General Protecht Gp. (Zh. Dongzheng) v. Leviton Mfg. (Fed. Cir. 2011)
By Dennis Crouch
Note: This is an important case that clarifies a Federal Circuit rule of contract interpretation. The court holds here that a patent license will be presumed to cover continuation patents claiming priority to the licensed patent. Contracting parties can overcome this presumption by including within the contract “clear indication of mutual intent to the contrary.” This case should be read in conjunction with TransCore v. Electronic Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009). In TransCore, a seeming clear statement that the license did not “apply to any other patents [already issued] or to be issued in the future” was insufficient to overcome the presumption that future continuation applications were included within the license. In both TransCore and GPG, the presumption is derived both (1) from a reading of the terms of the written contract and (2) from equitable estoppel principles.
The case is also notable for its approval of the use of a preliminary injunction against the parties to stop proceedings occurring in a separate judicial forum.
* * * *
Background: In a prior lawsuit, Leviton sued GPG for infringing two of its circuit interrupter patents. Prior to trial, the parties settled and Leviton issued a covenant not to sue GPG or its customers on the patents-in-suit. The settlement also included a venue clause – indicating that any dispute would be “prosecuted exclusively in the U.S. District Court for the District of New Mexico.”
After the settlement, Leviton continued to prosecute continuation applications stemming from the original patents and, in 2010, filed complaints in both the International Trade Commission (ITC) and the Northern District of California against GPG for infringing two of the continuation patents.
In response, GPC filed a declaratory action in the New Mexico court and persuaded the judge there to issue a preliminary injunction barring Leviton from pursuing its claims in either the ITC or California. GPC argued that the prior settlement implicitly provides the company with a license to the newly issued patents and that, according to the prior settlement, any dispute regarding the license must be decided by the New Mexico court.
On appeal, the Federal Circuit affirmed lower court’s preliminary injunction.
This case presents a non-frivolous dispute regarding the scope of a patent license. The outcome of that dispute will determine whether the patentee can sustain its suit for infringement. Thus, there is no question in this case that the dispute “relates to or arises out of” the Settlement Agreement. The forum selection clause therefore applies, and the district court did not abuse its discretion in granting the preliminary injunction on that basis.
GPC’s implied license argument is non-frivolous based upon the Federal Circuit’s decision in TransCore v. Electronic Transaction Consultants Corp., 563 F.3d 1271 (Fed. Cir. 2009). In that caes, TransCore had previously settled a lawsuit that gave ETC (through MARK IV) a license to practice the patents in suit. The settlement specifically stated that the covenant not to sue “shall not apply to any other patents issued as of the effective date of this Agreement or to be issued in the future.” However, when TransCore’s continuation patent later issued, the Federal Circuit held that the new patent was also covered by an implied license and through legal estoppels. Here, the court found that the same principles apply.
From our holding in TransCore it reasonably follows that where, as here, continuations issue from parent patents that previously have been licensed as to certain products, it may be presumed that, absent a clear indication of mutual intent to the contrary, those products are impliedly licensed under the continuations as well. If the parties intend otherwise, it is their burden to make such intent clear in the license. It is well settled that parties are free to contract around an interpretive presumption that does not reflect their intentions.
Affirmed.
Note: The preliminary injunction issue (esp. irreparable harm) is to be discussed in a separate post.
Thanks, but I’ve said what I have to say, and your stuff is apparently above my reading level – for all its clarity, I just can’t get through it. My friend’s son Stephen would probably understand it; he fancies himself a writer, but I don’t get his stuff either.
I’ll let someone smarter than me talk now, as I’m off to the butcher to buy a pork kidney to fry up for a late breakfast. Sarah?
Here is a Gem for my community. There is a park where everyone tries to set up Yard Sales. They run them off after it gets overwhelming. I suggest you allow parks like these once a month setups for 5.00. 30 or 40 vendors.. that ought to pay for the gas that is used to mow area Cemeteries’ and other areas that are kept up by the county. There are so many things we can do in all levels of government to meet some of the demands on them as we go through this crisis.
And by the way if you are caught littering you ought to be given a weekend job of cleaning up where you littered. Wow how clean it will become after those that litter are pictured in their County or Town Paper.
“but you’re not much fun to talk to.”
Stop taking this so personally – the fun is in the issues. Just because you have subscribed to a view that you cannot defend, does not mean that you cannot have fun.
Don’t give up so easily on defending your views.
Maybe letting the Cat out of the bag at this juncture is too much. Correcting the problem is what you need to do. We are all important.
On another note, this is what congress needs to do.
Remember when your child was given a decision to make- you can have this or you can have that-not both?
This is what you do. Create a panel of 9.
Example: Post Offices good idea.
To the People. You can have a Post Office real close, or you can have your full Entitlement. You can have Saturday mail but less entitlement. You can have home delivery with less entitlement, or you can have a box at the end of your street set up for delivery to all. This is how you do it. Tough choices with decisions that have to be made. I am sure if you give the people a choice they will make the decisions with you. And the Party lines will get less rigid as we do. Simple!
Perhaps you’ve achieved that clarity you prefer, but you’re not much fun to talk to. Have a nice weekend, though!
“most expeditiously disposes of the second dispute. How’s that?”
Same thing in different words. Well actually, now even less clear as by leaving out who brings the second dispute you impugn the ability of the court to play its proper role no matter who brings the action. You now have only arrived at the incorrect place of trying to legislate the types of suit that can be brought in the first instance in a more flagrant manner of abrogating the purpose of the courts.
As I mentioned, such shortcuts do not work to bring about justice and that is what the courts are for. Wanting less activity in the courts cannot be accomplished by denying the rightful place of people to be in those courts. You (with purposeful personification) must do better.
As it is, you exhibit a bias against the patentee above in thinking that a patentee bringing the suit must have the onus of foreseeing all clarity (or possible non-clarity) in a contract. And as I indicated (but was not evidently specificly enough) the rules of contract interpretation already cover this (the specific being that any ambiguity in the terms are decided against the drafter of the contract). The point to be made here, though, is that the court’s call for clarity is mistaken. The court’s rationale is based on an errant application of existing case law. The court has played the role of judicial activist in making existing patent and contact law into a nose of wax, and then tweaking that nose to arrive at the conclusion it wants to arrive at. Both parties signed the contract – both had a chance to perform due diligence and it was the defendant that lacked the “proper” performance (I notice that you have no rebuttal to this point – should I assume that you agree with me?).
A further thought for consideration on the error of trying to protect “the product.” While the court here expands the scope of the contract to include anything that has a relation to the patent disclosure (as opposed to the patent claims in suit), the rationale for such an expansion can equally be applied to cover any other patents not so related to disclosure, but that still cover the product. After all, if the perceived intent of the parties is to allow the defendant to sell the product without fear of suit, than all patents that could possibly be used in suit on that product must have been thought to have been included for that aim. Otherwise, we still have the same effect of frustration of the defendant.
Those who partake in patent pools, even those who have patents on complex devices will, I am sure, have serious issues with this type of reasoning and judicial activism.
Yes – I see that “personalizing” makes for a more likely response to trigger an overly defensive response. As I said – you recognize this but fall prey to that very effect. There is no need here to become overly defensive, and de-personalizing tend to result in writing that is more circumspect, and thus, less clear. I prefer the clarity even at the risk that you might be slightly offensive to the other person in the exchange.
As far as the court “picking a winner” – I think you still got this wrong. It is not about the court picking a winner as much as it is picking a set of extrinsic rules and following those rules – no matter who is the winner. Here, as has been shown, an exsting rule was simply incorrectly applied. The rule was not followed and it appears that the reason why the rule was not followed was because the judges wanted a specific result.
As to the “personalization effect” – it appears that you are falling to the same “sensitivity” factor that you note in your opening remarks.
Does it? I’m afraid I’ve left a false impression, then, as I’m not the slightest bit offended, so far.
I think it best that you follow your own advice in this regards.
Ok, thanks! But what was my own advice in this regards?
I doubt that these posts are meant as personal attacks.
I doubt it, too. I was merely trying to gently point out that arguments that refer to the person (e.g., “you make this mistake,” “your thinking is flawed,” “you are biased towards so-and-so,”etc.) are naturally going to trigger an overly defensive reaction, as compared to arguments that focus exclusively on the issues. That’s been my experience, anyway.
Public policy, at least in this instance, seems to flow from some sense of inequity being done (the defendant is getting the shaft because the same product is being sued on)…
Perhaps, but my previous argument does not rely on that sense of inequity. In the case of an ambiguous contract, someone is going to get shafted. The court has to pick a winner. Where the equities are equal, which should it pick? I’m simply arguing that in that case, it should adopt a rule that tends to reduce litigation, by putting the burden on the patentee to make the license clear. I’m not arguing that this is fair; it probably is not. I’m arguing that it makes the best sense. Again, however, all of this only makes sense if we accept the premise that the contract is not already clear on this point. You’re free to not accept it.
I disagree and point out that you posit an impossibility as there is no way to determine which of the two sides is most likely to be the plaintiff in the future.
Really? As between two parties where only one has asserted a property right by filing suit, it’s not a teensy bit more likely that the patent owner will be the plaintiff in any future suit between those parties? Since I can’t provide any statistics, I’ll have to defer to you on this point. Accordingly, I’ll change my argument slightly – it’s not that the court should put the burden on the most likely plaintiff, but that the court should adopt the rule (lack of clarity favors the licensee) that most expeditiously disposes of the second dispute. How’s that?
“Your points are well taken, but I thought my argument was focused more on public policy than on equity. Ignoring for the moment the virtues that flow from the general enrichment of trial attorneys, I think it’s safe to say that society is better off with fewer lawsuits, everything else remaining equal.”
Public policy, at least in this instance, seems to flow from some sense of inequity being done (the defendant is getting the shaft because the same product is being sued on) – I see how New Light is treating your position based on the legal logic and separating out the emotional stand.
As for being better off with fewer lawsuits, while in agreement with the premise, I would disagree that the end would justify any means. In other words, where a lawsuit serves the purpose of having courts in the first place, it is unwise to simply force a minimization of the occurance of lawsuits generally and thus override the purpose of the courts’ existence. Such shortcuts do not lead to justice, the purpose of having courts.
“Thus, I’m suggesting that a rule of contract interpretation that puts the burden of clarity on the party that is most likely to be a future plaintiff might be a good idea”
I disagree and point out that you posit an impossibility as there is no way to determine which of the two sides is most likely to be the plaintiff in the future. This type of “prejudging” is wrought with imparting value judgements on the types of actions that can, or “should” be brought to a court. The system already has mechanisms in place that control this. As such, both sides must be held equally responsible. To babysit one side or the other is not the role of the courts. Is this a case of actual injustice or a case of a side making a bad deal? I lean towards the bad deal side because, as noted, some minimal level of due diligence would have prevented this case landing back in court. Why are you so quick to excuse the defendant’s lack of due diligence?
“I think this contract was less than crystal clear.”
No contract is ever crystal clear – All contracts that end up in court are there because the parties disagree on something. Once again, you seek the impossible. While I agree with the ultimate state you seek, I cannot agree with the necessary ignoring of reality that you engage in. The fact that extrinsic rules of contract interpretation exist at all speak to the fact that the level of “crystalness” you would desire is just not possible. All that remains is deciding how to judge issues left not so clear. And the system already exists to do so. I would agree with the others that the changes invoked in this decision – based on the reasoning presented, make the overall arena of contract and patent law less clear; as has been pointed out – this decision does not apply the controlling case law correctly. The judges arrive at their wanted result (which may indeed be the right result), but they do so in an apparently improper manner.
As to the “personalization effect” – it appears that you are falling to the same “sensitivity” factor that you note in your opening remarks. I think it best that you follow your own advice in this regards. I doubt that these posts are meant as personal attacks.
The fact that you think products were protected as opposed to actual suit based on claims only shows that you have fallen to the same logical mistake as the judges did here (I admit it is easy to feel sorry for someone, but feeling sorry is not the same as justice).
Respectfully, I think you have fallen to the logical mistake of confusing the argument with the person. I raised some points in opposition to yours, as any good advocate should be able to do. Why do you insist on personalizing the discussion, rather than keeping the focus on the arguments? In fact, you have no idea what I think or how I feel. At least, I think you don’t…
Anyway, thanks for the comments. Your points are well taken, but I thought my argument was focused more on public policy than on equity. Ignoring for the moment the virtues that flow from the general enrichment of trial attorneys, I think it’s safe to say that society is better off with fewer lawsuits, everything else remaining equal. Thus, I’m suggesting that a rule of contract interpretation that puts the burden of clarity on the party that is most likely to be a future plaintiff might be a good idea. If you take the position that the contract was crystal clear as it was, then this approach (and the court’s) makes no sense. However, (and now I’m telling you what I really think), I think this contract was less than crystal clear.
Leopold,
I must admit to being one of the sensitive ones posting on this blog. I guess that comes from the expectation that I am dealing with professionals and professionals do not purposefully mistate law or cause confusion, but rather work towards understanding – even when that understanding requires emotionally held beliefs to be surrendered and changed. I try to not get too emotional myself, realizing there are those who rather enjoy the mischief – I just make it a point to not interact with those types (or to do so as little as possible).
Be that as it may, I think that you are raising a decent counterpoint, but one that I would reject as placing “equity” – or at least the perception of “equity” from only one side of the equation over the right and ability to contract tha tboth sides agreed to willingly.
Further, I wish to avert (or at least highlight) what I see as dangerous error. When the courts get to the point of not understanding what patents entail – of when continuations are possible (and existing) and when they are not – and forcefeed opinions that worsen actual contract law, rather than admit that someone made a bad deal, we approach a type of nanny-state, and we make patent law even more difficult and noncongruent with other law.
In fact, there is another point that I disagreed with in the present decision – the logic used by the court in section i. There, they make a point that language could have been used, but the parties did not use that language. However, I believe this to be exactly 180 degrees misapplied. That portion of the contract had the express language of what would not be sued upon. Had the parties actually had the intent, the parties should have made sure that language was used that expressed that intent that further non-suit was to be based on more than the claims at hand – but would be based on the disclosure and any future patents that may arise. This would have been simple enough – and quite in fact, would have been very much like the language in the controlling case that I point out was flubbed by the court. The fact that this language was not used, that active and alive applications related to the patents at issue, were not expressly included by either party, should be indicative that the parties did not contemplate their inclusion in the license.
The danger in backing up too much is losing sight of what actually happened – the actual words used in the agreement. The courts should not babysit those who are represented by counsel in a litigation matter, when both parties have the option of agreeing to the terms or not signing up to those terms. No one forced the defendant to not do a better job of due diligence and include still active patent applications (or the actual similar language as found in the actual controlling case law). To give you an anwer, I believe that both parties are responsible for understanding the clarity of what they are agreeing to. Is it too much to ask that any active related patents and patent applications be inserted into the agreement by the defendant? I too may feel sorry for them, but I feel worse for everyone else that now must suffer because the judges are compelled to use reasoning that is plainly not satisfying for a critically thinking legal professional.
As to your idea that a defendant expect that anything in a patent application outside of the actual claims at suit to be covered by the agreement to not sue (on the express claims as agreed to in the license settlement) asks too much. One way to think about the “equity” of this situation is to reverse the roles in a fashion and ask yourself if you would be fine allowing someone to sue you for patent infringement based not on what was in the actual claims, but rather what was merely disclosed in the patent application. I think the clarity of that answer should be savored. As I mentioned above, not keeping the distinction between the claims and the disclosure straight makes a mockery of the “dedicated to the public” and fair notice doctrines. Why is one way – favoring one side more equitable than the other? I would hold that it is not. If they had agreed to a license – based on that “precisely the same disclosure”, rather than on the claims in suit, then the Judges would have found that way and there would not be a need to twist the noses of both Patent law and contract law. But that was up to the parties to do – not a nanny court, tha tot reach the decision they have, must make such weak arguments (i and ii).
The fact that you think products were protected as opposed to actual suit based on claims only shows that you have fallen to the same logical mistake as the judges did here (I admit it is easy to feel sorry for someone, but feeling sorry is not the same as justice). Patent professionals should not fall to that mistake. And we should not accept the explanations of those that do without at least noting the plain error.
I do hope that this is not the last chance that the courts have in deciding this matter. I hope that they can correct their error (if indeed there is one – I note that I do not have all the facts of that nondisclosed settlement agreement). At the very least, I hope the faulty reasoning is recognized and not repeated in future cases.
Garbled that a bit. I meant: It’s not crazy for the defendants to think that the settlement agreement resolves the case, and allows them to continue selling/making their electrical thingamabobs. But then the same plaintiff comes after the same products, over patents that are based on precisely the same disclosure! …
New,
Those are some pretty good arguments, and I don’t disagree that the Federal Circuit could have taken the technical route that you do. But, is it not fair to back up a little, as the Federal Circuit did, and ask what the settlement agreement was supposed to do? It’s not crazy for the defendants to think that the settlement agreement resolves the case, and allows them to continue their electrical thingamabobs. But then the same plaintiff comes after the same products, over continuation products! Doesn’t somebody have an obligation to make the settlement agreement clear? Sure, there’s fault on both sides as to this agreement, but isn’t it good public policy to discourage repeat litigation that could be avoided by just a little care in drafting agreements?
People here seem to be a little sensitive, so please rest assured that I’m not attacking you. Just asking for your thoughts.
Is it putting too fine a point on things to point out that Continuations and Divisionals only come from applications and never from patents?
Once you have a patent, then your chain is finished at that link – if the license is to a patent, then any further Coninuations or Divisionals would have had to have come from the application (prior to that application actually maturing into a patent).
Now this may be moot, as most good licensing contracts are appropriately drawn to all issued patents, any live applications and any future applications stemming from those live applications; but then again, since it appears that this license was drawn up after patent grant due to a previous litigation settlement agreement for infringement of U.S. Patent Nos. 6,246,558 and 6,864,766, this may not be a moot point.
The language of Transcore seemingly most on point here: “shall not apply to any other patents . . . to be issued in the future,” is language that I think is flubbed in the instant decision.
Levitron’s second argument “(2) the manifest mutual intent of the parties in the present case was to convey narrower rights than were conveyed in TransCore such that no license can be implied here” sounds in this vein.
The court confuses claims and disclosure – as the settlement agreement sounds to patents (and thus to claims). It is well known that not everything in a single patent – as covered by its claims can be sued upon. The notion of unclaimed matter devoted tot the public evinces this. This decision seems to “derogate’ this well known doctrine, and conflate the patent under license with the broader disclosure merely supporting the patent. The mere fact that the court mouths the words “it reasonably follows” does not make it so. The freedom to contract should be interpreted to the chosen words – and those words here seem to be patent (and not patent disclosure). The court’s reasoning at page 12 – that Transcore did something else – are just not to the proper point of the express language in Transcore that seems missing in this case.
Section ii of the court’s reasoning is not satisfying. To me, this stretches into judicial activism and rewrites the contract to include express language equivalent to “shall not apply to any other patents . . . to be issued in the future,” which may (or conceedingly may not) be absent.
Whether or not the same products are implicated confuses what a patent does and misses another well-known patent concept that a product maybe covered by more than one distinct patent, and a license to any one patent may not mean that a product can then be utilized.
Put simply, inventive subject matter just is not the same thing as claimed invention. If the two were indeed the same, then the Office should have required terminal disclaimers.
And I think this is another, better way of looking at this situation, but terminal disclaimer is not discussed. If, as the New Mexico district court did find, that GPG must practice the ’124 and ’151 patents to obtain the benefit of their bargain to practice the ’766 and ’558 patents, then this requirement not to abrogate the agreed to rights of the actual patents would transcend the whole continuation/division labeling discussion, and is a more satisfying basis than rewriting contracts. However, I would view this as having necessarily been found by the Patent Office with a requirement for terminal disclaimer. I do not know if the district court used this reasoning, but it did actually “[find] this condition met, the court ruled in GPG’s favor.”
Patent 7,463,124 does have a terminal disclaimer, but 7,764,151 does not.
The contract in GPG was entered into before TransCore was decided.
Ned, I do not disagree. (How’s that for a ringing endorsement?) I think that willfully calling a CON a DIV would be a foolish thing to do, especially since the terminal disclaimer needed to overcome the obviousness-type double patenting issue in this case would usually have no significance whatsoever.
Have a nice weekend!
It also necessarily held that patents which do not dominate are not licensed.
I’ve read that case, too, Ned. I respectfully disagree. At most, the Transcore court said that because the later application dominated the licensed patent it was clear that Transcore was estopped, since otherwise it would be derogating from the rights previously granted. The court did not purport to put limits on the extent of those rights – it did not need to do so to reach its holding. This new case is broader, but not inconsistent.
Leo, then you agree that my initial concern is well founded. Under this holding, even divisionals will be implicitly licensed.
I think the Supreme Court would have significant problems with this case. At least it the Feds should have a chance to correct their error before it goes that far.
Leo, Just one more point we should discuss here. The labels can be misleading. I agree that whether a continuation is in fact entitled to the status of a divisional is subject to question in court or in the Office, but the converse is not, I submit, true. If a practitioner willfully labels a continuation as a divisional without any basis in fact for that label, I would suggest that he is engaging significant misconduct that should subject the practitioner to some sort of discipline. I don’t know, given Therasense, that such misconduct would be sufficient to render any patent unenforceable, but it is close to that.
Leo, Transcore relied on the requirement that the later patent dominated the licensed patent. It also necessarily held that patents which do not dominate are not licensed. This case is not consistent.
Thus, there is no basis in this holding to exclude divisionals. The holding depends upon the disclosure, not upon the claims.
I agree completely. As far as I can tell, the holding does NOT exclude divisionals.
My point is that the substance of the holding, to the extent it implicitly relies on labels (divisional vs. continuation) rather than substance of what is claimed, is irrational.
That would be an excellent point, if the holding implicitly relied on labels. But it doesn’t.
They problem with your “thinking” Leo,…
What’s up with the “thinking” in quotes, Ned?
Licenses or settlements relying on the principles of Transcore are now undone.
Transcore already established that it was possible to grant an implied license if you weren’t careful. I agree that the new decision is broader, but it’s hard for me to muster a lot of sympathy for anyone who “relied on the principles of Transcore” and thus, presumably, intentionally failed to explicitly address the status of CONs and DIVs in a settlement agreement.
They problem with your “thinking” Leo, is that this holding retroactively applies to all covenants not to sue, and, as you note, it not only extends, its prior holding in Transcore, it, I would argue, undermines its rationale and is inconsistent with it. Licenses or settlements relying on the principles of Transcore are now undone.
This holding is as bad as the holding in Film Tec, which, through its loose discussion of the issues, undid at least two centuries of well established law that present agreement to assign future invention provided only equitable and not legal title. These distinctions are not unimportant. They are critically important.
Leopold, I think you misunderstood my post. I said that what they said about continuations, that “by definition, continuations can claim no new invention not already supported in the earlier issued patents” (a direct quote) is equally true of divisionals. Thus, there is no basis in this holding to exclude divisionals. The holding depends upon the disclosure, not upon the claims.
My point is that the substance of the holding, to the extent it implicitly relies on labels (divisional vs. continuation) rather than substance of what is claimed, is irrational.
Ok, now I’ve read the case.
No, the court’s decision does not turn on whether the later application is a CON or DIV. The court simply says that a licensor who wants to exclude a CON or DIV must go out of his way to make that clear.
The holding of the court is tantamount to saying that a judgment of non infringement is res judicata against a subsequently issued continuation without regard to whether there was a terminal disclaimer involved or any inspection of what was actually claimed.
Not at all. The court decided that it doesn’t matter what was claimed in the respective applications, for the purposes of determining whether a license is implied. In that respect, it appears to have broadened its holding from Transcore.
The holding of this court is tantamount to saying that exhaustion applies to unlicensed continuation patents for the same reason without ever looking at the claims.
No, not really. If you grant an implied license to the continuations, they’re not “unlicensed,” are they? Nothing prevents you from saying: “Licensor does not grant, and Licensee does not receive, a license with respect to any continuations, divisionals, or continuations-in-part of the Licensed Patents.”
Dennis was right, this is an important case. But the sky is not falling. At least this part of the sky is not falling.
waah?
Sigh. I guess I’m going to have to read the case …
The only important distinction that I’m aware of is that a true divisional, resulting from a restriction, is “immune” from an obviousness-type double patenting rejection. But that should be a simple question of fact, apart from whatever label the applicant puts on the application. Perhaps there are other distinctions.
Can someone (other than Ned, who is at a loss) who has actually read the case tell us whether the court’s holding really turns on the distinction between a CON and a DIV?
XMNR: “Is it not true that applicant may designate an application filed as a result of a restriction as CON and, conversely, a straight-up continuation (no restriction) as a DIV?”
Only through error.
If it is the label “continuation” rather than “division” that is the basis for this court’s holding, they are making a mokery of our legal system.
The holding of the court is tantamount to saying that a judgment of non infringement is res judicata against a subsequently issued continuation without regard to whether there was a terminal disclaimer involved or any inspection of what was actually claimed.
The holding of this court is tantamount to saying that exhaustion applies to unlicensed continuation patents for the same reason without ever looking at the claims.
The more one thinks about this case, the more one finds fault.
Only through error.
If it is the label “continuation” rather than “division” that is the basis for this court’s holding, they are making a mokery of our legal system.
Is it not true that applicant may designate an application filed as a result of a restriction as CON and, conversely, a straight-up continuation (no restriction) as a DIV?
The patentee argued that the continuations involved new limitations not found in the licensed patents, essentially that the continuations claimed different inventions. This argument would perhaps have had more weight had the asserted patents been divisionals. But the holding in this regard becomes unclear when considering what Federal Circuit actually stated. It stated that the continuation had the same “disclosure as the previously licensed patents and that, by definition, the continuations can claim no new invention not already supported in the earlier issued patents.” This statement is equally true of divisionals, which by definition claim different inventions. Perhaps the federal circuit meant to say that the continuation must be directed to the same invention as disclosed and claimed in the parent. But they did not say that.
I am at a loss as to what to think about this case.
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