WiAV Solutions v. Motorola: Clarifying the Meaning of “Exclusive Licensee”

By Jason Rantanen

WiAV Solutions LLC v. Motorola, Inc. (Fed. Cir. 2010)
Panel: Rader, Linn (author), Dyk

WiAV is the purported exclusive licensee of seven patents relating to aspects of signal transmission and data encoding/decoding owned by Mindspeed Technologies, Inc.  In 2009, WiAV sued a set of companies including Motorola, Inc.; Nokia Corporation; Palm, Inc.; and Sony Ericsson Mobile Communications (USA), Inc. for infringement of the Mindspeed patents.  The defendants contended, and the district court agreed, that WiAV lacked constitutional standing to assert the patents because WiAV is not an exclusive licensee of the patents under Textile Productions, Inc. v. Mead. Corp., 134 F.3d 1481 (Fed. Cir. 1998), which they argued holds that a party cannot be an exclusive licensee of a patent when a third party has the right to license the patent. 

In reversing the district court's dismissal, the CAFC rejected this argument, instead holding that "a licensee is an exclusive licensee of a patent if it holds any of the exclusionary rights that accompany a patent."  Slip. Op. at 17 (emphasis added). This decision is in the vein of the court's earlier decision this year in Alfred E. Mann Foundation For Scientific Research v. Cochlear Corp., 604 F.3d 1354, in which it concluded that a licensee is an exclusive licensee of a patent despite retaining the ability to license the patent to settle lawsuits. 

Scope of the Licensing
The licensing rights at issue were held by six third parties, and stemmed from a series of spin-offs and other agreements that occurred as the patents were transferred from company to company. For example, when Rockwell International Corporation, the original owner of the Mindspeed patents, assigned them to Conexant, the second owner, its subsidiary, Rockwell Science Center, received a limited, non-exclusive license to use the patents in connection with its business, along with the right to sublicense to Rockwell International and its "Affiliates," or to transfer the license in connection with the sale of the respective businesses to which the intellectual property rights relate.  The district court found that several of these licensees retained a limited right to license the patents in the field of wireless handsets, and concluded that under Textile Productions, WiAV could thus not be an exclusive licensee of the Mindspeed Patents.

Any Exclusionary Rights
On appeal, the CAFC rejected the argument that, under Textile Productions  "a licensee cannot be an exclusive licensee of a patent if others retain the right to license the patent."  Slip. Op. at 11.  Turning straight to the constitutional analysis, the court held that the standing determination  focuses only on whether a party has any exclusionary right in a patent:

Because the legally protected interests in a patent are the exclusionary rights created by the Patent Act, a party holding one or more of those exclusionary rights—such as an exclusive licensee—suffers a legally cognizable injury when an unauthorized party encroaches upon those rights and therefore has standing to sue. 

Thus, the touchstone of constitutional standing in a patent infringement suit is whether a party can establish that it has an exclusionary right in a patent that, if violated by another, would cause the party holding the exclusionary right to suffer legal injury. Contrary to the suggestion of the Defendants, neither this court’s Textile Productions nor Mars decision freed the constitutional standing inquiry from its legal injury mooring.

Slip Op. at 14-15.  Textile Productions, on the other hand, involved only the narrow question of whether a particular type of contract, a requirements contract for a patented product, automatically converts the exclusive supplier into an exclusive licensee.  "Nowhere did the Textile Productions court suggest that a party holding one or more of the exclusionary rights in a patent does not have standing to sue to protect those rights against infringement by an unauthorized third party. Nor is there any indication that the court created a bright-line rule that a party cannot be an exclusive licensee of a patent if others have the right to license the patent."  Slip. Op. at 16.

The CAFC did impose one important limitation on the broad rule for standing: "Because an exclusive licensee derives its standing from the exclusionary rights it holds, it follows that its standing will ordinarily be coterminous with those rights."  Slip Op. at 17. Thus, an exclusive licensee may have standing to sue some parties, but not others; it may also lack standing to sue a party who has the ability to obtain a license from another party with the right to grant it. 

Applying its holding, the court concluded that none of the pre-existing licenses granted the right to license the Defendants to practice the patents in WiAV's field of exclusivity, and thus WiAV possessed constitutional standing for this case. 

Note: WiAV does not disturb the requirement that "[a]n exclusive licenseee generally must join the patent owner to the suit to satisfy prudential standing constraints, i.e., the 'judicially self-imposed limits on the exercise of federal jurisdiction.'" Slip Op. at 14-15, fn. 1.  Here, WiAV had satisfied those concerns by adding Mindspeed to the suit as the "defendant patent owner." 

Prometheus Laboratories v. Mayo: The Broad Scope of Statutory Subject Matter

By Jason Rantanen

Prometheus Laboratories, Inc. v. Mayo Collaborative Services (Fed. Cir. 2010)
Panel: Rader, Lourie (author), Bryson

Last Friday, the Federal Circuit released its second noteworthy post-Bilski decision (the first being Research Corp v. Microsoft).  The opinion, Prometheus v. Mayo, issued following a grant-vacate-remand order from the Supreme Court instructing the CAFC to revisit its original decision in light of Bilski.  Despite this procedural posture, however, the new opinion is quite similar to the old, arriving at the same conclusion through essentially the same reasoning.   

Prometheus initially came to the Federal Circuit following a district court grant of summary judgment of invalidity under § 101 (lack of patentable subject matter).  After the CAFC reversed the ruling of invalidity using its "machine-or-transformation" test, Mayo sought review by the Supreme Court.  The Court granted certiorari, vacated the CAFC decision, and remanded for consideration in light of its Bilski opinion.  Earlier Patently-O commentary includes a summary of the original Federal Circuit opinion and a discussion of the remand.

The patents-in-suit claim a method for determining whether a patient has received a therapeutically efficacious amount of drugs such as 6-mercaptopurine ("6-MP") and azthiopurine ("AZA"), which are used to treat inflammatory bowel diseases but can produce toxic side effects.  In the human body, these drugs metabolize into 6-MP metabolites, including 6-methylmercaptopurine ("6-MMP") and 6-thioguanine ("6-TG").  By administering the drug, measuring the subject's levels of 6-MMP and 6-TG and comparing them to pre-determined levels, toxicity can be minimized and efficacy maximized. 

Claim 1 of Patent No. 6,355,623 is representative:

1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:
    (a) administering a drug providing 6-thioguanine to a subject having said im-mune-mediated gastrointestinal disorder; and
    (b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,
    wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and
    wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

Although similar in most respects, some claims of the second patent-in-suit, No. 6,680,302, dispense with the "administering" step.

The Patents Do Not Claim a Physical Phenomena
On remand, the CAFC again rejected Mayo's argument that the '623 and '302 patents claim a "natural phenomenon."  In seeking a judgment of invalidity under Section 101, Mayo contended (and the district court agreed) that the "administering" and "determining" steps are merely necessary data-gathering steps for the use of the correlations between 6-TG and 6-MMP and therapeutic efficacy or toxicity in patients.  Because these correlations are simply natural phenomena, Mayo reasoned, they were unpatentable.

As before, the Federal Circuit disagreed, noting that Bilski provides a broad – although not unlimited – scope for patent protection, and “an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.”  Slip. Op. at 12, quoting Bilski, 130 S.Ct. at 3230.  Furthermore, the court stated, neither the Supreme Court's order to vacate and remand the original Prometheus decision nor Bilski dictates a wholly different analysis or different result.  

The crux of the CAFC's determination that the asserted claims recite a patent-eligible application of naturally occurring correlations between metabolite levels and efficacy or toxicity as opposed to the natural correlation itself rests on the specific treatment steps recited by the claims: the "administering" step and the "determining" step.  "The inventive nature of the claimed methods stems not from preemption of all use of these natural processes, but from the application of a natural phenomenon in a series of steps comprising particular methods of treatment." Slip. Op. at 15-16.

In support of its conclusion, the court reiterated its earlier determination that the treatment methods in Prometheus's patents satisfy the "machine-or-transformation test.  Although this is not the exclusive test, post-Bilski, it nevertheless provides important clues to subject matter patentabilty.  In applying the machine-or-transformation framework, the court specifically rejected Mayo's argument that the disputed claims simply claim natural correlations and the associated data-gathering steps, broadly stating that the asserted claims are "claims to methods of treatment, which are always transformative when one of a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition."  Slip Op. at 17.  Even leaving out the administration step does not make the claims unpatentable, as the CAFC also found the "determining" step to be transformative because it involves "[s]ome form of manipulation, such as the high pressure liquid chromatography method specified in several of the asserted dependent claims or some other modification of the substances to be measured, [which] is necessary to extract the metabolites from a bodily sample and determine their concentration."  Id. at 18.

In reaching this conclusion, however, the court was forced to distinguish its earlier decision In re Grams, 888 F.2d 835 (Fed. Cir. 1989), which similarly claimed a process that involved "(1) performing a clinical test on individuals and (2) based on the data from that test, determining if an abnormality existed and determining possible causes of any abnormality by using an algorithm."  Id. at 20.   Unlike the claims in Grams – which the CAFC found unpatentable "because the tests were just to 'obtain data'" (Slip Op. at 20) – the claims of the Prometheus patents "require the performing of clinical tests on individuals that were transformative." 

Mental Steps
In addition to its overarching analysis of the subject matter issue, the opinion also includes an interesting discussion of the use of mental steps in patent claims.  Although the CAFC agreed that the final "wherein" clauses are mental steps, "A subsequent mental step does not, by itself, negate the transformative nature of prior steps. Thus, when viewed in the proper context, the final step of providing a warning based on the results of the prior steps does not detract from the patentability of Prometheus’s claimed methods as a whole." Slip Op. at 21. Because no claim in the Prometheus patents claims only mental steps, "contrary to Mayo’s assertions, a physician who only evaluates the result of the claimed methods, without carrying out the administering and/or determining steps that are present in all the claims, cannot infringe any claim that requires such steps." Id.

Additional Commentary
In addition to an extensive discussion about the decision in response to Dennis's post on Sunday, other sites commenting on the decision include:

  • Patent Docs
  • patents4life
  • IP Watchdog
  • Chris Holman's IP Blog
  • Hal Weger of Foley has suggested that another grant of certiorari may be down the road, given the opinion's refusal to discuss a three-Justice dissent from the dismissal of certiorari in Lab. Corp., 548 U.S. 124, that was cited with approval by five Justices in two concurrences in Bilski.

Akamai v. Limelight: Joint Infringement Requires an Agency Relationship or a Contractual Obligation

By Jason Rantanen and Dennis Crouch

Akamai Technologies, Inc. v. Limelight Networks, Inc. (Fed. Cir. 2010)
Panel: Rader, Linn (author), Prost

Three years ago, in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), the Federal Circuit sharply limited the ability of patent holders to assert claims of joint infringement.  The BMC decision was further bolstered by Muniauction, Inc. v. Thomson Corp. and I-Deal (Fed. Cir. 2008). Akamai v. Limelight expands on the "control or direct" rule announced in BMC and Muniauction, explaining that joint infringement requires an agency relationship or a contractual obligation to carry out the relevant steps. 

Akamai's Claim of Joint Infringement
In order to win a patent infringement case, a patentee must prove that a single entity practiced every element (either literally or by equivalents) of at least one valid, enforceable claim. Joint infringement issues can arise when a patent holder asserts method claims over activities whose steps are not carried out by a single party.  For example, if a patent claims a method involving performing steps A, B, and C, the patent holder may need to argue joint infringement (as opposed to straightforward direct infringement) if steps A and B are performed by one party and step C is performed by a second party. 

In Akamai, while the accused party (Limelight) performed the majority of the steps of the asserted claims, at least one of the steps of each claim was performed by its customers.  The patent, No. 6,108,703, is directed to an improved method for storing web page content.  Conventionally, the entirety of a web page, including both the page itself and embedded content (such as graphics) is stored on a single server, or mirrored in its entirety across multiple servers.  The patents-in-suit claim a new approach, which involves storing only the embedded objects on mirrored servers (called a "Content Delivery Network," or "CDN"), while having the webpage itself continue to reside on the content provider's servers.  In order to make this system work, the claims further require that the object URLs be "tagged" to resolve to the CDN. 

Daniel Lewin and his adviser Thomas Leighton devised these methods (or algorithms) while at MIT where Leighton was the head of MIT's Computer Science and Artificial Intelligence Laboratory.  The pair founded Akamai, and their invention continues to serve as a basis for the company's core business.  Lewin was killed aboard American Airlines flight 11 when it crashed into the north tower of the World Trade Center on September 11, 2001.

Limelight, Akamai's direct competitor in the CDN business, performed most of the claimed steps but had its customers (companies such as Netflix) tag the URLs.  Because some of the steps were performed by Limelight and some by its customers, Akamai relied on a theory of joint liability, arguing that Limelight controls or directs the activities of its customers.  At trial, the jury sided with Akamai and awarded over $40 million in lost-profit-damages. The district court rejected the jury verdict and supplemented its own non-infringement judgment – holding that there was "no material difference between Limelight's interaction with his customers and that of Thomson in Muniauction."

On appeal, Akamai contended that substantial evidence supported the infringement finding, arguing that Limelight "(1) creates and assigns a unique hostname for the content provider; (2) provides explicit step-by-step instructions to perform the tagging and serving claim steps; (3) offers technical assistance to help content providers with their performance of the claim step; and (4) contractually requires content providers to perform the tagging and serving claim steps if they utilize the Limelight service."  Slip Op at 11. 

Important holdings
In affirming the district court's judgment of noninfringement, the CAFC expanded on its ruling in BMC that "joint liability may be found when one party 'control[s] or direct[s]' the activities of another party."  Slip Op. at 9.  After noting the foundational nature of this standard, the Akamai panel further held that "what is essential is not merely the exercise of control or the providing of instructions, but whether the relationship between the parties is such that acts of one may be attributed to the other."   Id. at 12.  The court interpreted this as requiring either an agency relationship or a contractual obligation: "as a matter of Federal Circuit law that there can only be joint infringement when there is an agency relationship between the parties who perform the method steps or when one party is contractually obligated to the other to perform the steps."  Slip Op. at 14.

Analyzing the issue as a question of agency law, the CAFC concluded that no substantial evidence supported a finding that Limelight's customers perform any of the steps of the claimed method as agents for Limelight.  (Citing the Restatement (3rd) of Agency §1.01). The court also rejected Akamai's theory that Limelight's customers are contractually required to perform the tagging step.  Rather, the court stated, the contract does not obligate the customers to perform any of the method steps; instead, it "merely explains that the customer will have to perform the steps if it decides to take advantage of Limelight's service."  Slip Op. at 16.

Note: The court repeated the warning it set forth in BMC Resources, 498 F.3d at 1381, that concerns about the difficulty of proving infringement of claims that must be infringed by multiple parties "by proper claim drafting.  A patentee can usually structure a claim to capture infringement by a single party."  Slip. Op. at 17 (quoting BMC Resources).  Failing this, the court suggested (citing Mark Lemley's Divided Infringement article) that patentees may be able to correct a claim by seeking a reissue patent.

Claim Construction
Akamai also challenged the district court's construction of two claim terms in related patents, contending that both constructions imported limitations from the specification into the claims.  In a fact-intensive analysis, the CAFC rejected Akamai's arguments, concluding that the district court correctly interpreted the disputed terms given the treatment of the invention in the specification and the lack of any contrary evidence in the prosecution history. 

In re Vistaprint Ltd.: Venue Transfer Denied

By Jason Rantanen

In re Vistaprint Ltd. (Fed. Cir. 2010)
Panel: Gajarsa, Schall (author), and Moore

In a counterpoint to its recent decision in In re Acer, this morning the Federal Circuit denied a request for a writ of mandamus seeking transfer of venue out of the Eastern District of Texas.  The underlying action was bought by ColorQuick, LLC, which holds a patent relating to the preparation of production data for printing, against Vistaprint Limited and OfficeMax Incorporated.  As in Acer, none of the parties resided in Texas: Vistaprint, a foreign corporation, has a wholly-owned subsidiary in Massachusetts; OfficeMax is a Delaware corporation with its principal place of business in Illinois; and ColorQuick is a New Jersey corporation.  Both the panel and author in this appeal were identical to the panel and author that granted the writ in In re Acer.

In denying the request for a writ, the CAFC acknowledged the lack of residency, but ruled that the district court did not abuse its discretion in denying transfer.  The panel first noted that although a trial court has broad discretion in transfer decisions pursuant to 28 U.S.C. § 1404(a), "that is not the same as saying that it may accord weight simply as it pleases."  Slip Op. at 4.  Applying that standard, the panel concluded the district court's weighing of factors in this case did not amount to a "patently erroneous result."  Id. (quoting In re Volkswagen of Am., Inc., 545 F.3d 304, 310 (5th Cir. 2008) (en banc)). Specifically, the CAFC concluded that the district court had not abused its discretion in weighing two factors relating to judicial economy: that the trial court had gained substantial experience in construing the claims of the same patent during a prior litigation and that there was a related case currently pending before the same court.

The CAFC also rejected the petitioners' argument that it is always improper for a district court to deny transfer based on judicial economy when all of the convenience factors clearly favor transfer.  While the court noted the importance of the convenience factors, it also recognized that "§ 1404(a) commits the balancing determination to the sound discretion of the trial court based not on per se rules but rather on an 'individualized, case-by-case consideration of convenience and fairness.'"  Slip Op. at 6-7 (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)).  In this specific case, the CAFC could not conclude that "the trial court's balancing was so unreasonable as to warrant the extraordinary relief of mandamus."  Id. at 8.

Note: The opinion's final footnote appears to summarize the panel's overarching view on mandamus petitions directed to the venue transfer issue.  It states:

Our holding today does not mean that, once a patent is litigated in a particular venue the patent owner will necessarily have a free pass to maintain all future litigation involving that patent in that venue. However, where, as here, the trial court performed a detailed analysis explaining that it is very familiar with the only asserted patent and the related technology, and where there is a co-pending litigation before the trial court involving the same patent-in-suit, and pertaining to the same underly-ing technology and accusing similar services, we cannot say the trial court clearly abused its discretion in denying transfer.

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

By Jason Rantanen

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Jason Rantanen

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

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

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

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

Nuance Communications v. Abbyy Software

By Jason Rantanen

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

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

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

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

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

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

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

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

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

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

By Jason Rantanen

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

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

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

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

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

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

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

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

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

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

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

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

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

Hyatt v. Kappos: Federal Circuit Opens Door to Post-BPAI Civil Actions

By Dennis Crouch

Hyatt v. Kappos (Fed. Cir. 2010) (en banc)

Summary: In a 6-2-1 en banc decision, the Federal Circuit has reversed its prior precedent and held that a patent applicant must be allowed to introduce new evidence in a Section 145 civil action filed to challenge a USPTO refusal to grant patent rights and that the issues implicated by the new facts must be considered de novo.

[W]e hold that the only limitations on the admissibility of evidence applicable to a § 145 proceeding are the limitations imposed by the Federal Rules of Evidence and Federal Rules of Civil Procedure. Therefore, we hold that the district court applied the wrong legal standard for the admissibility of evidence in a § 145 proceeding and abused its discretion when it excluded Mr. Hyatt's declaration. . . .

The particular significance of a § 145 civil action is that it affords an applicant the opportunity to introduce new evidence after the close of the administra-tive proceedings—and once an applicant introduces new evidence on an issue, the district court reviews that issue de novo.

However, the Court also wrote that an applicant may still be barred from presenting new "issues" in the civil action and that, when no new evidence is presented, that BPAI findings and rulings should be given deference under the Administrative Procedures Act.

Impact: This decision could be seen as relieving some pressure on applicants to ensure that their cases for patentability are exhaustively presented to the USPTO's internal Board of Patent Appeals and Interferences (BPAI). The decision is especially important in light of the growing role of BPAI appeals in the ordinary course of patent prosecution. In its argument, the USPTO suggests that a strategic applicant may now choose hold-back some evidence from the BPAI appeal in order to overcome the APA deference if the case goes to the District Court.

Statute in Question: 35 U.S.C. § 145 creates a right to a "civil action" in Federal District Court against the USPTO Director whenever an applicant is "dissatisfied with the decision of the Board of Patent Appeals and Interferences in an appeal under section 134(a)." In the alternative, an applicant may appeal directly to the Court of Appeals for the Federal Circuit.

Background: Gil Hyatt is a well-known inventor and successful patentee. Hyatt filed a civil action in 2003 after the BPAI sustained written description and enablement rejections for seventy-nine of Hyatt's claims. The examiner had issued "2546 separate rejections of Mr. Hyatt's 117 claims" based on the doctrines of inadequate "written description, lack of enablement, double patenting, anticipation, and obviousness." The Board reversed all of the examiner rejections except for the § 112 p1 arguments. Complicating this case is the fact that the application's claimed priority date is 1975. Hyatt has aggressively pushed the bounds of USPTO practice. This decision is one of more than a dozen Federal Circuit decisions focusing on Hyatt's patent rights. When California pursued Hyatt for tax revenue for his patent licenses, Hyatt took the case to the Supreme Court and eventually won a $388 million judgment against the state of California for invasion of privacy.

After the Board affirmed a set of written description and enablement rejections, Hyatt filed a Section 145 civil action and included a declaration offering new evidence of enablement and written description. The district court excluded that inventor-declaration from evidence based on Hyatt's "negligence" in failing to previously submit the information to the PTO. In a 2009 panel decision, the Federal Circuit held that the district court had properly excluded the new evidence – holding that the district court may properly exclude evidence that Hyatt should have produced to the PTO. That opinion was penned by former Chief Judge Michel and Joined by Judge Dyk. Judge Moore wrote a vigorous dissent that supported a patent applicant's right to a full civil action including the right to submit additional evidence when challenging a PTO decision.

Judge Moore wrote the en banc decision that was joined by Chief Judge Rader and Judges Lourie, Bryson, Linn, and Prost. Judge Dyk dissented and was joined by Judge Gajarsa. Judge Newman Concurred-in-Part – arguing that the civil action should not give deference to PTO factual determinations.

A key to the majority decision is the notion that a Section 145 civil action is not an appeal, but rather a new, separate lawsuit filed to force the PTO to act. In its analysis, the court began with a focus on the 150-year history of the civil action right (and its predecessor Bill in Equity) and the reality that new evidence has always a part of those remedies. See, e.g., Gandy v. Marble, 122 U.S. 432 (1887) (explaining that the [predecessor] § 4915 suit in equity was "not a technical appeal from the Patent Office, nor confined to the case as made in the record on that office"). The court then reviewed the current text of the statute, implications of the APA, and various policy arguments before reaching its conclusions.

In a 37-page dissent, Judge Dyk argued that the majority made an improper leap from (1) the correct premise that new evidence should be admissible in the civil action to (2) the incorrect conclusion that the law provides no meaningful limits on the introduction of new evidence regardless of what was presented at the BPAI.


AstraZeneca v Apotex: Affirmance of a Preliminary Injunction

By Jason Rantanen

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

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

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

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

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

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

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

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

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

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

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

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

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

By Jason Rantanen

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

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

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

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

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

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

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

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

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

US Patent Law Provides Prior-Inventor Rights, NOT Prior-User Rights

Solvay v. Honeywell (Fed. Cir. 2010)< ?xml:namespace prefix ="" o />

This case presents a nice fact pattern for a law school examination question on the operation of the novelty rules of 35 U.S.C. § 102.  Solvay’s patent covers a method for manufacturing a non-ozone-depleting form of penta-flouro-propane (HFC-245fa) that is primarily used in spray-foam insulation products. Honeywell manufactures and sells over 1,000,000 pounds of the compound each year.

Prior-User Facts: Honeywell (at that time, AlliedSignal), the accused infringer, was in possession of a working model of the invention in the United States (US) prior to Solvay’s invention date. However, Honeywell was not the original inventor. Rather, Honeywell had copied its working model from one created by a Russian agency (in Russia, but under contract with Honeywell).  Honeywell engineers continued to work on the project as they moved toward commercialization. However, by the time that Honeywell began to commercially use or publicize the invention, Solvay had already independently invented the method and filed for patent protection.

The question on appeal is whether any of the novelty provisions of Section 102 render Solvay’s patent claims invalid.  The two primary statutory candidates are 35 U.S.C. § 102(a) and § 102(g)(2). 

A patent claim is invalid under Section 102(a)  if the invention was “known or used by others” in the US prior to the patentee’s date of invention.  If the statute is construed according to the plain meaning of its terms, then Honeywell wins and the patent is invalid.  Several US-based individuals at Honeywell knew of the invention prior to Solvay’s invention date – seemingly satisfying the “known or used by others” in the US requirement of the statute. Unfortunately for Honeywell, courts require that the prior knowledge or use of the invention be somehow public.  In this case, Honeywell had kept its work in the US confidential.  Therefore, Honeywell’s prior knowledge and use of the invention is insufficient to invalidate the asserted claims under Section 102(a).  Many accused infringers (and others) have argued that the law should provide a prior-user defense for situations such as this one.  That defense does not exist except for the limited (now severely limited) case of business method patents.

Section 102(g)(2) creates a prior-inventor defense that can also render a patent claim invalid. However, that defense has a number of important limitations. Under Section 102(g)(2), a claim will be held invalid if, before the patentee’s invention date, the claimed invention “was made in [the US] by another inventor who had not abandoned, suppressed, or concealed it.”  Section 102(g) ends with the statement that the question of invention priority will consider “not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other.”

As I mentioned, Section 102(g)(2) creates a prior-inventor defense, not a prior-user defense.  The original inventor was the Russian agency operating in Russia.  That invention cannot satisfy the elements of the statute because Section 102(g)(2) requires that the prior invention be made in the US. For its part, Honeywell is not a prior inventor because it simply copied the work of the Russian agency. Thus, the patent skates-by Section 102(g)(2) as well.

* * * * *

More Information: The district court held the patent invalid based on Section 102(g)(2). In reaching that conclusion, the district court decided that the made by “another inventor” element of the provision did not actually require that the prior-user be an original-inventor.  Rather, the district court held that for the purposes of Section 102(g), all that is required is that the prior-user “appreciate” the invention.  In coming to that conclusion, the court distinguished the language of  Section 102(f), which does require that the applicant “he … himself invent.”  On appeal, the Federal Circuit rejected that argument — holding that “when the statute uses the words ‘the invention was made in this country,’ it is referring to the act of inventing in the United States” because “originality is . . .  inherent to the notion of conception.”  In its analysis, the Federal Circuit appears to have added some detail to the common definition of conception which should now read: “the formation in the mind of the inventor, of [the inventor’s own] definite and permanent idea of the complete and operative invention, as it is hereafter to be applied in practice.”

Not the First Inventor: Honeywell argued strongly that it does not make sense for Solvay to have a patent since it was clearly not the first inventor and, if you follow the chain of title, the prior invention had never been abandoned, suppressed, or concealed.  Although seemingly sympathetic to Honeywell’s policy argument, the appellate court decided that it was bound by the statute.

Whether this holding ignores the realities of globalization and outsourcing by modern-day research companies, as Honeywell contended at oral argument, is not the question before us. The question before us is whether, under the undisputed facts, Honeywell qualifies as “another inventor” under 35 U.S.C. § 102(g)(2). Because Honeywell did not itself conceive the RSCAC process of making HFC-245fa, under 35 U.S.C. § 102(g)(2), as this court has construed the statute, it is not “another inventor” of the subject matter claimed in the ‘817 patent.

Although perhaps only shorthand, it is interesting that the court focuses on the question of whether the corporate entity –  Honeywell –  was the inventor.  Although some proposed amendments to the Patent Act would lead toward corporate inventorship, the current law is that all inventors must be real persons.

Teva v. Eisai: Standing for subsequent Paragraph IV filers

By Jason Rantanen

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

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

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

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

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

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

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

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

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

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

Guest Post: An Interesting Preview of Myriad?

By Professor Paul M. Janicke, University of Houston Law Center

The Myriad case from the Southern District of New York, involving patent eligibility of DNA isolates derived from naturally occurring DNA, drew a great deal of attention. The court basically held such isolates ineligible for patent coverage as being too similar to the natural substances, and hence barred by the product-of-nature case law. In the district court Myriad drew twenty-three amici briefs and a great deal of press attention. It is now on appeal at the Federal Circuit, where the first brief is due to be filed October 22. However, in a little-noticed partial dissenting opinion in another case, Circuit Judge Timothy Dyk has given a preview of his likely views on this important question.

The appellate case was Intervet Inc. v. Merial Ltd., decided by a Federal Circuit panel on August 4. The case involved DNA sequences encoding viruses harmful to pigs. According to the patent involved, knowledge of such sequences facilitates detection methods and production of vaccines against the harmful viruses. The patent specification gave full-length DNA sequences for five strains of these types of viruses, and a sequence for a similar but harmless pig virus for comparison purposes. The issues raised below and on appeal were: (i) whether the district court’s constructions of certain claim terms were correct; and (ii) whether a narrowing amendment made in the PTO while a claim was under prior art rejection foreclosed all access to the doctrine of equivalents for the territory between the original language and the amended language or left some of it open. No statutory subject matter issue was raised below or in the appeal.

The Intervet panel majority, consisting of Judges Prost and Bryson, decided those issues largely in favor of the patentee, Merial. Judge Dyk issued an opinion concurring in part and dissenting in part on the appealed questions. However, he also took the occasion to caution that the court’s decision in the case did not mean the court was acquiescing in the patent-eligibility of DNA, even in isolate form: “I write separately primarily to make clear that in construing the claims, we are not deciding that the claims as construed are limited to patentable subject matter.” He proceeded to address the main issue pending in Myriad, namely, whether isolates of DNA similar to DNA found in natural sources like humans or animals are eligible for patenting, or whether they run afoul of the Supreme Court’s pronouncements about products of nature in cases such as Funk Bros., Chakrabarty, and the recent Bilski decision. Judge Dyk indicated he did not think claiming the DNA in its isolated form was sufficient to distinguish it, for eligibility purposes, from the naturally occurring substance. He read the Supreme Court cases to require subject matter that is “qualitatively different” from the naturally occurring substance, and said it was “far from clear” that DNA isolates as claimed here met that test.[8] Perhaps foreshadowing his position in Myriad, he stated:  

The mere fact that such a DNA molecule does not occur in isolated form in nature does not, by itself, answer the question. It would be difficult to argue, for instance, that one could patent the leaves of a plant merely because the leaves do not occur in nature in their isolated form.

The impact of Judge Dyk’s views is difficult to predict. His is certainly an important judicial voice. However, he may not be on the panel drawn to hear the Myriad appeal, and the case may never be heard en banc. Moreover, these might not be Judge Dyk’s final positions on the issues. Only time will tell how this important case plays out. 

* * * * *

[1] Association for Molecular Pathology v. United States Patent & Trademark Office, 2010 U.S. Dist. LEXIS 35418 (S.D.N.Y. April 2, 2010). Myriad Genetics was a co-defendant and co-owner of at least one of the patents in this declaratory action and exclusive licensee under others, hence Myriad has become the popular name of the case.

[2] 2010 WL 3064311 (Fed. Cir. 2010).

[3] See U.S. Patent 6,368,601, col. 1, lines 6-10.

[4] Id. at *9.

[5] Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948).
[6] Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). 

[7] Bilski v. Kappos, 130 S.Ct. 3218 (2010).

[8] Intervet, 2010 WL 3064311 at *11.

[9] Id.

Written Description, Claim Scope, and Showing Possession of Hidden Embodiments

PatentLawImage001Laryngeal Mask Co. v. Ambu AS (Fed. Cir. 2010)

The district court rejected LMA’s patent on summary judgment — holding that the claims covering a laryngeal mask device were invalid for lack of written description.

The written description issues here are similar to those presented in Liebel-Flarsheim and Lizard Tech.  The patented invention included both (1) a “cuff” with a “thicker and stiffer” region and (2) a “backplate.”  The described embodiments all showed the thick-stiff region of the cuff connected to the backplate,  but the accused device’s cuff-backplate connection was in a different location. The claims themselves did not expressly limit the connection-site with reference to the thick-stiff region and therefore arguably covered the accused device.  Given that broad construction of the claims (as requested by the patentee), the district court held the patent invalid on written description grounds because the patent document failed to describe or show possession of the invention as embodied by the accused device.

On appeal, the Federal Circuit panel of Chief Judge Rader, Judge Lourie, and Judge Moore rejected the district court’s findings — holding instead that the factual question of written description should be left for the jury in this case. 

Rather than focusing on affirmative evidence of possession, the Federal Circuit highlighted that nothing in the specification suggested that that design of the connection between the cuff and backplate was important or necessary to the invention.

“We agree with LMA that one of ordinary skill in the art could read these disclosures as providing for a cuff reinforcement in the distal region that need not be connected to the backplate. In addition, we agree with LMA that one of ordinary skill in the art could read the Cuff Wall Thickening Passage as disclosing a thickened cuff portion that need not be connected to the backplate.”

Because those factual conclusions raised issues of material fact, the appellate panel reversed the summary judgment holding and remanded.

The Court’s approach implicitly presumes that the asserted patent satisfies the written description requirement and then looks to see whether the evidence is sufficient to overcome that presumption. That method of analysis makes sense based on the procedural setup of the case: Namely, (1) clear and convincing evidence is required to prove that the patent lacks written description; (2) the decision being reviewed was one of summary judgment; and (3) written description is a question of fact.


  • The court also reversed a claim construction holding that had led to summary judgment of non-infringement.
  • The asserted claims were all added during prosecution. The original claims required that the backplate be “hermetically bonded to a periphery of the main-cuff” and the new claims have a seemingly broader requirement that the backplate be “attached” to the cuff.  The original claim appears broad enough to cover the link as embodied in the accused device.



Fujitsu Ltd. v. Netgear

By: Jason Rantanen

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

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

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

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

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

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

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

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

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

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

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

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

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

Prometheus v. Mayo: Patenting Medical Methods

Prometheus Labs. v. Mayo Collaborative Services (Mayo Clinic) (Fed. Cir. 2010)

This case is one of several pending Federal Circuit appeals that are questioning whether medical diagnostic and treatment methods are the proper subject of patent protection.

The claims asserted by Prometheus are directed toward a method of “optimizing therapeutic efficacy” by first administering an active drug (6-thioguanine) to a subject and then using the subject’s metabolite blood-level to adjust future doses of the drug.  (U.S. Patents 6,355,623 and 6,680,302). Thus, most of the claims are centered around three ordered-steps of:

  1. administering the drug to the subject;
  2. determining the amount of drug in the subject’s blood; and
  3. re-calibrating the drug dosage based on step-2.

A broader claim (claim 46 of the ‘632 patent) eliminates the administering step of claim 1 above.

The district court found the claims invalid as lacking patentable subject matter under 35 U.S.C. 101.  On appeal, the Federal Circuit reversed — holding that the steps of “administering a drug” and “determining the level of 6-thioguanine” were both sufficiently transformative of “a particular article into a different state or thing.”  That Federal Circut decision was based on the court’s machine-or-transformation test that was subsequently discredited by the Supreme Court in Bilski v. Kappos (2010).  In the wake of its Bilski decision, the Supreme Court vacated the Federal Circuit’s Prometheus decision and remanded for a new opinion.  Seeing this as a potential watershed case, Mayo immediately requested that the Federal Circuit hear the case en banc.

Briefing by October 1: The Federal Circuit has apparently denied the en banc request and has moved-forward with a rapid briefing schedule: By October 1, 2010, both parties are scheduled to submit 20–page briefs “addressing the effect of the Supreme Court’s Bilski decision on the disposition of this case. No additional briefing or oral argument is contemplated at this time.”  The scheduling order was signed by the court clerk Jan Horbaly.

Judges in Charge: The scheduling order suggests that the remand will be taken as a supplement to the original decision. A quirk of that original decision is that the three-member panel included two judges who are not on the Federal Circuit (Chief Judge Paul Michel (Ret.) and E.D. Texas District Court Judge Ron Clark). The third member of the panel is Judge Lourie.  Federal Circuit rules indicate that Judge Clark can retain on the panel on remand, but would not be part of any en banc hearing.

Related cases include Classen Immunotherapies Inc. v. Biogen Idec (method of determining an immunization schedule) and Association for Molecular Pathology v. Myriad Genetics (gene patents). 

Successor Company Holds Patents Assigned to Predecessor Company (Even if Assigned after Predecessor Dissolved)

Tri-Star Electronics Int'l. v. Preci-Dip Durtal SA (Fed. Cir. 2010)

Mr. Kerek (from Ohio) invented the claimed “socket contact” while an employee of Tri-Star and he duly executed an assignment of his rights to to Tri-Star.  The year prior to the invention, Tri-Star (OHIO) had merged and become Tri-Star (CALIFORNIA).  However, Kerek's assignment clearly stated that the assignment of rights was to Tri-Star (OHIO) — even though that Ohio company no longer existed. Later, Tri-Star (CALIFORNIA) merged and became Tri-Star (DELAWARE).

Here, the accused infringer has challenged whether Tri-Star (DELAWARE) has standing as owner of the patent rights.  The Federal Circuit accepted this interlocutory appeal and held that Tri-Star (DELAWARE) is the owner of the patent rights.  

In making its decision, the Federal Circuit found two points of law important:

First, contract law attempts to satisfy the mutual intent of the parties, and here, it was clear that the employee had intended to transfer rights to his employer as required by the employment contract.

Second, even after a merger, a predecessor company continues to exist under Ohio law for the purposes of allowing its property to vest.

Based on these two points, the Federal Circuit held that the stated transfer to the merged Tri-Star (OHIO) equated to a transfer to its successor Tri-Star (CALIFORNIA). The later transfer to Tri-Star (DELAWARE) was not disputed.

* * * * *

I have no problem with the Federal Circuit's statements regarding Ohio law — it is correct as far as I know. However, I do have some concern with the ongoing fallacy that there is no Federal law or policy controlling the transfer of patent rights. On point, there is a Federal Law requiring that patent assignments be done “in writing.” 35 U.S.C. 261. Based on that statute, the court should have considered how the supposed transfer from Kerek to Tri-Star (CALIFORNIA) fits within that statutory requirement. In addition, we have seen an increasing number of companies playing games with the patent recordation system by using shell corporations and by mis-recording assignment records. Here, for instance, the assignment record showed ownership by Tri-Star (CALIFORNIA) despite the documentation in the underlying assignment.  Those concerns are important — especially if we believe that the public properly has an interest in knowing the identity of patent owners.

Preambles as Limitations

By Jason Rantanen

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

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

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

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

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

A method for photoselective vaporization of tissue, comprising:

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

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

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

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

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

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

Slip Op. at 10 (internal citations omitted).

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

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

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

GPG v. ITC: Federal Circuit Review of ITC Determinations

By Jason Rantanen

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

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

* * * *

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

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

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

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

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

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

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

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

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

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

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

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

(Dissent at 8-9).


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