Tag Archives: Affirmed Without Opinion

The Federal Circuit decides a substantial number of its cases without opinion, but rather simply issues a judgment of “affirmed without opinion.” This procedure began in the late 1980’s and has been relatively noncontroversial. Lately, however, the patent statute has been reconsidered and the process appears to violate Section 144 of the Patent Act.

Shore v. Lee

In Shore v. Lee, the Federal Circuit affirmed a PTAB finding without opinion.  Shore’s petition to the Supreme Court asks whether “the Federal Circuit’s affirmance without opinion of the PTO’s rejection of Petitioner’s patent application violate 35 U.S.C. § 144?”  In its first opportunity to support the Federal Circuit’s R.36 jurisprudence, the Department of Justice has passed – instead waiving its right to offer any argument in support.  The Supreme Court will consider the petition later this month.

Wrongly Affirmed Without Opinion: At the Supreme Court

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Similarly in Broadband ITV v. Hawaiian Telecom, respondents have waived their right to respond to Broadband’s challenge to quick-look eligibility denials.

Supreme Court: Challenging Quick-Look Eligibility Denials

IPR Petition Response => Claim Construction Disclaimer

Aylus Networks v. Apple (Fed. Cir. 2017)

The court here holds that claim construction “prosecution disclaimer” applies to statements made by the patentee in a preliminary response to an IPR proceeding.  This holding makes sense and was entirely expected — however it also sets yet another trap for patentees seeking to enforce their patent rights.

The appeal here involves Aylus infringement lawsuit against Apple that alleges AirPlay infringes U.S. Patent No. RE 44,412.  After Aylus sued Apple for infringement, Apple responded with two inter partes review (IPR) petitions challenging all of the patented claims.  However, the Director (via the PTAB) refused to grant the petition as to several claims, including 2, 4, 21, and 23.

Back in the litigation, Aylus amended its complaint to only allege infringement of those non-instituted claims.  In its subsequent motion for summary judgment of non-infringement, Apple argued for a narrow interpretation of the claimed use of “CPP logic . . . negotiate media content delivery between the MS and the MR.”  As evidence for the narrow interpretation, Apple and the district court focused on statements by the patentee (Aylus) in its preliminary response to Apple’s IPR petition.  On appeal here, the Federal Circuit has affirmed:

[S]tatements made by a patent owner during an IPR proceeding, whether before or after an institution decision, can be relied on to support a finding of prosecution disclaimer.

Those of us closely following IPR doctrine will raise some hairs at this statement since the Federal Circuit has previously held that “IPR does not begin until it is instituted.” Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293, 1300 (Fed. Cir. 2016).   Here, the court recognized that general holding, but found that it dies not apply “for the purposes of prosecution disclaimer.” Rather, for this situation, the court found that the proceedings begin with the IPR petition.

If I were writing the opinion, I would have come to the same result – that statements by the applicant to the PTO can form prosecution disclaimer.  However, I would have reached the conclusion without upsetting and further complicating the definition of an IPR proceeding.

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An oddity of all of this is that the Federal Circuit appears quite concerned in this case about the linkages between claim construction during inter partes review and subsequent litigation, but previously ignored that issue during the prior cuozzo debate.   My take has long been that we should be applying the actual claim construction in both situations.

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This case focused on prosecution disclaimer and the finding of a clear and unmistakable disclaimer of claim scope.  However, the same approach should also apply in applying IPR statements as primary intrinsic evidence used in the claim construction analysis even when short of disclaimer.

Step one: Find the Gist (Do not Construe)

In Blue Spike v. Google, the patentee has asked the Supreme Court to further elucidate its test for eligibility under Mayo, Alice, and Myriad with the following three questions presented.

  1. May patentable subject matter under § 101 properly be assessed by over-generalizing patent claims to a “gist”?
  2. May a district court properly assess patentability under § 101 prior to authoritatively construing the patent’s claims?
  3. May a district court adjudicating a motion for judgment on the pleadings on § 101 patentability grounds properly consider questions of patent enablement under 35 U.S.C. § 112?

We have an interesting case here where the district court expressly stated its approach to Mayo/Alice Step 1 is to distill the claimed invention to its “gist” and ask whether that gist is an abstract idea.

In its lawsuit against Google, Blue Spike asserted five related patents: U.S. Patent Nos. 7,346,472 (the “’472 Patent”), 7,660, 700 (the “’700 Patent”), 7,949,494 (the “’494 Patent”), 8,214,175 (the “’175 Patent”), and 8,712,728 (the “’728 Patent”).  Looking at asserted claim 1 of the ‘472 patent as an example: the claim requires comparing a query signal with a reference signal.  The process involves creating an “abstract” (essentially a hash or digital fingerprint) of each signal that uses “perceptual qualities” of each signal, and then comparing those abstracts.

The district court dismissed the case on the pleadings – holding that the asserted claims were all invalid as a matter of law for effectively encompassing an abstract idea.  On appeal, the Federal Circuit affirmed without opinion.

In its decision, the district court expressly “distill[ed] the gist of the claim[s]” and found that the gist of the claims is to “model, on a computer, ‘the highly effective ability of humans to identify and recognize a signal’ [using a method that] mirrors the manner in which the human mind undertakes the same task.” (quoting the patent specification).   Essentially, the court found, all of the claims are directed to the abstract idea – “the idea of comparing one thing to another.”  Moving on from there, the court recognized the computer implementation, but found no inventive concept in that implementation.  The patentee argues here that the court erred in its gist analysis, and compounded that error by failing to construe the claims prior to the gisting process:

[M]any trial courts have adopted the practice of reducing patent claims to a highly general “gist,” then assessing that gist to determine whether it is so abstract as to be unpatentable. Because distillation to a “gist” inherently abstracts from a patent’s specific claims, this approach builds in a bias towards invalidity. . . . Deciding eligibility before claim construction exacerbates the tendency noted above to ignore a patent’s specific claims and over-generalize its “gist.”

The petition also spends substantial time discussing the Federal Circuit’s new status quo of issuing a substantial number of no-opinion judgments under Rule 36:

[T]he Federal Circuit appears unwilling to shoulder the responsibility for clarifying the Alice/Mayo analysis. That court’s use of summary Rule 36 affirmances seems to be both commonplace and increasing. This is particularly true in cases concerning patentable subject matter under § 101. One recent report identified a dozen Federal Circuit appeals raising this issue decided by Rule 36 affirmances in 2016 alone. . . . [P]recedential opinions in § 101 cases are important not just for trial courts reviewing issued patents, but also for the PTO’s examiners who must determine whether to issue patents in the first place. When the Federal Circuit fails to write a written opinion, it fails to provide the USPTO with necessary examples to use in granting patent applications.

In this particular case, the R.36 judgment is not a law violation (since the case arose from the district court rather than the PTO) but should also not be an excuse for failing to properly resolve the case – certainly the issues raised are not resolved and there is need for explanatory precedent.

[Blue Spike Petition (April 6 2017)]


Without Offering Any Reasons, Federal Circuit Denies Rehearing on Issue of Judgments Without Opinion

by Dennis Crouch

The Federal Circuit has denied Leak Survey’s petition for rehearing en banc on the issue R.36.  Perhaps ironically, the court has continued to remain silent on its justification for issuing judgments without opinion.  Although the Supreme Court has generally empowered appellate courts to issue summary affirmances without explaining reasoning for their judgment, the statutes provide special rules for cases arising from patent and trademark cases.  On the patent side, 35 U.S.C. § 144 requires the Federal Circuit to hear appeals from the PTO, “review the decision,” and, once a decision is reached “the court shall issue to the Director its mandate and opinion.”

First Rehearing Request Challenging No-Opinion Judgments

I argue (as did Leak Survey) that Section 144 requires the court to write opinions in these cases — as was the longstanding standard practice of both the Federal Circuit and its predecessor court the CCPA before the 1989 internal rule changes by the Federal Circuit.

In my article on the topic, I recognize the argument’s weakest point: since the statute requires issuance of “its opinion”, the requirement might only only kick-in if the court actually has an opinion.  In his thoughtful challenge to my approach, Matthew J. Dowd argues that the statute only requires issuance of an opinion once such an opinion exists — but absent an opinion, the statute only requires issuance of the mandate. Matthew J. Dowd, An Examination of the Federal Circuit’s Use of Rule 36 Summary Affirmances (Feb. 19, 2017). Thus, Dowd would clarify that the statutory requirement that, after reviewing the case, “the court shall issue … its … opinion” only kicks-in if the court decides to write an opinion.  I think Dowd is wrong.

In my article, I write:

For a patentee, providing the written description is part of the quid pro quo exchange for receiving patent rights. In the same way, forming a reasoned decision is the role of every appellate court, and the statute simply requires that those reasons be written and released.

Reaching a judgment in each merits case is both an inherent duty of the appellate court and a statutory requirement, and that judgment requires the court to at least form a reasoned opinion that justifies the outcome. In other words, the court must make its judgment based upon the law at hand applied to the facts presented. Even when issuing a judgment without releasing an opinion, the court must have formed reasons for its judgment that are at least self-satisfyingly sufficient. Anything less would be a reversible arbitrary judgment and likely a violation of the due process rights of the parties.

The statutory requirement of issuing “its … opinion” is not an illusory request that can be avoided by simply not writing an opinion. Rather, the statute requires a transformation of the court’s internal decision justifications into a document that becomes part of the record of the case as it returns to the PTO.

By now, the court has had many opportunities to justify its approach.  It is now becoming more than simply ironic that the Federal Circuit continues to avoid explaining its justifications for a lack of transparency.

PTAB Must Justify Each of its Obviousness Conclusions

Securus Tech v. Global Tel*Link (Fed. Cir. 2017) (IPR2014-01278) (Pat. No. 7,860,222)

In this nonprecedential decision by Judge Chen, the Federal Circuit has partially-vacated and remanded – finding that the Board (PTAB) had failed to explain its obviousness decision.

Although obviousness is a question of law, essentially all of the building blocks to that conclusion are factual queries.  The result then is that obviousness decisions by the PTAB are difficult to overturn on appeal – since an agency’s factual findings are given substantial deference on appeal.  Unlike a jury, the PTAB has to actually make the necessary factual findings that lead to its obviousness findings.  In addition, the PTAB must explain how the evidence-presented led to its particular conclusion:

First, the Board must “make the necessary findings and have an adequate ‘evidentiary basis for its findings.'” [Quoting In re Nuvasive (Fed. Cir. 2016), internally quoting In re Lee (Fed. Cir. 2002)].  Second, the Board “must examine the relevant data and articulate a satisfactory explanation for its actions including a rational connection between the facts found and the choice made.” Id.

Thus, although a low standard, the PTAB must have at least a rational basis for connecting the evidence to its factual findings.  In its analysis, the Board must also consider counter-arguments.

In this case, the Board “failed to articulate any reasoning for reaching its decision” as to claims 3, 8, 14-15, 17, 19 22-32, and 34-36.  (emphasis in original). Considering the PTAB Decision [IPR2014-01278-FWD-20160121], the Court looks to be absolutely correct that it fails to particularly explain the invalidity of these claims.

There continues to be an internal debate within the Federal Circuit on how the PTAB should handle IPR Failures by the PTAB.  Here, the court vacated and remanded for further consideration.  Other panels have simply reversed without providing the PTAB opportunity to correct its errors (if possible).


Focus on Procedure: Judge Chen’s decision here was careful to focus on procedure since the substance is almost totally lacking.  The ‘222 Patent’s Claim 1 is directed to a communications system whose invalidity was easily affirmed by the Federal Circuit.  Disputed Claim 3 depends from Claim 1 and adds the requirement that “communications between individuals comprise telephone calls.”  Without any prior art, one skill in the art of communications systems would find it obvious to use a telephone to communicate.  Further, the actual prior art relied upon by the Board (U.S. App. Pub No. 2004/0081296) discloses telephones for this purpose.  All this also helps to explain the remand.

Wrongly Affirmed Without Opinion: At the Supreme Court

Shore v. Lee (Supreme Court 2017)

In a new petition for writ of certiorari, patent attorney and inventor Michael Shore has challenged the propriety of the Federal Circuit’s continued approach of affirming patent office decisions without opinion. In a forthcoming article titled “Wrongly Affirmed Without Opinion” (Wake Forest Law Review), I raise the previously unnoticed requirement of 35 U.S.C. § 144 that the Federal Circuit issue an opinion in appeals from the Patent Office (PTO).  Although the Supreme Court generally permits its lower appellate courts to issue summary affirmances, I argue that the Patent and Trademark statutes take precedence in this particular situation.  The issue has come to a head with the large number of no-opinion judgments being issued by the court since the creation of the system of administrative patent trials (IPR/PGR/CBM).

Running with that argument, Shore raises the following three questions:

  1. Does the Federal Circuit’s affirmance without opinion of the PTO’s rejection of Petitioner’s patent application violate 35 U.S.C. § 144?
  2. Does the statute’s requirement that the Federal Circuit issue a “mandate and opinion” govern over Federal Rule of Appellate Procedure 36’s general permission for appellate courts to render judgment without opinion?
  3. Assuming that the Federal Circuit can issue an affirmance without opinion despite the language of § 144, does the Federal Circuit act within its discretion by issuing an affirmance without opinion that does not meet any of the criteria listed in Fed. Cir. R. 36(a)-(e)?

[Read the petition: 2017_WL_1406097]

Certainly, if the PTAB had issued its judgment without opinion, the Federal Circuit would have immediately vacated that decision. However, the appellate court suggests that the rules of opinion writing should not be self applied.

In the underlying case, Shore’s patent application (with co-inventor Charles Attal – founder of Austin City Limits Festival) covers a method for creating a custom video track of a live musical performance.  The claims were rejected as obvious – affirmed by the PTAB.  On appeal, Shore raised several challenges regarding both interpretation of the prior art and claim construction.  Rather than working through those arguments, the Federal Circuit simply affirmed without opinion.

Supreme Court: Challenging Quick-Look Eligibility Denials

by Dennis Crouch

Broadband ITV v. Hawaiian Telecom (Supreme Court 2017)

A newly filed petition for writ of certiorari offers a substantial challenge to the quick-look eligibility decisions that have been so popular among district courts.  The challenge here is especially focused on no-evidence eligibility decisions that serve as a substitute for an obviousness determination.

In the case, the claims of BBiTV’s U.S. Patent No. 7,631,336 have been repeatedly upheld as non-obvious before a Hawaii district court ruled them ineligible on summary judgment.  In its 103 analysis, the Hawaii court also denied summary judgment of obviousness – finding questions of material fact regarding whether (1) elements of the claims were found in the prior art or (2) PHOSITA would have been motivated to combine those elements.  In its simultaneous 101 decision, however, the court determined as a matter of law that those same elements were “well-understood, routine, conventional activities previously known to the industry” that lack the “inventive concept” required by Alice.  The decision was (as is now common) affirmed without opinion by the Federal Circuit.

The petition challenges the decision and the newly-popular approach of using eligibility as a shortcut to more difficult and fact-intensive obviousness analysis. The three three questions:

1. Evidence for Underlying Factual Findings: Whether the statutory presumption of validity set forth in 35 U.S.C. § 282 applies to claims challenged under 35 U.S.C. § 101, as set forth by this Court in Microsoft Corp. v. i4i L.P., 564 U.S. 91 (2011), when the ultimate legal conclusion relies upon underlying findings of fact, such as whether the additional novel and non-obvious elements of the claims are merely well-understood, routine, and conventional or whether they add an inventive concept.

2. Standard for Summary Judgment: Whether, unlike every other area of law involving motions for summary judgment, as set forth by Fed. R. Civ. P. 56 and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986), and its progeny, a district court may resolve material underlying fact disputes against the non-movant party on a summary judgment motion for lack of patent-eligibility under § 101.

3. Not All Abstraction Are Abstract: Whether the judicially-created exception for “abstract ideas” broadly includes any abstraction of a claim (including novel business practices or methods of organizing human activities) or only “fundamental” and “long-standing” (i.e., pre-existing) practices and methods, as recognized by this Court in Bilski v. Kappos, 561 U.S. 593, 611 (2010) and Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347, 2356- 57 (2014).

The questions begin with the implicit understanding that, although a question of law, eligibility decisions are based upon a set of factual determinations that should be treated like any other factual determination by the court.  This approach is directly contrary to the approach often taken these days that follows Judge Mayer’s concurring opinion in Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014).

An important legal question here is how close the link should be between obviousness and eligibility.  Post-KSR and Alice, there does appear to be substantial connection between the obviousness analysis associated with combining-old-elements and the eligibility analysis of elements that are “well-understood, routine, and conventional.”  The two should often correlate, the court here may have the opportunity to explain the differences both in doctrine and procedure.

Read the petition here: [LINK]

Amicus Briefs in support of the Petition are due by May 17, 2017.


Licensee Marking Requirement

PezPatentRembrandt Wireless v. Samsung (Fed. Cir. 2017)

A jury found for Rembrandt and awarded $15.7 million in damages. On appeal, the Federal Circuit has affirmed on infringement and validity – but rejected the lower court’s finding that the patent had been properly marked.

Back-damages for patent infringement is a bit interesting. The marking statute creates a constructive notice regime for sales of ‘patented articles’ and then cuts-off damages for failure to mark those articles: 

In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.

35 U.S.C. § 287.  The marking requirement does not apply only to patentees, but also to “any persons” making or selling the invention “for or under” the patentee.  The courts have interpreted this requirement then as applying to a patent licensee — “thereby limiting the patentee’s damage recovery when the patented article is not marked” by the licensee.  Quoting Amsted Indus. Inc. v. Buckeye Steel Castings Co., 24 F.3d 178, 185 (Fed. Cir. 1994).

Here, Rembrandt had previously licensed the patent at-issue (U.S. Patent No. 8,023,580) to Zhone Tech who sold unmarked products allegedly embodying claim 40 of the patent.  (Zhone was not required to mark under the license agreement).

As soon as Samsung sought to limit its potential damages to the date of actual-notice, Rembrandt dropped its allegations that Samsung infringed claim 40 and also filed a statutory disclaimer with the USPTO disclaiming claim 40.  Samsung was later found to infringe other remaining claims of the patent – and the district court ruled that the disclaimer was sufficient to cure the marking problem.

On appeal, the Federal Circuit disagrees:

Rembrandt’s position, adopted by the district court, effectively provides an end-run around the marking statute and is irreconcilable with the statute’s purpose. Allowing Rembrandt to use disclaimer to avoid the consequence of its failure to mark undermines the marking statute’s public notice function. . . .

The marking statute protects the public’s ability to exploit an unmarked product’s features without liability for damages until a patentee provides either constructive notice through marking or actual notice.


Disclaiming a patent claim does not later erase the fact that the claim was previously in effect and had not been properly marked.

The Court suggested a potential question of whether the focus should be claim-by-claim rather than patent-by-patent, but declined to rule on that issue because it had not been properly raised on appeal.   On remand, the district court will be asked to look into that question and – if needed – recalculated the damage award.

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The case here offers an important distinction – in my mind – between a patent license and a covenant-not-to-sue. Any reasonable license that covers an ‘article’ would include the marking requirement.   In my mind (although perhaps not the court’s) a mere covenant-not-to-sue should not fall under the marking requirement.

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Typical Marking License Language: Licensee mark all Licensed Products made or sold in the United States with an appropriate patent marking. All Licensed Products shipped to or sold in other countries must be marked in such a manner as to provide notice to potential infringers pursuant to the patent laws and practice of the country of manufacture or sale.  Licensor shall have the right to inspect Licensee’s Licensed Products to determine if Licensee is marking in accordance with this paragraph.


Issue Preclusion: Claim Construction in Prior Lawsuit

US5428933-1by Dennis Crouch

Phil-Insul Corp. (IntegraSpec) v. Airlite Plastics (Fed. Cir. 2017) [IntegraSpec].

IntegraSpec’s U.S. Patent No. 5,428,933 covers an insulated concrete form (Styrofoam molds) used in building construction.

Back in 2011, IntegraSpec sued Reward Wall and Nudura Corp. for infringing the ‘933 patent. In that case, the district court sided with the defendants – finding no infringement. That decision was affirmed in 2014 by the CAFC without opinion.  During the interim, the USPTO also confirmed the patentability of several claims of the patent.

Meanwhile, IntegraSpec sued Airlite in May 2012 alleging infringement, but the district court dismissed the case in 2014 (after a two year stay) finding them precluded based upon the common law doctrine of collateral estoppel (these days usually called issue preclusion).  Here, we might term this non-mutual defensive collateral estoppel.

Basically, IntegraSpec was asking for a different claim construction in the second case than what was awarded in the first case.  The district court saw the problem with this since accused products were virtually identical and the narrow claim construction in the original case was critical to the non-infringement outcome.

Collateral estoppel kicks-in to prevent a party from re-litigating an already decided issue when:

(1) Same Party: the party being precluded was a party (or in privity with a party) in the prior action.

(2) Same Issue: the issue being precluded is the same as the issue in the prior action;

(3) Actually Litigated: the issue being precluded was actually litigated in the prior action;

(4) Final Judgment: the issue being precluded was determined by a valid final judgment; and

(5) Essential: the determination of the issue in the prior action must have been essential to the prior judgment.

The list above is 8th Circuit law, but is fairly standard.  The Federal Circuit has created some additional patent-specific rules regarding issue preclusion – For infringement, two infringement claims are “the same” if the accused products are “essentially the same,” i.e., differences are either “merely colorable” or else unrelated to the limitations of the asserted patent claims. Roche Palo Alto LLC v. Apotex, Inc., 531 F.3d 1372 (Fed. Cir. 2008)

On appeal, the Federal Circuit has affirmed – specifically holding that its prior R.36 Judgment may be used in support of an issue preclusion conclusion so long as only a single dispositive issue was appealed in that prior appeal.

The second issue – in the first case claim 1 was asserted. Meanwhile, claim 1 was cancelled in a reexam and formerly dependent claim 2 rewritten to include all of the prior limitations.  In this new action, claim 2 is asserted.  In the appeal, the Federal Circuit confirmed that collateral estoppel applies even though the original court interpreted claim 1.  The court based this upon its bare statement that “It is well-established, however, that claim terms are to be construed consistently throughout a patent.”


Modified Opinion: Federal Circuit Won’t Enjoin Non-Party

Asetek Danmark v. CMI USA (“Cooler Master”) (Fed. Cir. 2017)

The Federal Circuit has updated its original decision in Asetek, with Judge Prost deleting her dissent and her points being incorporated into the majority opinion.  The change here relates to the injunction pending remand.

Asetek sued CMI/Cooler-Master for infringing its computer fan patents. U.S. Patent Nos. 8,240,362 and 8,245,764 (“cooling systems”).  A jury sided with Asetek and the patentee was awarded damages as well as an injunction against specific Cooler Master products.  The problem – is that the injunction was awarded against CMI USA as well as “Cooler Master Co., Ltd.”, a Taiwanese company who was no longer a party to the lawsuit.   On appeal, the Federal Circuit substantially affirmed but remanded on the injunction since it applied to a non-party and went beyond that non-party’s ‘abetting a new violation’ by the adjudged infringer.

The oddity of the original Judge Taranto opinion was that it did not actually vacate the injunction but kept it in-force until modified by the lower court. “We do not think it appropriate to vacate the injunction at present.”  Writing in dissent, Chief Judge Prost argued that “The correct course of action would be to vacate the portions of the injunction that improperly reach Cooler Master.”

Following the original opinion, CMI filed for rehearing and that has been partially granted today with a new opinion from the original panel.  The new opinion here adopts Chief Judge Prost’s position and her partial dissent is deleted as is the panel’s non-vacatur.  The new opinion now partially vacates the injunction so that it no longer applies to the non-party (except for aiding and abetting).  The new paragraph:

Two final, related points. First, the need for further proceedings to determine the proper reach of the injunction in this case leads us to vacate the injunction, effective upon issuance of our mandate, insofar as the injunction reaches conduct by Cooler Master that does not abet new violations by CMI. The district court is to conduct those proceedings in as reasonably prompt a fashion as possible. Our partial vacatur of the injunction does not foreclose Asetek from pursuing reinstatement of the vacated portion of the injunction should there be unjustifiable delay by Cooler Master in completing the proceedings, or from pursuing any other remedies against Cooler Master, if otherwise authorized by law.

The en banc court simultaneously released its denial of rehearing after noting that the panel had revised its opinion.  CMI’s en banc petition began as follows:

The Panel Majority’s precedential opinion has promulgated a new rule that a pre-liability permanent injunction against a non-party is permissible pending a determination of liability under the “legally identified with” theory. There are three issues with this opinion. First, it violates the rule that everyone has a right to his day in court. Second, it violates the rule that actual success on the merits must precede entry of a permanent injunction. Third, its remand of further proceedings to determine the “legal identity” issue is an impermissible advisory opinion.

I believe that the revised decision here is legally correct, but it always gives me pause to watch companies and owners divide-up the structure of their firms without substantially dividing management and control — and then use that division to partially avoid legal liability.  The end result is that the potential corporate complexity can substantially raise the costs of enforcement without providing any social benefit.  In this case, Asetek writes that “the precise historical and corporate relationship between CMI and Cooler Master is murky; not even their counsel is sure of it.”  The parties always had the same attorneys, and CMI distributes all of Cooler Master’s products in the US, and assists with US marketing.



Whether a Patent Right is a Public Right


by Dennis Crouch

Another interesting en banc petition by Robert Greenspoon and Phil Mann: Cascades Projection v. Espon and Sony, Appeal No. 17-1517 (Fed. Cir. 2017).  The petition asks one question: “Whether a patent right is a public right.” Of course, the Federal Circuit has already decided this in MCM – which is why the petitioner is bypassing the initial appeal and asking directly for an en banc hearing.

[S]ince this Court has not had a chance (as a full court) to consider the exceptionally important constitutional question, since intervening decisions after MCM have encroached upon the MCM constitutional holding, since patentees continue to bring the same constitutional challenge in hopes of overturning the MCM constitutional holding, and since overturning the MCM holding will potentially reduce this Court’s ballooning USPTO docket, Appellant seeks initial en banc review.

The “public rights” issue is complicated, but the basic outcome is simple – if patents rights are not public rights (but instead private rights) then an administrative agency cannot lawfully revoke a patent once issued (without the permission of the patentee).

The Supreme Court appeared to speak directly on this issue in McCormick Harvesting Mach. Co. v. Aultman-Miller Co., 169 U.S. 606 (1898):

The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent. Moore v. Robbins, 96 U. S. 530, 533; U. S. v. American Bell Tel. Co., 128 U. S. 315, 364, 9 Sup. Ct. 90; Lumber Co. v. Rust, 168 U. S. 589, 593, 18 Sup. Ct. 208.

Although the direct case is 100+ years ago, we’re still working with the same United States Constitution that protects private property rights against governmental intrusion that violate due process and equal protection principles.

In MCM, the Federal Circuit distinguished these old cases by noting that patent office cancellations were not authorized by Congress: “McCormick … certainly did not forbid Congress from granting the PTO the authority to correct or cancel an issued patent.” MCM (opinion by Judge Dyk, joined by Judges Prost and Hughes).  The petition offers several responses: (1) McCormick does not actualy provide the ‘statutory caveat’ but instead limits PTO authority “for any reason whatever.” (2) The reissue statute in force in McCormick did expressly authorize examiners to reject the issued claims – whether original or amended. Thus, the McCormick decision did limit the power of Congress to increase PTO power.

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One of the petitioner’s justifications for en banc review here is that it might allow the court to limit its docket.  In the process, the petition cites my recent Wrongly Affirmed Without Opinion article for the proposition that the court’s opinion writing docket may soon be further ballooning. “If Professor Crouch is right, it could be serendipitous if the Court overrules MCM, thus reducing docket load through reduction of incentives of patent owners to appeal.”

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The public/private divide is, in reality, a false dichotomy since the Court is comfortable with the notion of “quasi-private right” — which has the aspects of a private property right, but which can be subjected to administrative agency control.  A key recent opinion on point is B&B Hardware (2015) – albeit the dissent by Justice Thomas (with Scalia):

Trademark registration under the Lanham Act has the characteristics of a quasi-private right. Registration is a creature of the Lanham Act, which “confers important legal rights and benefits on trademark owners who register their marks.” Because registration is merely a statutory government entitlement, no one disputes that the TTAB may constitutionally adjudicate a registration claim.

By contrast, the right to adopt and exclusively use a trademark appears to be a private property right that “has been long recognized by the common law and the chancery courts of England and of this country.” In re Trade–Mark Cases, 100 U.S. 82, 92, 25 L.Ed. 550 (1879). As this Court explained when addressing Congress’ first trademark statute, enacted in 1870, the exclusive right to use a trademark “was not created by the act of Congress, and does not now depend upon it for its enforcement.” Ibid. “The whole system of trade-mark property and the civil remedies for its protection existed long anterior to that act, and have remained in full force since its passage.” Ibid. Thus, it appears that the trademark infringement suit at issue in this case might be of a type that must be decided by “Article III judges in Article III courts.” Stern, 564 U.S., at ––––, 131 S.Ct., at 2609.

B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1317, 191 L. Ed. 2d 222 (2015) (Thomas, J. Dissenting).

Scan-to-Email Patent Finally Done; Claim Scope Broadened by Narrow Provisional Application

MPHJ Tech v. Ricoh (Fed. Cir. 2017)[16-1243-opinion-2-9-2017-11]

MPHJ’s patent enforcement campaign helped revive calls for further reform of the patent litigation system.  The patentee apparently mailed out thousands of demand letters to both small and large businesses who it suspected of infringing its scan-to-email patents.  The primary patent at issue is U.S. Patent No. 8,488,173.

Ricoh, Xerox, and Lexmark successfully petitioned for inter partes review (IPR), and the PTAB concluded that the challenged claims (1–8) are invalid as both anticipated and obvious.[1] On appeal, the Federal Circuit has affirmed.

Claim 1 is a fairly long sentence – 410 words, but basically requires a scanner with the ability to both store a local file and also email a file that can be operated with a “go button” followed by “seamless” transmission.  The patent itself is based upon a complex family of 15+ prior US filings, most of which have been abandoned, with the earliest priority filing of October 1996.

Although more than 20 years ago, there was prior art even back then.  However, the identified prior art process was apparently not entirely “seamless” in operation. On appeal, the patentee asked for a narrowing construction of the claim scope to require “a one-step operation without human intervention.”  Unfortunately for MPHJ, the claims are not so clear.

Relying upon the Provisional to Interpret the Claims: Attempting to narrow the claim scope, MPHJ pointed to one of the referenced provisional applications that disclosed a “one step” process requiring the user to simply push “a single button”  On appeal, the Federal Circuit agreed that the provisional is relevant, but not how MPHJ hoped. Rather, the court found that the fact MPHJ omitted those limiting statements when it drafted the non-provisional serves as a suggestion that the claims were not intended to be limited either.

We agree that a provisional application can contribute to understanding the claims.[2] . . . In this case, it is the deletion from the ’798 Provisional application that contributes understanding of the intended scope of the final application. . . . We conclude that a person of skill in this field would deem the removal of these limiting clauses to be significant. The [challenged] Patent in its final form contains no statement or suggestion of an intent to limit the claims to the deleted one-step operation. Neither the specification nor the claims state that this limited scope is the only intended scope. Instead, the ’173 Patent describes the single step operation as “optional.” . . . A person skilled in this field would reasonably conclude that the inventor intended that single-step operation would be optional, not obligatory.

MPHJ’s efforts really should be written up as a case-study.  Unfortunate for patentees that this is the case members of the public will continue to hear about for years to come.

For patent prosecutors.  Here we have another example of how a low-quality provisional filing failed the patentee.  Now, you have to recognize that changes you make when filing the non-provisional will be used against you in the claim construction process.  While there may be ways to use this strategically, I expect that more patentees will be trapped than benefited.




= = = = =

[1] Ricoh Ams. Corp. v. MPHJ Tech. Invs., No. IPR2014-00538, 2015 WL 4911675, (P.T.A.B. Aug. 12, 2015).

[2] See Trs. of Columbia Univ. in New York v. Symantec Corp., 811 F.3d 1359, 1365 (Fed. Cir. 2016) (looking to the provisional application for guidance as to claim construction); Vederi, LLC v. Google, Inc., 744 F.3d 1376, 1383 (Fed. Cir. 2014) (same).

First Rehearing Request Challenging No-Opinion Judgments

by Dennis Crouch

LSI v. FLIR (Fed. Cir. 2017) (request for rehearing) [16-1299-leak-surveys-v-flir_combined-rehg]

In its newly filed petition for rehearing, Leak Surveys has asked the Federal Circuit to withdraw its Judgment Without Opinion. Leak’s Counsel (Donald Puckett) argues:

It is hard to imagine an appeal more unsuitable for affirmance without opinion under Fed. Cir. R. 36 than this one.

The petition makes two primary arguments:

  1. If the Federal Circuit’s judgment is based upon new or alternative grounds not stated by the PTAB, then it must write an opinion.  Although the reason for a judgment without opinion are not directly discernible, the petitioner here suggests that it was likely based upon theories first espoused by the court and respondent at oral arguments — sufficient to form a prima facie conclusion that the judgment relied upon new or alternate grounds.
  2. LSI urges the en banc Court to grant rehearing to decide whether this Court can ever affirm a PTAB IPR decision without opinion. See 35 U.S.C. § 141 (in USPTO appeal, Federal Circuit “shall issue to the Director its mandate and opinion . . .”) (emphasis added). See also Crouch, Wrongly Affirmed Without Opinion, Univ. of Missou. L. Stud. Research Paper No. 2017-02, Forthcoming 52 Wake Forest Law Review ___ (2017) (http://ssrn.com/abstract=2909007).

In offering the first weaker option, LSI gives the court an option in case it “may hesitate to open a floodgate of rehearing requests.”  Of course, there are only about a dozen R.36 decisions that are still within the court’s 30-day deadline for requesting rehearing.  (The Supreme Court has a 90-day deadline).  The stronger approach that I argue for: “LSI presents this argument here to preserve it for further appeal to the U.S.
Supreme Court if necessary.”  [Amicus support due within two weeks]

The underlying appeal center on the validity of Leak’s U.S. Patent No. 8,193,496 and 8,426,813 that cover gas-leak detection equipment and methods using a passive-IR camera and bandpass filter.  The primary issues were claim construction (“leak” and “normal operating conditions”) and motivation to combine in the ultimate obviousness conclusion.   The original brief began as follows:

The IPR proceedings below resulted in the creation of a dense factual record involving 24 declarations and 14 depositions. Almost all witnesses were scientists (many with Ph.D. degrees) having personal knowledge of the petroleum industry’s extensive efforts (and failures) to develop a commercially viable imaging system for detecting hydrocarbon gas leaks in the field. Most of these same witnesses also offered first-hand testimony of [the inventor] David Furry’s own efforts to solve the same technical problem. Several witnesses -top scientists from the largest petroleum companies – described the day in 2004 when Furry showed up at the industry’s “Scan Off” to demonstrate his “Hawk” camera against the industry’s then-best optical leak detection systems. These scientists, having dedicated years of work and countless resources to creating a commercially viable optical leak detection system, testified that they were completely surprised and astonished by the Hawk’s unexpected results. It was immediately apparent that Furry had solved an important technical problem that the petroleum industry had been unable to solve.




Supreme Court Update: Are Secondary Indicia of Invention Relevant to Eligibility?

by Dennis Crouch

The Supreme Court is on recess until Feb 17.

I don’t know if my end-of-April prediction will hold true, but I do expect Neil Gorsuch to become a Justice on the United States Supreme Court.  As a 10th Circuit Judge, Gorsuch never decided a patent case, but does have a handful of interesting IP cases.

There are a few petitions filed that we have not discussed here: 

 In its newest petition, DataTreasury takes 101 for a new spin by taking the 101/103 analysis to its next logical level.  If we are going to include a 103 analysis as part of the eligibility doctrine then lets go whole hog.  Thus, DataTreasury asks: whether a court must consider secondary indicia of invention as evidence in its eligibility analysis? In the case, the Federal Circuit had affirmed the PTAB judgment without opinion under R.36. A second eligibility petition is found in TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc. TDE asks the court to “please reconcile Diehr and Alice.” (I’m not literally quoting here).  The patent at issue (No. 6,892,812) claims a four-step process of “determining the state of a well operation.” (a) store several potential “states”; (b) receive well operation data from a plurality of systems; (c) determine that the data is valid by comparing it to a threshold limit; and (d) set the state based upon the valid data.

In Wi-LAN v. Apple, the patentee revives both Cuozzo and Markman claim construction arguments – this time focusing on “whether claim terms used to define the metes and bounds of an invention are generally given their “plain and ordinary meaning,” or are redefined (limited) to match the scope of the exemplary embodiments provided in the specification.”

duPont v. Macdermid asks whether summary judgment of obviousness is proper because of the factual disputes at issue.  Similarly, in Enplas v. Seoul Semiconductor, the petitioner argues that a finding of anticipation by the PTAB must be supported by findings each and every element of the subject patent claim is disclosed in the prior art.  In Enplas, the Federal Circuit affirmed the PTAB on a R.36 Judgment Without Appeal — it difficult for the petitioner to point to the particular deficiencies.


=== THE LIST===

1. 2016-2016 Decisions:

  • Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component);  GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978.  These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

3. Petitions with Invited Views of SG (CVSG): 

4. Petitions for Writ of Certiorari Pending:

  • Claim Construction: Wi-LAN USA, Inc., et al. v. Apple Inc., No. 16-913 (“plain and ordinary meaning”)
  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Anticipation/Obviousness: E.I. du Pont de Nemours and Company v. MacDermid Printing Solutions, L.L.C., No. 16-905 (summary judgment of obviousness proper)
  • Jury Trial: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Jury Trial: Nanovapor Fuels Group, Inc., et al. v. Vapor Point, LLC, et al., No. 16-892 (Can a party forfeit a properly demanded trial by jury without an explicit, clear, and unequivocal waiver?)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • LachesMedinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility: TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc., No. 16-890 (Please reconcile Diehr and Alice)
  • Eligibility: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (secondary indicia as part of eligibility analysis).
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)

5. Petitions for Writ of Certiorari Denied or Dismissed:


Writing Opinions at the Federal Circuit

It has now been one week since I posted a draft version of my article Wrongly Affirmed Without Opinion arguing that the Patent and Trademark Statutes requires that the USPTO issue opinions in PTO appeals (rather than just Rule 36 Judgments Without Opinion).  Although the court has not offered any public statement, it has not issued any R.36 judgments during this time.  During the month of January the court issued 15 judgments in PTO appeal. Those included: 1 precedential opinion, 2 non-precedential opinions, and 12 judgments without opinion.  No PTO appeal decisions have been issued yet in February 2017.


The Statute Bars Affirmances Without Opinion

by Dennis Crouch

This follows up on yesterday’s post on my new draft article “Wrongly Affirmed Without Opinion.”

The basic argument in the paper is that both the Patent Act and the Lanham Acts require the Federal Circuit to provide an opinion when issuing a judgment on an appeal from the Patent & Trademark Office (PTO).[1] In particular, both statutes indicate that, upon determination of the case, the Federal Circuit “shall issue … its mandate and opinion.” As the article explains, Rule 36 Judgments Without Opinion are (almost by definition) not opinions and thus do not satisfy the opinion requirement.

The article steps through some potential alternate constructions of the statutory language (the plain language is best) and considers whether Congress actually has the power to require the court to write an opinion (it does).  If the court wants to keep issuing R.36 judgments, its best bet would be to construe the “shall issue its … opinion” akin to the best mode requirement — that it only needs to offer an opinion if it actually has an opinion.  I argue that construction is not the best and also misses the reality that the judges form reasons for their judgment before issuing a R.36 judgment — the law just requires those to be written.

[1] See 35 U.S.C. § 144 (patent cases) and 15 U.S.C. § 1071(a)(4) (trademark cases).

Draft is online through SSRN: https://ssrn.com/abstract=2909007.

Wrongly Affirmed Without Opinion

by Dennis Crouch

I have uploaded a draft of a short article of mine titled Wrongly Affirmed Without Opinion – If I am correct, is has some potentially of shaking up the Federal Circuit’s current practice of issuing so many Rule 36 Affirmances Without Opinion.  [Download the Paper from SSRN: https://ssrn.com/abstract=2909007]

Many see the Court of Appeals for the Federal Circuit as the patent court because of its national jurisdiction over patent cases and its congressional mandate to strengthen and bring uniformity to the patent system, presumably through precedential decision-making. Oddly, for the past few years most of the court’s merits decisions in Patent and Trademark Office appeals have not been released with precedential opinions – or even non-precedential opinions for that matter. Rather, most are filed as judgments without any opinion at all. The court’s approach is surprising considering the current high levels of uncertainty in the areas of patent law procedure (AIA Trials before the PTAB) and doctrine (eligibility under Alice and Mayo) that are being decided without opinion.

This short article raises a surprisingly simple but novel argument: the Federal Circuit is required by statute to issue an opinion in these PTO appeals. As I explain, the statute is plain and clear and is supported by strong policy goals. The court’s recent spate of hidden decisions is threatening its public legitimacy. I respect the members of this court so much, and I hope they will use this opportunity to take the next step in the right direction.

Supreme Court 2017 – Patent Preview

by Dennis Crouch

A new Supreme Court justice will likely be in place by the end of April, although the Trump edition is unlikely to substantially shake-up patent law doctrine in the short term.

The Supreme Court has decided one patent case this term. Samsung (design patent damages).  Five more cases have been granted certiorari and are scheduled to be decided by mid June 2017. These include SCA Hygiene (whether laches applies in patent cases); Life Tech (infringement under 35 U.S.C. § 271(f)(1) for supplying single component); Impression Products (using patents as a personal property servitude); Sandoz (BPCIA patent dance); and last-but-not-least TC Heartland (Does the general definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b)).

Big news is that the Supreme Court granted writs of certiorari in the BPCIA dispute between Sandoz and Amgen.   The BPCIA can be thought of as the ‘Hatch Waxman of biologics’ – enacted as part of ObamaCare.   The provision offers automatic market exclusivity for twelve years for producers of pioneer biologics.   Those years of exclusivity enforced by the FDA – who will not approve a competitor’s expedited biosimilar  drug application during the exclusivity period.   The statute then provides for a process of exchanging patent and manufacturing information between a potential biosimilar producer and the pioneer – known as the patent dance.  The case here is the Court’s first chance to interpret the provisions of the law – the specific issue involves whether the pioneer (here Amgen) is required to ‘dance.’ [Andrew Williams has more @patentdocs]

A new eligibility petition by Matthew Powers in IPLearn-Focus v. Microsoft raises eligibility in a procedural form – Can a court properly find an abstract idea based only upon (1) the patent document and (2) attorney argument? (What if the only evidence presented supports eligibility?).  After reading claim 1 and 24 (24 is at issue) of U.S. Patent No. 8,538,320, you may see why the lower court bounced this. Federal Circuit affirmed the district court’s ruling without opinion under Federal Circuit Rule 36 and then denied IPLF’s petition for rehearing (again without opinion).

1. A computing system comprising:

a display;

an imaging sensor to sense a first feature of a user regarding a first volitional behavior of the user to produce a first set of measurements, the imaging sensor being detached from the first feature to sense the first feature, the first feature relating to the head of the user, and the first set of measurements including an image of the first feature, wherein the system further to sense a second feature of the user regarding a second volitional behavior of the user to produce a second set of measurements, the second feature not relating to the head of the user; and

a processor coupled to the imaging sensor and the display, the processor to:

analyze at least the first set and the second set of measurements; and determine whether to change what is to be presented by the display in view of the analysis.

24. A computing system as recited in claim 1, wherein the system capable of providing an indication regarding whether the user is paying attention to content presented by the display.

=== THE LIST===

1. 2016-2016 Decisions:

  • Design Patent Damages: Samsung Electronics Co. v. Apple Inc., No 15-777 (Total profits may be based upon either the entire product sold to consumers or a component);  GVR order in parallel case Systems, Inc. v. Nordock, Inc., No. 15-978.  These cases are now back before the Federal Circuit for the job of explaining when a component

2. Petitions Granted:

3. Petitions with Invited Views of SG (CVSG): 

4. Petitions for Writ of Certiorari Pending:

  • Is it a Patent Case?: Boston Scientific Corporation, et al. v. Mirowski Family Ventures, LLC, No. 16-470 (how closely must a state court “hew” federal court patent law precedents?) (Appeal from MD State Court)
  • Anticipation/Obviousness: Google Inc., et al. v. Arendi S A.R.L., et al., No. 16-626 (can “common sense” invalidate a patent claim that includes novel elements?) (Supreme Court has requested a brief in response)
  • Civil Procedure – Final Judgment: Johnson & Johnson Vision Care, Inc. v. Rembrandt Vision Technologies, L.P., No. 16-489 (Reopening final decision under R.60).
  • Anticipation/Obviousness: Enplas Corporation v. Seoul Semiconductor Co., Ltd., et al., No. 16-867 (“Whether a finding of anticipation under 35 U.S.C. § 102 must be supported by findings that each and every element of the subject patent claim is disclosed in the prior art?”)
  • Post Grant Admin: Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, et al., No. 16-712 (“Whether inter partes review … violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.”) [oilstatespetition]
  • Eligibility: IPLearn-Focus, LLC v. Microsoft Corp., No. 16-859 (evidence necessary for finding an abstract idea)
  • Post Grant Admin: SightSound Technologies, LLC v. Apple Inc., No. 16-483 (Can the Federal Circuit review USPTO decision to initiate an IPR on a ground never asserted by any party)
  • Is it a Patent Case?: Big Baboon, Inc. v. Michelle K. Lee, No. 16-496 (Appeal of APA seeking overturning of evidentiary admission findings during reexamination – heard by Federal Circuit or Regional Circuit?)
  • LachesMedinol Ltd. v. Cordis Corporation, et al., No. 15-998 (follow-on to SCA); Endotach LLC v. Cook Medical LLC, No. 16-127 (SCA Redux); Romag Fasteners, Inc. v. Fossil, Inc., et al, No. 16-202 (SCA Redux plus TM issue)
  • Eligibility and CBM: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (I have not seen the petition yet, but underlying case challenged whether (1) case was properly classified as CBM and (2) whether PTAB properly ruled claims ineligible as abstract ideas) (Patent Nos. 5,910,988 and 6,032,137).

5. Petitions for Writ of Certiorari Denied or Dismissed:

Yes, All Elements Rule Still Applies to Infringement

Medgraph v. Medtronic (Fed. Cir. 2016)

Medgraph’s claims are directed to a set of methods “for improving and facilitating diagnosis and treatment of patients.” See U.S. Patent 5,974,124 and U.S. Patent 6,122,351.   The problem is that the claims require actions by both the computer system and also a patient/doctor.  This claim structure directly runs headlong into traditional requirement for direct infringement of a patent – that all steps of the claim be performed-by or attributable-to a single entity.

In its 2015 decision, the district court ruled that Medtronic could not be liable for infringement because there was no “showing that Medtronic itself directly infringed the method claims or that it acted as a ‘mastermind’ by controlling or directing anyone else’s direct infringement.” Citing Akamai Techs., Inc v. Limelight Networks, Inc., 786 F.3d 899 (Fed. Cir. 2015) (decision on remand from SCT).

Following the district court’s decision in this case, the Federal Circuit issued a per curiam en banc decision broadening the scope of potential attribution. Akamai Techs., Inc. v. Limelight Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015).  In this most recent en banc decision, the court held that the “single entity” theory of direct infringement can also be extended “when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”

On appeal here, Medgraph argued for remand to allow the district court to consider infringement under this broader theory.  However, the Federal Circuit rejected that suggestion.  The court held instead that Medgraph’s case fails on any and all theories of direct infringement because Medgraph failed to produce evidence that the missing steps were actually performed by the patient and doctor. In addition, Medgraph failed to identify evidence fitting within the new broader attribution guidelines.

“The district court also correctly concluded that Medtronic was not liable under a theory of indirect infringement, because indirect infringement is predicated on direct infringement. That rule was also unaffected by Akamai V, so the outcome would, again, not change if we were to vacate and remand. ”

Dismissal Affirmed

= = = =

I was curious how the patentee here thought it might win without proving infringement of each element. In its reply brief, Medgraph explained that (1) Medtronic instructed users to practice the claim steps; and (2) Medtronic ‘admits’ that about 20% of patients used the system in an infringing manner.  This admission came from Medtronic’s appeal brief that stated “the record shows that approximately 80 percent of customers in fact use the system in this non-infringing way.”  This evidence coupled with its expert testimony are, according to Medgraph, enough to prove infringement. See Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317 (Fed. Cir. 2009) (circumstantial evidence sufficient); Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1272 (Fed. Cir. 1986) (“[c]ircumstantial evidence is not only sufficient, but may also be more certain, satisfying and persuasive than direct evidence.”).

= = = =

Although the Federal Circuit’s most recent Akamai decision loosened the knot a bit on the strict single-entity requirement, it remains a tough requirement.  Here, for instance, it does not appear to be enough that an accused infringer instructed its customers on how to use its system in a way that infringes.  Rather, liability under Akamai will only be created if the alleged infringer requires that those steps be followed or receives some benefit upon their performance.

Power Integrations v. Fairchild Semiconductor

By Jason Rantanen

Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. (Fed. Cir. 2016) 15-1329.Opinion.12-8-2016.1
Panel: Prost, Schall, Chen (author)

This appeal is the latest in a long-running patent saga between Power Integrations and Fairchild.  Each asserted patents against the other; each won as to liability against the other. The most interesting aspect of this opinion is its discussion of inducement, in which the court rejects a jury instruction on inducement that expressly stated that the third party’s direct infringement “need not have been actually caused by the [accused inducer’s] actions.”

Background:  The complexity of this appeal is illustrated by the opinion’s 8 bullet-point summary of its holdings.   The jury found that Power Integrations’ Patent Nos. 6,107,851 and 6,249,876 were not anticipated and were directly and indirectly infringed by Fairchild and that Fairchild’s Patent No. 7,259,972 was not obvious and was infringed by Power Integrations under the doctrine of equivalents (but was not literally infringed or indirectly infringed by Power Integrations).  The jury also found Power Integrations’ Patent No. 7,834,605 neither anticipated nor obvious.  Following trial, the district court granted judgment as a matter of law that Fairchild directly infringed this patent.  The district court granted a permanent injunction against Fairchild and declined to grant an inunction against Power Integrations.

Fairchild appealed and Power Integrations cross-appealed.

Inducement: The indirect infringement issue involved 35 U.S.C. § 271(b), a one sentence provision at the heart of several significant opinions over the last few years.  Section 271(b) reads “[w]hoever actively induces infringement of a patent shall be liable as an infringer.”  Basic elements of an inducement claim include some type of action by the alleged inducer to encourage acts by a third party, an awareness that the third party’s acts would infringe a patent, and actual direct infringement by a third party.

The full jury instruction takes up almost a page and a half of the opinion.  The critical passage on appeal reads:

In order to establish active inducement of infringement, it is not sufficient that others directly infringe the claim. Nor is it sufficient that the party accused of infringement was aware of the acts by others that directly infringe. Rather, in order to find inducement, you must find that the party accused of infringement intended others to use its products in at least some ways that would infringe the asserted claims of the patent. However, that infringement need not have been actually caused by the party’s actions. All that is required is that the party took steps to encourage or assist that infringement, regardless of whether that encouragement succeeded, or was even received.

Slip Op. at 22 (emphasis in opinion).  The problem, in the court’s words, was that “[t]his instruction left the jury with the incorrect understanding that a party may be liable for induced infringement even where it does not successfully communicate with and induce a third-party direct infringer.”  Id. at 23.  Rather, inducement “requires successful communication between the alleged inducer and the third-party direct infringer.”  Id.  Quoting from Dynacore Holdings Corp. v. U.S. Philips Corp., 363, F.3d 1263, 1274 (Fed. Cir. 2004), the court observed “[w]e have further held that “[t]o prevail under a theory of indirect infringement, [plaintiff] must first prove that the defendants’ actions led to direct infringement of the [patent-in-suit].”  Id. at 24.  Thus, “a finding of induced infringement requires actual inducement.”  Id.  In terms of doctrine, the court situates this inquiry in the requirement of inducement itself.

Although the court does not come right out and say it, this is fundamentally a theory of causality in inducement.  In other words, it is not enough that the alleged inducer engage in acts intended to result in direct infringement by a third party and that the third party directly infringes.  At a minimum, there must be a successful communication between the two.  Attempted inducement is not enough; there must be “actual inducement.”  This interpretation  is further bolstered by the court’s rejection of the language in the jury instruction stating that “infringement need not have been actually caused by the party’s actions.”   That said, despite the invitation to address causality presented by the jury instruction, the court conspicuously avoids describing its holding in those terms.  Nowhere outside of the jury instruction and a few unrelated places does a permutation of “caus” appear.

Even as it recognized a requirement that there be some link between the acts of the alleged inducer and the directly infringing acts,  however, the Federal Circuit was not willing to go so far as to say that Fairchild did not induce infringement  as a matter of law.  After rejecting Fairchild’s argument on the lack of sufficiency of the evidence generally, the Federal Circuit dismissed its argument on nexus between Fairchild’s acts and the ultimate direct infringement.  Fairchild contended

that Power Integrations introduced evidence of only three acts of direct infringement—sales of an HP printer, Acer notebook computer, and Samsung notebook computer containing infringing Fairchild controller chips—and that Power Integrations was required to present evidence that Fairchild specifically induced HP, Acer, Samsung, or the retailers from which Power Integrations purchased the infringing products to incorporate the infringing controller chips into products bound for the United States.

Id. at 30.  The Federal Circuit rejected the argument that such specificity was required in the nexus.  “While none of [Power Integrations’  evidence can be directly linked to the particular HP printer, Acer notebook computer, or Samsung notebook computer Power Integrations
introduced at trial as representative acts of direct infringement, it was sufficient to allow the jury to find that Fairchild had induced its customers (including HP, Acer, and Samsung) to infringe as a class. This is all that we require.”  Id. at 31.  “Indeed, we have affirmed induced infringement verdicts based on circumstantial evidence of inducement (e.g., advertisements, user manuals) directed to a class of direct infringers (e.g., customers, end users) without
requiring hard proof that any individual third-party direct infringer was actually persuaded to infringe by that material.”  Id.

Thus, although some evidence of a link between inducer’s acts and the directly infringing acts is required, it need not be with the level of specificity that might need to be shown in other contexts.  Absolute precision of proof as to the machine in the courtroom is not necessary.  And yet, some proof of a link must be present.  Here, the court concluded, there was sufficient evidence for a reasonable jury to find that necessary link.

At this point you might be asking why all of this mattered, given that Fairchild did not appeal the jury verdict that it directly infringed the patents.  The reason is because the finding of inducement greatly expanded the scope of Fairchild’s liability beyond its direct infringement in the United States.  Based on its decision on inducement, the Federal Circuit vacated the district court’s grant of Power Integrations’ motion for a permanent injunction against Fairchild.  Of course, given that these issues are being remanded to the district court, it is conceivable that the outcomes of both could ultimately be the same.

Practice commentary: The opinion contains a simple articulation of the requirements of an inducement claim that rearranges the conventional elements.  Near the beginning of its discussion of the jury verdict, the court describes the elements as follows:

In other words, Power Integrations was required to prove that: (1) a third party directly infringed the asserted claims of the ’851 and ’876 patents; (2) Fairchild induced those infringing acts; and (3) Fairchild knew the acts it induced constituted infringement.

In my view, this version is much easier to understand than the usual way inducement is articulated.

Anticipation: The court’s review on anticipation of the ‘605 patent is also interesting as an example of a jury verdict of no anticipation being overturned on appeal.   Here, Fairchild bore a double-burden on Power Integrations ‘605 patent: not only did it bear the burden of proving that the presumptively-valid claims were anticipated, but it also had to convince the Federal Circuit on appeal that the jury’s finding to the contrary was unsupported by substantial evidence.  Fairchild was helped on appeal by the relative narrowness of the disputed evidentiary issue.  On that particular issue, the court concluded that Power Integrations’ own expert had testified that the critical element required by the claims was disclosed by the prior art reference.

Doctrine of equivalents: The main point here is Power Integrations’ successful claim vitiation argument.

Edit: Added the opinion itself.