In re Midwest Athletics and Sports Alliance LLC (Fed. Cir. 2021)
MASA sued Xerox for infringing 20 different patents that all relate to printer related technology. The district court felt that 20 patents was too many to handle and so ordered MASA to reduce the number of asserted patents to 8 patents by the summary judgment pre-trial stage; and then further drop down to only 4 asserted patents by trial. The defendant agreed that the eliminated patents would be dismissed without prejudice and that any applicable statute of limitations would be tolled — allowing later refiling of those claims.
Courts regularly limit the number of claims that may be asserted, but here the district court “acknowledges that it knows of no other court that has similarly found that it has the authority to limit the number of patents that a plaintiff may assert (as opposed to the number of claims) in the context of case management.” MASA petition. Court’s regularly use case-management powers to limit issues brought to trial — and typically push parties to work together to resolve their issues through a sort of negotiation: Plaintiff drops claims / defendant drops defenses or counterclaims. Here, MASA proposed such an approach “MASA proposed a balanced approach consistent with case narrowing precedent, in which MASA would narrow its infringement case by reducing the number of asserted claims at certain points in the case, and Xerox would narrow its invalidity case by reducing the number of its invalidity theories.” Id. However, the the court instead ordered MASA to eliminate patents from the case entirely.
MASA argued that the order to eliminate entire patents is different than eliminating particular claims, since each patent offers a discrete cause of action. However, the Federal Circuit has denied MASA’s petition for writ of mandamus. In particular the court found that the dismissal without prejudice and tolling provide sufficient safeguards and “negate any concern that MASA would be deprived of any substantive or procedural right here.”
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Patents at issue: U.S. Patent Nos. 7,502,582 (“‘582 Patent”), 7,720,425 (“‘425 Patent”), 8,005,415 (“‘415 Patent”), 6,203,005 (“‘3005 Patent”), 6,305,684 (‘‘684 Patent”), 8,019,255 (“‘255 Patent”), 8,634,113 (“‘113 Patent”), 6,718,285 (“‘285 Patent”), 6,909,856 (“‘856 Patent”), 6,799,005 (“‘9005 Patent”), 6,462,756 (“’756 Patent”), 6,509,974 (“‘974 Patent”), 6,411,314 (“‘314 Patent”), 6,724,998 (“’998 Patent”), 6,993,278 (“’278 Patent”), 7,658,375 (“’375 Patent”), 8,220,795 (“’795 Patent”), 8,554,089 (“’089 Patent”), 8,591,022 (“’022 Patent”) 8,805,239 (“’239 Patent”). According to MASA, “the Asserted Patents can be grouped into four general categories: (1) Roller/Feeder Patents (‘3005, ‘255, and ‘113 Patents); Pentachrome Patents (‘415, ‘425, ‘582 Patents); (3) Printer performance and Maintenance Patents (‘285 and ‘856 Patents); and Work Flow Patents (‘9005, ‘314, ‘974 and ‘756 Patents). MASA accuses different models of Xerox’s office equipment of infringement, including printers, scanners, and
multifunction systems.”
The court has denied DMF’s mandamus petition on an interesting post-IPR estoppel question.
DMF sued ELCO Lighting in 2018 for infringing DMF’s U.S. Patent No. 9,964,266. As is usual these days, ELCO turned-around and filed an inter partes review petition — challenging the patent’s validity based upon a 2011 product catalog (printed publication) that had featured the Hatteras lighting product. Although the PTAB instituted the IPR, it eventually sided with the patentee in holding that the prior printed publication wasn’t enough render the invention obvious.
Back in the district court, ELCO is seeking again to invalidate the claims based upon the Hattaras lighting product. The difference now is that they are not simply raising the defense based upon the printed publication but rather are presenting the actual product as prior art based upon it being “in public use, on sale, or otherwise available to the public.” 35 U.S.C. 102.
Section 315(e)(2) estops an IPR petitioner from later asserting in litigation that a “claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” IPRs are limited only to arguments based upon patent documents and printed publications — and so the actual prior product could not have been used as the basis for the IPR. The district court went a bit further and found that there must be “a substantive difference” between the publication and the physical product that is “germane to the invalidity dispute.”
Here, the district court found substantive, germane differences. In particular, the failing of the prior art reference was that the elements of the invention required cobbling together images from different products in the catalog. The PTAB found that mix-and-match approach improper. In the district court litigation, ELCO is seeking to use the single product to show each element.
On Mandamus, the Federal Circuit did not delve into whether the substantive-germane legal standard was correct or whether the facts had been properly decided — but did find them not “clearly and indisputably erroneous.” Further, the court found that mandamus was not necessary — the patentee should wait until final judgment and appeal. “DMF has not shown that a post-judgment appeal is an inadequate remedy for asserting a statutory estoppel argument.”
You may have heard that most US utility patent claims use the open transition phrase COMPRISING. Here’s the data to support that hearsay. The chart below shows data from independent claims gleaned from issued US patens grouped by patent issue year.
To make the chart, I calculated the percentage of independent claims that include the phrase comprising or comprises or comprise as the first traditional (or only) transitional phrase within the claim text.
Patent courses traditionally talk about the three primary transition phrases:
Comprising/Comprises/Comprised of (Open Transition)
Consisting of (Closed Transition)
Consisting Essentially Of (Hybrid Transition)
In recent patents, fewer than 1% of claims use “consisting of” or consisting essentially of.” Rather, the biggest non-comprising segment is the category of claims that lack any traditional phrase as shown in the chart below. These non-traditional claims might use the word “having” or “including” as a transitional phrase, or they might not use any word at all.
Here are a few examples of these non-traditional transitions from 2021 patents:
One or more non-transitory, computer-readable media having instructions that, when executed by one or more processors, cause a device to: …
A non-transitory computer-readable medium configured to store instructions that, when executed by one or more processors, cause the one or more processors to perform operations that include:
A handheld, self contained, air cooled induction heater including …
A compound or a pharmaceutically acceptable salt thereof, wherein said compound is: …
A compound, or a pharmaceutically acceptable salt thereof, having the structure of
A method, by one or more processors, for managing text in rendered images: [No transition at all except for a colon]
Intermediate of formula B-20 [showing structural diagram of compound and going on to include several markush groups]
In many cases it appears that attorneys may be using the alternative transitions as part of their claim stratification strategy. Thus, many of the claims relying upon a non-traditional transition sit alongside other claims in the same patent that use “comprising.”
The Supreme Court has strongly supported arbitration as an alternative dispute resolution mechanism. The Federal Arbitration Act (FAA) codifies this “liberal federal policy favoring arbitration agreements.” Quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Although the right to arbitrate patent cases is seemingly clear from the FAA, Congress went further in its 1982 PTO appropriations bill to expressly codify the enforcement of arbitration agreements for “any dispute relating to patent validity or infringement.” 35 U.S.C. 294. Sometimes a party subject to arbitration will still file their dispute in court. At that point, the opposing side will move to stay or dismiss the case and compel arbitration.
The core question in MaxPower Semiconductor (Fed. Cir. Sept 8, 2021), is whether the arbitration agreement can be used to cut-short an inter partes review (IPR) proceeding. Here, the Federal Circuit effectively sided with the PTO and the patent challenger and refused to compel arbitration. The majority opinion is by Judge Reyna and joined by Judge Chen. Judge O’Malley dissented — arguing that the court failed to live up to the statute:
The majority’s denial of a writ of mandamus in this case allows the Patent Trial and Appeal Board to add a new caveat to Congress’s clear instruction that agreements to arbitrate patent validity shall be “valid, irrevocable, and enforceable”—i.e., except during inter partes review.
O’Malley in Dissent.
Background: MaxPower worked for several years with Rohm Semiconductor to develop RFP power transistor technology. MaxPower obtained the patents and licensed those to ROHM with an ongoing running royalty. The license included an arbitration agreement. Money flowed for several years. Rohm eventually developed a new silicon carbide transistor and privately suggested new product was not covered by the agreement. At that point, MaxPower provided notice that it was planning to initiate arbitration in 30 days. ROHM acted first — filing the IPR petition at issue here as well as a lawsuit in N.D. Cal. seeking a declaration of non-infringement of the same patents. The N.D. Cal. Judge granted MaxPower’s petition to compel arbitration, and the appeal of that determination is separately pending before the Federal Circuit.
The PTAB instituted the IPR — holding that it was not bound by the Federal Arbitration Act or Section 294 of the Patent Act. According to the PTAB, those provisions are tied to civil litigation, not USPTO proceedings. PTAB explained:
After careful consideration of this issue, we conclude that the arbitration clause is not a reason to decline institution. Even if Patent Owner’s recitation of the facts is true, and even if the question of whether patentability falls within the scope of the agreement to arbitrate is committed to the arbiter, we nevertheless do not find a statute, rule, or policy that would preclude the Office from acting on the Petition.
NonAppealable: The first problem with MaxPower’s appeal is the statutory rule that institution decisions are nonappealable. 35 U.S.C. § 314(d). The court also ruled that mandamus was not appropriate here because it was being used as a “means of avoiding the statutory prohibition on appellate review of agency institution decisions.” In re Power Integrations, Inc., 899 F.3d 1316 (Fed. Cir. 2018). Another way to get to appeal is via the collateral order doctrine, but, according to the court, that doctrine also requires an issue of rights that “will be irretrievably lost in the absence of an immediate appeal.” Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214 (Fed. Cir. 2013).
The FAA itself also creates a right of appeal for refusing to stay any action subject to arbitration. However, the right to stay under the FAA is limited to stays of proceedings in Federal Court. As such, that provision also does not apply.
In the end, the Federal Circuit found no authority to hear the appeal, and thus dismissed the appeal and denied the mandamus petition. The court suggested that it might be able to do something once the IPR concludes and a right to appeal attaches. However, the court also noted that the questions here might all be wrapped-up in non-appealable initiation questions. “If MaxPower is truly not raising matters that are absolutely barred from appellate review under section 314(d) (an issue we need not decide here), then MaxPower can meaningfully raise its arbitration-related challenges after the Board’s final written decisions.”
In dissent, Judge O’Malley would have heard the case on mandamus. The court’s failure to hear the case “cast[s] a shadow over all agreements to arbitrate patent validity, which, after today, apply only in district courts and not in inter partes review proceedings.”
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I have not seen the arbitration agreement in this case. But there is usually a big question about whether patent validity and/or infringement are covered by the agreement that is particularly focused on licensing. The district court’s parallel decision staying its case to await the arbitration outcome is set for Oral arguments in October. The Judge did not actually determine the question of arbitrability, but rather found that issue was for the arbitrator to resolve.
Editor’s Note: Avery Welker is a 2L at Mizzou and likely a future patent attorney. He authors a series linking law school canonical cases with intellectual property counterparts. You can email ideas for future posts to avery@patentlyo.com. – Dennis Crouch
By Avery Welker
My Civil Procedure I outline turned out to be the longest outline of my first law school semester. Personally, I was betting on joinder and class actions to contain the most notes throughout the semester. As it turned out, discovery took the “most notes” crown. That makes sense – there’s a lot to discover in a lawsuit! Upon review of my outline, some of these rules started to come back to me.
That includes, of course, Rule 26, which outlines discovery generally and contains rules on the duty to disclose.[1] Wrapped within Rule 26 are details about expert testimony.[2] While Rule 26 didn’t end up wholly dispositive of this lawsuit, it certainly was the final nail in the coffin for an inventor’s testimony through the course of Pandrol USA, LP v. Airboss Railway Products, Inc.[3]
This appeal arose from a summary judgment grant to Pandrol[4] (Plaintiffs-Appellees) over Airboss[5] (Defendants-Appellants), declaring that Airboss failed to show clear and convincing evidence of patent invalidity.[6]
The patent at issue, U.S. Patent No. 5,110,046 (’046 Patent), relates to preventing abrasion on tie rail seats by using a plate designed to absorb abrasion between the rail pad and rail tie.[7] FIG. 1 below shows the abrasion plate (labeled 10) in between the pad (labeled 4) and the tie (labeled 1).[8]
One issue in the appeal centered on the testimony of the ’046 Patent’s inventor, Hartley Young.[9] Normally, an inventor testifies on behalf of the patentee. However, by the time of this lawsuit, Young had taken a job with the defendant, Airboss, and submitted a declaration supporting his new employer’s contention that the patent was invalid.[10] At the district court level, assignor estoppel quickly put a stop to that testimony.[11] The Federal Circuit agreed and noted that exclusion of the inventor’s anti-patent testimony was justified based on “unfairness and injustice.”[12]
Where Rule 26 comes into play is the rest of the testimony.[13] Under Rule 26(a)(2), Airboss was required to file an expert report for Young’s declaration because the declaration contained .[14] This declaration contained Young’s opinion on the patent specification interpretation to be used on other issues in the trial.[15] The district court noted that Young’s testimony falls under Federal Rule of Evidence 702 and requires an expert report.[16] On appeal, the Federal Circuit agreed. Even though Young was an inventor and thus a potential fact-witness, his declaration also “contains expert opinion because he opines on claim construction and interpretation of the original application.”[17] In the end, the Federal Circuit affirmed district court’s exclusion of Young’s testimony on both the assignor estoppel and Rule 26 grounds, thus putting the final nail in his testimony.[18]
With Young’s testimony excluded entirely, clearly, that evidence could not come in. Many can speculate on what the outcome of this case would have been including Young’s testimony. No doubt that information from the inventor himself would be very relevant and accurate as to factual issues! However, one bullet point in my notes on expert witnesses lays out the base reasoning for this rule: “Essentially making sure experts are qualified and aren’t using ‘quack science.’”
Rule 26 certainly has plenty of moving parts. The overarching tools of discovery have many checkboxes and procedural steps to jump through. Sometimes I wonder how I kept it all straight on my final exam last year!
E.D. Va. Judge Brinkema sides with USPTO — holding that the Patent Act’s use of the term “individual” is limited to a human person — and thus that only humans can be inventors. Read the decision here: Thayler v. USPTO AI patent Decision
Lubby’s US9750284 covers a vape-pen (“personal vaporizer”). Lubby sued Henry Chung for patent infringement and won at trial with a jury verdict of almost $1 million. On appeal though the Federal Circuit has reversed-in-part — holding that the pre-suit damages were not available under 35 U.S.C. § 287.
In general, the patent laws bar a remedy for any infringement that occurred more than six years prior to the filing of the lawsuit. “[N]o recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.” 35 U.S.C. § 286. Back damages are further limited in by the patent marking statute of Section 287. That provision calls for a patentee to to mark any “patented article” that it sells or licenses-for-sale with the patent number. If the patentee sells/licenses-to-sell a product covered by the patent without so marking, then back damages can only be recovered for infringement after the infringer is “notified of the infringement and continues to infringe thereafter.” Id.; See also 35 U.S.C. § 287(a) (“Filing of an action for infringement shall constitute . . . notice.”).
Here, the patent covers an article (a personal vaporizor) and Lubby sells articles that appear to be covered by the patent (the J-Pen). In this case, Lubby did not disclose its damages computations until the day before trial, and those computations included request for back damages. The court’s approach is actually to assume marking unless the defense objects with at least some minimal evidence of the lack of marking. Here, Chung objected on that same day and pointed to the J-Pen’s lack of marking of the patent number. At that point, Lubby should have presented its evidence of marking. However, Lubby did not present any such evidence at trial. As such, Lubby “can only recover damages for the period that it provided actual notice,” which is the date that it notified Chung of the infringement.
Chung did have notice that the patent existed, but that is also different than notice of infringement under the statute. “[T]he actual notice requirement of § 287(a) is satisfied when the recipient is informed of the identity of the patent and the activity that is believed to be an infringement, accompanied by a proposal to abate the infringement, whether by license or otherwise.” SRI Int’l, Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462 (Fed. Cir. 1997).
The appellate court ordered a new trial on remand to calculate the post-filing sales numbers that will serve as the appropriate damages award.
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Chung also appealed on the merits of the infringement case. However, Chung did not file a R.50(a) JMOL motion on the issue and therefore lost his primary right to appeal. Chung did request a new trial under R.59, and the court does have power to hear an appeal of a denial of new trial. However, that standard is much higher — requiring an “absolute absence of evidence to support the jury’s verdict.” Here, the court found some evidence supporting infringement and thus upheld the verdict.
The Federal Circuit has confirmed that Belcher’s U.S. Patent No. 9,283,197 is unenforceable due to inequitable conduct based upon materials withheld during prosecution. The patent covers l-epinephrine formulations at pH between 2.8 and 3.3 and with certain impurity level limitations. During prosecution, the examiner found a prior art reference with a wider encompasing pH range of 2.2 to 5.0, but the patentee successfully argued that its narrower range was a critical element of the invention and necessary to prevent racemization of the l-epinephrine.
Prior to the application’s issuance, Belcher’s Chief Science Officer (Rubin) obtained possession and tested samples from two competing products (JHP & Sintetica) and found that they were both within the claimed pH range and within the claimed impurity levels. In addition, Rubin was in possession of a reference (Stepensky) that disclosed an overlapping pH range (3.25 to 3.7). In fact, while the application was pending, Rubin communicated with the FDA regarding these samples. However, none of them were disclosed to the USPTO.
Patent applicants and their attorneys are bound by a duty of candor and good faith in dealing with the USPTO. As part of this, 37 C.F.R. § 1.56 establishes a duty to disclose information material to patentability. This duty exists as long as the patent application is pending and applies to all “individuals associated with the filing or prosecution of [the] patent application.” The Office has generally tied the duty only to human-persons, and so the duty has not been applied directly to corporate applicants. As here, the focus is typically whether there is an individual person who has a duty and who failed their duty.
Patent examiners rarely exert their investigatory authority and so patents associated with a duty-of-candor violation are rarely uncovered until litigation. At that point, the patent is not automatically invalid. Rather, the patent may be deemed unenforceable due to inequitable conduct during prosecution, but only if the violation is both material and intentional.
To prevail on an inequitable conduct defense, a defendant must establish both the materiality of the withheld reference and the applicant’s intent to deceive the PTO.
Duty: Rubin testified that he was helped draft the patent application, including the claims and also helped formulate responses to office actions. That was enough to bind Rubin with the duty of candor.
Materiality: Here, the claims were found obvious by the district court based upon the withheld prior art, a finding that was not appealed. That was enough for the Federal Circuit to conclude that the documents were material to patentability.
Intent: On deceptive intent, the case lacked direct evidence that Rubin intended to deceive the USPTO, but the district court found sufficient circumstantial evidence within the repeated discussion of the references with the FDA. In particular, Rubin modified the proposed pH range from a wider range to the narrower range in order to take advantage of the data from Sintetica reference product and thus expedite FDA approval.
Unenforceability affirmed.
I’ll note here that some of you might be thinking — but the claims are obvious anyway. I’ll be curious to see whether the inequitable conduct finding results in an unfair competition claim against Belcher.
Second note – Belcher was a quite inexperienced patent applicant at the time that likely was part of the failures here.
