Tag Archives: Claim Construction

Federal Circuit Orders District Court to Stay Litigation to Await Conclusion of Later-Filed Post-Issuance Review (CBM) Proceeding

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By Dennis Crouch

VirtualAgility Inc., v. Salesforce.com, Dell, Dr. Pepper, et al. (Fed. Cir. 2014)

The America-Invents-Act (AIA) created set of new and powerful administrative proceedings that allow third parties to challenge issued patents. These include post-grant review (PGR), covered business method review (CBM), and inter partes review (IPR). Congress maintained the less-powerful but still important third-party requested ex parte reexamination. In the coming months, the Federal Circuit will be challenged with reviewing various aspects of the new proceedings. Perhaps most importantly, the court will be challenged with determining how much deference and leeway to give the USPTO in developing its own procedures and interpretation of the law.

Apart from the agency deference issue, a second major issue whose steam continues to build involves the rising number of conflicts between federal courts and the patent office. Traditionally, post-issuance challenges have been handled by the courts, but the new procedures have shifted the balance of power. It turns out that most patents involved in post-issuance administrative challenges are also involved in parallel challenges in federal district court. These parallel proceedings will often have somewhat different results, and many remain confused over the potential result of such a conflict. In the extreme, the issue raises constitutional questions of separation of powers between the executive (the PTO) and the courts.

One solution to the conflict is to have the decision-makers take turns and apply principles of estoppel, preclusion, and comity to resolve the delayed process in a way that avoids conflict with the first-decided case. The PTO has generally refused to stay its proceedings and many district court judges have difficulty ordering stays – especially in cases such as this where the review request is filed several months after the infringement lawsuit. It is important to recognize that post-issuance review requests are limited by law to only challenge issues that can also be challenged in court. Thus, for a judge, the post-issuance review request serves as a transparent statement that the defendant does not trust the judge or jury to make the call.

The Timeline Here: In January 2013, VA sued the defendants in the Eastern District of Texas, alleging infringement of its U.S. Patent No. 8,095,413. Five months later (May 2013) one of the defendants (Salesforce.Com) filed a covered business method review (CBM) petition alleging that that the claim of the patent were all invalid under Sections 101, 102, and 103 of the Patent Act. In November 2013, the PTAB partially granted the CBM petition and ordered review of the claims under Sections 101 and 102 (but not 103) and setting a July 2014 PTAB trial date with a final decision expected by November 2014. At that point, the district court was made-aware of the PTAB’s late-start but rapid progress. However, the district court refused to stay the litigation pending outcome of the PTAB case and continued moving forward with claim construction hearing set for April 2014 and trial also set for November 2014.

One aspect of the new CBM process is that the statute allows for interlocutory appeal of a district court’s decision to grant or deny a stay of litigation pending CBM review. Thus, after the district court refused to grant the stay, Salesforce appealed. The Federal Circuit quickly granted a stay of the district court litigation pending appeal and has now ordered that the district court to stay its proceedings pending the CBM review. The majority decision here is written by Judge Moore and joined by Judge Chen. Judge Newman wrote in dissent arguing that the decision here removes the discretion given to district courts.

The statute provides four factors that a district court must consider when determining whether or not to grant a stay of a late-filed CBM review.

[T]he court shall decide whether to enter a stay based on—

(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;

(B) whether discovery is complete and whether a trial date has been set;

(C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and

(D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

AIA §18(b)(1). Regarding appeals, the statute indicates that the Federal Circuit’s “shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.” AIA §18(b)(2). Thus, Judge Newman’s call for deference is likely misplaced. For its part, the majority refused to determine whether any deference is required and instead held that reversal was warranted even under an abuse of discretion standard.

The result here provides a strong suggestion to district courts that they should stay litigation once the PTAB has indicated that it will review the identical claims being litigated in court.

Federal Circuit: How Not to Describe the Invention

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By Dennis Crouch

X2Y Attenuators v. US International Trade Commission as well as Intel, Apple, & HP (Fed. Cir. 2014)

In this case, the Federal Circuit affirms a narrow construction of X2Y’s claim terms based upon a disavowal of scope. In the face of USPTO pleas for patentees to more particularly define claim terms, this case offers reasons for applicants to push-back against that approach.

The decision here fully and problematically supports the current patent drafting norms where the true nature and advances offered by inventions are hidden in order to avoid unduly limiting claim scope. Under standard patent drafting technique, no elements are described as necessary, critical, preferred, or even discouraged. And, “the invention” is never particularly defined or called-out. That strategy has the result of substantially decreasing the disclosure value of a patent.

= = = =

The founder of X2Y Tech was Mr. Anthony A. Anthony who passed away in 2012 while continuing to fight for royalty agreements from major manufacturers. During his life, Anthony obtained more than 100 patents covering a variety of electronic components and circuitry configurations.

X2Y’s claims require a set of electrodes but do not expressly indicate their relative configuration. The specification discusses a particular “sandwich” configuration of electrodes and the USITC found that the claims should be construed as also requiring the sandwich formation. On appeal, the Federal Circuit affirms – finding that the language of the specification requires that the claims be so limited.

Under Phillips v. AWH, the specification and prosecution history of a patent can provide insight into proper the claim interpretation. In addition to the scope-shading offered by Phillips, scope disclaimers or term definitions coming from the applicant can dramatically shift claim scope. However, the law requires that any disclaimer must be found in a clear and unambiguous statement made by the applicant.

In this case, the specification refers to the sandwich configuration as “universal to all the embodiments” and as “an essential element among all embodiments or connotations of the inventions.” The court finds these statements to represent a “clear and unmistakable disavowal of claim scope.” The standard for finding disavowal, while exacting, was met in this case.

To be clear, an important element of the decision here is that the disavowal is not tied to any particular claim language, but applies to all claims of the patent without regard to their express claim terms. In fact, the court goes even further and found that statements made in some family-member applications also apply to establish the disclaimer here.

The court notes that one mechanism for overcoming the disclaimer in a child application would be to expressly amend the claim scope so as to reject the disclaimer – of course that result may well have written description problems.

A unanimous majority opinion was filed by Judge Moore and joined by judges Reyna and Wallach. Judge Reyna also filed a separate concurring opinion discussing whether claim construction must come before determining whether a priority claim is proper.

Federal Circuit: You Don’t Infringe . . . You Still Must Pay for Infringing

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By Dennis Crouch

Retractable Tech v. Becton Dickinson and Co (Fed. Cir. 2014)

This patent infringement lawsuit is now in its seventh year. The case revolves around a set of patents owned by Retractable that cover a form of retractable safety-syringe. The original jury found that BDs 1mL and 3mL syringes both infringe with the result of $5 million for past damages and the district court ordered a permanent injunction. In the 2011 appeal, the Federal Circuit altered that claim construction and concluded that there was no infringement of the 3mL devices. On remand, the district court then altered the injunction (to only focus on the 1mL device). However, the district court refused to reconsider the damage award – finding that the damage award was subject to a final judgment that had not been directly appealed nor the subject of an order for reconsideration from the prior appeal. Now, the Federal Circuit affirms that judgment – finding that the lower court properly precluded BD from re-raising the damages issue on remand. This case is a bit of a civil procedure oddity. The jury awarded damages for infringement based on a finding that two different products infringe and final judgment was entered. The appellate court then partially reversed the decision – finding that only one of the products infringed. But, the infringer is not able to get the damage award modified.

In Verizon Services v. Vonage, 503 F.3d 1295 (Fed. Cir 2007), the court wrote that “where the jury rendered a single verdict on damages, without breaking down the damages attributable to each patent, the normal rule would require a new trial as to damages.” That case appears on-point to the present situation. However, both the district court and appellate panel have disagreed – finding that a district court is not permitted “to revisit damages in the absence of a reversal or remand of a damages determination. . . . [T]here is no ‘normal rule’ giving district courts the authority to regularly revisit or recalculate damages that fall within our mandate.”

Conceding that the rule here is very much a technicality, the court writes that the whole case outcome would be different had BD included one additional phrase in its prior appeal brief that requested a remand on the damages issue. Although a technicality, it appears that the decision not to include that phrase was a strategic decision made by BD’s appellate attorneys from WilmerHale and not any sort of oversight. In particular, BD wanted (and asked for) a bigger outcome (complete reversal or new trial) rather than simply a reduction in the damage award. I don’t believe that anyone will go home feeling sorry for BD.

This decision here was written by Judge Linn and joined by Judge Lourie. Judge Rader had been on the original panel but has now retired and thus did not participate in the final determination.

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Taming the Mongrel: Aligning Appellate Review of Claim Construction with its Evidentiary Character in Teva v. Sandoz

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Guest Post by Peter. S. Menell, J. Jonas Anderson, and Arti K. Rai.  Below, they summarize their recently filed amicus brief in Teva v. Sandoz.

In its seminal Markman decision, the Supreme Court sought to usher in a more effective, transparent patent litigation regime through its ruling that “the construction of a patent, including terms of art within its claim, is exclusively within the province of the court.” Markman v. Westview Instruments, Inc. (Markman II), 517 U.S. 370, 372 (1996). Notwithstanding the constitutional right to patent jury trials, the Court ruled that claim construction would no longer be conducted by lay jurors in shrouded deliberations. Rather, based on historical analysis of the role of juries in patent cases, characterization of the nature of claim construction, and a comparative assessment of judicial institutional capabilities, the Court concluded that the Seventh Amendment right of trial by jury did not extend to claim construction and that trial judges were better equipped than juries to resolve the mixed fact/law controversies inherent in construing disputed patent claim terms.

In the aftermath of Markman II, the Federal Circuit adhered to its Markman decision, Markman v. Westview Instruments, Inc. (Markman I), 52 F.3d 967 (1995) (en banc) – that claim construction is a “purely legal issue” subject to plenary de novo review, see Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1451 (Fed. Cir. 1998) (en banc) – downplaying the Supreme Court’s more nuanced description of claim construction as a “mongrel practice” merely “within the province of the court.” Markman II, 517 U.S. at 372, 378. Over nearly two decades of experience in the post-Markman era, it has become apparent that the Federal Circuit’s adherence to its Markman I plenary de novo appellate review standard has frustrated district courts’ distinctive capabilities to apprehend and resolve the factual disputes inherent in claim construction determinations, undermined the transparency of the claim construction process, discouraged detailed and transparent explanations of claim construction reasoning, and produced unusual and at times alarming levels of appellate reversals. These effects have cast doubt on the predictability of patent litigation, discouraged settlements, delayed resolution of patent disputes, and run up the overall costs of patent litigation.

The Supreme Court’s Markman II decision points toward a balanced, structurally sound, legally appropriate, hybrid standard of appellate review that would promote more accurate and efficient patent dispute resolution. Factual determinations underlying claim construction rulings should be subject to the “clearly erroneous” standard of review, while the Federal Circuit should retain de novo review over the ultimate claim construction decision. In this manner, district court judges, in their capacity as fact-finders, could better surmount the distinctive challenges posed by the technical, mixed fact/law controversies inherent in patent claim construction. A hybrid standard would encourage district judges to identify the “person of ordinary skill in the art” and, where appropriate, build fuller, more transparent records to support their claim construction decisions. These effects would promote clearer substantive analysis, more settlements following claim construction and trial, more effective appellate review, and fewer reversals and remands.

A hybrid appellate standard is unlikely to undermine the national uniformity of the patent system. In any event, concerns about national uniformity and clarity of patent claims are more appropriately addressed through improvements to the patent prosecution process, meaningful implementation of the 35 U.S.C. §112(b) claim indefiniteness standard, post-grant review and reexamination procedures, consolidation of claim construction through multi-district litigation, and adjustments to substantive claim construction jurisprudence.

Our brief filed in Teva v. Sandoz can be accessed at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457958

Peter S. Menell is the Koret Professor of Law and Director of the Berkeley Center for Law & Technology at the University of California at Berkeley School of Law (Boalt Hall), J. Jonas Anderson is an Assistant Professor of Law at American University Washington College of Law, and Arti K. Rai is the Elvin R. Latty  Professor of Law and Co-Director of the Duke Center for Innovation Policy at Duke Law School.

Teva v. Sandoz: Teva’s Opening Merits Brief

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By Jason Rantanen

Teva recently filed its merits brief in Teva v. Sandoz (previous PatentlyO discussion here and here).  It’s main argument on the issue of claim construction is that claim construction involves making findings of fact and Rule 52(a)(6) of the Federal Rules of Civil Procedure states that “[f]indings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous.”   In support of the first part of this argument, the brief points to determinations about the perspective offered by a person of ordinary skill in the art and the use of extrinsic evidence to resolve ambiguities; these, the brief argues, are inherently factual determinations for which deference should be given to the district court.

A key issue will be whether these types of judicial determinations are actually factual findings, or whether they are something else.  Certainly reviewing courts make determinations about some types of historical evidence all the time – one need only look at Justice Breyer’s discussion of legislative history and Congressional intent in Aereo for recent example – without invoking deference.  These determinations aren’t limited to “purposivists”: Justice Scalia’s originalist approach to interpreting legal statutes, for example, involves looking to how the text would have been understood at the time it was issued, something that can involve historical linguistic research.  Figuring out whether the “facts” involved in claim construction are akin to something like legislative history or the historical determinations involved in an originalist approach, or instead are the type of “facts” encompassed by Rule 52 is central to the invocation of that rule.  Much of Teva’s brief seeks to tackle this challenge, arguing that the facts involved in claim construction are exactly the kinds of facts that are encompassed by Rule 52.

Of these arguments, I found the most compelling to be the point that even as  determinations such as the knowledge of a person of ordinary skill in the art are factual and reviewed with deference in one context (such as obviousness and enablement), they are reviewed without deference in claim construction.  It will be interesting to see how Sandoz responds.

One important tension that the brief fails to resolve, however, is the key question of how deference on factfinding plays into decisions about claim construction.  If the ultimate determination of the meaning of claim terms remains one of law, does that basically invite an obviousness-like determination wherein certain subsidiary issues – such as the knowledge possessed by a PHOSITA and content of extrinsic evidence – are reviewed with deference, but the reviewing court makes the final determination, weighing each of the various pieces of information, without deference?  Or is it something else?

The brief does seem to indirectly offer a vision of how deference to factual findings should work, but it strikes me as leaving no place for the other side of the mongrel practice: the legal component.  The vision offered by the brief appears in Part IV., on pages 53-54, where Teva argues that the Federal Circuit erred by not granting deference to the district court on the “understanding of Figure 1, of SEC technology,
and of the prosecution history.”  In other words, Teva’s view of deference manifests as the lens through which the interpreter of the legal doctrine looks at not just the extrinsic evidence (the SEC technology), but also the patent document itself and the prosecution history.  If this is the correct approach to deference – that the reviewing court must give deference to the district court’s interpretation of the patent document and prosecution history – it is hard for me to see anything left that isn’t entitled to deference.  (Maybe the ordinary meaning of the claims themselves?  But that’s “the ordinary meaning to a person of skill in the art,” so that doesn’t work.).  This “lens” approach to deference seems to go too far, in my mind, and is fundamentally at odds with the way other factual findings and deference work in patent law doctrines such as nonobviousness and enablement.

The brief also challenges the various rationales for reviewing factual issues in claim construction de novo: “Markman requires it” argument, the interpretation of legal documents is a question of law argument, and the uniformity argument.  It also  argues that allowing de novo review of facts on appeal produces poorer decisions and is costly to the patent system, citing to the reversal rate data.  (Although this latter point seems to depend heavily on how deference is actually implemented – it would seem that the de novo review of certain subsidiary elements of claim construction, alone, would have only a very marginal effect on decision quality and litigation cost).

You can download a copy of the brief here: Teva’s Opening Brief

Teva v. Sandoz: Standard of Review for Claim Construction(?)

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By Jason Rantanen

While many eyes will be on the Supreme Court on Monday when it releases its decision in Hobby Lobby v. Sebelius, the term is over for patent cases.  Over the past few months, the Court issued an astonishing six patent law-related opinions (almost 10% of the Court’s docket), covering ground from claim definiteness (Nautilus) to the exceptional case standard in Section 285 (Octane, Highmark) to multi-actor infringement (Limelight) to the burden of proof in noninfringement declaratory judgment actions (Medtronic) to the ever-present patentable subject matter case (Alice).  Three of these opinions (Alice,  Highmark, and Limelight) resolved deep intra-circuit splits at the Federal Circuit.  Altogether, this term profoundly altered the landscape of patent law jurisprudence.  Perhaps more important than the substance of the Court’s opinions was the change itself: through opinions such as Nautilius and Alice, the court made it clear to participants that the law of patents can be a dynamic, changing thing, an organicness that forward-thinking patent attorneys and agents – even more than litigators – will be forced to grapple with.

I’ll be talking more about this year’s developments in patent law at the Wisconsin State Bar Association’s annual Door County Intellectual Property Academy in a few weeks, and the Supreme Court will certainly take center stage.  Dennis will be there as well.

For now, though, the next major event in patent law jurisprudence is likely to be the Court’s opinion in Teva v. Sandoz, in which the Petitioner posed the question:

Whether a district court’s factual finding in support of its construction of a patent claim term may be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires.

But this case is more complex than the (relatively) simple issue of deference in appellate review of claim constructions.  At the trial court level, the district judge did not simply construe the claim in a way unfavorable to Sandoz, the accused infringer.  Rather, the district judge rejected Sandoz’s argument that the claim term “Average Molecular Weight” was indefinite and construed the claim in Teva’s favor.  On appeal the Federal Circuit reviewed the issue of claim definiteness without deference and concluded that the term was indefinite (applying it’s pre-Nautilus standard of “not amenable to construction” or “insolubly ambiguous”).  

Herein lies the sticky part: If one takes the view that questions of claim definiteness and claim construction are effectively one and the same, then this case squarely presents a question about the appropriate standard of review for claim construction. This seems intuitive: both revolve around determining claim meaning.

But treating issues of claim definiteness and construction as if they are just different sides of the same coin runs into a glitch if there is a factual component: one issue (definiteness) arguably comes with a “clear and convincing” evidentiary standard while the other (claim construction) does not.  (While there is a canon that claims should be interpreted to preserve their validity, it’s  a weak one that only operates as a last resort.  See Phillips v. AWH Corp., 415 F.3d 1303, 1327 (Fed. Cir. 2005) (“While we have acknowledged the maxim that claims should be construed to preserve their validity, we have not applied that principle broadly, and we have certainly not endorsed a regime in which validity analysis is a regular component of claim construction.”).)  If different evidentiary standards are being applied to the factual components of each, then claim definiteness and claim construction must be separate issues.

If this logic is sound and claim definiteness and construction are distinct issues, then Teva v Sandoz is really only about the standard of review on the issue of claim definiteness, not about the standard of review of claim construction.  But the observation about evidentiary standards notwithstanding, it seems counterintuitive to say that the question of whether “a patent’s claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty” is somehow different from how those skilled in the art would interpret the claims.  And Teva’s Brief, which I’ll summarize tomorrow, treats indefiniteness and claim construction as if they were the same thing.

How, then, could the Court escape this conundrum of different evidentiary standards for what is essentially the same determination, aside from concluding both are pure issues of law, a position that would be at odds with Markman and probably Nautilus?   First, the Court could conclude that indefiniteness does not implicate the clear-and-convincing evidence standard.  The Court went halfway there in Nautilus, observing that the “presumption of validity does not alter the degree of clarity that §112, ¶2 demands from patent applicants,” but left open the question of whether subsidiary issues of definiteness trigger the clear-and-convincing evidence standard.  A second possibility would be for the Court to implement a “clear-and-convincing” evidentiary standard for issues of fact in claim construction (although how that would work in a form other than the current pro-validity canon, I have no idea).

There are also some less-than-helpful options that would further churn up the muddy bottom of patent law. It’s entirely possible that the Court could issue an opinion solely addressing the issue of whether or not the appellate court must grant deference to district court factual findings on the issue of indefiniteness, and leave unanswered the question of whether deference is appropriate in the context of claim constructions.  Or, it could avoid discussing the appropriate evidentiary standards for claim construction and indefiniteness (as it did in Nautilus), instead leaving folks to ponder whether they are the same or different.

I’ll also make the observation that after the Court granted certiorari in this case, it issued Nautilus v. Biosig, which lowered the standard for finding claims indefinite.  Even if the Court were to reverse in this case – ruling that factual issues in claim construction and claim definiteness are entitled to deference – it would seem that the inevitable result would be a remand to the Federal Circuit, and then probably to the district court, to apply the new standard.

If you thought Alice v CLS Bank lacked a useful analytic structure

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wait until you read Aereo.

By Jason Rantanen

American Broadcasting Cos., Inc. v. Aereo, Inc. (2014) Download ABC v Aereo

This morning the Supreme Court issued the much-awaited opinion in American Broadcasting Cos. v. Aereo, in which a 6-3 majority concluded that Aereo’s subscription television service, which uses thousands of small antennas and other equipment housed in a warehouse, violates the petitioners’ exclusive rights to perform their copyrighted works publicly within the meaning of the Transmit Clause.  Writing for the majority, Justice Breyer eschewed formal distinctions, instead reasoning that if it’s basically the same as a duck, it’s a duck:

In other cases involving different kinds of service or technology providers, a user’s involvement in the operation of the provider’s equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act.  But the many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here.  We conclude that Aereo is not just an equipment supplier and that Aereo “perform[s].”

Much of the critiques and discussion immediately following the release of the opnion focused on the difficulty in applying this “looks-like-cable-TV” rule to the vast ecosystem of current and emerging content access, distribution and dissemination technologies.  These criticisms mirror points made by Justice Scalia in dissent (who used the “looks-like-cable-TV” term):

III. Guilt By Resemblence

The Court’s conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs.  [] That reasoning suffers from a trio of defects

(Internal citation omitted).

While Aereo unquestionably has profound implications for the technology sector generally, for patent law purposes it offers another insight into how the Judges might approach the issue of claim construction that is currently being briefed in Teva v. Sandoz.  Aereo involved a question of statutory interpretation – itself undeniably a question of law.  Here, the majority adopted a legislative history/legislative intent/legislative purpose that resulted in something akin to the “essence” of the statute being what was really important.  The dissent would have applied a much more formal textualist approach in ascertaining its scope.  It is the first of these two approaches that seems to me to be strikingly similar to how the Court has approached patent claims in recent opinions when directly confronted with substantive issues in cases such as KSR, Bilski, and Alice.  If the Court does embrace a more purposivist approach to claim construction in Teva, it would be dramatically alter the landscape of patent claims even more than its decisions on substantive doctrines such as nonobviousness and patentable subject matter.

Of course, the question presented in Teva is nominally only about the question of whether deference to district courts on issues of claim construction is appropriate, not about claim construction philosophies generally.  That said, it seems to me that it will be difficult for the Court to avoid interjecting its views on claim construction into whatever opinion it issues on deference.

Indefiniteness “Can Be” Difficult under Nautilus

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Ex parte Breed, Appeal No. 2012-003990 (PTAB 2014)

On June 2, 2014, the Supreme Court decided Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014) lowering the standard for negating patentability due to indefiniteness. The new test requires that the claim scope be “reasonably certain” to one skilled in the art at the time of the patent.

On June 4, 2014, the Patent Trial and Appeal Board (PTAB) issued its first decision interpreting Nautilus. David Breed is a prolific inventor and is named on more than 300 patents and is one of the inventors of the airbag. More recently, Breed has collaborated with Acacia Research Corp to enforce his patents.

The application at issue in this case is part of a large family of at least seven issued patents that claim priority back to a 2000 provisional application and is directed to a highway monitoring system that provides reports and information on road conditions. Application No. 12/020,684.

Claim 1 is a system claim that includes a whereby clause indicating that “whereby roadway conditions from multiple roadways can be obtained and processed at the remote facility.” The examiner rejected the claim as indefinite based upon the “can be” limitation and the PTAB has now affirmed that finding:

Patent applicants face powerful incentives to inject ambiguity into their claims, a temptation that needs to be mitigated by the courts. See Nautilus, Inc. v. Biosig Instr., Inc., 2014 WL 2440536 at *7, __ U.S. __ (June 2, 2014). Patent drafters are in the best position to resolve ambiguities in their claims. See Halliburton Energy Servs., Inc. v. M-I LLC, 514 F.3d 1244, 1255 (Fed. Cir. 2008). Section 112 places the burden of precise claim drafting on the applicant. See In re Morris, 127 F.3d 1048, 1056-57 (Fed. Cir. 1997).

. . .

Claim 1 recites that roadway conditions from multiple roadways “can be” obtained and processed at the remote facility and “can be” directed from the remote facility to other vehicles. The Examiner rejected claim 1 as indefinite. The Examiner stated that it is not clear if Appellants intended the “can be” claim limitation to be optional or that the phrase should be interpreted as a definite statement. . . .

Appellants now argue that the features following the “can be” phrases should be interpreted as optional and, as such, the claim is not indefinite. The verb form of the word “can” carries multiple meanings in the English language. It can be used to indicate a physical ability or some other specified capability. It can also be used to indicate a possibility or probability.

During examination of a patent application, pending claims are given their broadest reasonable construction consistent with the specification. In re Am. Acad. of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004). In the instant case, Appellants have not directed us to any language in the Specification that supports a construction of “can be” that yields a particular and distinct meaning in claim 1. Instead, Appellants merely urge us to adopt one of two plausible interpretations. . . .

We agree with the Examiner that “can be” is indefinite, because it is susceptible to more than one plausible construction. It is unclear whether the limitation refers to a capability that is required to be present in the invention or whether it refers to a system capability that is a mere possibility that is not required. In other words, it is unclear whether a vehicle monitoring system can practice the invention of claim 1 by satisfying all of the other limitations of claim 1, without necessarily being required to possess the capability to obtain and process roadway conditions at a remote facility or to direct information from a remote facility to other vehicles on a roadway.

During prosecution, a claim is properly rejected as indefinite if it is “amenable to two or more plausible claim constructions.” Ex parte Miyazaki, 2008 WL 5105055 at *5 (BPAI Nov. 19, 2008) (precedential). The Miyazaki standard for indefinite rejection is justified, at least in part, because the applicant has the opportunity and the obligation to define his or her invention precisely during prosecution before the PTO.

Here, Appellants’ use of the phrase “can be” renders claim 1 indefinite and we sustain the Examiner’s rejection of claim 1 under 35 U.S.C. § 112(b).

The PTAB also quoted the Supreme Court’s nose-of-wax statement from its 1886 decision:

Some persons seem to suppose that a claim in a patent is like a nose of wax which may be turned and twisted in any direction, by merely referring to the specification, so as to make it include something more than, or something different from, what its words express. The context may, undoubtedly, be resorted to, and often is resorted to, for the purpose of better understanding the meaning of the claim; but not for the purpose of changing it, and making it different from what it is. The claim is a statutory requirement, prescribed for the very purpose of making the patentee define precisely what his invention is; and it is unjust to the public, as well as an evasion of the law, to construe it in a manner different from the plain import of its terms. This has been so often expressed in the opinions of this court that it is unnecessary to pursue the subject further.

White v. Dunbar, 119 U.S. 47, 51-52 (1886) (emphasis added by PTAB).

I think that the decision here is correct and the USPTO is right to force the patent applicant to nail-down the particular scope of the invention being claimed. One interesting counter-point comes from the Supreme Court’s notion that definiteness requires examination of the prosecution history – here Breed argued that the term meant “optional,” but the PTAB here indicates that it is not sufficient to merely indicate which of two possible interpretations is the correct – rather a claim amendment is in order to solidify and provide express notice of that applicant decision.

The Proper Role for the Presumption of Validity

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Guest Post by Derek Dahlgren

In 2011, the Supreme Court addressed the presumption of validity in Microsoft Corp. v. i4i Limited Partnership, 131 S. Ct. 2238 (2011). It confirmed that the standard of proof for invalidity is clear and convincing evidence. Initially, this opinion was seen by many as preserving the strength of patents. But closer scrutiny reveals that the Supreme Court’s analysis does not extend to all invalidity defenses. According to Justice Breyer’s concurrence, joined by Justices Scalia and Alito, the presumption of validity only provides protection against factual elements of an invalidity challenge. That concurrence, and the Supreme Court’s recent opinion in Nautilus, Inc. v. Biosig Instruments, Inc., suggest that the presumption of validity has no application to purely legal bases for invalidity.

A brief discussion of i4i and Nautilus is instructive. In i4i, Microsoft appealed a jury decision finding that it had not proven invalidity due to the on-sale bar, a purely factual inquiry, by clear and convincing evidence. On appeal, Microsoft argued that a defendant to an infringement action need only persuade the jury of an invalidity defense by a preponderance of the evidence. The Supreme Court rejected that argument.

Instead, the Supreme Court concluded that the presumption of validity codified the pre-1952 standard set forth in opinions such as Radio Corp. v. Radio Laboratories, 293 U.S. 1 (1934). The Supreme Court stated that by the time Congress enacted § 282, “the presumption encompassed not only an allocation of the burden of proof but also an imposition of a heightened standard of proof.” i4i, 131 S. Ct. at 2246. The Supreme then upheld the Federal Circuit’s articulation that “a defendant seeking to overcome [the presumption of validity] must persuade the factfinder of its invalidity defense by clear and convincing evidence.” Id. at 2243.

Justice Breyer wrote a separate concurrence. There, he stated “I believe it worth emphasizing that in this area of law as in others the evidentiary standard of proof applies to questions of fact and not to questions of law.” Id. at 2253. He also noted:

Many claims of invalidity rest, however, not upon factual disputes but upon how the law applies to facts as given . . . Where the ultimate question of patent validity turns on the correct answer to legal questions—what these subsidiary legal standards mean or how they apply to the facts as given—today’s strict standard of proof has no application.

Id.

In Nautilus, the same issue—the application of the presumption of validity—arose at oral argument. During the argument, Justice Kennedy pressed Nautilus’ counsel on how the presumption of validity applies to indefiniteness. Nautilus’ counsel conceded that the presumption of validity would accord deference to the PTO’s fact-finding. Tr. at 19:22 – 21:8. But he stated that since there were no fact-findings at issue in this case, the presumption did not apply. Id. At Justice Kennedy’s prompting, he also agreed that the PTO’s legal decisions are not accorded any deference. Id. at 21:4-8.

On June 2, 2014, the Supreme Court issued its opinion in Nautilus, and again touched on the issue. In footnote 10, the Supreme Court rejected the idea that a permissive definiteness standard accords with the presumption of validity. Slip Op. at 13 n.10. To the contrary, it stated that the presumption does not alter the degree of clarity that § 112, ¶2 requires. Id. That said, the Supreme Court ultimately did not address the parties’ dispute as to whether subsidiary factual issues trigger the clear-and-convincing evidence standard. Id. Because the Federal Circuit treated indefiniteness as a legal issue reviewed without deference, and the parties had not identified any contested factual matter, Supreme Court concluded the question could be settled another day. Id.

So where does that leave us? While the Supreme Court has not expressly held that the presumption of validity has no role in purely legal validity challenges, it certainly makes sense. According to i4i, the presumption of validity serves two functions: allocating the burden of proof and imposing the standard of proof. 131 S. Ct. at 2246. For a purely legal question, however, there is nothing to prove by clear and convincing evidence. Furthermore, to apply the presumption for a legal challenge would give deference to the PTO’s legal conclusions. The Federal Circuit does not do that. And the PTO lacks substantive rule-making authority, at least with respect to defining the metes and bounds of invalidity defenses. Thus, there does not appear to be any basis for according deference to the PTO’s legal conclusions. Consequently, for pure questions of law, it seems reasonable to conclude that the presumption of validity has absolutely no bearing. And as a result, invalidity challenges based on purely legal grounds may be much more powerful.

Nonetheless, while the Supreme Court may have circumscribed the application of the presumption of validity, it now has the opportunity to reject the assertion that claim construction is a pure question of law. See Teva Pharms. USA, Inc. v. Sandoz, Inc., No. 13-854. The Supreme Court hinted in Nautilus that factual questions permeate claim construction when it cited to Markman and stated that claim construction “may turn on evaluations of expert testimony.” Nautilus, slip op. at 11. Should that become settled law after Teva, one likely consequence would be a resurgence of the presumption in areas previously considered purely legal domains. Generally, the pure legal bases for invalidity are premised on the notion that claim construction is a pure question of law. Therefore, while the Supreme Court may have given patent challengers a gift in i4i and Nautilus, it could be short-lived to a certain degree.

Derek Dahlgren is an associate at Rothwell, Figg, Ernst & Manbeck, P.C. The opinions expressed are those of the author and do not necessarily reflect the views of Rothwell, Figg, Ernst & Manbeck, P.C. or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Judge Chen and Nonobviousness

Patent, , , ,

By Jason Rantanen

The past two weeks have seen a substantial number of nonobviousness opinions emerge from the Federal Circuit.  These decisions are particularly interesting because they contain pairs of opinions with opposite outcomes.  Judge Lourie, the second longest-tenured active judge on the court, wrote two of them while Judge Chen, the second-newest member of the court, wrote a third and a dissent in the fourth.  Each found (or would have found) the patents in question to be obvious in one opinion and nonobvious in the other.  For those interested in the jurisprudential views of Judge Chen, especially, the pairing may provide some useful insights.

Allergan, Inc. v. Apotex Inc. (Fed. Cir. 2014) Download Allergan v. Apotex
Panel: Prost (author), Reyna, and Chen (dissenting in part)

Allergan and Duke University hold a pair of patents relating to an ophthalmic solution used as a treatment for eyebrow hair loss.  Allergan sells LATISSE a 0.03% bimatoprost ophthalmic solution as a topical treatment for eyebrow hair loss.  After Apotex and other manufacturers submitted Abbreviated New Drug Applications to the FDA seeking to market generic versions of LATISSE, Allergan and Duke sued for infringement.  Following a bench trial, the district court rejected the generic manufacturers’ invalidity arguments, found infringement, and entered an injunction.  The manufacturers appealed.

On appeal, the Federal Circuit addressed claim construction, anticipation and obviousness, affirming the district court’s contested claim construction of “treating hair loss” and its determination that the patents were not anticipated, but reversing the finding of nonobviousness.  I could write a lengthy post on the majority opinion alone, but this passage particularly caught my eye since it relates specifically to the issue of what subjects the Federal Circuit considers to be issues of law versus fact in the nonobviousness inquiry:

In sum, even if the district court did not commit clear error in its findings of fact, failure to consider the appropriate scope of the ’029 patent’s claimed invention in evaluating the reasonable expectation of success and secondary considerations constitutes a legal error that we review without deference.

Slip Op. at 23 (emphasis added).  The substantial breadth of the asserted claims of the ‘029 patent was particularly troubling to the majority, both in assessing the Graham factors and the nexus for secondary considerations.

Writing in dissent, Judge Chen would have found the ‘029 patent to be nonobvious.  In reaching this conclusion, he placed much more weight on the determination of the examiner during prosecution:

To begin with, issued patents enjoy a presumption of validity, which can only be rebutted by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2245–46 (2011). A party challenging a patent’s validity must do so with “evidence which produces in the mind of the trier of fact an abiding conviction that the truth of [the] factual contentions are highly probable.” Buildex Inc. v. Kason Indus., Inc., 849 F.2d 1461, 1463 (Fed. Cir. 1988) (citing Colorado v. New Mexico, 467 U.S. 310, 316 (1984)). This is not a burden that is easily satisfied.

Dissent at 2.  Particularly persuasive to Judge Chen was the fact that examiner considered the key reference during examination and allowed the claims over it following an amendment by the patentee:

In light of the particularly heavy burden to show obviousness over a reference disclosed during prosecution and discussed by the examiner, Appellants have
not shown that Johnstone now somehow teaches or suggests the very structural feature that the patentee claimed to distinguish the Johnstone compounds.

Id. at 4.  On his part, Judge Chen found the disclosure Johnstone reference to be meaninglessly broad and generic:

This is not a situation in which there are a finite number of identified, predictable solutions. See KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007). Rather, the
single sentence in Johnstone actually proposes hundreds of thousands, or even millions, of variations on the alpha chain. [] The compound in Johnstone
could have a saturated bond at any position on the alpha chain, an unsaturated bond at any position, a triple bond at any position, or even a combination of any of these bonds. As a result, a person of ordinary skill in the art was not faced with a “small or easily traversed” number of options based on Johnstone. [] In this instance, covering everything effectively tells us nothing.

Id. at 5-6 (internal citations omitted).

Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2014) Download BMS v Teva
Panel: Prost, Plager, Chen (author)

Bristol-Myers Squibb (BMS) owns Patent No. 5,206,244, which relates to certain antiviral compounds.  At issue was claim 8, which covers entecavir, a treatment for hepatitis B that BMS markets under the name BARACLUDE.  Teva submitted an ANDA seeking to market a generic version of entecavir; BMS sued for infringement.  After trial, the district court held claim 8 to be obvious based on the selection of 2’CDG as a lead compound from the prior and a finding that a skilled artisan would have been motivated to make the necessary modification with a reasonable expectation of success at creating a compound with beneficial antiviral properties.  BMS appealed.

Unlike the Allergan case, the analytic framework presented by the parties for the question of obviousness was the lead-compound approach.  BMS contended that the district court had erred in selecting 2′-CDG as a lead compound, a particular legal framework that is frequently used in chemical compound cases.  The Federal Circuit disagreed, agreeing with the district judge’s conclusion that “those of ordinary skill in the art would have selected 2′-CDG, a carbocyclic analog, as a lead compound for
further development efforts before BMS applied for the 244 patent in October 1990.”  Slip Op. at 10-11.   The appellate court also rejected BMS’s argument on motivation to modify the lead compound to make the patented compound, pointing to detailed evidence and testimony on why the modification would have been obvious.

Nor was the presence of unexpected results sufficient to establish nonobviousness on their own.

Contrary to BMS’s argument, unexpected results do not per se defeat, or prevent, the finding that a modification to a lead compound will yield expected, beneficial
properties. Rather, as secondary considerations of nonobviousness, they come into play in determining “the ultimate question of patentability.”

…

Secondary considerations of nonobviousness “must always when present be considered,” and can serve as an important check against hindsight bias. See Cyclobenzaprine, 676 F.3d at 1075-76, 1079 (quoting Stratoflex, Inc. v. Aeroquip Corp, 713 F.2d 1530, 1538-39 (Fed. Cir. 1983)). While secondary considerations must be taken into account, they do not necessarily control the obviousness
determination.

Slip Op. at 15-16.  Here, the district court did not commit error in its factual findings that the unexpected properties did not compel a finding of nonobviousness, and the two legal errors that it committed (“(1) comparing entecavir to another hepatitis B drug on the market instead of the closest prior art, 2′-CDG; and (2) inappropriately look[ing] to what the inventor knew at the time of the invention—instead of one of ordinary skill in the art—to determine what was expected.”  Slip Op. at 18) were harmless.

First Impressions: My reading of Judge Chen’s majority opinion is that it reflects a careful, thorough review of the district court’s opinion (which itself is helpfully quite detailed and Magistrate Judge Burke should be commended for his own thoughtful analysis).  Conclusions are supported by detailed discussions and even if one disagrees with the overall conclusion of obviousness here, that disagreement seems less likely due to the carefulness of his approach and more likely due to some of the core difficulties inherent in pharmaceutical innovation such as the challenge of ascertaining marketable in vivo efficacy and the high value our society places on large-scale data-driven safety and efficacy determinations, determinations that can be quite costly yet have little if any direct role in substantive patent law questions.

Another possible reading of these two opinions is that they reflect a fair amount of deference to the decision making of others more familiar withe the specific facts.  In Allergan, in addition expressly referencing the examiner’s decision to allow the patent, Judge Chen’s view would also have affirmed the district court’s ruling of nonobviousness.   And in BMS, Judge Chen drew heavily on the district court’s findings.  (That said, one reason why these opinions aren’t in as much tension as they might be is because the district court’s analysis of obviousness in Allergan was at least an order of magnitude thinner than that of the judge in BMS).  At this point, this is merely an observation, and we’ll have to wait for future opinions from Judge Chen.

“Mine-run” and other puzzles

Patent,

By Jason Rantanen

I’m currently spending much of my time attempting to untangle the mess that is the law around Section 284 enhanced damages (i.e.: willful infringement) and Section 285 attorney fee awards (i.e.: exceptional case determinations).  Octane Fitness doesn’t reset the field so much as add a new layer to an already complex area of law, a layer that also potentially impacts willful infringement due to the Federal Circuit’s linking of the two standards.

There’s a term in Octane Fitness, though, that leaped out at me as I was reading the Court’s opinion.  In discussing what constitutes an exceptional case (and why the Federal Circuit’s objective + subjective standard is incorrect), Justice Sotomayor writes:

But a case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.

572 U.S. ___ (2014), Slip Op. at 9.  Perhaps you’re all snickering, but I had no idea what “mine-run” meant so I went and looked it up.  (My first thought was that it had something to do with Minecraft, but I knew that couldn’t possibly be right.)  In the interests of sharing my new-found enlightenment, here’s the definition from Meriam-Webster Online:

1:  the unsorted product of a mine
2:  a product of common or average grade <the mine-run of commercial breads pall with continued eating — Lee Anderson>
The term “mine-run” turns out to be quite popular in recent Supreme Court opinions, appearing in 34 since 2000 (and only 5 in the two centuries before that based on my Westlaw search), although there’s no consensus on whether the term is “mine-run” or “mine run.”
This got me to thinking about other somewhat-Delphic references that the Justices have used in their patent law opinions.  (Or at least, esoteric to me).  The one that immediately comes to mind is the Court’s periodic reference to candles and games, which popped up most recently in FTC v. Actavis.  I’m not planning on doing an exhaustive search, but I suspect there are others.

Struggling with Nautilus: Patent Claims Through the Eyes of Non-Lawyer Technologists

Patent, ,

By Dennis Crouch

This post goes on a tangent from the recent decision in Q.I. Press Controls v. Michelle K. Lee, USPTO Chief (Fed. Cir. 2014).

Quad/Tech’s Patent No. 6,867,423 covers a visual inspection system for identifying errors in printing press operation – such as paper misalignment or poor color. The invention basically has a digital camera with a ring non-strobe LED’s surrounding the lens. The camera is pointed toward the printing press operation. The prior art included cameras with ring-LED lighting as well as the use of cameras to monitor printing press activity. However, none of the prior art references combine both of these features. In the bulk of the claims, the “printing press” element is found only something akin to a field-of-use limitation found in the claim preamble. Thus, claim 1 is directed to “[a] visual inspection system configured to be in optical communication with a substrate of a printing press, said visual inspection system comprising: . . .” However, claims 61-72 refer more expressly to the printing press linkage within the body of the claim.

The court’s opinion (as we cover in a separate post) focuses on obviousness and written description. Here, I write about indefiniteness as it relates to these preamble limitations.

Is it a Technical or a Legal Document?: A usual rule of patent claim construction is that limitations found in the preamble of a claim – especially field-of-use limitations – do not limit claim scope. However, sometimes preamble terms are limiting as the Court explained in Pitney Bowes:

If the claim preamble, when read in the context of the entire claim, recites limitations of the claim, or, if the claim preamble is ‘necessary to give life, meaning, and vitality’ to the claim, then the claim preamble should be construed as if in the balance of the claim.

Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1305 (Fed. Cir. 1999); M.P.E.P. 2111.02. Many claim construction questions involve drawing quite fine-lines of involving coverage scope. Preamble-limitations are different because we are often talking about importing an entire limitation into the coverage that was not previously there. By examining the body of court decisions, it is possible to elucidate a set of factors helpful in determining whether a particular preamble-limitation should be scope-limiting. But this is a pretty tricky issue and I don’t think that we should assume that inventors and technology developers would understand the particular circumstances of when certain preamble-limitations are limiting. Rather, those legal-technicality questions are typically the province of patent attorneys who work with the substance of the law on a daily basis.

It turns out this is important following the Supreme Court’s recent indefiniteness decision in Nautilus. In Nautilus, the Supreme Court provided a clear statement that patent claims are technical-in-nature and designed to be read by persons-having-ordinary-skill-in-the-art. For camera technology, someone of skill in the art might be a camera designer and in the indefiniteness context the indefiniteness question is whether the claim scope would be reasonably certain to the camera designer (after considering the intrinsic evidence).

Tying this back to the issue of preamble-limitations: An ordinary camera designer would not be familiar with the law of preamble-limitations and how they would apply in this case. And, this leaves us with a several of potential results. Perhaps (1) a claim is invalid as indefinite when its scope depends upon and substantially changes according to the particularities of the preamble-limitation doctrine. (2) An alternative tact is to assume that the Supreme Court’s PHOSITA has been advised by a skilled patent attorney and thus understands the law.

How will Nautilus affect indefiniteness at the PTO?

Indefinite, Patent, ,

Guest post by Lisa Larrimore Ouellette (Visiting Fellow, Yale Law School Information Society Project) and Jonathan Masur (Deputy Dean and Professor of Law, University of Chicago Law School).

In our new draft article, Deference Mistakes, we examine indefiniteness doctrine as one example of how decisionmakers sometimes mistakenly rely on precedents in inapposite contexts. So we were very interested in the Supreme Court’s reformulation of the indefiniteness standard in Nautilus v. Biosig on Monday, and particularly in how this decision will affect the indefiniteness standard applied in the examination context.

Pre-Nautilus, claims under examination at the PTO were supposed to be evaluated under a stricter indefiniteness standard than granted claims. In Exxon Research (2001), the Federal Circuit stated that to “accord respect to the statutory presumption of patent validity,” it would find granted patent claims indefinite “only if reasonable efforts at claim construction proved futile” and the claim was “insolubly ambiguous.”

The obvious corollary to the Federal Circuit’s holding in Exxon is that when the presumption of validity does not apply, the indefiniteness standard should be more stringent. The BPAI explicitly clarified this point in the precedential Ex parte Miyazaki (2008) when it held that examiners should use “a lower threshold of ambiguity” such that claims are indefinite if “amenable to two or more plausible constructions,” and the MPEP emphasizes this point.

As we describe in Deference Mistakes, however, the less stringent “insolubly ambiguous” standard was mistakenly imported into the examination context and repeatedly cited in BPAI and PTAB decisions even after Miyazaki. And once ambiguous claims are granted, they are entitled to the presumption of validity and are less likely to be struck down, notwithstanding that they were granted under a mistaken standard.  The affirmance of these patents on appeal following infringement proceedings likely led to the PTO granting even more indefinite patents, which were then upheld on appeal, a vicious cycle. And if these patents came to be seen as the new normal, that could have made the PTO even more permissive. The result could have been creeping decay of the PTO’s effective indefiniteness standard, with indefinite patents begetting ever more indefinite patents.

At first glance, Nautilus appears to fix this problem of two different legal standards that might be mistakenly applied in the wrong context. In footnote 10, the Supreme Court states that the “presumption of validity does not alter the degree of clarity that §112, ¶2 demands from patent applicants,” suggesting that the legal test for indefiniteness should be the same in the infringement and examination contexts. The Court expressly leaves open whether this evaluation of the claims involves subsidiary factual findings and whether deference is due to any such findings—issues the Court will return to next Term in Teva v. Sandoz. But however these fact-based issues are resolved, it seems that Miyazaki‘s articulation of the legal standard for indefiniteness is no longer good law (unless, of course, the Federal Circuit adopts this as the unitary test).

Doctrinally, this requirement of a unitary legal standard for indefiniteness seems clearly right: as the Supreme Court explained in Microsoft v. i4i, the presumption of validity required by §282 is an evidentiary standard that requires invalidity to be proven by clear-and-convincing evidence, and it is thus inapplicable to questions of law. Eliminating the dual standard also has the apparent benefit of preventing the kinds of overt mistakes we point out in Deference Mistakes.

As we explain in Deference Mistakes, however, eliminating the formal legal distinctions between “deference regimes” may not solve the problem where such deference arises from functional considerations. We worry that preventing the PTO from applying “a lower threshold of ambiguity” might inadvertently undermine the PTO’s current efforts to improve patent claim clarity. Although the EFF cheered Nautilus for being likely to “invalidate many more patents,” the Court suggested at p. 12 that the test “the Federal Circuit applies in practice” may be fine, so on remand the Federal Circuit may well use the same analysis under a new name. Even if indefiniteness is a purely legal question such that the presumption of validity has no formal effect, in practice courts may apply a relatively loose standard due to an understandable reluctance to impose the drastic penalty of invalidity just because a claim could have been written more clearly. In the examination context, where applicants have the ability to amend vague claims, the PTO’s efforts to demand greater clarity make sense. But if the looser indefiniteness standard from the infringement context is incorporated into the examination context—no longer as a doctrinal mistake, but as a legal requirement—it may subvert these efforts and exacerbate the problem of ambiguous patents.

Court Affirms Rule 11 Sanctions for Frivolous Claim Construction, Infringement Position

Ethics

Source Vagabond Sys. Ltd v. Pearl Cohen Zedek Latzer LLP (Fed. Cir. June 5, 2014) is here.  Judge Wallach (with KM and JR (not EW)) affirmed imposition of Rule 11 sanctions against the firm that had represented the patentee.  Not a lot of new law, but it does make it clear that you’d better do a reasonable pre-suit investigation (claim charts not required always, but a good idea…) before you file a suit.

Is the Federal Circuit Really Worse Than the Cubs?

Patent,

By Jason Rantanen

Yesterday, following the Supreme Court’s unanimous reversal of the Federal Circuit in Nautilus and Limelight, Vera Ranieri of the Electronic Frontier Foundation observed that:

These rulings mean that the Federal Circuit has been unanimously overruled in every single patent case heard by the Supreme Court this term. Since there have been five decisions, the Federal Circuit is now an extraordinary 0-45 in supporting votes by Supreme Court justices this year. Even the Chicago Cubs have a better record than that.

Vera Ranieri, Supreme Court Overrules Federal Circuit Again. And Again. (June 2, 2014).

Ranieri has a point: the Supreme Court has not been kind to the Federal Circuit this term.  Worse than the record on these five decisions (Highmark, Octane Fitness, Medtronic, Nautilus, and Limelight), some of the Court’s comments are harshly critical of the appellate court.  As Dennis noted yesterday, in Limelight the Court wrote that “The Federal Circuit’s analysis fundamentally misunderstands what it means to infringe a method patent.”  By such measures it appears that the Federal Circuit does not currently have much credibility with the Court.

These are bleak numbers indeed, but some context is important.  First, consider that even as the Supreme Court has reversed on these five cases, it also has denied certiorari in other petitions arising from the Federal Circuit (If anyone has solid figures on these, I’d love to see them).  These petitions were vigorously pursued, often with the support of amicus.  So it’s not as if the Federal Circuit is always “losing.”

In addition, it’s important to keep in mind the broader picture: so far this term, the Supreme Court has reversed in 77% of all merits decisions except those arising from the Federal Circuit.  Last year, the Court’s final reversal rate was 72%. (source: SCOSTUSBLOG).  So that the Federal Circuit went 0 for 5 (two of which, Octane Fitness and Highmark, were a linked pair) doesn’t mean that the sky is falling.  And since 2010, the Federal Circuit has actually done fairly well: out of the 13 patent cases arising from the Federal Circuit since Bilski v. Kappos, the Supreme Court has affirmed the outcome in whole or part 7 times.

Even if these figures told the entire story on reversals, however, it’s not as if the Federal Circuit presently speaks with one voice, if it ever did.  It is full of disuniformity, with multiple viewpoints that are at odds with one another.  Given this disuniformity, it should not be surprising that two of the five cases in which the Court reversed the Federal Circuit involved a highly fractured court (Highmark and Limelight).  In these cases, the Court did not reverse a unanimous Federal Circuit, but rather settled a deep intra-circuit divide.  (Nautilus involved a concurrence by Judge Schall, but he agreed with the legal standard for indefiniteness applied by the majority).

Both Highmark and Limelight illustrate this point well: in Highmark, 5 of the 12 judges on the Federal Circuit favored a deferential standard for exceptional case determinations, an approach ultimately adopted by the Court.  Likewise, in Limelight the Supreme Court essentially agreed with the five dissenting Federal Circuit judges that indirect infringement under 271(b) requires an act of direct infringement under 271(a) (although as Tim Holbrook pointed out to me, Justice Alito left open the door for active inducement of any type of direct infringement, such as 271(f) or (g)).  And, when the Court issues its opinion in Alice, it will inevitably rule in the same direction as one or another group of judges in that highly fractured decision.  So too in Teva v. Sandoz, which will address the issue of de novo review of claim construction that split the en banc Federal Circuit 6-4.  What we are observing with the Court is, in substantial part, less outright reversals and more the resolution of intra-circuit splits, divisions that are arguably – at least in the case of subject matter eligibility – of its own making.

Thanks to former Iowa Law student and semester EFF intern Dan Garon for pointing me to Ms. Ranieri’s article.  Full disclosure: I’m not a Cubs fan.  Also, I made one substantive edit, revising the number of cases since Bilski to 13 (I had originally counted Caraco v. Novo, but on reflection it’s not really a patent case).

Supreme Court: To Be Valid, Patent Claims Must Provide Reasonable Certainty Regarding the Claim Scope

Patent, ,

By Dennis Crouch

Nautilus v. BioSig (Supreme Court 2014) [New download here: 13-369_k53m]

Patents provide exclusive rights that are defined by a set of claims. The claims spell out the metes-and-bounds of the invention being claimed and are designed to put the world on notice of what is and what is not infringement. To facilitate this notice function of patent claims, the patent statute requires that the “claims particularly point[] out and distinctly claim[] the subject matter which the inventor or a joint inventor regards as the invention.” 35 U.S.C. § 112(b). The courts have wrapped these requirements in a doctrine known as indefiniteness. A patent claim that fails the test of indefiniteness is deemed unpatentable, invalid, and unenforceable.

Most patent claims have some amount of ambiguity in their scope. The question before the court in this case is how much is too much? Through a series of cases, the Federal Circuit has implemented was arguably a stiff test of indefiniteness – making it quite difficult to find a claim invalid as indefinite. As the Supreme Court writes:

According to the Federal Circuit, a patent claim passes the §112, ¶2 threshold so long as the claim is “amenable to construction,” and the claim, as construed, is not “insolubly ambiguous.”

In its opinion here, the Supreme Court found that the insolubly ambiguous fails to apply the statutory requirement noted above. In its place, the court has created a new test as follows:

A patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art [at the time the patent was filed] about the scope of the invention. . . . .

The standard we adopt accords with opinions of this Court stating that “the certainty which the law requires in patents is not greater than is reasonable, having regard to their subject-matter.” Minerals Separation, Ltd. v. Hyde, 242 U. S. 261, 270 (1916). . . .

It cannot be sufficient that a court can ascribe some meaning to a patent’s claims; the definiteness inquiry trains on the understanding of a skilled artisan at the time of the patent application, not that of a court viewing matters post hoc. To tolerate imprecision just short of that rendering a claim “insolubly ambiguous” would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of uncertainty,” against which this Court has warned.

On remand, the Federal Circuit will decide whether the particular claims at issue here meet that test.

In the decision, the court highlights the reality that the old rule offers an incentive for patentees to intentionally “inject ambiguity into their claims.” The new standard is intended to help eliminate that standard.

Key points and ongoing issues from the opinion:

  • The addition of a reasonableness inquiry into the analysis means that indefiniteness appears to be moving be moving away from a question of law and into factual territory. The issue has traditionally been seen as part-and-parcel of claim construction, but now has the potential of being shifted to a question for trial. Of particular note here is the Supreme Court’s reluctance to decide the particular case and its allusion to the notion that the result “may turn on evaluations of expert testimony.” (quoting Markman).
  • The Supreme Court indicates that “a patent” will be invalid based upon the failure of its claims. The longstanding practice of the Federal Circuit is that indefiniteness is done on a claim-by-claim basis, but here the court suggests that approach should change.  Assuming that indefiniteness is still considered on a claim-by-claim basis, one outcome of this decision is that it adds additional value to patents with multiple claim formulations.
  • The Supreme Court indicates that any ambiguity should be considered “at the time the patent was filed” and also that the patent’s prosecution history are important in the consideration. What is unclear then is whether the court intended to mean that the consideration should be at the patent issuance, the application actual filing date, the application’s effective filing date (taking into account priority claims to prior filed applications), or the date that the claims in question were filed / amended.

Supreme Court Takes-On Question of Joint Infringement

Patent, Supreme Court, , , ,

By Dennis Crouch

[Transcript of Oral Arguments]

The Supreme Court heard oral arguments today in Limelight Networks Inc. v. Akamai Technologies, Inc. Limelight is best seen as part of a series of cases considering what it means to be an infringer. In particular, the court has struggled to determine what to do when one party performs a portion of a patented invention and then another party performs the remaining portion. In this setup, the parties are able to collectively benefit from the invention without being labelled infringers under the Federal Circuit’s strict single-entity-infringer rule. See BMC v. Paymentech (Fed. Cir. 2007). The BMC line of cases creates an avenue for avoiding infringement by properly dividing the corporate structure. That pathway is further solidified by our current age of distributed computing that allows for servers and systems to closely interoperate even though controlled by different parties. In this case, the invention is focused on a mechanism for quickly delivering video streams to lots of people over the internet by distributing servers. The patent spells out the entire method and system for accomplishing this result, but the defendant here each only practice a portion of the whole invention but expressly encourages its customers to perform the rest. In an admittedly biased way, the patentee’s attorney Seth Waxman explained the setup as follows:

Mr. Waxman: This case is not complicated. This case involves a four­ or five­step method in which Limelight performs all but one or two of the steps and tells its customers, if you want to use our service, you have to perform the other step. Here’s exactly how you do it. We have somebody 24 hours a day, seven days a week assigned to you to help make sure you do it the right way.

In Limelight, the Federal Circuit (sitting en banc) offered one outlet to limit avenues-of-infringement. Here, the appellate court held that an entity can be liable for inducing infringement if that party induces performance of the entire invention, even if no single party performed all of the elements. That holding is a shift in thinking – prior case law required evidence of underlying single-actor direct infringement as a pre-requisite to an inducement finding. The statute for inducement indicates simply that “whoever actively induces infringement of a patent shall be liable as an infringer.” 35 U.S.C. § 271(b). An interesting element of this case is that the Limelight originally indicated that it would reconsider the BMC doctrine regarding direct infringement. However, the en banc panel decided to limit its analysis only to the inducement theory. If Limelight is successful on appeal, the Federal Circuit may then have an opportunity to reconsider the single-actor rule for direct infringement under Section 271(a). More particularly, the Federal Circuit has applied a fairly strict agency doctrine rule, but other areas of law have allowed for a more liberal agency doctrine that would potentially capture the type of joint infringement alleged in this case.

The question presented is:

Whether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. § 271(b) even though no one has committed direct infringement under Section 271(a).

Aaron Panner argued on behalf of the petitioner Limelight (the accused infringer) and shared time with Assistant Solicitor Ginger Anders who filed a brief in support of the petitioner. Seth Waxman argued on behalf of the respondent-patentee Akamai. In the case, the US government took the middle-ground position that the patentee has the best policy argument but that the statute clearly supports reversal.

Focusing first on the policy issues, the court asked whether Limelight is asking for a rule that allows patentees to skirt infringement simply by altering its corporate structure:

CHIEF JUSTICE ROBERTS: Your position makes it pretty easy to ­­ to get around patent protection, doesn’t it? All you’ve got to do is find one step in the process and essentially outsource it or make it attractive for someone else to perform that particular step and you’ve essentially invalidated the patent.

MR. PANNER: I don’t think so, Your Honor. In the two following senses.

First of all, empirically speaking, there have not been very many cases in which this has proven to be a problem. It has been a long understood principle of patent claim drafting that method claims should be drafted from the point of view of a potential infringer so that all of the steps can be carried out by that potential infringer. And prospectively, certainly ­­ and given that this rule has been clearly articulated by the Federal Circuit now for many years, or at least several years, prospectively, the patent applicant has every incentive to draft claims from the point of view of a single potential infringer.

This ­­ the claim that’s at issue here, there’s no dispute. It could have been written in such a way that the steps would have been carried out by a single infringer and, indeed, that may have been the intent. . . .

JUSTICE SCALIA: I’m just arguing about whether the safe haven you have given us for patentees really exists. It doesn’t seem to me you can avoid the problem by simply requiring all the steps to be conducted by one person.

MR. PANNER: Well, Your Honor, in ­­ in my experience in ­­ in terms of dealing with patents that are written to technologies that do involve interaction, for example, between cellular phones and networks and content providers who are sending content to a phone, for example, it is very common to draft claims from the point of view of someone who’s participating in that process so that all of the steps will be carried out in that ­­ by that person. . . .

JUSTICE KAGAN: [N]otwithstanding what you said about 10 of 11 judges, it was clear that the judges thought that there was a real problem here in terms of an end run, and that they looked at this and said, well we could do it under 271(a) or we could do it under 271(b), and 271(b) seems a lot more natural and better for various reasons. But your sense in reading the opinion that all those judges who did it under 271(b) are just going to go back and do the exact same thing under 271(a).

Panner’s argument here does not seem like one that the judges would truly support – that the patentee wins or loses here based upon whether it correctly followed the proper claim-drafting trick.

Responding to the same issues, the US Government lawyer (Anders) recognized the “end run” problem as legitimate.

MS. ANDERS: I think the Federal Circuit was understandably concerned about allowing inducers to perform some stops of a process themselves to escape liability, but this Court has twice held in both Microsoft v. AT&T and before that Deep South v. Laitram that judicial concerns about gaps in 271’s coverage should not drive the Court’s interpretation of that provision. That is because any time that you close a gap in 271, expanding patent rights, you are invariably implicating competing concerns and it’s for Congress to resolve those concerns.

When his turn to speak, Waxman hit home the policy concerns:

MR. WAXMAN: Please make no mistake about what Limelight is asking you to do. Under Limelight’s theory, two or more people can divide up and perform the steps of any method claim, however drafted, without liability. . . . Let’s assume that there is disclosure and patenting of a cure for cancer or a novel treatment for cancer that involves, as they often do, the administration of different drugs sequentially. And two parties get together and say, I’ll administer Drug 1, you administer Drug 2, and we can take advantage of this marvelous patented process without paying anything ­­ giving anything whatsoever to the company that spent a billion dollars and 25 years developing.

Several of the Justices rightly recognized the potential notice problems of joint liability in a strict liability scenario. However, those fears are greatly reduced in the inducement context because liability requires knowledge that the acts being induced would constitute infringement. Waxman attempted to also allay those fears by referencing a common law knowledge requirement implied into joint-concert liability.

When the Federal Circuit decided this case, it appeared to be a new rule regarding inducement liability. In his appealing way, Waxman argued that it is not really new but rather it is a return to the common law notions that were disrupted by the Federal Circuit’s unnatural limitations on 271(a) joint liability that began in 2008.

JUSTICE SOTOMAYOR: [Is] this is a new rule by the Federal Circuit?

MR. WAXMAN: The answer is no. What is new is the 2008 ­­ beginning in 2008 jurisprudence in the Federal Circuit on 271(a) that unnaturally limited the common law attribution rules.

Very little time was spent on statutory construction – what is meant by the term “infringement” in 271(b)? Waxman does lay out his textual argument that infringement in 271(b) is not limited to “direct infringement under 271(a).” but rather offers the following notion:

MR. WAXMAN: A patentholder has the exclusive right to make, 15 sell, use, or offer to sell his invention during the term of the patent. That’s what sets out the metes and bounds of the property right. And any encroachment on that property right is an infringement. . . .

JUSTICE GINSBURG: An infringement without an infringer?

MR. WAXMAN: You can certainly have infringement without an actionable infringer, absolutely. Under anybody’s rule you can do that. The whole debate we have with the other side on the (a) question is how ­­ what attribution rules do or don’t apply. . . . .

JUSTICE SCALIA: What does ­­ what does (b) require? Does it require inducing an infringement or inducing an infringer?

MR. WAXMAN: Inducing an infringement. And I’ll give you a concrete example. Let’s say that there’s a five­step patented method that I know about, and I convince ­ I induce Mr. Panner to do steps 1, 2, and 3 and Ms. Anders to do steps 4 and 5. If I’m doing that because I know about the patent and I want to take advantage of their otherwise innocent performance collectively of the steps, at common law and at patent law, it was uncontroversial that I was liable. I was responsible.

Overall the oral arguments here are difficult to follow and thus the outcome is difficult to predict. The justices are rightly concerned that the their decision on 271(b) is dependent upon the meaning of joint infringement 271(a), but that may only be decided on remand.

JUSTICE ALITO: It’s ­­ it’s a good reason to think that the question before us really has no significance that I can think of unless the ­­ the Court of Appeals ­­ unless the Federal Circuit is right about [the limited scope of 271](a). . . . So you’re asking us to decide a question ­­ to assume the answer to the question on (a) and then decide a question on (b) that is of no value ­­ no significant ­­ maybe I don’t understand some other ­­ I don’t see some other situations where it would apply, and no significance unless the ruling on (a) stands, unless Muniauction is correct?

Waxman expressly suggested that the court go ahead and rule on the 271(a) issue (as it had suggested in a cross petition for certiorari) or simply remand the case to the Federal Circuit to decide the underlying 271(a) issue.

Oral Arguments: Can the Supreme Court Force Clarity in Claim Scope?

Patent, Supreme Court, , ,

By Dennis Crouch

Nautilus v. Biosig (Supreme Court 2014) [Transcript of Oral Arguments]

On April 28, 2014, the Supreme Court heard oral arguments in the important indefiniteness case concerning a fitness monitor patent. In my estimation, most issued patents have claim terms that are arguably indefinite. The usual litigation resolution of that problem is through the process of claim construction. The patent statute requires A patent can be held invalid as indefinite under 35 U.S.C. §112(b) for failing to “particularly point[] out and distinctly claim[]” the invention. However, the Federal Circuit has repeatedly found that the invalid-as-indefinite doctrine is quite narrow and only applies when a term is “insolubly ambiguous” and when “reasonable efforts at claim construction result in a definition that does not provide sufficient particularity and clarity to inform skilled artisans of the bounds of the claim.”

The result of this policy is that it provides patentees an incentive to seek a claimset that includes some “solubly” ambiguous terms that create colorable infringement argument and whose scope retains malleability. We only learn the true scope of a claim once it is interpreted in court – an often only after an appeal to the Federal Circuit. One approach to push against this downward spiral would be to follow the contract canon of construing claims against the drafter. Another approach is what Nautilus suggests – make it easier to invalidate claims on indefiniteness grounds. At the same time, lowering the standard could open the door to a new intensity of linguistic-noodling by accused infringers.

In this case, two questions are presented:

1. Does the Federal Circuit’s acceptance of ambiguous patent claims with multiple reasonable interpretations—so long as the ambiguity is not “insoluble” by a court—defeat the statutory requirement of particular and distinct patent claiming?

2. Does the presumption of validity dilute the requirement of particular and distinct patent claiming?

Claim construction is an issue in the vast majority of patent infringement lawsuits and, over the years, the Federal Circuit has altered a district court’s claim construction in hundreds of different cases. In many of those, the district court’s opinion was a reasonable interpretation of the claim scope even if not what the Federal Circuit saw as the very best interpretation. In that framework, it is easy to see how the Nautilus focus on “multiple reasonable interpretations” could have a dramatic impact on the validity since all of those claims would seemingly be invalidated based upon the existence of multiple reasonable interpretations.

Predicting Outcome: The oral arguments suggest that the Federal Circuit’s “insolubly ambiguous” test will be thrown out as too strict. However, none of the Justices appeared interested in the seemingly too loose rule that would invalidate claims that are open to multiple reasonable interpretations. The middle ground of requiring claim scope be of “reasonable certainty” seems to be the likely course.

The claim term at issue in this case involves two electrodes of a heart monitor being in a “spaced relationship” with each other. The district court held that term indefinite because the patent did not include any parameters as to the scope of that space. On appeal, the Federal Circuit reversed, determining that the term was amenable to construction since the purpose of the space was recited in a whereby clause (to help remove EMG signals coming from a single hand). In particular, the court held that the term had an upper and lower bound: each half must be held within a hand and it cannot physically be infinitesimally small. Now, one interesting aspect that relates to prior functional-claim cases is that on reexamination, the examiner found that the functional whereby clause to be the crucial limitation that made the claim patentable. Federal Circuit cited and discussed Halliburton. However, the court did not address the Taboo against functional element at the point of novelty but instead cited to a list of Federal Circuit decisions holding that functional claim limitations are just fine.

The arguments: Patent litigator John Vandenberg argued on behalf of the petitioner Nautilus while appellate specialist Mark Harris argued for the patentee Biosig. Harris shared time with US Assistant Solicitor Curtis Gannon as amicus. Overall, the oral arguments were not highly elucidating the one major area of new ground covered was an analogy to Chevron analysis whose first step is to determine whether a statute is ambiguous (or silent) as to a particular issue. In Chevron, statutory ambiguity allows government agencies more leeway in interpreting the law. In this context, the ambiguity would lead to a patent being held invalid. However, the court was clearly not comfortable with that test essentially because it is too loose for the resulting reaction (patent invalidity). Of course, invalidating a patent claim does not involve the same level of drama as invalidating a congressionally mandated statute. Apart from the constitutional-political issues, the patent claim being invalidated is typically one of many claims within the patent and that patent is one of many covering the accused activity. In addition, unlike statutes, the party benefiting most from the patent has full control of the language used in the patent grant.

In the oral arguments, Vandenberg makes two compelling points: (1) that ambiguity in the patents is intentional but not justified; and (2) that its requested rule is parallel to that already applied by the USPTO:

MR. VANDENBERG: I think it’s important to remember here that there is no legitimate need or excuse for ambiguity in patent claims. Once the applicant has satisfied paragraph one [of section 112] and its strict requirements for describing the invention, it is easy to claim the invention particularly and distinctly. The only reason that there are so many ambiguous claims out there today is that patent attorneys are trained to deliberately include ambiguous claims. Ambiguous claims make the patent monopoly more valuable. Every patent attorney knows that. . . .

There is no legitimate need for ambiguous claims. There is a strong economic incentive for patent attorneys to draft ambiguous claims, not to put all their eggs in that basket. They want some clear claims in case some copyist comes along, but they want ambiguous claims so they can ­­ their client can treat it as a nose of wax later, as happened here. That is well established in the patent bar, that there is this strong economic incentive. But patent attorneys have ample tools to avoid ambiguous claims if this Court tells them that it will no longer be permitted. That ­­that is the key here, is that there’s a strong economic incentive. The patent attorney and the inventor are in the best position to avoid the ambiguity that Congress prohibits and therefore, the problem is, the Federal Circuit has blessed ambiguity with its test. And in order to stop all of the problems that the amici have pointed out that are caused by ambiguous claims, we submit this Court needs to be clear and go back to United Carbon and General Electric and to the statutory text and be clear that ambiguity is simply not permitted.

After a bit of dancing, Vandenberg began to hit his stride in a discussion with Justice Kennedy:

JUSTICE KENNEDY: Do you agree that the standard at the PTO, and let’s say that it’s whether or not ­­ the claim is definite if a person skilled in the art would be reasonably certain of its scope. Is the standard used by the PTO the same standard that the CA Fed ought to use?

MR. VANDENBERG: Yes, it is, Your Honor.

JUSTICE KENNEDY: All right, that’s a sensible answer, I think. Now, how does the presumption of validity bear on the application of that same standard in the court of appeals?

MR. VANDENBERG: The presumption of validity certain applies to this defense. It requires the challenger to raise the defense, to preserve the defense, plead it as affirmative defense, to make the initial argument as to why the claim is ­­

JUSTICE KENNEDY: Doesn’t that imply some deference on findings of fact?

MR. VANDENBERG: Your Honor, it would be rare for there to be, in an indefiniteness case, to be any underlying finding of fact. The ­­ the issue of indefiniteness is really subsidiary.

JUSTICE KENNEDY: That is, the presumption of validity, does that accord some deference to the PTO? And how would that apply or not apply here?

MR. VANDENBERG: It would apply ­­ it does not apply in this case. There are no fact findings out of the Patent Office regarding indefiniteness. But if there was ­­ the same indefiniteness issue came up and the Patent Office found, for instance, that a term of art, let’s say nanotechnology, biotechnology term of art had a particular meaning, then that fact­finding may be entitled to deference by the trial court.

However, indefiniteness itself is a legal determination. The Federal Circuit said that.

JUSTICE KENNEDY: So there’s no deference to the PTO as to that legal interpretation.

MR. VANDENBERG: No, Your Honor, no more than there’d be deference to the Patent Office claim construction or any other legal decision.

Mr. Harris began his argument defending the Federal Circuit, but immediately ran from the insolubly ambiguous language of that decision.

MR. HARRIS: The decision of the Federal Circuit should be affirmed for two reasons: First, that court correctly held that the test for definiteness is whether a claim puts a skilled artisan on reasonable notice of the boundaries of the invention, and secondly, whatever

JUSTICE SCALIA: If that’s what it held we wouldn’t have taken this case. I thought we took it because [the Federal Circuit used] some really extravagant language.

I mean, it’s one thing to run away from that language, as your brief does. It’s another thing to deny that it exists.

MR. HARRIS: Justice Scalia, we are not denying that those words exist, “insolubly ambiguous,” but what I think this court below, the Federal Circuit, in this case explained, and it’s explained consistently, is that that ­­ those two words are not the test all by themselves.

CHIEF JUSTICE ROBERTS: So it was fair, as I suggested earlier, nobody agrees with that formulation [of insolubly ambiguous]?

MR. HARRIS: Yes, I guess so, Your Honor. . . .

Beyond the particular quibble over language, Harris seems to provide a convincing case that, even under a lower standard, the Biosig claims are still definite because of the uncontroverted evidence provided that one skilled in the art at the time would have been able to understand the meaning of the claim.

The role of the US Government in this case is interesting because it is in some tension with President Obama’s ongoing initiatives to push for clarity in claim scope. However, Gannon (from USDOJ) did argue that the presumption of validity should not play a role in the claim construction process. And rather that the resulting validity of a claim should not impact which construction is chosen.

Federal Circuit: Jury Must Award Damages for Infringement

Patent, ,

By Dennis Crouch

Apple v. Motorola (Fed. Cir. 2014)

Sitting by designation in the smart-device battle between Apple and Google’s proxy Motorola, famed 7th Circuit jurist Richard Posner offered the bold summary judgment conclusion that neither party had offered adequate proof of damages or ongoing harm to support injunctive relief. Here, each party had asserted infringement of three patents. However, without any remedy, the case became moot and Judge Posner dismissed the case with prejudice. The foundation for this decision was built when Judge Posner considered the lack of credibility of both sets of damages expert reports and excluded almost all of that testimony under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993).

On appeal, the Federal Circuit has – as expected – has reversed. The majority decision has several sections, but portions regarding damages are of most interest. First, the court provides a detailed analysis of damages expert analysis and finds a number of faults with Judge Posner’s exclusionary rules. However, the court goes on to hold that, even if the damages expert testimony were properly excluded, the proper calculation for damages on summary judgment is not zero.

Once a court has found that a patent is infringed and enforceable then it has a duty to award damages “in no event less than a reasonable royalty.” Here, the Federal Circuit appears to place the burden of identifying that minimum royalty on the fact finder:

Because no less than a reasonable royalty is required, the fact finder must determine what royalty is supported by the record. . . . If a patentee’s evidence fails to support its specific royalty estimate, the fact finder is still required to determine what royalty is supported by the record. . . . Indeed, if the record evidence does not fully support either party’s royalty estimate, the fact finder must still determine what constitutes a reasonable royalty from the record evidence. . . . Certainly, if the patentee’s proof is weak, the court is free to award a low, perhaps nominal, royalty, as long as that royalty is supported by the record.

Thus, a fact finder may award no damages only when the record supports a zero royalty award. For example, in a case completely lacking any evidence on which to base a damages award, the record may well support a zero royalty award. Also, a record could demonstrate that, at the time of infringement, the defendant considered the patent valueless and the patentee would have accepted no payment for the defendant’s infringement. Of course, it seems unlikely that a willing licensor and willing licensee would agree to a zero royalty payment in a hypothetical negotiation, where both infringement and validity are assumed.

The court goes on to note that it has been unable to find any case in history where the record properly supported an infringement award of zero.

The majority was penned by Judge Reyna and joined by Chief Judge Rader. However, these two Judges disagreed on one particular point – whether Motorola’s FRAND commitment for its patent removes all possibility of injunctive relief for unlicensed infringement. Judge Reyna says yes, Judge Rader says no – and that Apple’s bad behavior as an unwilling licensee should open the door for injunctive relief.

The majority opinion also vacated Judge Posner’s SJ determination that Apple was not entitled to an injunction seemingly because of a change in claim construction that now potentially creates a causal nexus between infringement and a market harm. Writing in dissent from that portion of the opinion, Judge Prost disagreed.