Federal Circuit Affirms $4.6 million award for litigation misconduct

Attorney Fees, Damages, Patent Cases 2009

ICU Medical v. Alaris Medical System pic-14.jpg (Fed. Cir. 2009)

ICU’s patents covers technology for using syringes to add drugs to an IV. The district court granted summary judgment of invalidity and also awarded attorney fees and found a violation of Rule 11 of the Federal Rules of Civil Procedure. Alaris was awarded $4.6 million in attorney fees and sanctions. On appeal, the Federal Circuit affirmed.

Section 285 of the Patent Act provides for the award of attorney fees to the winning party in “exceptional cases.” In Brooks Furniture, the Federal Circuit discussed a two-part test for whether attorneys fees may be awarded due to litigation conduct. The test requires that “both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless.” A district court fee award will be affirmed absent clear error.

The problem – ICU argued that the claim term “spike” could be a non-pointed structure such as a tube even though the specification “repeatedly and uniformly describes the spike as a pointed instrument.” The claim construction was not ICU’s only problem:

For example, the district court found that ICU made “multiple, repeated misrepresentations . . . to the Court regarding its own patents in an effort to conceal what are now characterized as errors in order to rescue the TRO/PI from denial.” These misrepresentations related to (1) ICU’s assertion of claims in the ’509 patent that were identical to claims in the ’592 patent (i.e., assertion of double-patented claims); (2) ICU’s assertion of more double-patented claims from the ’509 patent even after Alaris and the district court warned ICU of the double-patenting issue; (3) ICU’s misrepresentation of Federal Circuit authority; (4) ICU’s representation that figures 13 and 20–22 of the common specification “clearly” disclosed a spikeless embodiment, only to later acknowledge that these figures do not disclose such an embodiment and state that its representation was an “honest mistake.”

Although the Brooks Furniture rule discusses objectively baseless “litigation,” that rule is not construed to focus on the litigation as a whole. Rather, attorney fees may be assessed if any portion of the litigation is brought in bad faith and in an objectively baseless manner. Here, the Federal Circuit found that the lower court had “appropriately exercised its discretion in awarding attorney fees only for [a] portion of the litigation.”

Notes:

  • Federal Circuit Decision 08-1077.pdf
  • District Court award of Fees: 232495.pdf. Bottom line: “The Court finds that Alaris is due $4,587,622.44 in attorney fees and $164,721.19 in costs for the reasons set forth below. . . . This represents a reasonable lodestar calculation for Alaris’ work . . . , and it constitutes a reasonable pro rata amount of Alaris’ total expenditure of $11,000,000 in attorney fees and $2,000,000 in costs overall in this case.”
  • District Court decision to find a Section 285 exceptional case and Rule 11 sanctions. 232494.pdf. Money Quote: “[The submitted declarations] do not substantively justify or excuse ICU’s litigation tactics or show its good faith. These declarations were prepared by ICU’s litigation counsel for the purpose ofopposing the Rule 11 and Fees Motions, and comprise mostly self-serving assertions of good faith by interested witnesses, such as ICU’s CEO (Dr. George Lopez), trial counsel (Fulwider, Patton, Lee & Utecht; Paul Hastings; or Pooley & Oliver), patent counsel (Knobbe Martens) and its paid experts (Dr. Maureen Reitman and Bob Rogers). These materials lack the indicia of credibility provided by declarations or opinions from outside, independent counsel or experts, particularly outside patent, as opposed to litigation, counsel. Most of the materials appear to have been “memorialized” in retrospect, providing marginal support compared to, for example, an ex ante documented and vetted analysis that preceded the litigation or that, al minimum, preceded the TRO/PI request and the inclusion of the “spike” claims in the amended complaint.”
  • Although the district court decision appears to identify the Fulwider firm as “trial counsel,” that appears to have been a mistake made by the court. A Fulwider attorney has indicated that their firm “was never one of ICU’s trial counsel in that matter, and thus made no representations to the court on ICU’s behalf.” In fact, ICU appears to be somewhat of a toxic client. According to the court documents, Fulwider represented ICU in the 1990’s. At some point ICU dropped the firm as a client and sued for malpractice based on Fulwider’s representation of alleged ICU competitors. Fulwider did not admit wrongdoing, but a 2007 press release by ICU claims that ICU “will be paid $8 million in settlement of its claims against Fulwider.”

In re Nature’s Remedies: Foreign Regulatory Submission Invalidates Patent Under 102(b)

Anticipation, Patent, Patent Cases 2009,

In re Natures Remediesssp_temp_capture.jpg (Fed. Cir. 2009) (nonprecedential)

In October of 2005, a third party (Jemo-Pharm) submitted a request for ex parte re-examination of Natures Remedies patented claim covering an herbal composition of guarana, damiana, and yerbe-mate claimed to cause weight loss. More than one year before Remedies’ filing date, an anticipating composition had been submitted to a Danish regulatory organization as part of a request for approval for clinical testing. (The decision is unclear, but implies that the submission was done by Remedies).

A Danish official provided testimony that the submission was a public record and was open for inspection since its date of submission. Remedies’ expert, however, argued that a Danish trade-secrecy law would have prevented such inspection. The BPAI accepted the open-access line of argument and found the submission invalidating prior art under 35 USC 102(b). The patentee appealed – arguing that the official submission was not sufficiently publicly accessible to be considered 102(b) prior art.

On appeal, the Federal Circuit affirmed – finding that the regulatory submission was publicly available more than one year before Remedies filed its application. The court began by recognizing that the official’s testimony created a prima facie case that the submission was publicly accessible – shifting the burden to the patentee. Of course, BPAI factual findings such as this will be affirmed with a finding of “substantial evidence.”

Because [the Danish Official’s] declaration established a prima facie case of public availability, the onus was on Remedies to demonstrate that the [regulatory submission] was not accessible to interested members of the public. Remedies, however, failed to carry its burden.

Under the Danish trade-secrecy law, the regulatory submissions are kept secret when they are of “material importance” to a company’s “economy.” It appears that Remedies could have proven its case but failed to provide evidence to the Board.

Attorney argument, however, cannot take the place of record evidence. See In re Geisler, 116 F.3d 1465, 1470 (Fed. Cir. 1997); Johnston v. IVAC Corp., 885 F.2d 1574, 1581 (Fed. Cir. 1989). Here, the evidence of record does not establish that Remedies intended to keep the formulation of the Medi-Tab capsule confidential until after the study had been completed and a patent application had been filed.

Rejection affirmed

Notes:

  • 102(b) looks at prior art that was “described in a printed publication” more than one year prior to the date of application for the US patent. Implicit within ‘publication’ is a notion that the material is publicly accessible. Notably, however, there is generally no need to prove that the material was actually accessed. Thus, in this case, there is no discussion of whether the regulatory submission was ever seen by anyone.
  • Read the case
  • Reexam No. 90/007,785 (look it up in PAIR).
  • In some ways, this case is simply an extension of the Pivonka v. Axelrod case where the Federal Circuit held that the applicant has waived arguments by failing to present them at the Board of Patent Appeals.

In re Ferguson: Patentable Subject Matter

BPAI, Patent, Patent Cases 2009, Patentable Subject Matter, Software, , ,

In re Ferguson (Fed. Cir. 2009)

Scott Harris has been discussed several times on Patently-O. Harris is a former Fish & Richardson partner. Fish handles the most patent litigation of any firm in the country. In addition to being a patent attorney, Harris is an inventor. He has contracted with the plaintiffs firm Niro Scavone in several actions to enforce patents against Google and other companies. Harris is one of the named inventors of the Ferguson application and he handled the [futile] appeal.

The claimed invention focuses on a “method of marketing a product” and a “paradigm for marketing software.” These claims focus on methods and structures for operating a business.

Methods Under Bilski: Claim 1 reads as follows:

A method of marketing a product, comprising:

developing a shared marketing force, said shared marketing force including at least marketing channels, which enable marketing a number of related products;

using said shared marketing force to market a plurality of different products that are made by a plurality of different autonomous producing company, so that different autonomous companies, having different ownerships, respectively produce said related products;

obtaining a share of total profits from each of said plurality of different autonomous producing companies in return for said using; and

obtaining an exclusive right to market each of said plurality of products in return for said using.

Under Bilski, this case is open and shut. The claim is not even arguably tied to a machine — especially under the Nuijten construction of machine to be a “concrete thing, consisting of parts, or of certain devices and combination of devices [including] every mechanical device or combination of mechanical powers and devices to perform some function and produce a certain effect or result.” (Quoting Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863)). Thus, the 1863 touchability definition of machine appears to hold weight. On the second Bilski prong, the claim does not require transformation of any article into a different state or thing. The only transformation is that of legal rights and organizational relationships that were explicitly excluded in the Bilski decision: “transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”

Harris asked the court to consider a different test of patentable subject matter: “Does the claimed subject matter require that the product or process has more than a scintilla of interaction with the real world in a specific way?” The CAFC panel rejected that proposal primarily based on the precedential value of Bilski: “In light of this court’s clear statements that the “sole,” “definitive,” “applicable,” “governing,” and “proper” test for a process claim under § 101 is the Supreme Court’s machine-or-transformation test, see Bilski, passim, we are reluctant to consider Applicants’ proposed test.” The court went on to determine that the “scintilla” test would create too much ambiguity as well.

Non Method Claims: The application also included claims directed to a “paradigm for marketing software” made up of a marketing company that markets software in return for a contingent share of income. Although “instructive,” the Federal Circuit did not directly follow Bilski. Rather, the court looked to determine whether the claimed paradigm fit within one of the four statutory classes listed in Section 101:

Inventions Patentable: “… any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof…”

In a gentle Koan, the Court stated that it “need not resolve the particular class of statutory subject matter into which Applicants’ paradigm claims fall, [however], the claims must satisfy at least one category.” In fact, the court did attempt to resolve the particular class, but was unable to fit the paradigm claim into any of the four.

Applicants’ paradigm claims are not directed to processes, as “no act or series of acts” is required. Nuijten, 500 F.3d at 1355. Applicants do not argue otherwise. Applicants’ marketing company paradigm is also not a manufacture, because although a marketing company may own or produce tangible articles or commodities, it clearly cannot itself be an “‘article[]’ resulting from the process of manufacture.” Nuijten, 500 F.3d at 1356. Again, Applicants do not argue otherwise. And Applicants’ marketing company paradigm is certainly not a composition of matter. Applicants do not argue otherwise.  

Again applying the touchability notion of machine, the Court also rejected the notion that the company paradigm could be a machine:

Applicants do assert, however, that “[a] company is a physical thing, and as such analogous to a machine.” But the paradigm claims do not recite “a concrete thing, consisting of parts, or of certain devices and combination of devices,” Nuijtent, and as Applicants conceded during oral argument, “you cannot touch the company.”

Ending in a flourish, the court found that in fact, the Ferguson paradigm claims are “drawn quite literally to the paradigmatic abstract idea.” (quoting Warmerdam).

Judge Newman offers a poignant concurring opinion.  

Eastern District of Texas as the Best Venue

Jurisdiction, Patent, Patent Cases 2009

Mayer Lebowitz was a noted inventor of security technology. He died in 2005, but the trustee of his estate (Gellman) sued to enforce patent rights against various security companies including ADT, Diebold, Digital Security, Europlex, NAPCO, Numerex, Protection One, and Telular. Gelman lives in Texas and brought suit on behalf of the estate in the Eastern District of Texas – alleging infringement of U.S. patent No. 6,075,451. The ‘451 patent covers the method and electronics for sending alerts via a cellular network. That way, the lines can’t be cut, and installation may be much cheaper.

Judge Ward rejected the defendants motion to transfer Venue to the Northern District of Illinois – finding that the Plaintiff’s Texas location weighed heavily in favor of keeping the case in Texas. Gellman v. ADT Sec. Services, Inc., 2008 WL 4280351 (E.D.Tex. 2008). Following In re TS Tech, Telular has now moved for mandamus – asking the Federal Circuit to order that venue be transferred. In a preliminary ruling on the Motion, Judge Dyk demanded that Gellman brief the matter.

In a parallel case, Judge Ward recently refused to transfer a case that had been filed against a dozen auto manufacturers. MHL TEK, a Texas corporation, sued Audi, VW, Nissan, Hyundai, Kia, BMW, Porsche, Isuzu, etc. The defendants asked that the case be sent to the Eastern District of Michigan, Judge Ward found numerous reasons why Michigan was a poor choice of venue. MHL TEK, LLC, v. NISSAN MOTOR COMPANY, 2009 U.S. Dist. LEXIS 13676 (E.D. Tex. 2009). In his opinion, Judge Ward made the law on venue look quite silly when applied to major multi-party patent cases. For instance, the convenience factor looks at distance to the forum: “For defendants flying in from Germany, the Detroit airport would possibly be closer than the Shreveport airport. For defendants flying in from Asia over the Pacific, the Shreveport airport would possibly be closer than the Detroit airport.” As in the Gellman case, at least one defendant here (VW) has asked for the Federal Circuit to rule on mandamus. Briefing on that motion continues.

Both cases are easily contrasted with Odom v. Microsoft. (AKA Patent Hawk) In Odom’s case, both the patent holder and defendant were located in the Pacific Northwest, and the defendant asked that the case be transferred to the Plaintiff’s home jurisdiction. In both Gellman & MHL TEK, the plaintiffs are located in Texas and the multiple defendants are located throughout the country and the world without any particular site of nexus.

Waiving Arguments at the Board of Patent Appeals

BPAI, Obviousness, Patent, Patent Cases 2009

PatentLawPic692Pivonka v. Axelrod (Fed. Cir. 2009)(non-precedential)

In 2003, Axelrod asked the PTO to declare an interference against Pivonka’s patent which had issued the year prior. (Pat. No. 6,408,797). During the interference, the BPAI found Pivonka’s collapsible pet carrier claims to be unpatentable as obvious. [Link] On appeal, the Federal Circuit affirmed.

In reviewing a BPAI obviousness rejection, the Federal Circuit looks for “substantial evidence” to support any factual determinations, but reviews the ultimate question of obviousness de novo.

Here Pivonka pointed to three potential errors: (1) improperly saying that the invention has a “barn-like structure;” (2) failing to consider the patented claims individually; and (3) failing to appreciate the structural differences and functional benefits provided by the claimed invention as compared to the prior art.

The Federal Circuit dismissed these concerns in turn: (1) the reference to the barn was merely shorthand and not reversible error; (2) the applicant waived any right to have claims 2–9 considered separately by failing to make arguments on those claims earlier; and (3) the Board’s conclusion of obviousness was correct.

“Under KSR International Co. v. Teleflex, Inc. “[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” 550 U.S. 398, 1739 (2007). According to Dr. Shina’s unrebutted affidavit [Axelrod’s Expert], both the structural benefits and the way in which to build the container claimed by Pivonka were readily apparent to a person of ordinary skill in the art. Accordingly, we find no error in the Board’s conclusion that claims 1-9 are obvious.”

The Court also rejected an argument of improper procedure based on Pivonka’s waiver of the issue before the BPAI. One important take-away from this case is that the Federal Circuit generally treats the BPAI as it would a lower court in the sense that an issue must first be raised with the BPAI in order to be ripe for appeal to the Federal Circuit. If the issue is not raised at the lower level, then any appeal will be deemed waived.

Although not directly related, I enjoyed the following recent anonymous comment to another post:

Whoever said "necessity is the mother of invention" was wrong. According to KSR, "necessity is the mother of obviousness."

Underlying the interference is a patent infringement case between Pivonka and TFH Publications (Axelrod’s assignee). That case is also on appeal but will be heard by a different panel. Interestingly, after this favorable decision, TFH requested that the case be reassigned to the Axelrod panel. The Federal Circuit denied that motion. [Link]

Federal Circuit Affirms District Court’s Extension of 30-Month FDA Stay

Patent, Patent Cases 2009, Pharma, Procedure

Eli Lilly v. Teva Pharmaceuticals (Fed. Cir. 2009)

Teva is hoping to make a generic version of Lilly’s Evista brand raloxifene tablets that are used to help prevent postmenopausal osteoporosis. In May 2006, Teva filed an abbreviated new drug agreement (ANDA) and Lilly subsequently sued for patent infringement and to block the generic release. Under the law, after the patentee files suit, the FDA cannot then approve the generic for thirty months “unless the court has extended or reduced the period because of a failure of either [party] to cooperate reasonably in expediting the action.” This is commonly known as the “thirty month stay.”

In this case, the court originally set a trial date four months after the end of the thirty month period. In the months leading up to trial Teva altered its proposed generic formulation, which changed Lilly’s litigation strategy. As a result, the district court ordered that the FDA thirty month stay be extended for four extra months – until May 2009. Teva filed an emergency appeal to lift the stay.

On appeal, a split Federal Circuit panel affirmed – finding that the district court acted within its discretion in extending the stay based on Teva’s activity. “Trial courts, thus, may shorten or extend the thirty-month statutory period based on the parties’ uncooperative discovery practices before the court.” In its decision, the court distinguished the 2002 Andrx v. Bioval case. In Andrx, the Federal Circuit found that the district court had abused its discretion in shortening a thirty-month stay based on a party’s “positions before the FDA.” Rather, changes to the thirty-month period must be based on failure to cooperate court.

In dissent, Judge Prost argued that the majority misinterpreted the statute to grant too much deference to the district court in extending the stay. Rather, the statute requires that the stay should only be extended when a party fails “to cooperate reasonably in expediting the action.” Here, Judge Prost argues, the lower court did not find that Teva failed to cooperate, but only that Lilly could use more time to respond. The statute is limited in a way that does not allow extension of the stay in that situation.

Notes:

  • Judge Rader wrote the majority opinion and was joined by Chief Judge Michel.
  • On the expedited schedule, Appellant filed its principle brief November 24, 2008; briefing was complete on December 30, 2008; Oral arguments were heard on January 14, 2009; and a decision rendered on February 24, 2009.

Patent Attorney Argument as Inequitable Conduct

Inequitable Conduct, Patent, Patent Cases 2009, ,

Rothman v. Target Corp. (Fed. Cir. 2009)

A New Jersey jury found Rothman’s patent invalid, not infringed, and unenforceable due to inequitable conduct. (Pat No. 6,855,029). On appeal, the Federal Circuit reversed the inequitable conduct holding, but otherwise affirmed.

Obviousness: The asserted patent covers a breastfeeding shirt that includes a concealed, but fully supportive nursing bra. The original prototype was built by Ms. Rothman by sewing a Jockey brand tank-top together with an Olga brand nursing bra and some additional fabric. Thus, here we have a situation where the inventor took off the shelf items and took a few hours (a day into the night) to form them into a new combination. The appellate panel recognized that the particular manner in which an invention is actually made does not negate patentability. However, the appellate panel did see the simple inventive process as evidence of “the predictability and expectations in this field of art.” Based on these facts, the court could find no reason to disturb the obviousness holding since a PHOSITA “would have been motivated to combine an existing tank top with an existing nursing bra to arrive at the claimed invention.”

Inequitable Conduct: The Federal Circuit reversed the jury’s finding of inequitable conduct. One point of interest involved the patent attorney argument that “nursing garments are highly specialized … as distinguished from maternity garments, [and] are not analogous prior art to women’s garments in general…. Therefore, it is improper to combine a prior art reference from nursing garments with a prior art reference from garments generally, with no connection to nursing garments.” It turned out that the patent attorney had no prior experience in nursing garment technology and did not consult any industry experts before making his claims regarding the ‘highly specialized’ nature of the art and the impropriety of combining prior art.

The Federal Circuit no problem with these attorney statements:

[The attorney’s] remarks show an effort to persuade that does not even approach an effort to deceive the PTO or abuse the prosecution process. …

Appellees find fault with the final sentence from the excerpt above. However, [the attorney’s] conclusion that it is “improper to combine a prior art reference from nursing garments with a prior art reference from garments generally, with no connection to nursing garments” is nothing more than attorney argument based on the foregoing facts … [derived] from his analysis that nursing garments are different from regular women’s wear. … In any event, this type of conclusory analysis betrays no intent to deceive the PTO and obtain a patent with objectively false information. Rather, it is an attempt to characterize the prior art in a manner favorable to the attorney’s client—far from deception. No reasonable jury could rely on Mr. Jacobson’s statements as clear and convincing proof of inequitable conduct.

While the law prohibits genuine misrepresentations of material fact, a prosecuting attorney is free to present argument in favor of patentability without fear of committing inequitable conduct. . . . This court has little basis to find deceptive intent in the routine back and forth between examiner and applicant. Moreover, this court recognizes that the Patent Act gives the examiner the discretion to reject or accept an applicant’s arguments based on the examiner’s own conclusions regarding the prosecution record.

Attorneys should take this decision with a grain of salt based on the fact that Judge Rader authored the opinion and Judge Friedman was on the panel. Judge Rader is well known for his opinion that inequitable conduct is too liberally adjudged.

Federal Circuit Takings Case: Set Up for Supreme Court Review

Patent, Patent Cases 2009, Takings, ,

Casitas Municipal Water v. US (Fed. Cir. 2009) (en banc denial) (MAYER, SCHALL , and MOORE*)

Casitas is not a patent case, it is a takings case involving regulatory restrictions on water use imposed by US Government. The Federal Circuit has jurisdiction over this takings claim against the US Government because it is on appeal from the Court of Federal Claims (CFC). Although the Federal Circuit has denied the Federal Government’s motion for en banc rehearing, a set of diverging opinions sets this case in position for likely Supreme Court review.

History: The Ventura River Project provides water supply to Ventura County, California. In 1956, the US Government granted the local government the “perpetual right to use all water that becomes available through the construction and operation of the Project.” Then, in 1997, steelhead trout living in the Project became an endangered species under the Endangered Species Act (ESA), and the US Government required that Casitas construct a fish ladder and divert water over the fish ladder. Casitas complied, but filed suit in the CFC alleging that the Federal Government had taken its property without just compensation (and also under breach of contract). The CFC classified the Government action as “regulatory” rather than a “physical.” In takings law, compensation for regulatory takings is much more difficult to obtain, and Casitas admitted that it could not prove the required elements. This conclusion followed the Federal Government argument that “it did not seize, appropriate, divert, or impound any water, but merely required water to be left in the stream.”

Appeal: On appeal, the Federal Circuit reversed. Writing for the majority, Judge Moore concluded “that the government physically appropriated water that Casitas held a usufructuary right in.”

Here, the government admits for the purposes of summary judgment that it required Casitas to build the fish ladder facility, which is a man-made concrete structure that was not a portion of the existing … The government also admits that the operation of the fish ladder required water, which prior to the fish ladder’s construction flowed into the Casitas Reservoir … Specifically, the government admits that the operation of the fish ladder includes closing the overshot gate …and that the closure of this gate causes water that would have gone into the Casitas Reservoir via the Robles-Casitas Canal to be diverted into the fish ladder. … These admissions make clear that the government did not merely require some water to remain in stream, but instead actively caused the physical diversion of water away from the Robles-Casitas Canal … and towards the fish ladder, thus reducing Casitas’ water supply.

In dissent, Judge Mayer rejected the physical takings argument. At base, he argued, Casitas does not actually own the water. Rather, under California law, all water sources within California “belong to the public.” Even if Casitas did own the water flow, Mayer would have seen the endangered species requirements as regulatory because the requirements simply force a specific use of the water rather than take it away.

En Banc Rehearing: In what looks like a 7-5 (or 6-6) vote, the Federal Circuit denied a rehearing en banc. Judge Moore wrote a new opinion defending her original approach in the original opinion. In particular, Judge Moore focused on the “facts as presented” in the case. “[T]he government conceded (1) that Casitas had a property right in the water diverted from the Ventura River, and (2) that the government required Casitas to build and operate the fish ladder in such a way as to permanently appropriate water in which Casitas had the conceded property right.” Based on those two facts, the holding of a physical takings was easy.

Judge Gajarsa would have heard the case en banc. Gajarsa (joined by Chief Judge Michel and Judge Dyk) saw the taking as clearly regulatory in form because nothing had actually been taken by the US Government.

This denial implicates fundamental questions regarding takings law. The panel majority’s opinion suggests that a government action can be construed to be a physical taking even if no physical proprietary interest has actually been taken by the United States. This is contrary to present Supreme Court law and contrary to our case law. Accepting this analysis of the panel majority eliminates the fine distinction and balance that has been established by the Supreme Court between physical and regulatory takings. Moreover, it eliminates the ability of the legislature to provide for limited and parsimonious legislation protecting endangered species.

Notes:

  • Republican vs. Democrat: Moore’s position is clearly one of stronger property rights while Gajarsa/Mayer’s position is in favor of regulatory power of the government. It appears that this decision falls along political lines. Those thinking of the regulation as a physical taking (Moore, Schall, Rader, JJ) are all Republican appointees. Three of the five thinking of the regulation as regulatory in nature are Democratic appointees (Linn, Dyk, Gajarsa, JJ are all Clinton appointees; Michel, CJ, and Mayer, J, are Reagan appointees). At least three of the four other judges voted to deny a rehearing. Of those four, three are Republican appointees (Newman, Lourie, Prost, JJ, are all Republican appointees; Bryson, J, is a Clinton appointee). As you can see here, eight of the twelve active Federal Circuit judges are Republican appointees.
  • En Banc Denial
  • Original CAFC Opinion: Casitas Mun. Water Dist. v. United States, 543 F.3d 1276 (Fed. Cir. 2008).
  • Original CFC Opinion

Obviousness; Scope and Content of the Prior Art; Secondary Considerations

CAFC, Chemical, Obviousness, Patent, Patent Cases 2009, Patentable Subject Matter

Süd-Chemie v. Multisorb Technologies (Fed. Cir. 2009)

Süd-Chemie holds a patent covering a desiccant container for keeping products dry in shipment. In an infringement action, the Kentucky district court found the patent invalid as obvious. On appeal, the Federal Circuit vacated – holding that the lower court had erred in its analysis of the scope and content of the prior art. There are two primary take-away points from Sud-Chemie. First, obviousness jurisprudence continues to require detailed analysis of the claims and the prior art. I.e., KSR did not suddenly allow handwaving as a substitute for evidence and clear argument. Second, well presented secondary indicia of nonobviousness continue to be important in rebutting obviousness allegations.

Here, the claimed patent required the use of “compatible polymeric materials” used in a laminate seal. The prior art disclosed the use of laminate materials taken from the same general class of materials. However, the Federal Circuit recognized that the prior art did not specify that the selected materials be “compatible” in a way to allow for a proper laminate seal.

This is a case where a definition of the claim term in the specification greatly aided the patentee. The specification defined “compatible” materials as those that “mix on a molecular scale and will crystallize homogeneously.” The prior art reference did not teach this form of compatibility. In fact, the prior art appeared to teach “incompatible” materials.  

Multisorb ignores the fact that while the ’942 patent requires the inner surfaces of the laminate and microporous films to have similar softening points, Komatsu [the prior art] requires the films to have dissimilar softening points. Komatsu thus does not teach the use of a microporous film that is compatible with the inner surface of the laminate film.

Looking at secondary considerations, the Federal Circuit instructed district courts to “attend carefully to any evidence of … secondary considerations of nonobviousness.” Here, the focus is on the surprising and unexpected result that compatible materials formed stronger bonds even without adhesive.

The Federal Circuit did not apply these findings to form a conclusion on the issue of obviousness. Rather, the court remanded for further development of the facts.

[NOTE- This decision is from January 2009]

Federal Circuit Finds DJ Jurisdiction Even After Time-Limited Covenant Not To Sue

Declaratory Judgment, Jurisdiction, Patent, Patent Cases 2009

Revolution Eyewear v. Aspex Eyewear (Fed. Cir. 2009)pic-8.jpg

After several years of litigation, the patentee-plaintiff Revolution delivered a covenant not to sue to Aspex. The covenant was limited to the asserted patent and to activities prior to dismissal of the action. The district court dismissed the case, but Aspex did not let go. The accused infringer wanted assurances that it could continue selling the accused version of its eyeglass design without worrying about future charges of infringement.

In the appeal, Judge Newman agreed that a case or controversy continues to exist and that under MedImmune, the district court still retains jurisdiction. In the backdrop, the Newman was careful to differentiate this case from those where an accused defendant may be hoping to seek a speculative judicial opinion on future product lines:

This case is of larger substance than merely a would-be competitor seeking to test the waters by way of an advisory judicial opinion on an adverse patent….These parties are already in infringement litigation initiated by the patentee, the case has been pending since 2003, and already has produced a summary judgment of invalidity (which was later vacated by this court, 175 Fed. Appx. 350); the patentee filed its covenant in 2007, after four years of litigation, on the eve of trial of the question of enforceability. Throughout this period the accused eyewear were removed from the market by Aspex, and would not be shielded by the covenant should it be returned to the market, as Aspex states is its intention. Aspex states, and Revolution agreed at the argument of this appeal, that it is reasonable to believe that Revolution will again file suit should Aspex return to this market with the same product as it previously sold. By now barring the counterclaims that have been pending since 2003, Aspex states that this court would enable the “scare-the-customer-and-run” tactics that were deplored in Arrowhead.

Dismissal Reversed. On remand, the lower court retains subject matter jurisdiction over the declaratory judgment counterclaims.

Federal Circuit Applies KSR – Finding Combination Claims Obvious

Obviousness, Patent, Patent Cases 2009

PatentLawPic661Ball Aerosol v. Limited Brands, Bath & Body Works, etc. (Fed. Cir. 2009)

Ball’s patent covers a candle tin with a removable lid. The lid is designed to fit under the candle to help avoid scorching the underlying surface. According to the claims, the candle tin also has legs or “protrusions” that rest upon the cover.

On summary judgment, a Northern District of Illinois court found Ball’s patent valid as a matter of law. On appeal the Federal Circuit flipped the decision — finding the asserted claims invalid as a matter of law.

Here, it was undisputed that all of the elements of the claims can be found in the combination of two prior art references. In addition, the problem of candle-tin scorching was well known in the art. Finally, it is undisputed that the technology is “simple and easily understandable.”

This case falls squarely under the rule of law expounded by KSR where the Supreme Court held that “[i]f a person of ordinary skill can implement a predictable variation, § 103 likely bars its patentability.” Here, one prior art reference (Marchi) taught the candle with a cover that could be used as a base. The other reference (Wright) taught a candle with “bumps” on the bottom to avoid scorching the surface. In considering these two references, the Federal Circuit determined that the combination was obvious:

“The combination of a cover-stand and feet on the bottom of the candle holder was obvious to try in an effort to minimize scorching, as the combination would further raise the bottom of the candle holder above the supporting surface. The resulting, and desired, decreased heat transfer between the candle holder and the supporting surface from the combination would have been entirely predictable and grounded in common sense.”

Explicit Motivation: In KSR, the Supreme Court indicated that the reasons for combining prior art references “should be made explicit.” Here, the Federal Circuit clarified that statement – holding that the motivation need not be explicit in any prior art. Rather, the Supreme Court is referring “to the court’s analysis.” In other words, a court must explain its motivation in combining two or more references to invalidate a patent for obviousness.

Commercial Success: Even those who believe in objective indicia of nonobviousness admit that commercial success is one of the weakest forms. The problem is the general difficulty in tying the success of the product to the invention itself. Here, the Federal Circuit found that the “minimal indications of commercial success … do not outweigh the clear indication of obviousness apparent from the prior art.”

Holding: Judgment Reversed, Claims are invalid as obvious

Notes: I have pasted figures from the two prior art references. One shows a candle with “protrusions” on the bottom the other shows a candle using the lid as a base. At least one of the references specifically discussed object of creating space between the candle and the surface to avoid scorching problems. Neither reference was cited by the patentee during prosecution.PatentLawPic662

PatentLawPic663

Cardiac Pacemaker v. Jude: Challenging 271(f) Liability for Components of a Method

CAFC, En Banc, Patent, Patent Cases 2009, Transnational

Cardiac Pacemakers v. St. Jude Medical (On motion for en banc rehearing)

35 U.S.C. § 271 defines various types of patent infringement including direct infringement and contributory infringement. Section 271(f) details a special cause of action that captures some transnational activities. In particular, Section 271(f) creates a cause of action for supplying components of a patented invention to be assembled abroad.

In 2007, the Supreme Court ruled on a 271(f) case — finding that software per se cannot be considered a “component” under the statute. Microsoft v AT&T, 550 U.S. 437 (2007). In December 2008, the Federal Circuit decided Cardiac Pacemaker and held that the Microsoft v. AT&T did not overrule a prior precedential ruling that Section 271(f) does extend to cover components of a claimed method. “[T]he Supreme Court’s decision does not alter [the] holding” that “271(f) applies to components used in the performance of patented methods and processes.” The precedent in question is Union Carbide v. Shell. Although the Federal Circuit denied a request to rehear the Union Carbide case, Judges Lourie, Michel, and Linn, argued then that the issue was ready for en banc review. Judge Dyk also dissent from the en banc denial in Union Carbide.

In their decision, the panel (Judges Newman, Mayer, & Lourie) practically begged for en banc rehearing: “As a panel, we cannot reverse the holding of another panel of this court. We thus affirm the district court’s decisions relating to damages.” [Link] Of course, Judge Mayer signed-on to Judge Rader’s original Union Carbide opinion.

Now, the defendant (St. Jude) has asked for a rehearing en banc. If unsuccessful, we can expect a petition for a writ of certiorari. The FCBA and AIPLA joined forces in an amicus brief supporting the rehearing en banc and for a reversal of the Union Carbide analysis. Writing on behalf of Cisco, Intel, Microsoft, Oracle, and Symantec, Ed Reines also argues that the rule should be overturned. The tech companies argue in particular that the limit on exports creates major adverse economic incentives.

“A very common business arrangement is for United States companies to export instructions, materials, recipes, and other knowledge-exports to Asian and other off-shore locations where manufacturing processes takes place. An overbroad extraterritorial interpretation of § 271(f) to apply to process patents creates potential worldwide liability for companies based in the United States that export anything that can properly be considered a process step. Yet, if their competitors exist outside the United States, they are not exposed to liability for United States patent infringement for supporting foreign manufacturing processes.”

A good handful of judges have at least loosely indicated that they would support an en banc rehearing — making this a very likely candidate.

Notes:

Briefs:

Federal Split Decision Highlights Unpredictability of Claim Construction (Once Again)

Claim Construction, Obviousness, Patent, Patent Cases 2009,

Kinetic Concepts v. Blue Sky Medical Group (Fed. Cir. 2009)

Virtually every theory or defense in patent law requires claim construction before coming to a final conclusion. This case focused on obviousness and considered how the results turn on the construction of the claim term “treating a wound.” A two-member majority (Judges Prost and Bryson) narrowly construed the term to only include treatment of surface wounds (instead of internal organs) and affirmed a nonobviousness holding. The dissent (Judge Dyk) saw a broader definition leading him to a conclusion that the claims were obvious in light of the prior art.

Hal Wegner aptly notes that it would be “difficult without an intensive study of the record to determine whether the majority or the dissent has properly construed the claims under Federal Circuit precedent: Indeed, it is possible that both constructions are acceptable. Kinetic Concepts thus once again points to the continued imperative of statutory claim construction reform.”

As per usual, Judge Dyk’s dissent is sharp – finding that the majority erred first by finding that the term should be limited to the disclosed embodiments and erred again by narrowly misreading the scope of the disclosed embodiments:

“In my view, the majority improperly holds that the claim term “wound” can be limited to the disclosed embodiments in the specification, and, having done so, then misreads the specification as showing only embodiments treating harm to the surface of the body or skin wounds. Under the correct construction of this claim term, the asserted claims of U.S. Patent Nos. 5,636,643 (“’643 Patent”) and 5,645,081 (“’081 Patent”) would have been obvious.”

Notes: Read the decision 07-1340.pdf.

Classen v. Biogen: Request for Rehearing

Patent, Patent Cases 2009, Patentable Subject Matter

In Classen v. Biogen, the Federal Circuit issued a one paragraph non-precedential opinion rejecting Dr. Classen's claimed method for evaluating a vaccine immunization schedule. The problem with the claims stems from the Bilsmane or transformation test. The appellate panel found that "the claims are invalid under 35 U.S.C. § 101. Dr. Classen's claims are neither "tied to a particular machine or apparatus" nor do they "transform[] a particular article into a different state or thing." Bilski, 545 F.3d at 954."

Now, Classen has filed its request for a rehearing en banc and is looking for further amicus support. The brief cites only one case — Bilski — and argues the facts: that at least the claim limitation of "immunizing mammals" is a qualifying transformation of matter.

Notes:

BPAI Again Rejects System Claims under Bilski

BPAI, Patent, Patent Cases 2009, Patentable Subject Matter

Ex parte Atkins (BPAI 2009)

The BPAI has again raised the issue of Post-Bilski patentable subject matter sua sponte. Like most claims challenged under Section101, Atkins claims also have serious nonobvousness and indefiniteness problems.

Atkins claims a method of “converting a unidirectional domain name to a bidirectional domain name.” In reviewing the claim under Bilski, the BPAI noted that the claims do not “recite any machine or apparatus or call for transforming an article into a different state or thing. A domain name is simply a series of characters representing the address of a resource, such as a server, on the World Wide Web. All of the steps are data manipulation steps.”

Atkins also claims a parallel “system” for converting the domain name. The BPAI rejected the system claims under Bilski since “those claims encompass any and all structures for performing the recited functions. As a result, [the system claims] are at least as broad as method claims … which we have determined recite patent ineligible subject matter under Bilski.”

The Exodus: Following TS Tech, Patent Lawsuit Transferred from E.D. Texas to Oregon

Jurisdiction, Patent, Patent Cases 2009,

A few days ago I was discussing TS Tech with a patent law guru. I suggested that TS Tech would not have a major impact on the location of patent cases – largely because local judges still retain a large amount of discretion in determining whether another venue is more convenient. . . . What do I know.

Odom v. Microsoft (E.D. Tex, Jan 30 2009)

Famed patent blogger Gary Odom sued Microsoft in the Eastern District of Texas – alleging that the Office 07 toolbar infringes Odom's software patent. Judge Love was assigned the case — but now he has granted Microsoft's motion to transfer the case to Oregon. You see, Odom is located in Oregon, Microsoft in Washington, the Klarquist firm (who once worked with both Odom and Microsoft) is in Oregon.

Judge Love relied on the Federal Circuit's TS Tech (J. Rader) opinion and the 5th Circuit's VW opinion (en banc) in determining that the suit should continue in the Northwest rather than Texas.

Under the circumstances presented here, the convenience of witnesses and localized interests weigh in favor of transfer with the other factors neutral or weighing slightly in favor of transfer. This is a case that is significantly localized in the Northwest. Both parties are residents of the Northwest, and Microsoft’s equitable defenses all arise out of conduct and contracts in the Northwest. No Texas resident is a party to this litigation, nor is any Texas state law cause of action asserted. All identified witnesses—with the possible exception of one—are located in the Northwest. This is not a case where witnesses are expected to be traveling from all over the country or world. In summary, there is little convenience to the parties for this case to remain in Texas, while there are several reasons why it would be more convenient for the parties to litigate this case in Oregon.

Case transferred.

Notes:

  • Order to transfer order to transfer from texas
  • E.D. Texas Blogger Michael Smith has more details
  • It remains to be seen if Judges Ward and Davis follow suit.
  • In the opinion, Judge Love did distinguish some portions of TS Tech. Importantly, much of the likely evidence is in electronic form. The court found that the physical location of the servers holding that electronic evidence did not impact the inconvenient forum analysis.

Bilski at the Supreme Court

Patent, Patent Cases 2009, Patentable Subject Matter, ,

Bernard Bilski’s petition for certiorari is due within days (unless an extension is granted). I think that there is a real question of whether (and how) the patent community should react to presentation of the case. Should the patent community support this case for Supreme Court review, wait for a better situated case, or sit content with the machine-or-transformation test outlined by the Federal Circuit in the en banc Bilski decision? Each position has its merits.

The case is well developed, parties and amici have already invested time standing behind the case. Yet, the underlying invention is not compelling (a method of hedging the risk of bad weather by using commodities trading) and issues of obviousness would almost certainly cloud the issues. There are many other potential cases in the pipeline, and the Supreme Court may properly wait to see how the new Bilski rule develops before weighing-in.

Federal Circuit Finds Stent Patent Obvious by Combining Embodiments in a Single Prior Art Reference

Obviousness, Patent, Patent Cases 2009

Boston Scientific v. Cordis (Fed. Cir. 2009)

In 2003, Boston Scientific sued Cordis for infringement of its drug-eluting, non-thrombogenic, expandable stent. (Patent No. 6,120,536). The stent, thus has a metal core surrounded by a drugged layer that is then surrounded by a non-thrombogenic layer. A jury found the asserted claims infringed and not obvious. The district court accepted the jury verdict and denied the Cordis motions for JMOL and a new trial. On appeal, the Federal Circuit reversed – finding the patent obvious as a matter of law.

Cordis pointed to another Medtronic patent (“Wolff”) as prior art that – by itself – renders the claims invalid. Wolff discloses two separate embodiments: (Fig 4) a metallic core with a drug-eluting coating and (Fig 3B) a drug-eluting core with a non-thombogenic coating. Thus, Wolff “teaches all of the [claimed] limitations. . . . The only qualification to this statement of fact is that all of the limitations are found in two separate embodiments pictured side by side in the patent, not in one embodiment.”

Applying KSR, the Federal Circuit found that it would have been obvious to combine the two embodiments since the combination was simply a “predictable variation.”

“Combining two embodiments disclosed adjacent to each other in a prior art patent does not require a leap of inventiveness.”

Holding: The asserted claim “would have been obvious in view of Wolff.”

Note: The Cordis brief used a particularly effective strategy of including the two embodiments to be combined followed by a demonstrative drawing of how they would have been combined. Here, they used the same drawing style and also used the same figure numbering.

Federal Circuit Revises (Muzzles) Comiskey

En Banc, Patent, Patent Cases 2009, Patentable Subject Matter,

In re Comiskey (Fed. Cir. 2009) (Revised Panel Opinion)(En Banc Order)

After a request for en banc rehearing, the original Federal Circuit panel has revised its decision in Comsikey – erasing the “misunderstood” phrases of the original opinion linking Sections 101 (subject matter) and 103 (nonobviousness). The original opinion implicitly held that any portion of an invention that would constitute nonstatutory subject matter would be considered de facto obvious. [Link]

The new opinion finds that Comiskey’s method claims do not present patentable subject matter and remanded the case to the PTO to determine the subject matter eligibility of the system claims. The Federal Circuit refused to consider nonobviousness issues – even though nonobviousness was the sole issue presented in the original appeal. Subject matter eligibility had been raised sua sponte by the panel.

Judges Moore and Newman each dissented from the en banc order. Judge Moore argued that the decision violates the court’s “well established precedent that this court will not consider new grounds of rejecting patent claims on appeal.”

Muddling Through Claim Construction

Claim Construction, Patent, Patent Cases 2009,

Vehicle IP v. General Motors Corp. and OnStar (Fed. Cir. 2009)(Nonprecedential)

VIP’s patent covers a vehicle navigation system. After construing the asserted claims, the W.D. Wisc. court granted summary judgment of non-infringement. This appeal focuses on construction of the phrase “a notification region defined by a plurality of notification coordinates.”

The infringing systems use scalars – such as a distance – and the debate is whether those scalars fit the claimed “coordinates” limitation. The majority opinion (Prost & Bryson, JJ) held that the “plain language of the claims precludes the possibility that a coordinate can be a scalar.” According to the claim, the location of the device must “substantially corresponds to a notification coordinate,” and a bare distance does not correlate to a location. The majority also found suggestions in the prosecution history supporting a narrow construction of coordinate.

In dissent, Judge Mayer would not have limited the coordinate to “a longitude latitude pair.”

“In mathematics, there are many types of coordinate systems and the common ground is that they all define a point. For instance, in a curvilinear system, coordinates are defined with a fixed origin point, and a scalar distance offset from that point along a known curve, such as a section of road. A distance offset necessarily has a “partner” to define a point, as offsets are necessarily set off from another known point. A coordinate should not be construed to exclude defining a point by an offset from another point along a known path.”

In Hal Wegner’s words, this decision “demonstrates the different views that can be reached by reasonable minds on claim construction issues which, due to appellate de novo review, creates the opportunities for so much judicial uncertainty.” And, as suggested by dissenting judges in Phillips v. AWH, that en banc decision did little to create predictability in claim construction.