CAFC Affirms dismissal of German claims

Patent, Patent Cases 2006

Dr. Bonzel v. Pfizer (Fed. Cir. 2006).

Bonzel, a German residing in Germany, originally sued Pfizer and others in Minnesota state court for breach of contract (patent license) — but asserted that patent infringement was not an issue. The Minnesota court dismissed on grounds of forum non conveniens — finding that the case should be decided under German law by German courts.

Bonzel refiled in Federal Court, and included assertions of patent infringement, but his case was again dismissed.  On appeal, the Court of Appeals for the Federal Circuit affirmed the dismissal.

Issues

Judicial Estoppel: Judicial estoppel applies “when a party takes a later position that is inconsistent with a former position in the same dispute, on which the party had been successful and had prevailed based on the former position.  The CAFC found no judicial estoppel with regards to Bonzel’s earlier assertions of “no patent infringement” because the complaint was “sufficiently changed.”

Patent Jurisdiction: Bonzel’s charges of breach of contract do not “arise under” the patent laws — even though the breach of contract charges would likely require a determination of whether infringement occurred.

Diversity: The court did not have diversity jurisdiction because foreigners were on both sides of the v.

National Treatment: Bonzel also argued that dismissing his case was not allowed under the Paris Convention’s requirement that a nation’s courts give “equal treatment to nationals of other nations.”  Here, Bonzel argues that his case is being dismissed because he is a German. The CAFC disagreed, finding that the treaties do not “establish jurisdiction or require a nation’s court to receive litigation that it reasonably believes would be better conducted in another nation.”

How do Your Arguments Look in the Mirror?

Patent, Patent Cases 2006

Maytag v. Electrolux (N.D. Iowa 2006, 04-4067).

Maytag sued Electrolux for infringement of its patents relating to the design of a washing machine basket.  After a Markman hearing, Chief Judge Bennet began his claim construction decision with an “excerpt from a remarkably wise children’s story:”

  “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
  “The question is,” said Alice, “whether you can make words mean so many different things.”
  “The question is,” said Humpty Dumpty, “which is to be master—that’s all.”

Lewis Carroll, Alice’s Adventures in Wonderland and Through the Looking Glass 219 (George Stade ed., 2004) (1871). According to Judge Bennet, “[t]he irony in this case is that it is not altogether clear to the court just who is being Humpty Dumpty.” 

One innovative approach taken by the judge was to present a draft claim construction decision to the attorneys well before the Markman hearing as a way to help focus the hearing.  According to the Court, the experiment was a great success.

 

Supreme Court Eliminates Presumption of Market Power in Patent Antitrust Cases

Patent, Patent Cases 2006

IllinoisToolIllinois Tool Works v. Independent Ink (2006, 04-1329)

By Israel Encinosa

In an 8-0 decision (Justice Alito took no part), the United States Supreme Court has reversed the Federal Circuit’s decision in Illinois Tool Works, Inc. et al. v. Independent Ink, Inc., and expressly overruled some of its own prior rulings, holding that the mere fact that a tying product is patented does not support a presumption of market power.

The Court characterized the question before it as “whether the presumption of market power in a patented product should survive as a matter of antitrust law despite its demise in patent law.” The Court noted that the presumption that a patent confers market power originally arose outside the antitrust context as part of the patent misuse doctrine, and migrated to antitrust law in International Salt Co. v. United States, 332 U.S. 392, and its progeny. The Court further noted that while Congress continually chipped away at the presumption, ultimately amending the Patent Code to eliminate the presumption in the patent misuse context, the Court’s antitrust jurisprudence, in contrast, continued to rely on it.

Today’s decision marks a decisive shift in the Court’s antitrust jurisprudence as the Court clearly rejected the presumption of per se illegality of tying arrangements involving patented products. The Court ruled that "any conclusion that an arrangement is unlawful must be supported by proof of power in the relevant market rather than by a mere presumption thereof," and moreover, that "because a patent does not necessarily confer market power upon the patentee, in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product."

In addition to rejecting the per se rule, the Court also declined respondent’s invitation to "endorse a rebuttable presumption that patentees possess market power when they condition the purchase of the patented product on an agreement to buy unpatented goods exclusively from the patentee."

NOTE: Israel Encinosa is an attorney at Kirkland & Ellis where he focuses his energy on antitrust law and commercial litigation. He graduated from the University of Chicago Law School.

CAFC: The difference between permissible repair and impermissible reconstruction cannot turn on minor details

Patent, Patent Cases 2006

Jazz Photo v. U.S. (Fed. Cir. 2006, 05–1096)

In its fourth trip to the Court of Appeals for the Federal Circuit, the U.S. Gov’t (and Fuji Film) appealed a final judgment from the Court of International Trade (CIT) that released certain Jazz disposable camera’s that had been denied entry by Customs and that ordered Customs to allow Jazz to segregate the imported shipments between permissible and impermissible imports.

Jazz refurbishes the disposable cameras in Asia and (re)imports them to the U.S.  Some of the refurbished cameras were originally sold in the U.S. and thus could be permissibly repaired, while others were originally sold outside the U.S., and their import could be blocked. (See Exhaustion).

The Gov’t argued that even under the first-sale doctrine, Jazz Photo’s reimportation of cameras should be blocked because Jazz’s work on the cameras crossed the line from “permissible repair” to “impermissible reconstruction.”  Here, the appellate panel sided with Jazz Photo.

While there is no bright-line test for determining whether a device has been permissibly repaired, it does not turn on minor details. . . . Moreover, even if the trial court did not identify the specifics of each minor operation, the fact that they were incidental . . . indicates that the court considered them to be known processes that were permissible repair. We thus discern no error in the court’s conclusion that those “various minor operations” did not make a new single use camera and thus constituted permissible repair.

The CAFC also affirmed the lower court’s order requiring Customs to support the segregation of shipments:

Customs is obligated [under 19 CFR § 19.4(b)(1)] to supervise certain activities in its warehouse and that supervision is mandatory, not discretionary. . . . Because Customs was required to supervise the segregation of the subject LFFPs in its warehouse, we see no error in the trial court’s order.

Affirmed.

CAFC: Gross Negligence Does Not Constitute Inequitable Conduct

Patent, Patent Cases 2006

AIPLATalk150M. Eagles Tool v. Fisher Tooling (Fed. Cir. 2006, 05–1224).

On summary judgment, the district court found that Fisher’s patent was unenforceable due to inequitable conduct.  Specifically, the court found that a device that the patentee had been selling for twenty years contained many of the same components present in the patented invention and thus would have been material to the examiner’s analysis.  It was also undisputed that the inventors were familiar with the prior-art device.

On appeal, the CAFC took an opportunity to caution against overzealous findings of inequitable conduct:

Although it is not impermissible to grant summary judgment of inequitable conduct, this court “urges caution” in making an inequitable conduct determination at the summary judgment stage.

Here, the patentee took the position that “even if the failure to disclose the [prior art] constituted gross negligence, that cannot be the sole basis for finding an intent to deceive.”  The CAFC agreed.

The district court’s finding of inequitable conduct . . . essentially amounted to a finding of strict liability for nondisclosure. Such is not the law. Even if there were evidence of gross negligence in nondisclosure, which was not found, that would not necessarily constitute inequitable conduct.

Reversed.

Supreme Court Asked To Determine Extraterritorial Scope of U.S. Patent Laws

Patent, Patent Cases 2006

Microsoft has given the Supreme Court its third opportunity in as many years to tackle the Federal Circuit’s controversial interpretation of 35 U.S.C. 271(f). That statute allows a U.S. patentee to collect damages for foreign sales of a patented invention based on the export of one or more of its components.  The statute has been extended to the export of software code (AT&T, Eolas) as well as to the export of elements used in a patented method (Union Carbide).

In Microsoft v. AT&T, the software giant has asked the Court to answer:

  1. Whether digital software code . . . may be considered a “component[] of a patented invention” within the meaning of Section 271(f)(1); and
  2. Whether copies of such a component made in a foreign country are “supplie[d] . . . from the United States.”

AIPLATalk149

Here, Microsoft’s software code was generated in the U.S. and then shipped abroad where copies were generated.  AT&T claims (and courts have thus far agreed) that sales of those foreign copies infringe the U.S. patent and create liability.  If it stands, this case could have far-reaching effects in the fields of biotechnology (DNA/cell replication) as well as foreign piracy (shipping product from the U.S. to reverse engineer and copy in a foreign country).

From a business perspective, this interpretation of the statute gives business executives another reason to send software jobs overseas.  If the component was not exported from the U.S., there will be no damages under 271(f).

Important recent 271(f) cases:

  • NTP v. Research in Motion, (271(f) “component” would rarely if ever apply to method claims).
  • AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software being sold abroad);
  • Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. 2005) (271(f) “component” applies to method claims and software);
  • Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
  • Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).

Documents:

Product-by-Process Patent Must be Directed to New Product

Patent, Patent Cases 2006,

SmithKline Beecham v. Apotex (Fed. Cir. 2006, 04–1522).

SmithKline’s U.S. Patent No. 6,113,944 is directed to paroxetine (Paxil) made through an allegedly novel process (product-by-process). In 1998, Apotex filed its ANDA and paragraph IV certification asserting that the patent was invalid — thus provoking action from SmithKline.

On summary judgment, the district court found the patent invalid as anticipated by prior knowledge of paroxetine. Specifically, the lower court determined that the claimed process steps were not limiting.  Thus, any prior disclosure of the end-product was anticipating.

Product-by-Process: On appeal, the CAFC affirmed, finding that product-by-process claims cannot recapture the end-product from the public domain.

[O]nce a product is fully disclosed in the art, future claims to that same product are precluded, even if that product is claimed as made by a new process.

This rule of law follows the MPEP, which states that:

[Even] though product-by-process claims are limited by and defined by the process, determination of patentability is based on the product itself. The patentability of a product does not depend on its method of production. If the product in the product-by-process claim is the same as or obvious from a product of the prior art, the claim is unpatentable even though the prior product was made by a different process.

MPEP § 2113 (8th ed., Rev. 2, May 2004) (quoting In re Thorpe, 777 F.2d at 698).

Differences from Prior-Art Product: In a footnote, SmithKline’s attorneys noted that the product made through the claimed process is actually different (lacked a pink hue and did not contain spherical granules).  The district court ignored these differences because they were “not required by the patent claims or specification.” 

However, the appellate panel the differences at least interesting — “If those product-by-process claims produced a different product than that disclosed by the [prior art], there would be an argument that the [prior art] disclosure did not anticipate.” In the end, the panel refused to consider the issue because it was only raised in a footnote:

This footnote is the only statement that even approaches a substantive argument on novelty in the entire Argument section of SmithKline’s opening brief. . . . We find that these mere statements of disagreement with the district court as to the existence of factual disputes do not amount to a developed argument. . . . Further, arguments raised in footnotes are not preserved.

Invalidity affirmed.

Supreme Court to Determine Licensee’s Right to Sue for Declaratory Judgment of Invalidity or NonInfringement

Patent, Patent Cases 2006,

ChimericImmunoglobulinMedImmune v. Genentech* (Supreme Court 2006).

The Supreme Court has granted certiorari to determine when a patent licensee in good standing can challenge the validity of a patent.  In two separate opinions, the CAFC dismissed MedImmune’s cases — holding that a licensee has no standing to sue for declaratory judgment because it is not under threat of being sued for patent infringement.

This issue harks back to the 1969 Lear v. Adkins case that limited the ability of a licensee to sign-away its right to later challenge the validity of a licensed patent.  In Lear, the High Court found that the public’s interest in invalidating bad patents was strong enough to warrant a limit on the licensee’s ability to give up its future right to challenge validity. 

The question presented is:

Does Article III’s grant of jurisdiction of “all Cases . . . arising under . . . the Laws of the United States,” implemented in the “actual controversy” requirement of the Declaratory Judgment Act, 28 U.S.C. 2201(a), require a patent licensee to refuse to pay royalties and commit material breach of the license agreement before suing to declare the patent invalid, unenforceable or not infringed?

* A second petition MedImmune v. Centocor is also pending before the Court with the parallel question of: 

Does the “actual controversy” requirement of the Declaratory Judgment Act, 28 U.S.C. 2201(a) require a material breach of a license agreement by a licensee prior to suit for declaratory relief for patent infringement, invalidity, or unenforceability?

Documents:

Links:

Supreme Court Denies Phillips v. AWH Petition for Certiorari

Patent, Patent Cases 2006,

Phillips v. AWH Corp. (Supreme Court).

The Supreme Court has denied AWH’s bid for certiorari on the question of whether “all aspects of a district court’s patent claim construction may be reviewed de novo on appeal.”  That single rule of law has often been cited as the primary reason for the unusually high reversal rate of patent cases.

J. Newman: Inequitable Conduct Charges Again on the Rise

Patent, Patent Cases 2006

Ferring v. Barr Labs (Fed. Cir. 2006).

The Ferring decision seems to have again expanded the scope of inequitable conduct in patent cases.  In a twenty-page dissent, Judge Newman took issue with this expansion.

I agree with J. Newman that inequitable conduct is “a serious charge” that should not be taken lightly. In the past, the defense has been “grossly misused . . . with inequitable conduct charged in almost every case in litigation.”  Certainly, these charges do nothing to help the current popular distrust of the patent system.

After the CAFC decision in Kingsdown v. Hollister (requiring objective evidence of material misconduct + intent to deceive), charges of inequitable conduct were pushed to the background and taken-out of many cases. However, in this decision, Newman sees a revival:

My colleagues on this panel have regressed to that benighted era, rejecting the efforts of Kingsdown to bring objectivity to charges of inequitable conduct, instead reviving the culture of attack on inventor rights and attorney reputations based on inference and innuendo. My colleagues, endorsing several novel and unsupportable presumptions of wrongdoing, do injury to the reasonable practice of patent solicitation, even as they defy the rules of summary judgment.

Here, Newman argues, the panel has found materiality based on a “should have known ” standard:

The panel majority, steeped in adverse inferences, holds that good faith is irrelevant and presumes bad faith. Thus the court resurrects the plague of the past, ignoring the Kingsdown requirements of clear and convincing evidence of a misrepresentation or omission material to patentability, made intentionally and for the purpose of deception. I respectfully, but urgently, dissent.

Links:

Patentee Must Disclose Affiliations of Declarants

Patent, Patent Cases 2006

Ferring v. Barr Labs. (Fed. Cir. 2006).

By Grantland Drutchas

Ferring is a rather interesting CAFC decision on inequitable conduct. The CAFC affirmed summary judgment of inequitable conduct based solely on the applicant’s failure to disclose that individuals who submitted declarations in support of the patentability of the claims had affiliations with the assignee of the application.

One of the declarants was an employee of the assignee, one was a paid consultant; but the third was simply a researcher (presumably a clinician) whose employer had assisted with some clinical studies for the assignee and received some funding for those clinical studies from the assignee. The CAFC found the failure to disclose each of these relationships was material.

The appellate panel also held that an inference of intent can be found when the patentee fails to show a “credible explanation” for the patentee’s deception of the PTO. Importantly, the Court found that the patent holder has the burden to prove the credible explanation. Simply arguing plausible or possible explanations for the deception is not enough to rebut an inference of intent to deceive.

Grant Drutchas, a founding partner of MBHB, has nearly 20 years of experience in the practice of intellectual property law, with a particular emphasis on litigation, licensing, and client counseling.

Knorr-Bremse does not Preclude Inference of Reckless Behavior for Failure to Obtain Opinion

Patent, Patent Cases 2006

AIPLATalk060Golden Blount v. Robert H. Peterson Co. (Fed. Cir. 2006, 04–1609).  

Opinions of Counsel: This case holds that Knorr-Bremse does not prevent a court from finding that a defendant was at least reckless by obtaining an oral noninfringement opinion but failing to obtain a written opinion.  Rather, Knorr-Bremse only precludes an inference that an undisclosed written opinion would have been negative.

Damages: The defendant here was on the hook for contributory infringement — actual infringement occurred when customers assembled the fireplaces.  On damages, the CAFC partially reversed the lower court’s ruling.  The appellate panel found that lost-profit damages must be reduced by any products that were returned to the defendant without being opened by the customer — because in those cases the underlying direct infringement never occurred.

 Links:

Filed Briefs:

Court Reverses Claim Construction that Placed “Too Much Emphasis on the Ordinary Meaning”

Patent, Patent Cases 2006

Curtiss-Wright Flow Control Corp. v. Velan, Inc. (Feb. 15, 2006: 05-1373)

By Peter Zura

Velan appealed the lower court’s grant of a preliminary injunction in part over the construction of the term “adjustable” in the claimed feature reciting “an adjustable dynamic, live loaded seat coupled to said main body.”

In the preliminary injunction order, the trial court concluded that the bias force on the live loaded seat could be changed in a manner that is “not limited by any time, place, manner or means of adjustment.” In reaching this conclusion, the trial court relied on the ordinary meaning of “adjustable” to be “capable of making a change to something or capable of being changed.” The trial court refrained from further narrowing the term, alleging that claim differentiation prohibited the court from doing so, and also alleged that further limitations would impermissibly narrow the claim to the structure of the preferred embodiment.

The Federal Circuit, while commending the lower court’s restraint, disagreed. After applying a Phillips analysis to the claims in light of the specification, the Federal Circuit concluded that the disclosure defined the term “adjustable” to mean that the dynamic, live loaded seat can be adjusted while the de-heading system is in use.

Furthermore, the Federal Circuit reasoned that the district court’s construction of “adjustable” rendered that limitation nearly meaningless:

This court finds it difficult, if not impossible, to imagine any mechanical device that is not “adjustable,” under the ordinary meaning of that term adopted by the district court. Almost any mechanical device undergoes change (for instance, when dismantled to replace worn parts) when no consideration is given to the “time, place, manner, or means of adjustment.”

Thus, while the district court may have been correct that a device encompassed by claim 14 of the ’714 patent need not have an adjustment mechanism, it went too far in completely eliminating any constraints on the “adjustable” limitation. Moreover, the district court’s construction actually creates a redundancy: if “adjustable” means adjustable at any time and in any way, it is hard to imagine any meaning for the term because without limitations on time or manner of adjustment, all structures are “adjustable.”

Regarding the issue of claim differentiation between independent claims, the Federal Circuit provided that two considerations generally govern this claim construction tool when applied to two independent claims:

(1) claim differentiation takes on relevance in the context of a claim construction that would render additional, or different, language in another independent claim superfluous; and

(2) claim differentiation “can not broaden claims beyond their correct scope.

Finding that both of these considerations weighed against the district court’s construction, the preliminary injunction was vacated and the case was remanded.

(Published with permission)

Court Upholds Dual Patent/Copyright Protection for Software

Patent, Patent Cases 2006

Aharonian v. Gonzales (N.D.Cal. 2006).

Although he operates primarily through an e-mail list rather than through a website, Greg Aharonian is the honorary trailblazer for today’s intellectual property law blogs (including Patently-O).  He is also an activist.

In a lawsuit filed against the U.S. Government, Aharonian requested a declaratory judgment that copyright law cannot be applied to sourcecode.

Specifically, Aharonian hopes to build a powerful database of sourcecode to be used as a prior art repository — but does not want to be held liable for copyright infringement.  In a challenge to the statute, Aharonian argued that computer code is entirely made up of “algorithms” and “data structures,” both of which are uncopyrightable “ideas” or “processes” and additionally that the vague language of the Copyright Act is insufficient to support sourcecode copyrights. (And raised other arguments).

Standing: With any DJ action, there is often a question of standing. Here Aharonian was able to show that he was suffering a specific economic harm under the law (inability to build his database) and that economic harm, according to the court, was sufficient to establish standing.

This is not to say that all allegations of economic harm related to copyright law will be sufficient to meet the constitutional requirements for standing. For example, the mere assertion of a desire to copy, with no showing of an actual past or future business practice or actual economic benefit from copying, would not suffice. Here, however, plaintiff has an existing business which involves searching for potentially copyrighted prior art, and he has made a credible argument that incorporating (i.e. copying) such material into an automated search tool would result in additional profits.

Software as Math: The Aharonian machine will apparently transform computer code into a standardized logic framework and store that framework.  The court used that pont to avoid addressing the question head-on:

It would be unwise indeed for this court to make sweeping general pronouncements about the nature of software or the relationship between patent and copyright law, particularly where making such a pronouncement would have no clear effect on plaintiff’s ability to create his proposed database.

The court did take pains to distinguish patent and copyright cases — thus predicting their conclusion that both forms of protection are available for software:

A declaration that software consists entirely of “ideas”—data structures and algorithms—has no bearing on the applicability of copyright law to software source code, which, like all copyrightable material, is a particular written expression of ideas. . . . In sum, if plaintiff copies source code that is protected by copyright law, he infringes the copyright regardless of whether the ideas underlying the source code are patentable. Conversely, if plaintiff independently creates software that is functionally identical to other software, he does not infringe any copyright on the other software’s source code, even if his independently created source code is nearly identical to the copyrighted source code.

Vague Statute: On the issues of vagueness, the court essentially found that prior controlling precedent had interpreted the scope of the statute — leaving no room for the district court to hold otherwise.

Dismissed. The case is now on appeal.

Links:

  • Link: Website dedicated to the lawsuit.

CAFC Explains Materiality Standard for Inequitable Conduct

Patent, Patent Cases 2006,

AIPLATalk056

Digital Control (DCI) v. Charles Machine Works (aka DitchWitch) (Fed. Cir. 2006).

By Mark Chael,

DCI appealed the lower courts’ decision that its patents were unenforceable for inequitable conduct. DCI’s three asserted patents involve Horizontal Directional Drilling, which enables the creation of horizontal holes in the ground through with utility lines can be placed by allowing a worker to locate and/or orient the boring tool as it moves through the ground.

The district court previously awarded partial summary judgment to DitchWitch finding that there was no genuine issue of material fact that misstatements and omissions made by the inventor during prosecution of the patents were material. After a bench trial, the lower court held that the misstatements and omissions were made with intent to deceive and the level of materiality and inference of intent were both high. Thus, the lower court held that the patents were unenforceable.

The CAFC, however, held there were genuine issue of material fact regarding the materiality of the inventor’s failure to disclose prior art. The CAFC thus vacated the district court’s ruling that the patents were unenforceable and remanded for further proceedings regarding the materiality of the failure to disclose prior art.

Before reviewing the lower court’s determination that DitchWitch was entitled to summary judgment on the issue of materiality, the CAFC addressed the proper standard for determining whether a misstatement by omission is material. What follows in the text of the opinion is a comprehensive, yet succinct, summary of the development and current standing of the law of inequitable conduct and material misrepresentation, in view of the Patent Office’s amendment of Rule 56 (duty of candor and good faith / duty of disclosure). This panel followed the “reasonable examiner” materiality standard of old Rule 56, which “new Rule 56 was not intended to replace or supplant.”

Dr. Mark Chael’s prior research in biochemistry, molecular biology, and cellular biology make him well equipped to understand the intricacies involved in biotech and pharmaceutical patents. He is an associate at the intellectual property law firm McDonnell Boehnen Hulbert & Berghoff in Chicago.

Links:

Read the opinion.

Neither Poetry nor Bankruptcy Avoids Patent Infringement Damages

Patent, Patent Cases 2006

AIPLATalk055Hazelquist v. Guchi Moochie and Mr. Yamaguchi. (Fed. Cir. 2006).

It is now my dream to cite this case in open court:

DDC: “Your Honor, I would refer you to Guchi Moochi and Mr. Yamaguchi for controlling precedent.”
Court: “Quite compelling argument you have Counselor.”
Opposing Counsel: “Foiled again!”

To cite Guchi Moochi, you need a bankruptcy situation, and to be asking the court to collect post-bankruptcy damages:

DDC: “Under Guchi Moochi and Mr. Yamaguchi, although a discharge in bankruptcy operates as an injunction against a plaintiff asserting a claim for a cause of action that arose before the date of bankruptcy discharge, it does not act as an injunction against a plaintiff asserting a claim for a cause of action that arose after the date of bankruptcy discharge.”

Etc.:

  • Read the case: Link
  • cite as Dennis Crouch, Neither Poetry nor Bankruptcy Avoids Patent Infringement Damages, Patently-O, February 9, 2006, at https://patentlyo.com.

Non-Inventors Sloppy Lab Notebook Cannot Corroborate Reduction to Practice

Patent, Patent Cases 2006

Medichem v. Rolabo (Fed. Cir. 2006).

The parties here are sparing over rights to a novel process for making loratadine, the active ingredient of Claratin®. Rolabo filed its patent application first, but Medichem reduced to practice prior to that filing. 

Interference-in-fact: In order to proceed with an interference, the case must satisfy a two-way test — i.e., each disclosure, when considered as prior art, must at least render the other’s claims obvious.  Here some prior art taught away from adding a particular compound, while others suggested the addition.  The CAFC determined that in such a case, obviousness could be found because “the prior art, viewed as a whole, [teaches] that the addition of a tertiary amine sometimes works to improve the yield.” 

Priority: The later-filed case has the burden of establishing priority by a preponderance of the evidence. Here, the late-filer, Medichem, asserted an actual reduction to practice that occurred prior to Rolabo’s patent filing.  Proof of reduction to practice requires (1) an actual embodiment meeting all the claimed limitations; (2) showing that the invention would work; and (3) corroboration evidence to show (1) and (2).

On appeal, the CAFC found that Medichem failed to provide the necessary corroboration evidence under part (3) above — reversing the lower court’s decision. In its decision, the appellate panel found, as a matter of law, that a non-inventor’s lab notebook was insufficient corroboration evidence where the non-inventor did not testify at trial or otherwise attest to the notebook’s authenticity and where the notebook had not been signed and dated in accordance with good lab practices.

Given the facts of this case, [the noninventor’s] notebook should therefore not be accorded much corroborative value. In view of the minimal corroborative value of the inventors’ notebooks and the limited value of the NMR spectrum, we conclude that the evidence, evaluated as a whole under the rule of reason, is insufficient as a matter of law to corroborate Medichem’s reduction to practice.

Notes:

  • Interestingly, a parallel interference was also conducted by the BPAI — resolving the issue in favor of Rolabo. Stampa v. Jackson, 65 U.S.P.Q.2d 1942 (B.P.A.I. 2002).

 

 

 

CAFC: Diligence Easier to Prove than Conception

Patent, Patent Cases 2006

Brown v. Barbacid (Fed. Cir. 2006).

Both Brown and Barbacid claim to have invented a method for inhibiting cell growth control factors (farnesyl transferase). The effective filing dates at the PTO were April 18, 1990 and May 8, 1990 respectively.

In an interference proceeding, the PTO’s BPAI found that Brown had the earlier conception date, but that the early date was moot because Brown had “failed to provide corroborated evidence of diligence” in reducing the invention to practice.

Under 35 USC 102(g), the party that is the first to conceive of an invention is entitled to a patent over a later inventor — so long as the early inventor “exercised reasonable diligence from a time before the other party’s conception date to his own reduction to practice date.”

The CAFC found the time-line in this case as follows:

November 15, 1989 — Brown conception
March 6, 1990 — Barbacid conception and reduction to practice
April 18, 1990 — Brown constructive reduction to practice
May 8, 1990 — Barbacid constructive reduction to practice

Thus, in order to ensure priority over Barbacid, Brown must show continual diligence from before March 6 to April 18.  Furthermore, evidence is required to corroborate claims of diligence. However, such evidence can come from a variety of sources and is generally less rigorous to prove than conception.

The basic inquiry is whether, on all of the evidence, there was reasonably continuing activity to reduce the invention to practice. There is no rule requiring a specific kind of activity in determining whether the applicant was reasonably diligent in proceeding toward an actual or constructive reduction to practice.

Here, the BPAI refused to find diligence, and specifically found that the researcher’s laboratory notebook to be too cryptic to provide useful evidence. The appellate panel disagreed, finding that the evidence should be considered as viewed by persons skilled in the art. Specifically, there is no need to “reproduce on each page a statement of the larger research purpose” of the experiment because “this purpose may reasonably be shown in the various declarations.”

AIPLATalk053

Links:

Beware of Overshooting the Mark Set by Phillips v. AWH

Patent, Patent Cases 2006

AIPLATalk052Varco v. Pason Systems (Fed. Cir. 2006).

In a case involving oil and gas drilling equipment, the district court refused to grant the patentee a preliminary injunction.  Varco appealed claim construction.

Specifically, because the specification states that selected regulators 200-203 must be manually calibrated before use, the district court concluded the “selecting” step recited in the asserted claim requires manual calibration.

On appeal, the CAFC determined that the court’s construction was too narrow — and that it had impermissibly imported limitations into the claims.  In its decision, the appellate panel pointed to the preamble of the claim that indicated that it was a method for “automatically” regulating the drilling equipment.  Based on this and other tidbits pulled from the prosecution history, the court found that manual calibration was not required.

Vacated.

Note: This case brings home a point I made in my talk at the AIPLA winter meeting last week.  Specifically, courts should be wary of overshooting the instructions of Phillips. Notably, even though claims are interpreted in light of the specification, special care should be taken to avoid importing limitations from the claims.

Misleading prophetic examples only marginally relevant to materiality in inequitable conduct review

Patent, Patent Cases 2006

Purdue Pharma L.P. v. Endo Pharms. Inc. (Fed. Cir. 2006).

In a dramatic reversal of fortune, the Federal Circuit has reversed itself and the district court findings that Purdue’s Oxycontin patents-in-suit were unenforceable due to inequitable conduct that occurred during prosecution of the patents.

The district court found that Purdue repeatedly referred to its “surprising discovery” during prosecution, but did not inform the PTO that the “discovery” was based on “insight” without “scientific proof.”  In its initial decision, the Federal Circuit determined that the district court did not error in finding the two elements of inequitable conduct: materiality and intent.

On rehearing, the same three-member panel of Judges Gajarsa, Plager, and Linn came to a new conclusion — vacating the holding of inequitable conduct. 

The panel began by reviewing the law of inequitable conduct:

Applicants for patents have a duty to prosecute patents in the PTO with candor and good faith, including a duty to disclose information known to the applicants to be material to patentability. A breach of this duty may constitute inequitable conduct, which can arise from an affirmative misrepresentation of a material fact, failure to disclose material information, or submission of false material information, coupled with an intent to deceive or mislead the PTO.  A party asserting that a patent is unenforceable due to inequitable conduct must prove materiality and intent by clear and convincing evidence. Once threshold findings of materiality and intent are established, the trial court must weigh them to determine whether the equities warrant a conclusion that inequitable conduct occurred.

The court applies a “careful balance:”

[W]hen the misrepresentation or withheld information is highly material, a lesser quantum of proof is needed to establish the requisite intent. In contrast, the less material the information, the greater the proof must be.

Regarding materiality, the CAFC agreed with the district court that “Purdue’s actions met a threshold level of materiality.” However, the panel found that the “level of materiality [was] not especially high” — thus requiring solid proof to establish intent. The trial court, however failed to “properly consider the [low] level of materiality.” 

Based on the lack of evidence intent presented in the trial court’s opinion, the CAFC vacated with instructions to reconsider the evidence of intent based on a low level of materiality.

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