Rosco and Mirror Lite are competitors in the school bus mirror market.Rosco sought a declaratory judgment that Mirror Lite’s mirror patent was invalid, and Mirror Lite counterclaimed for infringement of the patent.
Rosco argued that prior to the date of invention,it conceived, reduced to practice, and sold mirrors as in the patent, thus rendering the patent invalid under 35 U.S.C § 102(a) (e.g., known or used by others).The trial court held the patent invalid.However, on appeal, the Fed. Cir. found that testimonial evidence of invalidity must be corroborated.
Weight of the Evidence: The trial court relied upon two pieces of evidence, other than Rosco’s testimony, to find that Exhibit 110, an example of the alleged prior art mirror, disclosed a decreasing radius of curvature as in the patent: testimony of Rosco’s patent expert (indicating that Rosco demonstrated to him Exhibit 110’s decreasing radius of curvature), and the court’s own inspection of the mirror.The Fed. Cir. held that none of this evidence provided sufficient corroboration that Exhibit 110 had a decreasing radius of curvature because both the district court and the patent expert were not skilled in the mirror arts.Thus, the Fed. Cir. found no basis for a finding of invalidity.
Inequitable Conduct: On the issue of inequitable conduct, the trial court held that Mirror Lite intended to mislead the examiner by failing to disclose Trial Exhibit EC, a prior art oval Mirror Lite mirror that existed more than one year prior to the patent’s priority date.However, the Fed. Cir. held that “[a]n applicant’s conduct in its entirety must ‘manifest a sufficiently culpable state of mind to warrant a determination that it was inequitable.’” The Exhibit was not so undisputedly material that intent could be inferred from materiality. Thus, there must be other evidence supporting a finding of intent. The district court found that Mirror Lite’s use of terms inconsistently in other patents having the same inventor suggested the requisite intent. The Fed. Cir. held that use of terms inconsistently (one way in the earlier patents and one way in testimony) does not render testimony deceptive, given admission in the testimony that terms could have two meanings. Thus, the Fed. Cir. reversed the judgment of inequitable conduct.
The case was remanded for further proceedings solely on the issue of infringement.
Joseph Herndon is a law clerk and at MBHB and is a registered patent agent. Joe has a stellar background in electrical engineering and will graduate from law school this year. herndon@mbhb.com.
Trintec v. Pedre Promotional Products (Fed. Cir. 2005).
Trintec sued Pedre for patent infringement in the District of Columbia accusing Pedre of violating Trintec’s patents on automation of printed faces for use in clocks and watches. Pedre moved to dismiss for lack of personal jurisdiction and improper venue. Pedre attached a declaration attesting that its sole office and place of business was in NY and that it has no facilities or representatives in Washington D.C. The district court granted Pedre’s motion and dismissed the complaint based on a lack of personal jurisdiction.
On appeal, the Federal Circuit reviewed the details of general and specific jurisdiction:
“Specific jurisdiction ‘arises out of’ or ‘relates to’ the cause of action even if those contacts are ‘isolated and sporadic.’ . . . General jurisdiction arises when a defendant maintains ‘continuous and systematic’ contacts with the forum state even when the cause of action has no relation to those contacts.
The appellate court also noted that they were "left totally in the dark about the reasons for the district court’s action. The panel then vacated the dismissal, finding that jurisdiction could be established under D.C.’s long-arm statute if Pedre’s products were sold in DC. (The sale creating a tort).
Interestingly the court discussed the extent that Pedre’s interactive website would create jurisdiction — however, in the end, they expressly decided not to decide that issue. (because it was moot).
The case was remanded for a further exploration of factual issues to determine whether jurisdiction does exist.
BlackBerry maker Research-In-Motion (RIM) has requested a rehearing en banc at the Federal Circuit in an attempt to escape from the $53 million damage award and the expected injunction against its BlackBerry system for patent infringement. In a strong power play, the Government of Canada has filed an amicus brief, supporting the rehearing. As have the Canadian Chamber of Commerce and the Information Technology Association of Canada. These Canadian Briefs essentially ask the court for comity — arguing that the holding in RIM upsets the business and legal climate in Canada. (Other amicus briefs are expected to be filed within the next few days).
Frankly, I was surprised at the Federal Circuit’s decision last month that found that RIM could be liable for direct infringement even though its some of the necessary elements of the asserted claims occurred outside the U.S. (in Canada). The diagram above (from RIM’s brief) shows RIM’s e-mail relay in operation in Canada. The relay is a distinguishing feature of NTP’s patents.
RIM’s most compelling argument is that the infringement of NTP’s patents did not occur “within the United States” as required by the statute. Obviously RIM’s argument is strictly true. However, the three judge appellate panel found that the test is not whether the infringement took place within the United States, but whether “control and beneficial use” of the infringing system was within the United States.
In my view, based on standing precedent of Deepsouth and Pellegrini, the Federal Circuit got this case wrong, and the standard of “control and beneficial use” should be tossed.
The court has traditionally had a strong stance against extraterritorial application of the patent laws. In Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518 (1972), the Supreme Court of the United States (SCOTUS) strictly interpreted the patent act to find that unauthorized manufacturers of patented products could avoid liability for infringement under the then-existing law by manufacturing the unassembled components of those products in the United States and then shipping the components out of the United States for assembly. Congress enacted 35 U.S.C. § 271(f) in order to close that loophole. However, § 271(f) does not apply to the facts of RIM v. NTP. In Pellegrini, the court found that Pellegrini’s case against Analog did not fall within the scope of newly enacted § 271(f), and thus, that the U.S. patent laws did not apply to extraterritorial manufacture and sale of a patented electric motor.
In each of these cases (Deepsouth & Pellegrini), the Court denied the plaintiff’s requests for extraterritorial application of the U.S. patent laws because the statute did not specifically call for such an application. Because the statute does not specifically call for infringement under the RIM v. NTP scenario there should be no infringement here either.
As an aside: I do believe that there should be some legislative action to amend the patent laws in order to catch individuals who move portions of their systems (such as their router) to another country in order to avoid liability for patent infringement. However, the Federal Circuit, like the Supreme Court in Deepsouth, is not in a position to generate such legislation. Is anyone interested in working with me to draft such legislation?
UPDATE: James Hill, a blog reader from the UK wrote in noting the similarity between RIM and the UK case of Menasche v. William Hill. [summary]In Menasche, the Court of Appeals ruled that the invention (a system for online betting) was put into effect in the UK even though the server was located abroad. “By using their terminals in the UK, William Hill’s customers were in a real sense also using the overseas host server in the UK.”
I think that there are some very strong similarities between the BlackBerry case and Menasche. The one major difference that RIM’s attorney made in my discussion with him is that the operation of the ROUTER is a critical element of NTP’s patent claims — that portion of the claim was particularly pointed out by NTP during prosecution of the patent as a factor that made the invention unique from other prior art. Thus, the claim is not keyed on the two end users, but rather about the entire chain of operation.
I agree that the specific facts are different from Pellegrini. However, the principle that I derive from Pellegrini and Deepsouth is that there is a specific statute in U.S. Patent law that calls for extraterritorial application of the patent laws, and regardless of the policy arguments, the U.S. patent laws do not apply to foreign actions except where specifically called for in the statute.
UPDATE II: Mr. Petit over at Scrivener’s Error makes the point that the the principle that “a right imply a remedy” might save the original opinion.
UPDATE III: Mathew Ingram, an excellent columnist at the Globe and Mail has written an article [subscription req’d] on the subject. He questions whether the Canadian Government made the right move by filing a brief in this case.
UPDATE IV: In an interesting twist, Computer Leasco Inc., a small computer company based in Michigan, filed a complaint against NTP alleging that NTP officials engaged in the “outright theft” of Computer Leasco’s interests in intellectual property that NTP now holds. (WSJ article)
In what appears to be its first divorce proceeding, the Federal Circuit has affirmed that a state court has power to affect the incidents of patent ownership after having divided the ownership interest. The court went on to find that California courts provided the proper venue for determining the parties’ rights and obligations (such as paying maintenance fees).
Further, the Court affirmed that the divorce decree did not create subject matter jurisdiction for the case under the Patent Act.
Supreme Court Expected to Determine Whether Early Drug Research Necessary for FDA Approval Can Constitute Patent Infringement.
Merck v. Integra LifeSciences, U.S. Supreme Court (Case No. 03-1237).
The appeal to the Supreme Court questions the limits of the safe harbor statute (35 USC 271(e)(1)) that permits a drug manufacturer to perform experiments needed to obtain FDA approval of their drugs without incurring liability for patent infringement, even if their activities infringe other’s patent rights.
Under the Fold: The Drug Price Competition and Patent Term Extension Act (Hatch-Waxman) created a safe harbor that permits drug manufacturers to perform the experiments needed to obtain FDA approval of their drugs without incurring liability for patent infringement, even if their activities infringe others patent rights.
However, the statute, codified at 35 USC § 271(e)(1), was limited by a 2003 decision by the Court of Appeals for the Federal Circuit. The Federal Circuit affirmed a lower court’s finding that the safe harbor against patent infringement does not apply to pre-clinical activities to identify and develop new drugs that will eventually be subject to FDA approval — and thus, that Merck was liable to Integra for patent infringement.
The Case: Integra alleged that Merck and Scripps infringed patents owned by Integra relating to peptides involved in interactions between cell surfaces and the extracellular matrix. Under contract from Merck, Scripps identified several potential anti-tumor peptide candidates and selected the most promising peptide by conducting in vivo and in vitro experiments to evaluate the specificity, efficacy, and toxicity of the peptide candidates for various diseases. Scripps also performed tests to assess the histopathology, toxicology, circulation, diffusion, plasma half-life, and proper mode of administering of the peptides candidates.
The Appeals Court held that these activities did not fall under the safe harbor (§ 271(e)(1)) because they were not done "solely for purposes reasonably related to the development and submission of information" to the FDA.
"the focus of the entire exemption is the provision of information to the FDA . . . [a]ctivities that do not directly produce information for the FDA are already straining the relationship to the central purpose of the safe harbor." (CAFC Opinion).
"Expansion of § 271(e)(1) to include the Scripps-Merck activities would effectively vitiate the exclusive rights of patentees owning biotechnology tool patents."
Supreme Court:
Merck has now appealed the case to the Supreme Court of the United States, petitioning the High Court to hear the question:
Under 35 U.S.C. 271(e)(1), it is generally not an act of infringement to use a patented invention “solely for uses reasonably related to the development and submission of information under a Federal law” regulating the manufacture, use, or sale of drugs. The question presented is whether the court of appeals erred in limiting that exemption to clinical studies designed to provide information for Food and Drug Administration approval of a new drug.
On request from the Court, the Solicitor General of the U.S. submitted the Government’s view that the case should be heard. The Government brief makes two major points, one legal and the other social:
Gov’t Brief: The decision of the court of appeals reflects an incorrect view of the law, and is likely to restrict significantly the development of new drugs. Fairly read, the decision below holds that “pre-clinical” research regarding a potential new drug is not protected by the FDA exemption because that exemption is limited to “clinical” research necessary to obtain ultimate FDA approval of a new drug. That holding is inconsistent with the text of the FDA exemption, reflects a mistaken and unduly narrow view of the types of information relevant to the FDA’s two-step process for evaluating potential new drugs, and is in tension with this Court’s decision in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990). Moreover, the court of appeals’ decision poses a direct and substantial threat to new drug research by dramatically narrowing the scope of protections enacted by Congress in Section 271(e)(1). Although this case is not an ideal vehicle for considering the issue, see p. 18, infra, the potential impact of the court of appeals’ legal conclusion is sufficiently important that the petition for a writ of certiorari should be granted.
Eli Lilly and Co. was also granted leave to file a brief as amicus curiae in the case. Justice O’Connor and Justice Breyer took no part in the consideration or decision of the petition for writ of cert. It is reported that both Justices own stock in Merck.
Academics Take Sides: Judge Richard Posner (In Lessig Blog) has advocated the creation of a fair-use exception for patents on research tools:
Link: For example, a generic drug manufacturer is permitted to use the patented drug to demonstrate that its generic equivalent is indeed therapeutically equivalent (the "testing" exception created by the Hatch-Waxman Act). More broadly, an inventor can use the information in the patent to try to invent around the patent. And Landes and I advocate an expansion of the patent fair-use principle to allow scientists to use patented research tools (such as the oncomouse) without license–provided the scientists aren’t allowed to use the tools to produce their own patented products!
In response, Lichtman has noted that Judge Posner’s proposal "is problematic for the simple reason that, often, the key market for research tools is to sell those tools to other researchers. If a researcher’s use of patented research tool is fair use, that would significantly degrade the incentive to create those research tools inthe first place. Moreover, even if your approach works, it is in sharp conflict with the Bayh-Dole instinct that society might very well be better off in a world where academic researchers patent their work. As you know, that legislation was passed in response to evidence that university breakthroughts were sitting on the shelves both because (a) they could not be owned exclusively under old NIH rules; and (b) universities had too little incentive to bring their work to the attention of industry."
Kouvato v. Stanley Works & Home Depot (Fed. Cir. 2005) (Unpublished)
Kouvato owns the patent and sued for infringement. In the defendant’s invalidity arguments, several pieces of prior art were introduced in an attempt to show that the patent was invalid. Kouvato’s expert testified, however, that one reference taught away from the patented design because it included a 90 degree transition shaft.
The Jury then returned a verdict of validity.
On appeal, the Federal Circuit overturned the verdict, finding that Kouvato’s expert had applied a misconception concerning the law.
Simply because a piece of prior art contains a feature that is not present in the patent does not mean that the prior art teaches away from the patent. A reference teaches away only when a person of ordinary skill, upon examining the reference, would be discouraged from following the path set out in the reference, or would be led in a direction different from the path that was taken by the applicant.
Thus, the CAFC found that the patent was invalid. "[The Defendants] Jore showed by clear and convincing evidence that the ’575 patent would have been obvious, and that showing went unrebutted at trial."
Lamle is the inventor of Farook, a game similar to Tic Tac Toe. In 1997 Lamle and Mattel agreed on an exclusive license. The contract terms were discussed via e-mail but a licensing agreement was never signed by Mattel.
After a pre-toy fair, Mattel concluded that it did not wish to license Farook. Mattel notified Lamle of its decision by fax sent to Lamle at the office of a business associate. The fax arrived while Lamle was present at his associates office attending a meeting with potential investors.
Lamle sued for breach of contract and patent infringement. However, the district court granted summary judgment to Mattel on all claims. "Its order and judgment listed six grounds for its decision, each being one sentence long, with no citations to any case or to the record, and providing no explanation as to the facts or law upon which it was relying." Specifically, the district court found that the agreement did not include all the essential terms and was additionally barred by the statute of frauds.
The federal circuit disagreed, finding that there were outstanding questions that could not be determined on summary judgment. Applying California law, the appellate court first held that the the existence of an oral agreement depended upon the intention of the parties — a subject that was not properly addressed on summary judgment.
The question as to whether an oral agreement, including all the essential terms and conditions thereof, which according to the mutual understanding of the parties is to be subsequently reduced to writing, shall take effect forthwith as a completed contract depends on the intention of the parties, to be determined by the surrounding facts and circumstances of a particular case.
Then, the e-mail outlining the terms of the deal was sufficient to overcome the Statute of Frauds that requires contracts that could not be performed within one year of their making to be contained within a written agreement.
Vacated and Remanded
In Dissent, Judge Newman could not find an oral agreement because the parties had specifically agreed that "any obligation would be contained in a formal written agreement."
As a matter of law, there can have been no patent license and manufacturing and sales agreement between Mattel and Mr. Lamle, when no such license and no manufacturing and sales agreement were ever entered into. Thus I must, respectfully, dissent from the court’s decision, for it is founded on incorrect principles of law.
Intro: Teleflex sued KSR for alleged infringement of Teleflex’s patented adjustable gas-pedal assembly (Patent No. 6,237,565). The case was dismissed on summary judgment after the judge determined that the invention was obvious. Teleflex appealed the decision.
Obviousness: A patent claim is obvious, and thus invalid, when the differences between the claimed invention and the prior art "are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art." The determination of whether an invention is obvious is based on a number of factors — commonly termed Graham Factors, including:
the scope and content of the prior art;
the level of skill of a person of ordinary skill in the art;
the differences between the claimed invention and the teachings of the prior art; and
the extent of any objective indicia of non-obviousness.
If obviousness is found by combining multiple references, there must also be some motivation to combine the prior art teachings in the particular manner claimed. In re Kotzab.
The Case: In its decision, the Appellate Court agreed with Teleflex, that the district court applied an incomplete teaching-suggestion-motivation test.
This is because the district court invalidated claim 4 of the ’565 patent on obviousness grounds without making “finding[s] as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention to make the combination in the manner claimed.” . . . The district court was required to make specific findings as to whether there was a suggestion or motivation to combine the teachings of Asano with an electronic control in the particular manner claimed by claim 4 of the ’565 patent.
Because the district court failed to make specific findings as to the suggestion or motivation to combine references, the CAFC vacated and remanded.
Freeman v. Gerber & Playtex (Fed. Cir. 2005) (Unpublished)
Freeman owns a patent on a spill-proof beverage container (a sippy-cup). During an infringement suit against Gerber & Playtex, the Kansas District Court ruled that means-plus-function clauses of the asserted claims were indefinite, and thus invalid. Freeman appealed.
On appeal, Freeman argued that the drawings sufficiently described the claimed structure & its function. Gerber, in response contended that "merely depicting a structure in a patent’s drawings is not enough to clearly link the structure to a particular recited function."
The court sided with Freeman, finding that patent drawings may be used to determine whether the patent "adequately disclosed structure corresponding to the recited functions." The court went on to find that including the figures in the analysis avoided any indefiniteness problem.
Business Objects v. Microstrategy (Fed. Cir. 2005)
Business Objects owns a patent on a relational database system that uses "semantically dynamic objects." The patent allows users to access a relational database without knowing standard database query language (SQL). (U.S. Patent No. 5,555,403).
The District Court ruled that Microstrategy’s product did not infringe several of the claims, even under the doctrine of equivalents — Thus granting summary judgment of noninfringement for Microstrategy.
On appeal the Federal Circuit affirmed in-part, but reversed the lower court’s ruling that an amendment to claim 4 during prosecution narrowed the claim and thus precluded equivalents.
Claim 4 was a method claim added during prosecution and is similar to the originally filed claims. However, the claim changed a step that involved "translating a user query to a structured query" to "generating queries in the predetermined query language." The district court held that this amendment narrowed the scope of the function of the query engine means for purposes of patentability and raised a Festo presumption.
However, the Federal Circuit found that the new claim actually broadened the scope of the patent. Under Festo, if the amendment is not narrowing, then prosecution history estoppel does not apply.
The case is remanded back to the Northern District of California.
[Link] Business Objects previously settled with Cognos and others in a dispute over the same patent.
Update: The plaintiff and defendant offered competing press releases on the outcome:
In an unpublished decision, the Federal Circuit affirmed the Delaware District Court’s claim construction, essentially putting to rest NCR’s patent infringement suit against palmOne for its popular Palm and Handspring handheld devices. NCR’s Patent Nos. 4,634,845 and 4,689,478 are directed to a handheld device and system employing such a device. The claims generally call for a handheld device having discrete display elements overlapped with discrete switches, along with control means and circuitry for interfacing with another device.
The Federal Circuit focused on the "plurality of discrete switches" and the closely related "means for entering data" elements. In an attempt to read on palmOne’s resistive touchscreen technology, NCR argued that the "plurality of discrete switches" should be construed as "more than one individually distinct programmed device for indicating that one of alternative states or conditions have been chosen." The Federal Circuit rejected this "programmed device" definition, and instead adopted the district court’s "physical switch" definition: "two or more distinct and separate manual or mechanically actuated devices for making, breaking, or changing the connections in an electric circuit." It based its decision on the claim language (which contradicted NCR’s assertion that software integrated into the plurality of switches, rather than the "control means," handled variable user instructions), and the patent specifications, which showed an array of switches made of "a few plastic-film layers and strips of conductive material." Similarly, the Federal Circuit agreed that the "means for entering data," a means-plus-function element under 35 U.S.C. § 112 ¶ 6, was limited to the physical switches set forth in the patent specifications.
Marcus Thymian is a partner at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago. Mr. Thymian is experienced in planning, creating, enforcing, and defending against patent portfolios, and was part of the team from McDonnell Boehnen Hulbert & Berghoff that represented Palm (now palmOne) before the Delaware District Court and on appeal. [Marcus Thymian’s Bio]
EFI makes controllers for network printing. Coyle obtained patents on his network printing inventions and informed EFI that it was (allegedly) violating his patent.
Coyle began to pressure EFI on an almost daily basis, threatening to drive EFI out of business. EFI alleges that Coyle repeatedly warned that he would bring multiple lawsuits, stating that “we’ll sue all of your customers” and “bad things are going to happen.” Coyle even identified specific attorneys and law firms in support of his litigation threats.
EFI sued for declaratory judgment. The district court, however, dismissed the action. EFI appealed to the Federal Circuit.
A declaratory action allows a party “who is reasonably at legal risk because of an unresolved dispute, to obtain judicial resolution of that dispute without having to await the commencement of legal action by the other side.”
The district court had dismissed the declaratory judgment action because it determined that EFI did not have any uncertainty about Coyle’s intention to sue (Coyle stated flatly that it he would sue). Additionally, the court found that EFI was not uncertain about the strength of its legal position.
On appeal, the Federal Circuit reversed, disagreeing with the district court’s interpretation of "uncertainty."
The proper inquiry should not have been whether a party is “certain” that its legal position and defense theories are sound, because litigation is rarely “certain,” even if one is confident of one’s position. When a party is threatened … there are other uncertainties, including whether there will be legal proceedings at all, not just whether one will prevail. There is the uncertainty whether one will have to incur the expense and inconvenience of litigation, and how it will affect the threatened party’s customers, suppliers, and shareholders. Reservation of funds for potential damages may be necessary. … “Uncertainty” in the context of the [Declaratory Judgment] Act refers to the reasonable apprehension created by a patentee’s threats and the looming specter of litigation that results from those threats.
Brooks Furniture brought a declaratory judgment action in Tennessee District Court after receiving a cease and desist letter from Dutailier International, the assignee of the design patent for “Rocking Chair Trim.”Although the cease and desist letter sent to Brooks Furniture was based upon opinions of counsel, officers, and outside experts, the district court found that the letter had been sent in bad faith by Dutailier because the opinions Dutailier relied upon did not discuss the chair back’s specific feature of a “trailing edge descending in a gentle ‘s’ curve.” Accordingly, the lower court deemed the case exceptional and awarded attorney fees.
The Federal Circuit vacated the award, rejecting the lower court’s narrow view of the opinion’s reasonableness:
The fact that an infringement opinion may not have mentioned every detail of the patented or the accused design does not necessarily render the opinion wrong or unreliable.
As the test for a design patent’s infringement is “substantial identity,” not every aspect of the design need be identical, and thus an opinion need not consider every aspect of a design to be reasonable.
Jennifer Swartz is an associate at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago.Ms. Swartz has experience in various aspects of intellectual property litigation including patent and trademark infringement, and trade secret violations. [Brief Bio]
Competitive Technologies and the University of Illinois v. Fujitsu (Fed. Cir. 2005).
In June 2004, the Federal Circuit dismissed the University of Illinois appeal for sovereign immunity under the Eleventh Amendment. In that opinion, the Court found that the appeal lacked proper jurisdiction because the district court’s decision to not allow sovereign immunity was not a "final decision."
Now, the Federal Circuit has denied the University’s request for a rehearing. Specifically, the University argued that the cases relied by the Federal Circuit had been undermined by later case law. The Federal Circuit disagreed:
As we have held, the decisions of the Supreme Court . . . make clear that a non-final resolution does not satisfy the Cohen test. Thus, the application of the first prong of Cohen in Agent Orange has not been undermined by subsequent decisions of the Supreme Court or other courts of appeals.
