argued the case: Carter Phillips and Seth Waxman.  Professor Duffy is one of the few patent attorneys who was also a Supreme Court clerk (Scalia).  Topics for discussion include:

  • The changed landscape of patent disputes
  • An analysis of the Supreme Court’s unanimous decision
  • An analysis of the two important concurring opinions
  • The application of the 4-factor permanent injunction test in patent infringement cases

Register here. $299. 

Inventor’s Post-filing Publication Disparaging Invention Leaves Patent Unenforceable

Patent, Patent Cases 2006, , ,

AIPLATalk217Research Corporation Technologies v. Microsoft (D. Az. 2006).

After a bench trial, Arizona District Court Judge Manual Real of found that RCT’s patents were unenforceable based on inequitable conduct that occurred during prosecution of the patents in suit. And, because it was an “exceptional case,” the judge granted Microsoft’s request for $8 million in attorney fees.

Back in 2001, RCT sued Microsoft for its patents directed to a “blue noise mask” used in halftoning digital images.  The new procedure was touted in the patent application as being “visually pleasing” and lacking “low frequency graininess at every level of gray.”  At the same time the inventors published a paper that reported resulted of “visually annoying clumps” with graininess.  In the paper, the inventors reportedly rejected the claimed algorithm in favor of another technique that was inconsistent with the patent.  That paper was never submitted to the PTO. 

The court found this seemingly contradictory information material because a “reasonable Patent Examiner clearly would have considered [the contradictory information] important to at least the written description and enablement requirement for patentability.”  For intent, the judge found that:

It is not credible that they did not know that a reasonable Examiner would consider it important to know that patent applicants’ reported efforts to practice the applications’ disclosed No K technique had led to “visually annoying clumps,” not the “visually pleasing” images promised by the patent applications and their patent claims.” 

In addition, the inventors were awful on the stand — one was “not credible” and the other “evasive.” Thus, further supporting the finding of intent to mislead the PTO.

AIPLATalk218According to a release by Microsoft’s attorney John Vandenberg*, the patents previously had been asserted against Hewlett-Packard Company, Seiko Epson Corporation, and Lexmark International, each of whom had settled out of court and taken a license. In awarding Microsoft attorney fees, the Court found it to be an “exceptional case” and that RCT knew or should have known of the inequitable conduct before the Patent Office. 

A couple of readers wrote-in to identify Judge Manny Real as a legendary old-school federal judge, and former chief judge in the central district of California. It appears that Judge Real is sitting by designation for this patent case. 

NonInfringement Opinion Discounted By Lack of Disclosure Evidence

Patent, Patent Cases 2006

Liquid Dynamics v. Vaughan (Fed. Cir. 2006)

In a detailed decision involving technology for pumping sewage, the CAFC affirmed a finding of infringement and willfulness.

An interesting aspect of the case involved the evidence of willful infringement. 

  • The CAFC agreed that Vaughan’s use of a former LD employee was persuasive evidence in proving copying.
  • Vaughan’s noninfringement opinion was properly discounted because the attorney was not given all the important evidence.

The case also gave a further analysis of Daubert principles in patent cases.

Biotech: Written Description Does Not Require Recitation Of A Known Structure

Patent, Patent Cases 2006,

AIPLATalk216Falker-Gunter Falkner v. Inglis (Fed. Cir. 2006, 05–1324)

by Donald Zuhn, PhD

In an appeal from a decision of the PTO Board, the Federal Circuit affirmed judgment for Appellees (Inglis et al.) in an interference involving vaccines comprising modified viral vectors. In particular, the subject matter of the interference concerned vaccines comprising a poxvirus vector having a deleted or inactivated essential gene, wherein the modified poxvirus is capable of producing infectious viral particles when grown in a host cell modified to produce the absent essential viral gene product. In contrast with the vaccines of the invention, traditional vaccines had been prepared by deleting or inactivating inessential genes in the viral vector, since the deletion or inactivation of essential genes made it difficult to produce vaccines in commercial quantities.

On appeal, Appellants (Falkner et al.) reiterated several arguments made before the Board, each concerning the common issue of whether Appellees had adequately described and enabled a poxvirus-based vaccine. Specifically, Appellants argued that because Appellees did not identify any essential poxvirus genes or the inactivation of any such genes, Appellees had not sufficiently described and enabled vaccines comprising a poxvirus vector having a deleted or inactivated essential gene.

With respect to the Board’s determination that Appellees had sufficiently described vaccines comprising poxvirus vectors having modified essential genes, the Court noted that there was undisputed testimony before the Board that at the time of filing of Appellees’ earliest application, the DNA sequence of the poxvirus genome and the locations of essential poxvirus genes had been disclosed in the scientific literature. Adhering to the well-established rule that "[a] patent need not teach . . . what is well known in the art," the Court held that "there is no per se rule that an adequate written description of an invention that involves a biological macromolecule must contain a recitation of known structure." In affirming the Board’s determination that Appellees adequately described the invention, the Court concluded that because "accessible literature sources clearly provided, as of the relevant date, [poxvirus] genes and their nucleotide sequences (here "essential genes"), satisfaction of the written description requirement does not require either the recitation or incorporation by reference (where permitted) of such genes and sequences."

NOTE: This post was written by Donald Zuhn, PhD. Don is a true expert in cutting edge biotech patent law and practices both prosecution and litigation at MBHB LLP in Chicago. (zuhn@mbhb.com).

CAFC “Clarifies” Design Patent Jurisprudence but Denies Rehearing En Banc

Patent, Patent Cases 2006

AIPLATalk070Lawman Armor v. Winner Int’l (Fed. Cir. 2006, en banc).

In February 2006, the Federal Circuit decided Lawman Armor in a way that utterly devalued design patents.  The decision appeared to read a design patent would never be enforceable if the patent was simply a novel combination of known elements.  Essentially, the decision held that, for the point of novelty test, multiple prior art references could be combined without any prior suggestion or motivation for doing so.  As noted in the AIPLA’s amicus brief requesting rehearing, if this result were true, there would be very few enforceable design patents because most (if not all) designs are combinations of old forms.

On motion for rehearing and rehearing en banc, the original CAFC panel issued a new opinion intended to “clarify” the original:

In our [original] decision, we did not intend to cast any doubt upon our prior decisions indicating that in appropriate circumstances a combination of design elements itself may constitute a ‘point of novelty.’ Such a combination is a different concept than the overall appearance of a design which, as indicated, our cases have recognized cannot be a point of novelty.

Thus, the result:

  • A unique combination of known elements may be a “point of novelty” for design patent infringement analysis; but
  • The “overall appearance” of a design cannot serve as such a “point of novelty.”

As one of the attorneys of record pointed out to me in a post-decision conversation, this distinction does not make sense for this case because the Appellant never argued that the point of novelty was simply the “overall appearance.” Rather, the Applicant set forth eight constituent elements and also argued that the combination of those elements was a ninth point of novelty.

Judge Newman, joined by Judges Rader and Gajarsa would have heard the case in an en banc panel. In a dissenting opinion, those judges argue that the overall appearance of a design should be sufficient to constitute patentable novelty:

The patentability of a design is determined on statutory criteria, as for all patents. The protocol called "point of novelty" has often aided the analysis of the application of these criteria to designs, but it is not a different concept from patentability based on the invention — the design — as a whole, and has not replaced the statutory provisions. Contrary to the panel’s view, the overall appearance of a design can indeed be novel, and can indeed constitute the patentable novelty.

Documents:

Links:

  • Design Patent: Patently-O discussing the petition for rehearing
  • Design Patent: Patently-O discussing the CAFC original panel decision
  • Welch: Discussing the CAFC original panel decision I
  • Welch: Discussing the CAFC original panel decision II
  • Welch: Discussing the rehearing decision
  • Welch: Discussing the Nike Brief
  • Welch: Discussing the IDSA brief