All posts by Jason Rantanen

About Jason Rantanen

Jason is a Law Professor at the University of Iowa College of Law.

Research Corp. v. Microsoft: Section 101 and Process Claims

Inequitable Conduct, Infringement, Patent, Patent Cases 2010, Patentable Subject Matter, Rantanen, , , ,

By Jason Rantanen

There are three articulated exceptions to the scope of patentable subject matter under 35 U.S.C. § 101: laws of nature, physical phenomena, and abstract ideas.  Research Corp. v. Microsoft places a high hurdle in front of challengers who seek to invalidate process patents on the third ground. 

Research Corp. Technologies v. Microsoft Corp. (Fed. Cir. 2010)
Panel: Rader (author), Newman, and Plager

Research Corporation ("RCT") owns several patents relating to digital image halftoning, which is the process of generating electronic display and print images using only a small number of pixel colors (ex.: red, blue and green in the case of color displays) while appearing to present many more colors and shades than were actually used.  Four related patents are relevant to this summary: Nos. 5,111,310, 5,341,228, 5,477,305, and 5,726,772.  The applications for the '310 and '228 patents (a continuation-in-part of the '310 patent) were filed before December 4, 1991; the remaining patents are continuations of the '228 patent and claim priority to the earlier filing dates. 

RCT brought an infringement action against Microsoft based on these patents; in response, Microsoft asserted, and the district court initially concluded, that the patents were unenforceable due to inequitable conduct, invalid and not infringed.  The Federal Circuit reversed that determination in 2008.  Microsoft subsequently sought summary judgment against the '310 and '228 patents on Section 101 patentable subject matter grounds, and asserted that the claims of the '772 patent were not entitled to the earlier priority date, thus rendering them anticipated.  The district court granted Microsoft's motions, and subsequently held that the only remaining claim, claim 29 of the '305 patent, also lacked entitlement to the earlier priority date.  Based on these ruling, the parties stipulated to a dismissal of the suit and RCT appealed.

Section 101 and Process Claims
In reversing the district court's ruling that the '310 and '228 patents failed to satisfy Section 101, the Federal Circuit identified a set of considerations that can be applied when assessing the question of abstractness.  Drawing upon the Supreme Court's precedent in this area, including its recent decision In re Bilski, the opinion first reiterates that there are only three articulated exceptions to subject matter eligibility: "laws of nature, physical phenomena, and abstract ideas." 

Focusing on the category of abstract ideas, the court noted the Supreme Court's admonition in Bilski not to provide a rigid formula or definition for abstractness.  Rather, "the Supreme Court invited this court to develop 'other limiting criteria that further the purpose of the Patent Act and are not inconsistent with its text.'" Slip Op. at 14.  With that guidance, the panel concluded that it perceived nothing abstract in the subject matter of the processes claimed in the '310 and '228 patents.  Specifically, the court observed that:

  • "The invention presents functional and palpable applications in the field of computer technology";
  • Some claims in the patents require physical components;
  • "[I]nventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act"; and
  • The incorporation of algorithms and formulas does not prevent patent eligibility.

Nevertheless, while finding these factors met in the instant case, the panel further noted that its analysis was limited to the context of Section 101, which provides only a coarse filter.  Abstractness challenges can also be brought against specific claims under Section 112 even if the requirements of Section 101 are met.

Comment: The court's discussion of Section 101 suggests that the issue of patentable subject matter should be analyzed with respect to the patent as a whole; in contrast, Section 112 challenges are analyzed on a per-claim basis.

Burden of Proof for Establishing Priority
In addressing the district court's ruling that the asserted claims of the '772 and '305 patents were not entitled to claim priority to the '310 and '228 filing dates, the opinion reinforced the court's prior ruling that the patent holder bears the burden of establishing priority.  As the court held, although a patent challenger has the burden of going forward with invalidating prior art, once it has done so the burden shifts to the patent holder.  Thus, in an instance where the patent holder attempts to defeat the assertion of invalidity by claiming priority to an earlier application, the patent holder bears the burden of proving the entitlement to priority – including that the claims of the earlier patent are supported by the written description of the earlier specification.

Note: The '772 and '305 patents shared the same specification as the earlier '305 and '228 patents.  If the relevant claims had been contained in the '305 or '228 patents, Microsoft would have had the burden of proving lack of written description, as opposed to the burden resting with RCT.  Thus, the fact that the claims were part of a continuation was highly significant with respect to the allocation of the burden.

Comment: A related issue is who bears the burden of proof in the context of claims to a pre-filing conception or reduction to practice date. Although not mandated by the text of the opinion, which specifically refers to the burden to establish "an earlier filing date," the court's analysis could be read to support the conclusion that the patent holder bears the burden of proof in this situation as well.

After dispensing with RCT's challenge to the district court's allocation of burden, the panel proceeded to address the priority claims on the merits.  With respect to the '772 claims, the panel agreed with the district court, concluding that they were unsupported by the prior disclosure.  The panel did reverse on the '305 claim, however, ruling that to satisfy the written description requirement for apparatus claims, the patent need not disclose every method of making the apparatus. 

Global-Tech v. SEB: Amicus Briefs

Amicus Brief, Patent, Rantanen

By Jason Rantanen

Several amicus briefs supporting Global-Tech/neither party were filed yesterday.  Among them is a brief by 41 Law, Economics, and Business Professors in support of the Petitioner that parallels a similar brief filed in support of the petition for certiorari.  The merits brief, coordinated by Mark Lemley, Timothy Holbrook, and Lynda Oswald, argues that the Court should reject the "deliberate indifference" standard articulated by the Federal Circuit in SEB, and instead hold that inducement require that the defendant "be aware of a patent and encourage an act that it knows or should know would infringe that patent."  In anticipation of an argument that may be made in support of the Respondent, the brief also asserts that a strict liability standard for inducement would be disastrous.  The brief can be directly downloaded here: Download 10-6, tsac, 41 Law, Economics, and Business Professors

The full set of amicus briefs is available on the American Bar Association Website.  It includes briefs from:

  • The Business Software Alliance in Support of Petitioner
  • Cisco Systems, Inc., Dell, Inc., and Intel Corporation in Support of Reversal
  • The Clearinghouse Association and Securities Industry and Financial Markets Association in Support of Petitioner
  • Comcast Corporation, Facebook, Inc., Intuit Inc., Microsoft Corporation, Netflix, Inc., Overstock.Com, Inc., and SAP America, Inc. in Support of Petitioner
  • Google, Inc., in Support of Petitioner
  • NewEgg, Inc., in Support of Petitioner
  • The Software Freedom Law Center in Support of Petitioner
  • Yahoo! Inc., Ebay Inc., Electronic Arts Inc., General Motors LLC, Hewlett Packard Company, McAfee, Inc., Red Hat, Inc., and Symantec Corporation in Support of Petitioner
  • The Federal Circuit Bar Association in Support of Neither Party
  • The Intellectual Property Owners Association in Support of Neither Party

In re Acer: Transfer Out of the Eastern District of Texas

Infringement, Jurisdiction, Patent, Patent Cases 2010, Rantanen

By Jason Rantanen

In re Acer America Corporation (Fed. Cir. 2010)
Panel: Gajarsa, Schall (Author), and Moore

In 2008, MedioStream, a company headquartered in the Northern District of California, brought a patent infringement suit in the Eastern District of Texas against twelve hardware and software companies, five of which are also headquartered in the Northern District of California.  The defendants moved to transfer venue to the Northern District of California pursuant to 28 U.S.C. 1404(a), which authorizes transfer "[f]or the convenience of parties and witnesses, in the interest of justice."  The district court denied the motion, primarily because one of the defendants, Dell, Inc., is headquarted in Round Rock, Texas, relatively close to (albeit outside) the Eastern District of Texas. The defendants petitioned the Federal Circuit for a writ of mandamus. 

On appeal, the Federal Circuit agreed with the Petitioners, concluding in a precedential opinion that the district court abused its discretion in denying the request to transfer venue.  Particularly important in the panel's analysis was the fact that a substantial number of party witnesses reside in or near the Northern District of California, and requiring them to travel to the Eastern District of Texas would result in substantial expenses for airfare, meals, lodging, and the loss of productivity from time spent away from work, as well as the personal costs imposed on the witnesses.  While it was possible that more than one Dell employee might testify, that number was likely to be insignificant in contrast with the substantial number of party witnesses that would be required to travel to Texas.  Similarly weighing in favor of transfer to California was the venue's ability to compel testmony through subspoena power, the presence of a significant portion of the evidence in the Northern District of Caliornia (and none in the Eastern District of Texas), and the local interest of the Northern District flowing from the residence of many of the parties in that district.

Note: Last month, the court granted a temporary stay of the district court proceedings.

Nuance Communications v. Abbyy Software

Infringement, Jurisdiction, Patent, Patent Cases 2010, Rantanen

By Jason Rantanen

Cases involving foreign parties often raise complex procedural issues.  In this case, two of the defendants – a Russian corporation and a Cypriot corproration – argued that the district court lacked personal jurisdiction and that the plaintiff's attempts at service were insufficient.

Nuance Communications, Inc. v. Abbyy Software House (Fed. Cir. 2010)
Panel: Rader (author) Newman, Prost

In 2008, Nuance Communications sued Abbyy USA Software House, Abbyy Production, and Abbyy Software for patent infringement.  Abbyy Production, a corporation organized under the laws of the Russian Federation, and Abbyy Software, a Cypriot corporation, filed a motion to dismiss for lack of personal jurisdiction and improper service of process.  In a short order, the district court granted the motion and declined to consider Nuance's request for jurisdictional discovery by not addressing that issue.

On appeal, the Federal Circuit reversed the district court's ruling.  On the question of personal jurisdiction, the panel first noted that because this is a patent case, Federal Circuit precedent applies rather than that of the regional circuit.  The overarching analysis, however, focused on the traditional "minimum contacts" approach: "whether the defendant purposefully established 'minimum contacts' in the forum state."  Because the question in this case was one of specific jurisdiction, it thus required examining:

(1) whether the defendant purposefully directed activities at residents of the forum; (2) whether the claim arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is reasonable and fair.

Slip. Op. at 8.  Applying this test, the majority concluded that the district court had erred in dismissing Abbyy Production and Abbyy Software.  With respect to Abbyy Production, the appellate court noted that the defendant had engaged in a variety of activities directed at California, including its distribution of the allegedly infringing software to Abbyy USA, a California entity.  These activities also satisfied the second prong, as Nuance alleged in its Complaint that Abbyy Production's importation of the software into California infringed and induced infringement of the patents-in-suit.  The panel further found that the third prong was met, noting that even beyond the fact that Abbyy Production purposefully targeted activities at the forum state, it and Abbyy USA operated under a shared management team and were represented by the same counsel.

The panel declined to conduct a similar analysis for Abbyy Software, concluding that the extent of its involvement in sales of the accused product was uncertain on the facts before the court.  Consequently, the court remanded for additional jurisdictional discovery.

The Federal Circuit also reversed the dismissal based on improper service of process.  After a lengthy discussion of the applicability of Hague Convention procedures to service of process on corporations in the Russian Federation, the panel declined to opine on whether personal service on corporations was permissible in this case.  Rather, the court held that permitting substituted service under Federal Rule of Civil Procedure 4(f)(3) was called for here, and service on Abbyy USA would be sufficient to satisfy constitutional notions of due process for service on Abbyy Production. 

Note: The panel also reversed the district court's sua sponte dismissal of Abbyy Software for improper service of process, noting that the court lacked authority to do so because Abbyy Software had waived the objection.

Liability for Future Indirect Infringement

Inducement, Infringement, Injunctions, Patent, Rantanen

By Jason Rantanen

In an earlier post, I summarized the Federal Circuit's affirmance of a preliminary injunction prohibiting Apotex from marketing its generic version of AstraZeneca's budesonide in AstraZeneca LP v. Apotex, Inc. 

The majority's discussion of inducement of infringement in this case is particularly interesting because it deals with inducement of infringement in the context of future acts, as opposed to damages for past inducement – and when dealing with future infringement, it's unclear whether an intent element should apply to indirect infringement at all.

Apotex Had Specific Intent to Cause Infringement
In its opinion affirming the district court's preliminary finding of inducement, the Federal Circuit rejected Apotex's argument that it lacked specific intent to cause infringement, concluding that Apotex knew about potential infringement problems posed by its label but nevertheless decided to proceed nonetheless.  Similarly unpersuasive to the court was Apotex's argument that it lacked specific intent because the FDA required it to include the pivotal titration language.  The majority pointed out that Apotex had a variety of options besides proceeding in the face of a risk of an infringement suit, including waiting until the patents expire, challenging infringement and validity, and formally appealing the FDA's denial of Apotex's proposed labeling amendment.  Given these circumstances, the court concluded that Apotex had the necessary specific intent to cause inducement.

Is Intent to Cause Infringement Even Relevant When Dealing With the Future?
The court's ruling, however, could be supported in another way: by concluding that inducement with respect to future acts of infringement does not require the patentee to establish that the accused party posessed "specific intent" to infringe the patent.   This is because when dealing with the future, there will necessarily be a court finding that the relevant third party conduct infringes. Inherent in the court's determination is the conclusion that once-daily use of Apotex's product – the use that the court concluded would result from Apotex's label – infringes AstraZeneca's patents.   In other words, once the court made this determination, AstraZeneca conclusively knew1 that patients taking its medication in a manner that it intended (i.e.: once daily) would infringe the method claims, and therefore continuing to engage in that conduct would satisfy the requrements of specific intent.  That Apotex may not want to infringe the patents is beside the point: its knowledge that the third party's conduct infringes, coupled with an intent to cause that conduct, is all that is required for this element of inducement, and for future acts those requirements would automatically be met. 

I'm not the first to identify this issue – Professor Timothy Holbrook made it few years back as well.  See Timothy Holbrook, The Intent Element of Induced Infringement, 22 SANTA CLARA COMPUTER & HIGH TECH. L.J. 399, 406 (2006).  Nevertheless, this is an instance where the argument that inducement of future infringement does not require the patent holder to prove specific intent to infringe could have been raised, and the parties apparently did not.

1 Note that this case involved a preliminary injunction, and thus the court's findings were necessarily non-final.  Thus one could argue that Apotex did not "know" that the future conduct would infringe despite the district court's preliminary determination of infringement because it could be subject to later change.   However, as in many pharmaceutical patent cases, the lower court's determination was made following substantial briefing and argument (along with a five-day hearing), and its reasoning was affirmed on appeal.  Furthermore, even in the preliminary injunction context, the focus should not be on the question of what Apotex thought in the past about infringement, but rather whether it would be substantially certain that the third party conduct would infringe in the future – an analysis that collapses into the district court's determination on the question of infringement.

Final Draft of ACTA Released

Copyright, Patent, Rantanen, Trademark

By Jason Rantanen

Yesterday, the negotiating parties (which include the United States) released the final draft of the Anti-Counterfeiting Trade Agreement (ACTA), a document that purports to combat the proliferation of pirated and counterfeit goods.  The development of this Agreement has been subject to considerable controversy, in large part due to the secretive nature of its negotiation, which took place outside conventional International IP bodies such as TRIPS and WIPO.  The Electronic Frontier Foundation, for example, has written extensively about the subject, as has Michael Geist. 

In its final state, ACTA relates primarily to copyright and trademark infringement, and expressly disclaims application to patent law in several sections.  Nevertheless, everyone interested in intellectual property law issues should give it a read (and at only 24 pages long it's a surprisingly concise document), as within the area of trademark and copyright infringement the scope of ACTA is very broad: despite its characterization as a "Trade Agreement," it covers the enforcement of IP rights in the domestic civil, criminal, and digital spheres in addition to providing for border control measures, 

Although ACTA generally tracks existing U.S. law on copyright and trademark infringement, the Agreement has a clear pro-rights holder slant.  For instance, provisions on discovery discuss only the rights of the party asserting the infringement claim, and do not require similar rights on the part of the alleged infringer.  Readers may also want to pay particular attention to the criminal provisions – which seem on their surface to make any commercial willful trademark or copyright infringement subject to criminal penalties.

Given that this document likely will be scrutinized by scholars and practitioners concerned about the implications of strong copyright and digital property rights, I'll identify just a few specific drafting issues that leaped out at me.

  • "Trademark counterfeiting" and "copyright piracy" are broadly defined, and seem to include any form of trademark or copyright infringement.  In other words, these terms could be readily replaced with "trademark infringement" and "copyright infringement" wherever they appear in the document.  That said, the trademark counterfeiting language is somewhat ambiguous, and could plausibly be read to only apply to instances where the mark "cannot be distinguished in its essential aspects" from the registered trademark.
  • Another issue is the sudden appearance of "copyright or related right," which is first used in Chapter Two, Article 2.2(1).  Perhaps this is an artifact from earlier drafts, but I didn't see any definition of these "related rights."
  • The procedures for civil enforcement of IP rights largely appear to parallel U.S. law.  However, the damages provisions strongly favor rights holders, perhaps more so than current domestic copyright and trademark law. 
  • Similarly, to the extent the sections on litigation discovery procedures expand parties' rights and obligations, they may create a disjunction with current law.
  • In the context of border measures, the terms "goods of a commercial nature" and "goods of a non-commercial nature" are left undefined.  On the surface, it seems like nearly every good hs a commercial nature, but perhaps I'm just picking at nits with this one.
  • Likewise, the term "acts carried out on a commercial scale," used in the context of the section on criminal penalties, seems equally broad, especially given that it includes "at least those carried out as commercial activities for direct or indirect economic or commercial advantage."
  • The pro-rights holder forum and education campaign requirements seem quite one-sided, especially for such a sensitive subject.  Chapter Three, Articles 3.1(4) and 3.4 are particularly strong in their requirement that governments present a pro-IP rights holder message.

The full text of the proposed version of ACTA is available here:  Download Finalized ACTA text.  In addition to substantive issues, some organizations have raised concerns about the potential approval of ACTA via Executive Agreement, as opposed to ratification by the Senate.  If the former approach is indeed used, it will likely have profound legal implications that courts, practitioners and scholars will need to address.

Update: As one commenter pointed out, Terry Hart's blog Copyhype has a detailed point-by-point comparison of many ACTA provisions to the relevant U.S. law.  Mr. Hart also responds to some of the negotiation transparency criticisms that various organizations have raised. 

En Banc Federal Circuit Arguments in TheraSense and TiVo: Update

En Banc, Patent, Rantanen,

By Jason Rantanen

Update: Binal Patel from Banner & Witcoff was kind enough to provide Patently-O with a transcript that the firm prepared of the TheraSense oral argument.  It can be obtained here: Download Therasense v Becton – transcription

* * *

Today the en banc Federal Circuit heard arguments in TheraSense v. BD and Bayer (Inequitable Conduct) and TiVo v. Echostar (post-injunction infringement proceedings).  Audio of both arguments is now available via the Federal Circuit's website, and Bruce Wexler of Paul Hastings has written a summary of the TheraSense argument.

Cancer Research Technology v. Barr Laboratories: Prosecution Laches and Inequitable Conduct

Inequitable Conduct, Infringement, Ownership, Patent, Patent Cases 2010, Patent Prosecution, Pharma, , ,

By Jason Rantanen

Cancer Research Technology Ltd. v. Barr Laboratories, Inc. (Fed. Cir. 2010)
Panel: Newman, Lourie (author), Prost (dissenting)

Although overshadowed by the en banc Federal Circuit arguments in TheraSense v. Becton Dickinson this morning, Cancer Research Technology v. Barr Laboratories may provide a preview of what the opinions in TheraSense could look like – although it doesn't necessarily indicate which view of inequitable conduct will ultimately prevail.  In Cancer Research, Judges Lourie and Newman reversed a district court finding of prosecution laches and inequitable conduct, while dissenting Judge Prost would have reached the opposite result.

The patent at issue (the '291 patent) involved a set of thirteen tetrazine derivatives that the original 1982 specification identified as possessing anticancer activities based on animal studies.  During the first nine years of prosecution, the examiner repeatedly rejected the claims due to lack of utility; rather than file a response to the office actions, the applicant instead filed continuation after continuation.  In 1991, Cancer Research obtained ownership of the patent application and shortly thereafter responded to the examiner's arguments.  The patent issued in 1993 and expires in 2014. 

Following Cancer Research's clinical testing, the FDA approved one of the compounds covered by the '291 patent (marketed as TEMODAR) for the treatment of one type of cancer in 1999 and a second in 2005.  In 2007, Barr Laboratories filed an Abbreviated New Drug Application ("ANDA") for a generic form of TEMODAR.  Cancer Research sued Barr for infringement four months later.  During the district court proceedings, the parties stipulated to validity and infringement and, after a bench trial, the court found that the patent was unenforceable due to prosecution laches and inequitable conduct. 

Prosecution Laches
Given the nearly ten-year delay before any meaningful response to the examiner's rejection was filed, Barr contended that the patent was unenforceable due to prosecution laches.  The district agreed, concluding that the delay in prosecution was unreasonable and unexplained.

On appeal, the majority reversed the finding of prosecution laches, holding that the doctrine requires not just unreasonable delay, but also a showing of prejudice.  The majority further held that "to establish prejudice, an accused infringer must show evidence of intervening rights, i.e., that either the accused infringer or others invested in, worked on, or used the claimed technology during the period of delay."  (Slip Op. at 9).  Here, there was no evidence of intervening rights during the prosecution period, such as evidence showing that someone other than the patent holder attempted to develop the claimed compounds.  Even Barr itself waited until 2007 – four years later than required – before filing its ANDA.  The majority also noted that there was no public harm: in the absence of the patent, Cancer Research likely would not have been incentivized to develop TEMODAR at all. 

Writing in dissent, Judge Prost rejected the notion that prosecution laches requires prejudice, let alone intervening rights; rather, under her reading of the precedent such a requirement is not part of the laches determination.  Furthermore, in her opinion, both Barr and the public were harmed by Barr's inability to market a generic version of TEMODOR.

Comment: I'm unconvinced by Judge Prost's argument on this point.  If she is correct, then the '291 patent was never enforceable – be it in 2007, when Barr filed its ANDA, or 1993, when it issued.  Yet without an enforceable patent, Cancer Research would never have developed TEMODOR, let alone engaged in the expensive Phase III clinical studies necessary to demonstrate its safety and efficacy.  Thus, the "harm" to the public would been greater in the absence of the '291 patent, not less.

Inequitable Conduct
The majority also rejected the district court's finding of inequitable conduct, while the dissent reached the opposite conclusion.  Both opinions focused on the subject of intent to deceive. 

The inequitable conduct issue in this case revolved around an extensive series of articles by an inventor on the '291 patent that presented data from post-application clinical trials of the claimed compounds.  These articles included conclusions indicating that some of the claimed compounds demonstrated high toxicity and low anticancer activity, which the district court found to be highly material to the patent claims because it directly contradicted statements in the '291 patent regarding the compounds' utility in treating cancers, as well as the patentability of a broadly written claim.

The majority, following the "intent cannot be inferred from materiality" line of thought, concluded that the district court's only basis for finding intent was its determination that the withheld articles were highly material.  "Because the district court did not rely on any other evidence to support its finding of deceptive intent beyond that used to find the withheld data material, the court in effect relied solely on its materiality finding to infer intent to deceive."  Slip Op. at 17.  The majority also concluded that the inference of deceptive drawn by the district court about the inventor's publication of data was not the only reasonable inference; rather, the broad publication of this data in multiple articles is inconsistent with an inference of intent to deceive.  Thus, an equally reasonable inference is that the inventor did not appreciate the potential importance of the published data to the patentability of the patent claims.

Judge Prost, again writing in dissent, would have affirmed the district court's determinations.  In contrast to the majority, which required independent evidence of intent, her view of inequitable conduct is that it does not require separate evidentiary bases for materiality and intent; rather it is appropriate to cite to the same evidence for materiality and intent.  Furthermore, here there was additional evidence of intent in the form of the district court's credibility findings, "which are virtually unreviewable by this court."  Thus, under her approach to intent in inequitable conduct, "[w]e should not draw inference that the district court has already excluded based on its own credibility findings."

Comment: The majority and dissent's views on intent can be partially reconciled under the position that, although an intent to deceive may be partially based on evidence of materiality, materiality cannot be the sole basis for the finding of intent to deceive.  Here, in the majority's opinion, the finding of materiality was the sole basis for the intent to deceive determination, because the only additional factor – the credibility determination – was based on an erroneous inference.  On the other hand, in the dissent's view credibility determinations are unreviewable and are sufficient to provide the "beyond the materiality" support for an intent to deceive finding.

AstraZeneca v Apotex: Affirmance of a Preliminary Injunction

Anticipation, Injunctions, Patent, Patent Cases 2010, Pharma, Prior Art, Rantanen, , ,

By Jason Rantanen

AstraZeneca LP v. Apotex, Inc. (Fed. Cir. 2010)
Panel: Rader, Bryson (dissenting in part), Linn (majority author),

Contrary to popular opinion, it's still possible to obtain a preliminary injunction in a patent case – it's just very difficult.  Astrazeneca v. Apotex provides an example of an affirmed preliminary injunction, and is significant for that reason alone.  It also raises some interesting inducement issues relating to intent that I'll discuss in a separate post.

Background
This case revolved around AstraZeneca's budesonide inhalation suspension drug product, which consists of a vial containing a single dose of budesonide suspended in a sterile liquid.  The drug is administered by squeezing the entire contents of the vial into a jet neubulizer, then inhaling the resulting mist through a mask attached to the nebulizer.  Because budesonide is an inhaled corticosteroid, the FDA requires that the label include a warning instructing patients to "titrate down" to the lowest effective dose of the medication to avoid any adverse effects from excessive use of the medication. 

The two patents at issue, Nos. 6,598,603 and 6,899,099, both contain method claims covering the once-daily use of the nebulized dose of a budesonide composition and product claims covering AstraZeneca's drug product kit.

Apotex sought approval to market a generic version of AstraZeneca's drug product.  As an ANDA applicant, it was well aware of AstraZeneca's patents, and sought to avoid the once-daily method claims by removing any mention of once-daily dosing from its labels.  While it succeeded in part, the FDA nevertheless required Apotex to keep the titration warning language in the generic product's label.

During the preliminary injunction proceedings, Apotex raised two principal arguments in response to the method claims.  First, it contended that they were anticipated; second, it contended that its distribution of the generic version of the drug would not induce infringement of AstraZeneca's method claims.  The district court rejected Apotex's arguments, and granted a preliminary injunction enjoining Apotex from marketing its product.

Note: The district court agreed with Apotex that the kit claims were invalid.  On appeal, the panel affirmed that determination. 

Anticipation
Apotex's first anticipation argument, involving a prior art patent, turned on a question of claim construction: whether the term "budesonide composition" encompassed budesonide encapsulated in liposomes (the '603 patent teaches dispersing budesonide in a solvent, either as a solution or a suspension that may include liposomes as an excipient).  The majority agreed with AstraZeneca's position, focusing on the discussion contained within the specification and buttressing its conclusions with extrinsic evidence (in this case, expert testimony).  Judge Bryson, dissenting on this point, reached the opposite conclusion: the claim term is not limited to budesonide directly dispresed in solvent, and thus the method claims are anticipated.

Apotex's also argued that a prior art British advertisement for AstraZeneca's product describing it as a twice-daily product anticipated the patents.  The majority again agreed with AstraZeneca that this reference did not anticipate the once-daily method claims, both because it did not disclose once daily dosing and because it was not enabled with respect to that type of dosing.  (Obviousness was apparently not in dispute, as at the time of the earlier reference no one recognized that the product could be administered once per day and still be effective).  Judge Bryson again disagreed, reading the prior art advertisement to suggest the administration of the drug once a day.

Inducement of Infringement
In challenging the district court's finding of inducement of infringement, Apotex focused on the subject of intent, arguing that its instructions did not demonstrate intent to cause the users of its product to engage in once-daily dosing and that it lacked specific intent to cause infringement of Apotex's patent.  The Federal Circuit rejected these arguments, affirming the district court's conclusion that the downward-titration instructions would necessarily result in some users engaging in once-daily dosing and noting that Apotex was well aware of the infringement problems raised by once-daily dosing, yet chose to proceed nonetheless.

Preliminary Injunction "Substantial Question of Invalidity" Standard
Although not playing a major role in the ultimate outcome of this appeal, the court's articulation of the "likelihood of success" standard, along with the subsidiary "substantial question of invalidity" element, is noteworthy given the divergent views on this subject, such as those expressed by Judges Newman and Gajarsa in Abbott Laboratories v. Sandoz, 544 F.3d 1341 (Fed. Cir. 2008).  AstraZeneca v. Apotex follows the approach of requiring a seemingly high threshold for patentees/low threshold for defendants on this issue:

For a patentee to establish that it is likely to succeed on the merits, it “must demonstrate that it will likely prove infringement of one or more claims of the patents-in-suit, and that at least one of those same allegedly infringed claims will also likely withstand the validity challenges presented by the accused infringer.” Ama-zon.com, 239 F.3d at 1351. When reviewing the grant of a preliminary injunction, this court “views the matter in light of the burdens and presumptions that will inhere at trial.” Titan Tire Corp., 566 F.3d at 1376 (citation omitted). A preliminary injunction should not issue if an alleged infringer raises a substantial question regarding either infringement or validity, i.e., the alleged infringer asserts an infringement or invalidity defense that the patentee has not shown lacks substantial merit. Genentech, Inc. v. Novo Nordisk A/S, 108 F.3d 1361, 1364 (Fed. Cir. 1997).

Split Court Denies Rehearing En Banc in Sun Pharmaceuticals v. Eli Lilly

Obviousness, Patent, Patent Cases 2010, Rantanen,

By Jason Rantanen

Sun Pharmaceutical Industries, Ltd. v. Eli Lilly and Company (Fed. Cir. 2010) (denial of rehearing and rehearing en banc)

In Sun Pharmaceutical, a Federal Circuit panel affirmed a district court determination that Eli Lilly's patent for a method of using gemcitabine to treat cancer was invalid due for obviousness-type double patenting based on another application, filed the same day, claiming the compound gemcitabine and disclosing its use for treating cancer.  (The previous Patently-O write-up is here).  This morning the Federal Circuit issued an order denying Eli Lilly's petition for rehearing and rehearing en banc.  The court was closely split on the latter, with four of the nine currently sitting judges dissenting on the decision not to rehear the decision en banc.

The dissent's principal concern was that, in its view, the panel opinion involved a departure from precedent, thus creating an intra-circuit split.  According to the dissent,

the panel held the claims to the anticancer use to be invalid for double patenting because the anticancer use was mentioned (but not claimed) in the continuation-in-part specification that is not prior art, stating that “[t]he asserted claims of the later ’826 patent simply claim the anticancer use disclosed in the specification of the ’614 patent,” reported at 611 F.3d at 1389.

The dissent pointed out that this approach, which focused on the disclosure of the simultaneously filed patent, not its claims, was contrary to precedent:

Uniformly, unlike examination for obviousness based on prior art, the issue of obviousness-type double patenting is directed to whether the invention claimed in a later patent is an obvious variant of the invention claimed in an earlier patent. The panel opinion violates a vast body of precedent.

Furthermore, according to the dissent, expanding the doctrine of obviousness-type double patenting to the facts of this case serves no good policy purpose and creates a schism in the law – a schism that should be addressed by the court en banc:

A change of law “in ways that negatively impact the patentability of important later-discovered uses” serves no public purpose in areas in which commercial development requires patent protection. Id. If the majority of the court now believes, as a matter of policy, that the law should be changed in this new direction, en banc treatment is particu-larly appropriate, for the court’s rule is that the earlier precedent prevails unless overruled en banc. A situation in which the court ignores this rule, and applies whatever law the panel prefers, is an indictment of the ability of this court to provide stable law in the areas entrusted to us.

Comment: Given that there are currently only nine sitting Federal Circuit judges, it seems unlikely that the court will grant a rehearing en banc absent extraordinary circumstances – especially in cases where the panel decision was unanimous.  In that situation, in order for an appeal to be reheard en banc, at least five of the six judges who did not participate on the panel would need to vote to rehear the decision en banc.  Of course, there are instances when this would not apply, as senior judges and visiting judges frequently participate in panel determinations, but it is something to keep in mind for the near future.

Inducement of Infringement: Should We Even Think of its Fault Element in Mens Rea Terms?

Infringement, Patent, Rantanen

By Jason Rantanen

The conventional approach to the fault elements1 of indirect and willful infringement is to speak of them in mens rea (or state of mind, if you prefer) terms.  But describing fault this way is largely nonsensical when dealing with modern indirect and willful infringement.  In my current work-in-progress, I suggest that the fault element of these doctrines should instead be conceived of as an objective inquiry that focuses on the degree of risk of infringement to a person in the accused party’s shoes.  Given the Supreme Court's grant of certiorari this morning in Global-Tech v SEB, questioning whether we should even be talking about the issue in mental state terms seems particularly timely.

Inducement of infringement is the poster child for the problems associated with viewing the fault elements for certain doctrines in mens rea terms.  For years, both the Federal Circuit and scholars struggled to define the state of mind necessary for inducement.  Did it require intent to infringe a patent, or just intent to cause the underlying acts that constituted infringement?  Even after the court settled this issue in DSU Medical, it continued to conceive of the requirement in mental state terms – in i4i v Microsoft, for example, the court stated that inducement requires that the accused party “knowingly induced infringement and possessed specific intent to encourage another’s infringement.”   598 F.3d 831, 851 (Fed. Cir. 2010).  And perhaps the strongest evidence of how deeply this view is entrenched is the Court’s Question Presented in SEB, which assumes that the fault element must be described in mental state terms – asking whether the accused infringer must possess a certain “state of mind,” be it one of deliberate indifference or purposeful conduct.

In my paper, I offer several reasons why viewing the fault element of inducement in mental state terms is wrong.  Among them are the following:

  • The “people” who are accused of inducement are not people at all.  They are corporations.  To speak of a corporation as having a specific state of mind is borderline meaningless.  Is it sufficient that an engineer’s purpose is to infringe a patent?  Or does one look to the legal department?  Or must senior management “intend” to infringe a patent?   These questions are particularly problematic in the patent infringement context, which involves assessments not just of factual consequences, but also of legal questions.
  • No one ever has the “purpose” of infringing a patent.  Of course, one may purposefully engage in acts that constitute infringement.  One may even purposefully copy another’s technology.  But no one’s purpose is to infringe a patent.
  • Nor does the alternate mens rea concept of “knowledge” work.  Knowledge is typically established when one is “substantially certain” of certain consequences.  Given the uncertainties associated with patent law, one can virtually never be “substantially certain” that conduct infringes a patent short of a final judgment.
  • Indeed, the facts of past opinions involving inducement suggest that, notwithstanding the court’s framing of the legal issue, what is really required is the existence of an obvious, high risk that the relevant conduct infringes a particular patent – not actual knowledge that it infringes a patent or purpose to infringe a patent.  Thus, although the fault element of inducement is commonly articulated as requiring “intent to infringe a patent,” I suggest that the normative standard that is actually being applied is one of recklessness. 

Rather than continue to attempt to articulate the fault element of inducement as if it required a subjective mental state, I suggest that an objective inquiry akin to civil recklessness is more appropriate.  Specifically, I argue that the better approach would be to ask whether, given the information known to the accused party at the relevant time, a high risk that the relevant conduct infringed a patent would be obvious to a person in the accused party’s place.   Obviously, my articulation is by no means perfect (and I’m dealing with some of the imperfections in my paper), but I think it provides a more intelligible articulation of the fault element for inducement than currently exists.

1 By "fault element," I simply mean the component that transforms a doctrine into something other than a strict liability claim.

Teva v. Eisai: Standing for subsequent Paragraph IV filers

Declaratory Judgment, Patent, Patent Cases 2010, Pharma, Standing

By Jason Rantanen

Teva Pharmaceuticals USA, Inc. v. Eisai Co. (Fed. Cir. 2010)
Panel: Rader, Dyk, and Prost (author)

A company seeking to market a generic version of a previously approved pharmaceutical product must file and receive approval of an Abbreviated New Drug Application (ANDA).  One aspect of the ANDA, called a "Paragraph IV Certification," involves an assertion that each of the patents for that drug listed in the Orange Book is invalid and/or not infringed.  The first manufacturer to file a Paragraph IV Certification is entitled to 180 days of generic marketing exclusivity; until the first-filer's exclusivity period has run, the FDA may not approve ANDA applications by other manufacturers who have filed Paragraph IV certifications for the same patent.   The first-filer's exclusivity period can be triggered by either (1) its commercial marketing of the drug; or (2) entry of a court judgment finding the patent invalid or not infringed.

Eisai holds the New Drug Application for donepezil, and owns five patents listed for this product in the Orange Book.  Of these five patents, one (the '841 patent) was the subject of separate litigation that produced a preliminary injunction barring Teva from marketing a generic version of donepezil until the expiration of the '841 patent in November 2010.  With respect to the remaining four patents, Ranbaxy Laboratories was the first to file a Paragraph IV certification; thus, because Ranbaxy's exclusivity period had not yet run, approval of Teva's ANDA was barred. 

To remedy this issue, Teva brought a declaratory judgment action against Eisai on the remaining four patents, seeking to trigger the exclusivity period.  Ultimately, there was no question as to whether Teva infringed the patents: Eisai had filed a statutory disclaimer for two of them, effectively canceling their claims, and had entered into a covenant not to sue Teva on the remaining two patents.  Nevertheless, all four patents continued to be listed in the Orange Book, precluding approval of Teva's ANDA.

After the Declaratory Judgment action was filed, Eisai moved to dismiss on the ground that Teva had failed to  establish the existence of an Article III case or controversy.  The district court agreed, dismissing the case for lack of jurisdiction.  Teva appealed.

The Federal Circuit reversed the dismissal.  With respect to the jurisdictional issue, the court focused on two cases: Caraco Pharmaceutical Laboratories, Ltd. v. Forest Laboratories, Inc., 527 F.3d 1278 (Fed. Cir. 2008) and Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1359 (Fed. Cir. 2008).   Looking to Caraco, the court explained that:

the generic drug company’s injury (i.e., exclusion from the market) is fairly traceable to the defendant’s actions because “but-for” the defendant’s decision to list a patent in the Orange Book, FDA approval of the generic drug company’s ANDA would not have been independently delayed by that patent. 527 F.3d at 1292; see 21 U.S.C. § 355(j)(5)(B)(iv). When an Orange Book listing creates an “independent barrier” to entering the marketplace that cannot be overcome without a court judgment that the listed patent is invalid or not infringed—as for Paragraph IV filers—the company manufacturing the generic drug has been deprived of an economic opportunity to compete. Id. at 1293; see also 21 U.S.C. § 355(j)(5)(B)(4). A declaratory judgment redresses this alleged injury because it eliminates the potential for the corresponding listed patent to exclude the generic drug from the market.

Slip. Op. at 11.  On the other hand, as in Janssen, where a generic manufacturer agrees that an Orange Book patent is valid, enforceable, and infringed, that generic manufacturer lacks standing to pursue a declaratory judgment action against other Orange Book patents for that drug because it cannot market its product even if the exclusivity period runs.  

Applying this framework, the court concluded that Teva had established an actual controversy.  The court distinguished Janssen on the ground that the preliminary injunction associated with the '841 patent was necessarily preliminary, and there was no final determination as to the validity, infringement or enforceability of the '841 patent.  Thus, although Teva could not currently market its product, the preliminary injunciton did not eliminate the existence of a controversy.

With respect to the discretionary component of the Declaratory Judgment Act, the Federal Circuit concluded that the district court had abused its discretion in declining jurisdiction, both because it had relied on its determination that it lacked subject matter jurisdiction as well as being unsupported by the facts. 

The Federal Circuit and Inequitable Conduct: Part III

CAFC, Inequitable Conduct, Patent, Rantanen, , ,

By Jason Rantanen

Yesterday, I discussed our conclusion that the Federal Circuit applies a stricter standard than the lower tribunals it reviews and that this preference for patentee success manifests through the intent to deceive component of the inequitable conduct analysis.   In this post, I raise some broad ideas about inequitable conduct jurisprudence.  The paper raises others as well, but the ones that follow offer a good perspective into what we believe may be going on. 

The first idea is that the Federal Circuit might be applying a standard for intent to deceive that is higher than that required by its own caselaw.  In other words, the Federal Circuit’s articulated standard – intent greater than gross negligence – might be lower then the court’s normative perspectives on inequitable conduct.  At least some circuit judges might be applying a requirement more akin to knowledge or purpose.  This idea finds some support in the empirical evidence.  Our data indicate that patentee win rates can vary dramatically (from 40% to 100%) depending on the judge authoring the opinion, as the below graph of 14 judges who sat on the bench during the past decade illustrates. 

Fig 11Following closely from this first idea, and also suggested by the Figure, is the notion that when it comes to inequitable conduct the Federal Circuit might be having trouble communicating its standard – particularly with respect to intent – because it is not speaking with one voice.  If the mental state standard applied at the appellate level differs between judges, lower tribunals might have a difficult time “locking on” to the Federal Circuit’s standard.  This problem could be amplified by the fact that, as we have shown, the Federal Circuit does not seem to have balancing jurisprudence, which theoretically would address mental state standards above the threshold.  Thus, rather than having a single standard for intent to deceive that is further refined through the balancing inquiry, Federal Circuit jurisprudence might have at least two distinct (and somewhat bipolar) mental state requirements, one higher than the other.  This state of affairs might produce jurisprudential variation (and perhaps confusion among district courts), and might concentrate (as we have observed) inequitable conduct’s focus on intent to deceive.

Another idea the paper raises is that uncertainty around the standard might reflect jurisprudential design (albeit, probably unintentional jurisprudential design).  For example, perhaps the Federal Circuit believes inequitable conduct doctrine is necessary to protect the integrity of the patent system, but is strongly biased against successful (for the patent challenger) inequitable conduct claims.  Thus, the court might desire to maintain the threat of inequitable conduct so as to encourage patent applicants to take appropriate care in dealing with the public.  Yet allowing too many findings of inequitable conduct might be equally bad, as it could lead the public to question the validity of the patent system altogether, and moreover might invite the “plague” of overasserting inequitable conduct so frequently warned about.  An obfuscated standard for intent to deceive might be just right for balancing these concerns, because it provides a structural context that allows the Federal Circuit to maintain the threat of inequitable conduct – and keep the patent bar in line – but rarely find inequitable conduct.  In effect, this structure encourages patentees to police themselves, and also creates a mechanism by which private parties are responsible for ensuring that patent applicants do not misbehave towards the government, i.e., the law sets up a system that mostly enforces itself. 

The entire paper, which also includes additional observations, ideas, and recommendations, can be downloaded here, and we welcome all comments.  In addition to responding below, comments can be sent to us directly at prm.icpaper@gmail.com.  If the download link does not work for you, and you would like a copy of the paper, please email the above address and I will be happy to send you a PDF.

The Federal Circuit and Inequitable Conduct: Part II

CAFC, Inequitable Conduct, Patent, Rantanen,

By Jason Rantanen

Part II of this series describes the methodology used in our working paper The Federal Circuit and Inequitable Conduct: An Empirical Analysis, and summarizes some of the key findings.  You can download the entire paper here.  In addition to responding below, comments can be sent either directly to us or to prm.icpaper@gmail.com.

Methodology
The study uses the technique of “content analysis,” which permits researchers to systematically read and empirically analyze the text of judicial opinions.  In broad terms, we first screened all Federal Circuit opinions that contained the term “inequitable conduct” to identify cases that analyzed the issue.  We read all of these cases, coding pertinent information from each independent analysis of inequitable conduct.1  Overall, we coded information from 361 inequitable conduct analyses between the years 1983 and 2010.  The coded information constitutes the empirical data, and the paper reports these data using a variety of statistical presentations and arguments. 

Results
We first examined patent applicants’ success before the Federal Circuit as opposed to lower tribunals.   Our analysis reveals that patentees are quite likely to succeed before the Federal Circuit, winning 76% of the time, a rate of success higher than that observed in the lower tribunal judgments the court is analyzing.  Overall, the Federal Circuit affirms lower tribunal findings of no inequitable conduct 91% of the time, but affirms findings of inequitable conduct only 45% of the time, as illustrated by the below graphs.  This suggests to us that the Federal Circuit is applying a stricter standard than in the lower tribunal opinions it reviews.

Fig 3
Fig 4
 
We next looked at the analytical structure of the inequitable conduct doctrine, which consists of three components: a materiality inquiry, an intent to deceive inquiry, and a discretionary judicial balancing of materiality and intent undertaken with a view toward deciding whether a patent applicant acted inequitably toward the public. 

Examining the data in this light revealed two key findings.  First, when the Federal Circuit gives a single reason for patentee success, that reason is nearly two and a half times more likely to be lack of intent to deceive than it is to be lack of materiality.  Second, balancing is expressly discussed only 8% of the time and forms the basis for a reversal only 2% of the time.  We think this means that the balancing inquiry does not play much of a substantive role in Federal Circuit inequitable conduct jurisprudence.  To be clear, while it looks like lower tribunals need to engage in this step of the analysis, the Federal Circuit does not seem to have any jurisprudence that guides or constrains how lower tribunals actually apply this step.  Instead, balancing at the Federal Circuit looks like a formality, such as checking a box or touching a base, as opposed to a meaningful guide to determining whether a patent applicant engaged in equitable conduct.

* * *

1In other words, if a case involved a claim that four patents were procured by inequitable conduct and the court’s analysis addressed all of the patents in a single textual analysis or rationale, then a single record entry was made in the dataset.  By contrast, if the court used one textual analysis or rationale to find, perhaps, that one of the patents was procured inequitably, and then used a single textual analysis or rationale to find that the other three were not, then two record entries were made in the dataset.

The Federal Circuit and Inequitable Conduct: Part I

CAFC, Inequitable Conduct, Patent, Rantanen,

By Jason Rantanen

Professor Lee Petherbridge, Ali Mojibi and myself are circulating a draft of our paper Inequitable Conduct and the Federal Circuit: An Empirical Analysis for comment.  The underlying study examines the content of the entire body of Federal Circuit inequitable conduct jurisprudence, and the paper offers several interpretations of the reported data.

Among the most interesting are: that the Federal Circuit seems to apply a stricter standard for inequitable conduct than a substantial number of the tribunals it reviews; that the Federal Circuit’s inequitable conduct standard is applied primarily through the intent to deceive component of the analysis; and that while the apparent lack of clarity in the inequitable conduct standard may be a result of judicial variation on the court, it may also represent a preference by the Federal Circuit to effect a jurisprudential design, the purpose of which is to encourage good faith behavior on the part of patent applicants while only rarely finding inequitable conduct. 

The abstract reads as follows:

Inequitable conduct is unique judicially created doctrine designed to punish patent applicants who behave inequitably toward the public in the course of patent acquisition.  Its name alone strikes fear into the hearts of patent prosecutors, and justly so – for when successfully asserted, inequitable conduct can have devastating consequences that reach far beyond a patentee’s case.  The need for a systematic empirical study of inequitable conduct jurisprudence has become especially pressing now that the Federal Circuit is reviewing inequitable conduct en banc – in terms so broad as to be unprecedented in the history of the doctrine.  This Article reports such a study. 

The study reported here provides evidence, inter alia, that the Federal Circuit applies an inequitable conduct standard stricter than that applied by a substantial number of the tribunals it reviews.  The Federal Circuit’s stricter standard manifests primarily through the intent to deceive component of inequitable conduct doctrine.  For all intents and purposes the Federal Circuit has no substantive jurisprudence around the balancing component, and the materiality component is comparatively less impactful then intent to deceive.  The court appears to have trouble communicating its stricter standard to lower tribunals.  We offer some explanations for why this might be so, and offer some modest suggestions that might advance inequitable conduct doctrine.

The complete Article can be downloaded here.   As this is a work in progress, we are particularly interested in any comments, including alternate explanations for the results we discuss.  In addition to responding below, comments can be sent to us directly or to prm.icpaper@gmail.com.

Fujitsu Ltd. v. Netgear

Infringement, Patent, Patent Cases 2010, ,

By: Jason Rantanen

Fujitsu Ltd. v. Netgear (Fed. Cir. 2010)
Panel: Lourie, Friedman, and Moore (author)

Indirect infringement claims are particularly relevant in the context of industry-wide interoperablity standards, because frequently companies simply manufacture products capable of particular behavior while the relevant methods are actually carried out by end users.  Patent No. 4,974,952 raises an example of this issue.  The '952 patent claims a method of sending wireless messages involving fragmenting the messages in a particular manner.  Philips, the patent holder, contended that any product that complied with certain sections of the IEEE 802.11 standard infringed the asserted claims, and that by complying with the standard Netgear indirectly infringed the '952 patent (presumably by selling the accused products).

The district court granted summary judgment of noninfringement in favor of Netgear, determining that Phillips had failed to establish either contributory infringement or inducement.  On appeal, the Federal Circuit determined that the district court had erred on some points, but nevertheless affirmed summary judgment of noninfringment with respect to all but four products. 

Use of Standards to establish Direct Infringement: The court's discussion of the use of industry-wide standards to prove infringement may become the most widely-cited portion of this opinion.  After considering the parties' arguments, along with that of amicus Association of Corporate Counsel Intellectual Property Committee, the court held that:

[A] district court may rely on an industry standard in analyzing infringement. If a district court construes the claims and finds that the reach of the claims includes any device that practices a standard, then this can be sufficient for a finding of infringement. We agree that claims should be compared to the accused product to determine infringement. However, if an accused product operates in accordance with a standard, then comparing the claims to that standard is the same as comparing the claims to the accused product….An accused infringer is free to either prove that the claims do not cover all implementations of the standard or to prove that it does not practice the standard.

…

We acknowledge, however, that in many instances, an industry standard does not provide the level of specificity required to establish that practicing that standard would always result in infringement. Or, as with the ’952 patent, the relevant section of the standard is optional, and standards compliance alone would not establish that the accused infringer chooses to implement the optional section. In these instances, it is not sufficient for the patent owner to establish infringement by arguing that the product admittedly practices the standard, therefore it infringes. In these cases, the patent owner must compare the claims to the accused products or, if appropriate, prove that the accused products implement any relevant optional sections of the standard.

Slip Op. at 8-9. Applying this holding, the panel concluded that because the fragmentation feature in the 802.11 standard was optional, and (although present in the Netgear devices) was turned off by default, Phillips was required to prove that customers actually used the infringing feature. On this point, the Federal Circuit agreed with the district court that there was only evidence of actual infringing use with respect to four products.

Substantial Noninfringing Uses: The Federal Circuit applied the analysis of i4i v. Microsoft, focusing on the specific feature at issue.  Here, because the specific feature was infringing when it was activated, there was no substantial noninfringing use.

Material Part of the Invention: Phillips accused two classes of products: those that only fragmented messages and those that only defragmented messages.  Because the claims of the '952 patent were specifically drawn to the fragmenting steps, not the defragmenting steps, the district court concluded that the accused defragmenting products could not infringe.  Phillips argued that because fragmentation necessarily infringes the asserted claims, than the defragmenting products are useful only for infringement, and Netgear should be liable for them.  The panel rejected this argument: even though the usefulness of the claimed method would be lost without data receivers capable of defragmenting messages, the lack of defragmentation steps in the claims means that products that only defragment messages cannot constitute a "material part" of the invention. 

Mental State Components of Indirect Infringement: In analyzing the respective mental state components for contributory infringement and inducement of infringement, the panel found that Netgear's receipt of letters identifying the '952 patent and alleging infringement by any 802.11 compliant standard were sufficient to survive summary judgment.

Comment: my current research focuses on mental state issues in patent law, including in the context of indirect infringement.  In the near future, I'll discuss this subject in more depth. 

Other issues: In addition to the above indirect infringement issues, the Federal Circuit also concluded that the district court had erred in limiting damages based on the patent marking statute (35 U.S.C. § 287), because the claims covered a method and § 287 does not apply where the patent is directed to a process or method.  The Federal Circuit also analyzed the district's construction of relevant claim terms in Patent Nos. 6,018,642 and 6,469,993, and affirmed its grant of summary judgment of noninfringement of those patents.  The analysis in this section may be particularly relevant to those operating in the wireless technology area.

Follow-up comment: Michael Barclay also noted the importance of the standard-as-evidence holding on his blog, IPDuck.  See http://ipduck.blogspot.com/2010/09/federal-circuit-approves-use-of.html

Preambles as Limitations

Claim Construction, Patent, Patent Cases 2010,

By Jason Rantanen

American Medical Systems, Inc. v. Biolitec, Inc. (Fed. Cir. 2010)
Panel: Bryson (author), Dyk (dissenting), and Prost

It may come as no surprise that the law on whether claim preambles can serve as limitations is unclear.  The Federal Circuit is aware of this issue, and at least one judge suggests that it may be time for the court to address this issue en banc.

The patent in this case, No. 6,986,764, relates to technology for vaporizing tissue using laser radiation.  The invention can be used to treat Benign Prostatic Hyperplasia, a condition in which growth of the prostate gland restricts the passage of urine out of the bladder and through the urethra.  By vaporizing or ablating some tissue, the size of the prostate is reduced, thus reducing bladder outlet obstructions.  Although laser radiation was known in the art, various problems were associated with its use.

The inventors of the '764 patent determined that by using high "volumetric power density" (a high amount of energy delivered to a given volume of tissue) they could produce increased vaporization efficiency while minimizing one of the problems associated with the procedure, residual coagulation.  The patent is directed to various methods and devices for achieving this high volumetric power density by manipulating variables such as wavelength, output power, beam quality, irrigant composition, and distance between the optical fiber and the tissue.

The dispute on appeal hinged on whether the preamble constituted a limitation.  Claim 31 is representative of the method claims. (The apparatus claims are similar, but recite "[a]n apparatus for photoselective vaporization of tissue.")  It recites:

A method for photoselective vaporization of tissue, comprising:

delivering laser radiation to a treatment area on the tissue, the laser radiation having a wavelength and having irradiance in the treatment area sufficient to cause vaporization of a substantially greater volume of tissue than a volume of residual coagulated tissue caused by the laser radiation, wherein the delivered laser radiation has an average irradiance in the treatment area greater than 10 kiloWatts/cm2 in a spot size at least 0.05 mm2.

During claim construction, the district court determined that the preamble phrase "photoselective vaporization" was a "fundamental characteristic" of the invention, and construed the term to mean "using a wavelength that is highly absorptive in the tissue, while being absorbed only to a negligible degree by water or other irrigant."  Based on this construction, the court granted summary judgment in favor of the accused infringer.

On appeal, the majority disagreed, concluding that the preamble phrase "photoselective vaporization of tissue" does not limit the claims of the '764 patent.  The court first noted the limited circumstances in which the preamble may limit claim scope:

“Generally,” we have said, “the preamble does not limit the claims.”  Nonetheless, the preamble may be construed as limiting “if it recites essential structure or steps, or if it is ‘necessary to give life, meaning, and vitality’ to the claim.” A preamble is not regarded as limiting, however, “when the claim body describes a structurally complete invention such that deletion of the preamble phrase does not affect the structure or steps of the claimed invention.”  If the preamble “is reasonably susceptible to being construed to be merely duplicative of the limitations in the body of the claim (and was not clearly added to overcome a [prior art] rejection), we do not construe it to be a separate limitation.”  We have held that the preamble has no separate limiting effect if, for example, “the preamble merely gives a descriptive name to the set of limitations in the body of the claim that completely set forth the invention.”

Slip Op. at 8-9 (internal citations omitted).  After rejecting a prosecution history-based argument and the argument that the preamble phrase provided a necessary antecedent basis, the court determined that the phrase "does not embody an essential component of the invention":

Instead, the term “photoselective vaporization” is simply a descriptive name for the invention that is fully set forth in the bodies of the claims….The bodies of the asserted apparatus claims (claims 63-64) describe a structurally complete device, including a laser adapted to deliver “radiation at a wavelength and irradiance . . . sufficient to cause [tissue] vaporization[.]” The bodies of those claims identify the covered wavelengths by function (“sufficient to cause vaporization”), and nothing in the claim language suggests that the term “photoselective” further limits those wavelengths.

Slip Op. at 10 (internal citations omitted).

Judge Dyk disagreed.  After first noting the confusing and unclear nature of the court's jurisprudence on this issue, he suggested that the court should dispense with the current articulation and instead apply the rule that preambles always limit claims:

It seems to me that a rule recognizing that all preambles are limiting would make better sense and would better serve the interests of all concerned. There is, after all, little to be said in favor of allowing an applicant, in the claim drafting process, to include material in the claims that is not binding. If patentees are allowed to include material in the claim definitions that is not bind-ing, patentees can suggest or imply one position before the U.S. Patent & Trademark Office (“PTO”) to secure allowance of the patent on the theory that the preamble is limiting and another, inconsistent position in infringe-ment litigation on the theory that it is not limiting. Principles of fairness thus dictate that the patentee should be required to clearly define the claimed inven-tion’s scope. By creating a uniform rule that all pream-bles are limiting, we would ensure the patentee has the burden of drafting a patent that avoids confusion as to the scope of the claims….Neither the Supreme Court nor our court sitting en banc has ever addressed the preamble limitation issue. I think the time may have come for us to eliminate this vague and confusing rule.

Dissent at 3-4.  He then turned to the issue of whether the preamble phrase in this case limited the scope of the patent, and concluded that it did based on the prosecution history and what he viewed as a definition of the term in the Summary of the Invention.  He also disagreed with the majority that the district court's construction would be inconsistent with the specification. 

GPG v. ITC: Federal Circuit Review of ITC Determinations

Infringement, Patent, Patent Cases 2010,

By Jason Rantanen

General Protecht Group v. International Trade Commission (Fed. Cir. 2010)
Majority opinion authored by Judge Dyk, joined by Judge Prost.  Dissenting opinion by Judge Newman.

ITC determinations are subject to review by the Federal Circuit under the standards of the Administrative Procedure Act, which allows for de novo review of legal determinations and review of factual findings for substantial evidence.  Although the parties in this appeal largely agreed on the meanings of the relevant claim terms, the majority concluded that the ITC's infringement finding lacked substantial evidence.  Writing in dissent, Judge Newman asserted that the majority's conclusion was based on issues never raised by the appellants.  

* * * *

The three appellants in this appeal, GPG, Trimone, and ELE, import ground fault circuit interrupters ("GFCIs") into the United States.  Pass & Seymour, Inc. obtained an exclusion order from the ITC following the Commission's finding that the devices infringed three patents: 7,283,340; 5,594,398; and 7,164,564. 

On appeal, although the appellants raised "numerous issues" challenging the Commission's determination of infringement, the panel found most of them unpersuasive.  Nevertheless, the majority did conclude that the Commission had erred in some respects, finding that (1) GPG's 2003 and 2006 GFCIs and ELE's 2006 GFCIs do not infringe the '340 patent because they lack a "detection circuit; (2) Trimone's 2006 GFCI's and ELE's 2006 GFCIs do not infringe the '340 patent because they lack the "load terminals" of the patent; and (3) GPG's 2006 GFCI's do not infringe the '398 patent because they perform the function of the "latching means" in a substantially different way than the structure disclosed in the patent.  In all other respects, the court affirmed the lower tribunal's determination.

The disagreement between the majority and dissent is illustrated by their positions on the "detection circuit" claim term, although it permeates the determinations on the other two terms as well.  The Administrative Law Judge construed "detection circuit" to mean "at least one detection circuit having a circuit segment connected between the line terminals and configured to generate a predetermined signal in response to detecting a proper wiring condition, which occurs when the line terminals are connected to a source of AC power.”  Neither ELE nor GPG challenged the construction on appeal; however, they argued that the Commission erred in adopting the ALJ's infringement finding.  The majority agreed that this element was not infringed: 

The construed claims require the “detection circuit” to “generate a predetermined signal in response to detecting a proper wiring condition.” Initial Determination, slip op. at 85 (emphasis added). But as Dr. Harman’s own testimony makes clear, his “predetermined signal” is merely the “current flow” originating from the hot line terminal. J.A. 40,396. The identified circuit does not generate this current; it is the current that comes from the AC power connection. So instead of detecting a proper wiring condition and generating a signal in response, as the properly construed claim requires, the accused GFCIs simply have power to operate, or not. Dr. Harman’s testimony is not substantial evidence to support a finding that ELE’s 2006 GFCIs infringe claims 14, 18, and 30 of the ’340 patent.

(Slip Op. at 9).  The majority applied similar reasoning with respect to GLG. 

In describing both ELE and GPG's arguments, the majority paid particular attention to the dissent's assertion that the appellants did not raise this issue, responding in a footnote that:

The dissent suggests that the parties did not raise this argument, but ELE clearly argued that “[b]y treating the ‘predetermined signal’ as including whatever AC power happens to arrive at a building from the local power plant, the Commission has broadened this limitation beyond all recognition and effectively reads it out of the claim.”

(Slip Op. at 8, fn. 3).

In a strident dissent, Judge Newman took a significantly different view of the ITC decision and majority opinion on appeal:

The Initial Decision of 170 pages and the Commission’s supplemental rulings of 32 pages present a full understanding of the technology, with rigorous discussion of the evidence and extensive analysis, findings, and conclusions. This court now finds its own facts, applies theories that were not raised by any party, uses incorrect standards of review, and creates its own electrical technology contrary to the uniform and unchallenged expert testimony.

(Dissent at 2).  With respect to the majority's "detection circuit" reasoning, after an extensive discussion of the Commission findings, Judge Newman concluded that:

[t]he court creates a theory not proposed by any party, and rules that a signal that originates from the line terminal is not generated by the detection circuit and thus is not “generated.” See Maj. Op. at 9 (“The identified circuit does not generate this current; it is the current that comes from the AC power connection.”). There is no support for this theory. The only signal generated in response to proper wiring as described in the ’340 patent is “generated” in the same way as in the accused devices, that is, the detection circuit uses power from the properly wired line terminals to supply a signal (claim 14) or response (claim 30) that allows the device to be reset. That is how the Commission, and the parties, interpreted the term. The court’s new interpretation of “generate” was not debated and is not briefed.

(Dissent at 8-9).

Notes:

  • I understand that Pass & Seymour is seeking a rehearing and rehearing en banc on the ground that the majority's approach is in conflict with the APA, and intends to raise the argument that the court based its determination on issues not preserved or presented by the parties, thus unfairly prejudicing the party against whom the issues were decided and wasting the resources of the parties and ITC.
  • The Federal Circuit also issued a companion opinion addressing Pass & Seymour's appeal from the ITC's determination that GPG's 2003 devices and Trimone's 2006 devices do not infringe the '398 patent, and that ELE's 2003 and 2006 devices, GPG's 2003 and 2006 devices, and Trimone's 2006 devices do not infringe Patent No. 7,212,386.  The appeal turned on questions of claim construction, with the majority opinion affirming the ITC's constructions largely by applying a "plain meaning" approach.  Judge Newman concurred in the result, but took the position that, with respect to the '386 patent, the majority should have adhered to the Commission's construction, rather then adopting its own construction. 

False Marking Claims: Standing

False Marking, Patent, Rantanen, Standing

By Jason Rantanen

Stauffer v. Brooks Brothers, Inc. v. United States (Fed. Cir. 2010)

Raymond Stauffer brought an action against Brooks Brothers claiming that bow ties sold by the defendant were falsely marked with patents that expired in 1954 and 1955.  Stauffer is a patent attorney who purchased some of the marked bow ties.  The district court granted Brooks Brothers' motion to dismiss for lack of standing, and subsequently denied the United States' motion to intervene.  Stauffer and the United States appealed.

Section 292 states:

(a) . . .
Whoever marks upon, or affixes to . . . any unpatented article, the word “patent” or any word or number importing that the same is patented, for the purpose of deceiving the public
. . .
Shall be fined not more than $500 for every such offense.
(b) Any person may sue for the penalty, in which event one-half shall go to the person suing and the other to the use of the United States.

(emphasis added).  This type of language is called a "qui tam" provision, by which the government  essentially asigns its rights to a private party (the qui tam "relator").  Because the relator is standing in the place of the United States, he or she must prove that the government, as opposed to the relator, satisfies the requirements for standing.  Central to this case was the district court's determination that Stauffer failed to sufficiently allege that the United States suffered an injury in fact from Brooks Brothers' alleged false marking. 

On appeal, the Federal Circuit concluded that the district court had erred on this point:

Congress has, by enacting section 292, defined an injury in fact to the United States. In other words, a violation of that statute inherently constitutes an injury to the United States. In passing the statute prohibiting deceptive patent mismarking, Congress determined that such conduct is harmful and should be prohibited. The parties have not cited any case in which the government has been denied standing to enforce its own law. Because the government would have standing to enforce its own law, Stauffer, as the government’s assignee, also has standing to enforce section 292.

Slip Op. at 9.

The panel rejected Brooks Brothers' reliance on Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992), which denied plaintiffs standing under a citizen-suit provision, as relating only to suits against the government itself.  It also rejected the argument that Stauffer's standing depends on whether the alleged injury is proprietary or sovereign, concluding that both types of injury are sufficient to confer standing on the government, and therefore on the relator. 

With respect to the Government's request to intervene, the Federal Circuit determined that the district court  erred in concluding that the government lacked an interest sufficient to intervene as a matter of right under Rule 24(a)(2).  The panel stated that:

Contrary to Brooks Brothers’ position, the government has an interest in enforcement of its laws and in one half the fine that Stauffer claims, disposing of the action would “as a practical matter impair or impede the [gov-ernment’s] ability to protect its interest,” and Stauffer may not adequately represent that interest….As an initial matter, Brooks Brothers does not contest the government’s assertion that Stauffer does not adequately represent the United States’ interest in this case.

Furthermore, the government would not be able to recover a fine from Brooks Brothers if Stauffer loses, as res judicata would attach to claims against Brooks Brothers for the particular markings at issue….Thus, even though, as the district court noted, “the issue of the government’s ability to bring an action pursuant to section 292” in general was not presented,[] the United States’ ability to protect its interest in this particular case would be impaired by disposing of this action without the government’s intervention. We there-ore reverse the district court’s decision denying the government’s motion to intervene.

Slip Op. at 15-16 (internal citations omitted).

Note: The Federal Circuit expressly declined to address several issues, including  the constitutionality of Section 292(b) (an issue that was raised by amicus Ciba Vision Corporation), whether section 292 addresses a proprietary or a sovereign injury, or both, and whether Stauffers alleged injuries to himself, or his asserted injuries to competition, give him standing.  In addition, in its remand the panel explicitly instructed the district court to consider Brooks Brothers' motion to dismiss pursuant to Rule 12(b)(6), which argued that the complaint fails to allege an intent to deceive the public with sufficient specificity.

Transocean v. Maersk: Speeding Up Deepsea Drilling

Enablement, Infringement, Obviousness, Patent, ,
By Jason Rantanen

Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc. (Fed. Cir. 2010)
Panel: Gajarsa, Mayer, Moore (author)

Drilling rigTransocean brought suit against Maersk for infringement of three patents relating to an improved apparatus for offshore drilling.  Offshore drilling involves lowering a variety of equipment, including the drill bit, a series of long pipes, and a blow-out-preventor, to the ocean floor in order to drill and stabilize a borehole that reaches a subterranean oil reservoir.  These components are moved by a derrick (the tower on the picture to the right), which is equipped with a station that raises and lowers them to the ocean floor.  To begin the drilling process, the rig lowers the drill bit to the ocean floor, adding sections of pipe until the bit reaches the floor.  Periodically as the drill descends into the seabed, it must be brought back up to the surface so that casings can be inserted into the borehole.  Conventional rigs utilized a derrick with only a single station for performing these steps, thus requiring that they be performed sequentially – a time consuming process. 

The patents-in-suit describe a derrick that includes two stations – a main advancing station and an auxiliary advancing station – that can each assemble the strings of drilling materials and lower them to the ocean floor.  According to the patent, this "dual-activity" rig can significantly decrease the time required to complete a borehole.  The accused infringer, Maersk, contracted with a U.S. company to build a rig with two stations for use in the Gulf of Mexico.  However, prior to delivery of the rig, Maersk implemented a modification that, it argued, precluded Transocean from claiming infringement.  It also argued that the claims were invalid.

The district court granted summary judgment in favor of Maersk, holding that the asserted claims were obvious and not enabled.  The court further ruled that Maersk's activities did not constitute either an offer for sale or a sale within the United States.  Transocean appealed these rulings, along with the district court's grant of summary judgment of collateral estoppel and no willful infringement.

Obviousness
The Federal Circuit's obviousness ruling is notable because, although it found that the references cited by Maersk created a prima facie case of obviousness, it concluded that the district court had erred by ignoring Transocean's significant objective evidence of nonobviousness.  This included evidence of industry skepticism about a dual drill string approach, industry praise for its dual activity rig, copying, and commercial success, in that its dual activity rigs commanded a higher licensing premium then standard rigs.  Although Maersk presented counter evidence, the Federal Circuit concluded that it was improper to resolve these disputes on summary judgment. 

Enablement
The Federal Circuit also reversed the grant of summary judgment of lack of enablement, finding that factual issues precluded such a ruling.  In particular, it noted that while the patent must enable one of ordinary skill in the art to practice the claimed invention without undue experimentation, it does not need to enable the most optimized configuration (unless it is an explicit part of the claims). 

Infringement
The district court's noninfringement ruling did not rest on a comparison of the accused device to the claim, but rather on a conclusion that there was no offer for sale or sale within the United States.  Although the contract at issue was between two U.S. companies, and specified an "Operating Area" for the rig that was in U.S. territorial waters, it was negotiated and signed outside of the United States.

The Federal Circuit disagreed that these activities fell outside the scope of 35 U.S.C. 271(a).  With respect to the "offer for sale" provision, after reviewing the legislative history of this language, analyzing its literal text, and considering the policy implications, the court concluded that it covered a contract between two U.S. companies for performance in the U.S., regardless of whether it was negotiated or signed within the U.S.  Likewise, the court concluded that, because the contract was for the sale of a patented invention with delivery and performance in the U.S., it constituted a sale for purposes of 271(a) as  a matter of law.

Note: Although the court used the term "patented invention," it was careful to note that there remained a dispute over whether the rig described in the contract actually infringed the patents-in-suit.

The Federal Circuit did, however, affirm the district court's ruling that Transocean was collaterally estopped from arguing that the rig Maersk ultimately delivered infringed the patents.  In another litigation, Transocean had obtained by an injunction requiring the defendant GlobalStantaFe Corp. ("GSF") to make a particular modification to its rig in order to avoid infringing the patents-in-suit.  Prior to delivering the rig to the United States, Maersk had learned about this injunction and made the relevant modification.  The Federal Circuit concluded that the ruling in the GSF litigation estopped Transocean from arguing that rigs with the modification infringed its patents.

The panel also affirmed the district court's ruling of no willful infringement, concluding that Maersk's activities were insufficient to create an objectively high risk of infringement.