Tag Archives: Federal Circuit En Banc

Egyptian Goddess v. Swisa (en banc 2008)

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Egyptian Goddess v. Swisa (en banc 2008)

More than a handful of studies and articles have discussed how the rise in patent law power parallels the founding and evolution of the Court of Appeals for the Federal Circuit (CAFC).  Those articles gloss over the CAFC’s negative impact on design patent law. Today, design patent law is in the weakest and most confused state since before the Supreme Court’s landmark 1871 decision of Gorham v. White. (Although, the law is admittedly more uniform now than it was pre-CAFC).

Through its en banc rehearing of Egyptian Goddess, the CAFC now has the opportunity to change course and breathe new life into this languishing area of intellectual property.

In Gorham, the Supreme Court created the test governing design patent infringement. The so-called ordinary observer test considers whether an ordinary purchaser of the claimed product, “giving such attention as a purchaser usually gives” would consider that “two designs are substantially the same.”  Later, cases recognized a problem with this simple formulation — finding that the ordinary observer test could potentially capture prior-art designs as infringing.  In response, the CAFC added an additional “points of novelty” test that requires a showing that accused devices appropriate the specific novel features of a patented design.

To many, this points-of-novelty requirement and the apparent rule requiring transform the design-patent picture claims into paragraph form as unduly limiting the potential scope of a design patent. The requirements are also seen by some as unnecessary because of the parallel validity requirements of novelty and nonobviousness. Two additional points-of-novelty test issues that raise ire are whether the design as a whole can be a point of novelty and whether the points of novelty can include “trivial” points.

The en banc appeal will focus on three separate questions:

  1. Should “point of novelty” be a test for infringement of a design patent? 
  2. If so, (a) should the court adopt the non-trivial advance test adopted by the panel majority in this case; (b) should the point of novelty test be part of the patentee’s burden on infringement or should it be an available defense; (c) should a design patentee, in defining a point of novelty, be permitted to divide closely related or, ornamentally integrated features of the patented design to match features contained in an accused design; (d) should it be permissible to find more than one “point of novelty” in a patented design; and (e) should the overall appearance of a design be permitted to be a point of novelty? See Lawman Armor Corp. v. Winner Int’l (Fed. Cir. 2006).
  3. Should claim construction apply to design patents, and, if so, what role should that construction play in the infringement analysis? See Elmer v. ICC (Fed. Cir. 1995).

Now, the plaintiff, Egyptian Goddess along with its amici have filed opening briefs in the case. (Attached below). Swisa’s opposition will arrive in a few weeks.   

Points of Novelty: Several of the briefs dismiss the points-of-novelty test as unnecessary in light of the validity requirements of novelty and nonobviousness.  That suggestion is ultimately unworkable because of a disconnect between a strict ordinary observer test of infringement and the obviousness test of invalidity. This disconnect would potentially allow a finding that a prior art design infringes a valid design patent. (Obviousness is in the eye of PHOSITA at the time of the invention while ordinary observer infringement is in the eye of an ordinary purchaser at the time of purchase).  The points-of-novelty approach is, however, seriously flawed — it is an odd process akin to separating a painting into various individual components and then making a list of those components that have never been used before. In most cases, the final list has little relation to the patented design. (This process is further facilitated by an overzealous Markman process).

The better approach is suggested in the AIPLA and Apple briefs. The ordinary observer test should necessarily include some consideration of the prior art, but that consideration should be at the level of the ordinary observer in a three-way visual comparison test.  Thus, in the Braun case (below), the accused design would be found to infringe if the ordinary observer finds it substantially the same as the patented design and more similar to the patented design than to the prior art.

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Academics are Out: It is notable that for this important case, only one academic (Professor Fryer of Baltimore) filed an amicus brief. Perry Saidman’s brief for Apple was the only brief citing a law review article, and it cited one by Perry Saidman.  Saidman also cited a Patently-O comment made by Chris Carini (author of the AIPLA brief).

CIAS Challenges Federal Circuit’s Interpretation of Prosecution History

Patent,

CIAS v. Alliance Gaming (On petition for Cert. 2008)

In a recent petition to the Supreme Court, CIAS asks the Supreme Court to think about how prosecution statements should be used for claim construction.

Issue: Whether the Federal Circuit’s use of patent prosecution history statements in claim construction is so erroneously inconsistent among its own panel decisions and incompatible with its prior en banc decision in Phillips as to make it impossible for the public to know with any degree of confidence the scope of patent claims; and whether that Court’s inconsistent judgment in this case should be reversed.

In this case, CIAS discussed a reference that had been cited by the Examiner. Although the reference was not asserted in a rejection, the CAFC found that CIAS’s discussion of the reference should shape how the patent claims were interpreted.

In its petition, CIAS argues that the CAFC’s approach to determine whether such prosecution history alters claim construction is much like the proverbial random walk.

Out of 16 district court cases since

Phillips specifically dealing with the issue of prosecution history disclaimer, the Federal Circuit has disagreed with the district court on that issue a total of 12 times. … [T]he Federal Circuit’s inconsistency has created a confused body of decisions. It is now extremely difficult for patent holders and the public to effectively gauge the meaning of claim terms in light of prosecution history statements.

Documents:

 

 

Patently-O Bits and Bytes No. 8

Patent
  • Upcoming Events:
  • Web Seminar on the implications of Nuijten and Comiskey on Business Method Patenting on Feb 14, 2008 hosted by the World Research Group (WRG) [Link] Patently-O readers receive a 20% discount with code NGD759.  (Regularly $299).
  • Web Seminar on Tafas v. Dudas on Feb 5, 2008 hosted by the Washington Legal Foundation (WLF). (FREE)
  • Cambridge, MA: Feb 14, 2008, PIUG 2008 Boston Biotechnology Meeting hosted by Genzyme. $50 registration fee (must register by Feb 7).
  • Nuijten and Comiskey are mentioned above. These cases are still under consideration at the CAFC for en banc rehearing.  Although rehearings are usually denied, one of these cases (or a consolidation) will likely be re-heard en banc — especially considering the mixed messages that patentees and the public have received regarding patents the extent that patent scope may be divorced from any specific technological innovation. Two other cases, Bilski (Bryson, Clevenger, Moore) and Ferguson, are still pending as well.
  • Speaker Needed: Cyberlaw and Data Privacy Committee needs a speaker for February 19.

    • Patently-O Bits and Bytes No. 7

    Patent
    • Patent Reform: The Senate has now placed the Patent Reform Act (S.1145) on the senate Calendar. [Link].  “Minority views” have been filed but are not yet available.
    • BPAI Composition: The CAFC has denied an en banc request in the Translogic case. That case challenged the legality of past BPAI appointment practices. [See Duffy]

    • Harmonization & Work Sharing: The PTO & JPO have announced a new bit of work-sharing cooperation. Under the agreement, a filing in one patent office would be deemed a filing in the partner office as well.  If successful, this proposal could eventually replace the PCT system. [LINK]
    • UK Patenting Computer Programs: A UK Court has now ordered the UK PTO to stop rejecting patents simply because they claim computer programs. [IPKAT]
    • Valuing Patents: Accountants don’t know how to place a value on patents. The solution appears to be an arbitrary standard. [LINK]

     

    Design Patents: Claim Construction Rules Lead to Summary Judgment of Non-Infringement

    Patent,

    ScreenShot001

    One question to be answered in the upcoming Egyptian Goddess en banc rehearing is whether Markman style claim construction should apply to design patent cases.  George Raynal, an associate at the Saidman firm, took a look at the practical impact of such claim construction: summary judgment.

    by George Raynal

    The effect of applying Markman to design patent claim construction prior to determining infringement has resulted in an overwhelming likelihood that an accused infringer will bring a successful motion for summary judgment of non-infringement.  < ?xml:namespace prefix ="" o />

    In a survey, 63 design patent infringement cases have been identified since Markman was first applied to a design patent claim in Elmer v. ICC Fabricating, Inc., 67 F.3d 1571 (Fed. Cir. 1995).  Of these, the accused infringer moved for summary judgment of non-infringement in 43 cases.  The movant was successful in 31 (72%)[1] of those 43 cases, whereas the motion for summary judgment of non-infringement was denied only 12[2] times.  Of the successful 31, ten[3] were appealed and only one[4] of those ten was reversed because the court could not agree that no reasonable jury could find infringement based on the record. 

    Additionally, summary judgment of infringement has been granted in only four design patent infringement cases since Elmer.[5]  A motion for summary judgment of infringement has been denied once.[6] (more…)

    Wegner’s Top Ten for 2008

    Patent, ,

    Hal Wegner has released his top ten upcoming cases for 2008:

    1. Quanta v. LG – Patent “Exhaustion”
    2. McFarling – Patent “Exhaustion”
    3. Kubin – Biotech Obviousness; Enzo Disclosure
    4. Classen v. Biogen – “Metabolite déjà vu”
    5. Convolve v. Seagate – Petition from In re Seagate
    6. Bilski – Patent-Eligibility under § 101
    7. Sanofi-Synthelabo – The Plavix Case
    8. Sang Su Lee II – Post-KSR Motivation
    9. Ferguson – Method of Marketing a Product
    10. Barnett – Internet-driven Method

     Hal Wegner’s list focuses on utility patent litigation. I would add three other cases from a slightly different vein:

    • Tafas v. Dudas – Challenging the PTO’s power to implement rules limiting continuations and claims. (summary judgment briefs filed).
    • Egyptian Goddess v. Swisa – Redefining the meaning of infringement and claim construction for design patents. (rehearing en banc pending).
    • Bender v. Dudas – Challenging the PTO’s ability to regulate patent attorney business relationships that go beyond ‘practice before the office.’ (on petition for certiorari).

    Design Patents: Controlling Pendency

    Design Patent, Patent

    Over the past decade, the PTO has taken control of pendency problems in the design patent area. In the early 1990’s design patents averaged over 30 months in prosecution. By 2001, that average pendency had fallen to less than 15 months.

    ScreenShot005

    The low pendency can allow design patents to serve as a preliminary substitute for future trade dress protection.  A design patent application offers immediate ‘patent pending’ status and would, in all likelihood, issue before the product would garner the secondary meaning sufficient for trade dress protection.  This is the approach taken by Apple with its iPod design patent applications. One of its issued iPod design patents (US D549,237 filed Aug 24 2005) appears identical to the company’s trademark design application (Serial No. 78925932 filed July 2006). The trademark case is still pending because Apple must make the required showing of secondary meaning.

    The major problem with this ‘patent then trademark’ approach is the narrow scope generally offered by design patents during litigation. This may change as the Federal Circuit is set to reconsider its design patent infringement jurisprudence in the upcoming Egyptian Goddess en banc case.

    There are major differences between the design patent examining corps and the utility patent examining corps — most notably, design patent examiners appear to stay-put. The 49 primary examiners associated with patents issued on December 4, 2007, have, on average, examined 3200+ design patents as primary examiners over an average of 12.5 years. (Medians of 3047 and 11.5 years respectively). Approximately 2/3 of design patents are prosecuted by one of the primary examiners without any assistance from an assistant examiner. For the same patents, assistant examiners have an average history of 400 examined design patents over a period of two years. (Median of 200 and 18 months respectively).

     * The graph above is based on a recently compiled dataset of the entire set of 300,000+ design patents issued between December, 1976 and December, 2007.

    Design Patent Claim Construction

    Patent,

    Kellogg v. Nike, 2007 WL 4118898 (D. Neb. 2007)

    ScreenShot084Design patent claim construction usually involves a court examining a series of drawings. When submitting his patent application, Kellogg included a statement that his invention covered a “cap with vents formed along the seams extending radially from the center.” During prosecution, the PTO removed that statement under MPEP 1503.1. In particular, the Examiner found that the “since illustration in the drawing views is its own best description, the statement preceding the claim is not necessary and should be removed.”

    Soon after Markman, the Federal Circuit determined that claim construction is also a requirement of design patent litigation. Elmer v. ICC Fabricating (Fed. Cir. 1995). The claim construction process usually involves the judge writing a paragraph describing the “visual impression” created by the drawings. Contessa v. Conagra (Fed. Cir. 2002). As construed, design patent claims should only include non-functional aspects of the design. Durling (Fed. Cir. 1996).

    ScreenShot085Here, the court described what he saw:

    An ornamental design for a vented baseball-styled cap as defined by the overall visual impressions as shown in figures 1 through 4. The cap has a hemispherical cap portion with a brim extending generally from one side of the cap portion. The hemispherical cap portion has four oblong-shaped vents that have sharply narrowing v-shaped ends. The vents are symmetrically shaped and extend along the seams of the panels of the cap in a generally “X”-shaped fashion with the center of the “X” being located at the top center of the cap.

    Of course, one problem with this type of claim construction is the difficulty in determining the level of detail. For instance, under this construction, a fitted cap could infringe even though the drawing clearly shows an adjustable cap. On the other side, the required shaping and symmetry is quite detailed. It is also unclear from the claim construction whether the claim is open ended — thus could a cap sporting five vents be infringing?

    Notes:

    • These questions will be answered in the upcoming Egyptian Goddess en banc appeal.
       

     

    Prosecution Disclaimer: Must be Clear and Unambiguous

    Patent,

    Elbex Video v. Sensormatic Electronics (Fed. Cir. 2007)

    Elbex sued Sensormatic for infringement of its patent covering a remote-controllable CCTV system. The district court (Judge Owen, Southern District of New York) granted summary judgment of non-infringement based on prosecution disclaimer of a portion of the scope of the claimed “receiving means.”

    Prosecution Disclaimer: During prosecution, the applicant had described the invention as having a “monitor” that receives a coded signal.  The claims, however, refer to a seemingly broader “receiving means.” Based on the prosecution statements, the district court found a disclaimer of scope:

    “[T]he district court found that the inventor limited the “receiving means” that receives the first code signal to a “monitor”… Implicit in its determination is a finding that the inventor clearly and unmistakably surrendered any claim scope between the “receiving means” that receives first code signals as expressly recited in the claims, and a “monitor” that receives first code signals.”

    On appeal, Judge Moore (with Judge Dyk) couldn’t find the “clear and unmistakable” disclaimer.

    “First, the statement in the prosecution history is unsupported by even a shred of evidence from the specification…. Second, read in isolation, the statement in the prosecution history could be argued to be a disclaimer. When the prosecution history as a whole is considered, the inventor’s response to the PTO is not as clear…. [Third, the] prosecution statement if taken [as a literal disclaimer] would result in an inoperable system.”

    This change in claim construction allowed for a reversal-in-part.

    District Court Judge Cote sat by designation on the panel found the disclaimer clear and unambiguous and would have affirmed. (Judge Cote is also from the S.D.N.Y.)

    Notes:

    • Cybor Corp. v. FAS Techs., 138 F.3d 1448 (Fed. Cir. 1998) (en banc) (“Prosecution history is relevant to the construction of a claim written in means-plus-function form.”).

    Egyptian Goddess Questions Presented

    Patent,

    The parties are requested to file briefs that should address the following questions:

    1. Should “point of novelty” be a test for infringement of design patent? 
    2. If so, (a) should the court adopt the non-trivial advance test adopted by the panel majority in this case; (b) should the point of novelty test be part of the patentee’s burden on infringement or should it be an available defense; (c) should a design patentee, in defining a point of novelty, be permitted to divide closely related or, ornamentally integrated features of the patented design to match features contained in an accused design; (d) should it be permissible to find more than one “point of novelty” in a patented design; and (e) should the overall appearance of a design be permitted to be a point of novelty? See Lawman Armor Corp. v. Winner Int’l, LLC, 449 F.3d 1190 (Fed. Cir. 2006).
    3. Should claim construction apply to design patents, and, if so, what role should that construction play in the infringement analysis? See Elmer v. ICC Fabricating, Inc., 67 F.3d 1571, 1577 (Fed. Cir. 1995).

    Appellant (Egyptian Goddess) has its opening brief due around January 24, 2008. Amicus briefs must either be granted “leave of the court” or consent of both parties. Fed. R. App. Proc. R. 29(a).

     

    An Ugly Stepsister: CAFC Accepts En Banc Design Patent Case

    Patent, ,

    PatentLawPic118Egyptian Goddess v. Swisa, Inc. (Fed. Cir. en Banc 2007)

    Design patents typically play the role of the pre-ball Cinderella – hopeful but meaningless and sitting in a pile of ash.  Already devalued, recent appellate decisions have further decimated design patent values.[1]< ?xml:namespace prefix ="" o />

    Infringement of a design patent requires satisfaction of both the ordinary observer test[2] and the points of novelty test[3]. In Egyptian Goddess, the patentee argued that the point of novelty of its ornamental fingernail buffer design[4] is the unique combination of four elements found in the design.[5]

    In the appeal, the Federal Circuit (Judge Moore) held that a combination of known elements may serve as a point of novelty – but only if the combination represents a “non-trivial advance over the prior art.”[6]  Here, the court found the combination trivial. The Egyptian Goddess panel opinion helps clarify the recent Lawman Armor opinion. In Lawman Armor, the court held (at least) that the “overall appearance” of a design cannot serve as a “point of novelty.”[7] 

    Picking up on some incongruence, Judge Dyk dissented from the Egyptian Goddess majority. Judge Dyk argued instead that the “non-trivial advance” requirement is antithetic to the notion of “points of novelty” in the same way that it would be odd to include a nonobviousness element within the requirements for novelty under 35 USC 102.  

    En Banc: Now, the Federal Circuit has agreed to re-hear the case en banc.  In all likelihood, the case will be at least vacated with the point of (non-trivial) novelty test being returned to a straight novelty requirement.[8] 

    A Nightmare: The law of design patents has become a nightmare of confusion and formality. Judge Moore recently stated in the oral arguments for In re Bilski that design patent law follows the same statutes as utility patents.[9] The truth is, however, that design patent law is almost wholly judge made law that varies dramatically from the Patent Statute and precedent interpreting the statute.  Thorny issues abound: How do design patents fit within the PTO’s concept of useful patentable subject matter under 35 U.S.C. § 101? Why does the patent office refuse to enter any true written claim of a new design beyond a few drawings while a court must put the claimed ‘ornamental design’ into text form during claim construction?

    Hopefully, the en banc court will take this opportunity to return some sanity to design patent law – starting with a complete overhaul of the definition of design patent infringement.  Perhaps Egyptian Goddess will be remembered as the fairy godmother of design patents.


    [1] See, for example, Egyptian Goddess, Inc. v. Swisa, Inc., 498 F.3d 1354 (Fed. Cir. 2007) (holding that infringement requires proof that one or more particular elements of the patented design exhibits a ‘non-trivial advance over the prior art.’); Arminak & Assocs. v. Saint-Gobain Calmar, Inc., 501 F.3d 1314 (Fed. Cir. 2007) (holding that an “ordinary observer” judging potential confusion is a corporate buyer rather than a retail customer); PHG Techs., LLC v. St. John Cos., 469 F.3d 1361 (Fed. Cir. 2006) (preliminary injunction vacated); Lawman Armor Corp. v. Winner Int’l LLC, 437 F.3d 1383 (Fed. Cir. 2006) clarified in en banc denial at 449 F.3d 1190 (Fed. Cir. 2006) (noting that the “overall appearance” of a design cannot serve as a “point of novelty.”).

    [2] Satisfaction of the ordinary observer test requires proof that an “ordinary observer” would think the accused design – examined as a whole – is substantially the same as the patented design.

    [3] Satisfaction of the points of novelty test requires proof that the accused device incorporates one or more of the “points of novelty” that distinguish the patented design from the prior art.  The points of novelty test is thus similar to a test of invalidity.

    [4] < ?xml:namespace prefix ="" st1 />U.S. Design Patent No. 467,389.

    [5] Egyptian Goddess listed the following four points of novelty: (1) an open hollow body; (2) square cross-section; (3) raised rectangular pads; and (4) exposed corners. Each of these elements are found in the prior art and thus do not server as individual points of novelty.

    [6] Egyptian Goddess, 498 F.3d 1354 (holding that the combination of elements here is trivial).

    [7] Lawman Armor Corp., 449 F.3d 1190 (Fed. Cir. 2006).

    [8] Normally, a majority of the twelve Federal Circuit judges must agree to hear a case en banc. 

    [9] 35 U.S.C. § 171 provides that “provisions of this title relating to patents for inventions shall apply to patents for designs, except as otherwise provided.” 

     

     

    Documents:

    CAFC Finds Washington DC Drug Price Law to be Unconstitutional

    Patent

    BIO and PhRMA v. District of Columbia (Fed. Cir. 2007).

    Earlier in 2007, the CAFC found a the District of Columbia’s new Drug Price Law to be unconstitutional as preempted by the patent laws. The law would have prohibited a manufacturer from enforcing a minimum retail price restriction or from charging “excessive prices” for patented drugs. (I.e., not more than 30% more than is charged in Canada or the UK). The appellate panel found that those limits conflicted with the incentive goals of the patent laws because they would limit the “full exercise of market power.”  In October 2007, the CAFC also denied a rehearing en banc. That denial includes two interesting opinions:

    Judge Dyk in Favor of Rehearing: Judge Dyk recognizes the broad holding of the original CAFC opinion — that “any state law regulating the prices of patented pharmaceutical products would likely be preempted as a result of the panel’s holding.”  In Judge Dyk’s opinion, a rehearing is not necessary to change the outcome — but rather to change misguided language in the decision.  In particular, Judge Dyk notes that the majority’s discussion of the “full exercise of market power” is overly broad:

    “A patent grant is designed not to allow the patent holder to exploit the grant for the maximum profit that the market will bear, but merely to confer a right of exclusivity.”

    There are many proper state activities that limit a patentee’s market power. These include:

    • Taxing the sale of patented products;
    • Regulating the sale of patented products (such as tobacco formulations and unsafe lamp oil);
    • Prohibiting the sale of patented products (such as casino games); and
    • Prohibiting price-fixing agreements on patented products.

    Judge Dyk argues that like these, price regulation — especially the prohibition on international price discrimination — are not preempted by the Patent Act (even though they may be bad policy).

    Judge Gajarsa argued against Judge Dyk’s position — In the process, however, Judge Gajarsa essentially rewrote the panel decision. Arguing that the decision is not based on a requirement that a patentee have full market power but rather, that the DC act is preempted because it upsets the careful balance of rights and incentives created by the US Government in the area of pharmaceutical development.

    This case could easily go to the Supreme Court.

    Translogic Challenges (1) the Constitutionality of BPAI Decisions and (2) CAFC’s Retroactive Application of a PTO Proceeding to a Jury Verdict

    Patent, ,

    In re Translogic (Fed. Cir. 2007)
    Translogic v. Hitachi ( Fed. Cir. 2007)

    In parallel proceedings, Translogic won its patent infringement case in a jury trial against Hitachi (jury agreed that the claims were valid) and lost its BPAI reexamination appeal (BPAI found claims invalid). Both appeals reached the CAFC at roughly the same time and were decided the same day with the following holding: 

    •  In re Translogic: BPAI affirmed; claims are obvious.
    • Translogic v. Hitachi: Based wholly on the above decision, the jury verdict vacated because claims are obvious.

    Translogic has now requested an en banc rehearing of this unusual pair of cases decisions: 

    Unlawful BPAI Composition: In a recent article, Professor John Duffy challenged the current process of appointing BPAI judges as unconstitutional. John F. Duffy, Are Administrative Patent Judges Unconstitutional? , 2007 Patently-O L.J. 21.  The crux of the Duffy article is that these administrative judges must be appointed by either the head of the Commerce Department or the President. I.e., appointment of these officers by lower level offices, such as the under-secretary, is unconstitutional. Art. II, § 2, cl. 2.  In Translogic’s favor, the Supreme Court has created “broad standing rules” that that do not require specific ‘injury’ due to botched appointment. Likewise, Translogic argues that court precedent provides standing despite a failure to raise this issue at the BPAI or in the original CAFC case. Professor Duffy’s article also found its way to Congress – HR 1908 would amend Section 6 of the Patent Act to require the Secretary of Commerce to appoint the BPAI members. Of course, this issue calls into question most recent BPAI decisions.

    Antiretroactivity Doctrine: Of course, if the BPAI’s decision is vacated, the CAFC must then take a second look at its summary decision in the infringement case.  Translogic also argues that the vacatur violates the Supreme Court’s “antiretroactivity doctrine.”  Under that doctrine, later cancellation of an issued patent should not be used to overturn a prior jury verdict. Although in dicta, the Supreme Court spoke on this very issue — noting that “title to these moneys [damage awards] does not depend upon the patent, but upon . . . judgment of the court.” Moffitt v. Garr, 66 US 273 (1861).  In any event, the patent is not invalid until the PTO issues a certificate of cancellation under 35 USC 307. Thus, the holding is at least severely premature.

    Jury Trial and Reexamination: The 7th Amendment right to a jury trial also includes a right not to have a jury verdict reexamined by a Court except according to the rules of Common Law. Translogic’s argument here is that the CAFC decision violates this right because it nullifies the jury verdict “without applying any appellate standard of review, based solely on its affirmance of a Board decision that explicitly reexamined facts tried to the jury.”

    Notes:

    • Thanks to Hal Wegner for noting this case in an email to the author.

    CAFC: No Sua Sponte Summary Judgment; No Baseless Suit Without Claim Construction

    Patent, Patent Cases 2007, Summary Judgment,

    ScreenShot063EON-Net v. Flagstar Bancorp (Fed. Cir. 07-1132) (non-precedential)

    In 2006, the Washington State district court granted summary judgment of non-infringement in Flagstar’s favor. The court also applied sanctions against the patentee’s attorneys – a NYC class action boutique — for filing the “baseless” litigation. [link]

    Sua Sponte Summary Judgment: A summary judgment motion for non-infringement must at least point to “specific ways in which the accused system [does] not meet the claim limitations.” (Exigent Technology). Without at least that threshold level of information, the court must reject such a motion. 

    Here, the court issued its summary judgment decision on sua sponte grounds (i.e., using grounds that had not been particularly raised in the SJ motion). Because EON did not have an opportunity to respond, the CAFC vacated and remanded.

    “The district court should have given Eon-Net an opportunity to fully present its arguments on these issues, even if the district court ultimately would have reached the same conclusion. We have previously held that where a district court construes a patent without following the necessary steps, we should remand the matter for further proceedings so that the district court can follow the appropriate steps.”

    Sanctions: Normally, an attorney is required to perform a “reasonable pre-filing inquiry” that includes an infringement analysis prior to filing a patent infringement complaint. Here, the district court sanctioned Eon’s counsel for not performing such an inquiry.

    In a major exception to the inquiry requirement, however, “an attorney may not be sanctioned solely for failing to conduct a reasonable inquiry as long as the complaint is well-founded.” Of course, in patent cases, a patent claim can rarely be deemed unfounded prior to claim construction.

    “[W]ithout a full claim construction analysis it is impossible to assess whether Eon-Net’s claim construction was unrealistic.”

    Furthermore, the “mere fact” that EON sent identical complaints to dozens of other companies is insufficient to establish that the complaint was filed for a sanctionable “improper purpose.”

    Damages: Contentious History Between Parties Justifies High Royalty Rate

    Damages, Patent, ,

    CaliperMitutoyo Corp v. Central Purchasing (Fed. Cir. 2007)

    Mitutoyo and Central have been wrangling for more than a decade over Mitutoyo’s patent covering electronic calipers. The history includes Central’s 1994 agreement to exit the market; a 1995 DJ finding that the patent is not invalid or unenforceable; and a 2006 summary judgment against Central.

    Both parties appealed on damages issues:

    Reasonable Royalty: On appeal the CAFC found the lower court’s 29.2% reasonable royalty rate acceptable. Although a seemingly high number, Central’s profit margin is around 70%. Most interestingly, the appellate panel held that the parties “contentious history” supports a high royalty rate. This serves as a reminder that a the reasonableness of the royalty still takes-into-account the positions of the parties.

    Lost Profits: Although Mitutoyo also sells calipers, Central was able to avoid lost profit damages by showing that the products had little customer or price overlap. (Central’s proof included economic evidence that the market for its $21 product was highly elastic – indicating few of its customers would have instead purchased Mitutoyo’s $100 product.)

    Willful Infringement: Mitutoyo’s willful infringement claim was dismissed on the pleadings under FRCP 12(b)(6) for failure to state a claim and failure to prosecute. On appeal the CAFC reversed – finding that Mitutoyo’s allegation of willful infringement coupled with Central’s long history with the patent were “plainly more than sufficient to meet the requirement of Rule 8(a)(2) for pleading a willful infringement claim and avoid dismissal.” Similarly, the appellate court held that failure to file a summary judgment motion on willfulness does not indicate “an intent to abandon [the] willfulness claim.”

    In its August 2007 Seagate en banc opinion, the CAFC raised the culpability standard for willful infringement. This case takes a step back to remind courts that the enhanced damages theory does not (yet) require a showing of fraud.

    Standing of a licensee to sue: Mitutoyo’s primary US licensee was also a party to the litigation. However, a licensee only has co-plaintiff standing if it holds “at least some of the proprietary rights” of the patent. Here, the licensee has no standing because Mitutoyo also allows one other company to import and distribute its products in the US.

     

    In re Seagate Technology:

    Patent, Patent Cases 2007

    In a rare unanimous en banc opinion, the CAFC has overruled its prior precedent — holding that willful infringement enhanced damages now requires “at least a showing of objective recklessness.”

    Accordingly, to establish willful infringement, a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. 

    This eliminates the “affirmative duty of due care” that has historically been created by notice of infringement.

    Attorney Client Privilege and Work Product: When asserting an opinion of counsel in defense to a willful infringement claim, any waiver of privilege or work product materials does not (normally) extend to trial counsel.

    Read the opinion

    Further Limitations on Doctrine of Equivalents: Equivalent Foreseeable if Disclosed in Relevant Art

    Patent

    Patent.Law012Festo Corp. v. SMC Corp. (Fed. Cir. 2007).

    In 1988, Festo sued SMC for infringement of its magnetized pistons.  Since then, the CAFC has issued numerous Festo opinions including two en banc. The Supreme Court has also ruled twice. This appeal, like many of the others involve the scope and limits of the doctrine of equivalents (DOE).

    Doctrine of Equivalents: While patent claim language traditionally defines the patent right, the doctrine of equivalents occasionally allows for a finding of infringement even when an accused product falls outside the literal limits of claim language.  More particularly, DOE applies when a claim limitation differs insubstantially from the accused product or if the accused element performs the substantially same function in substantially the same way with substantially the same result (function/way/result test).

    Prosecution History Estoppel: A narrowing claim amendment made during prosecution creates a presumption that the element should be narrowly interpreted — legally precluding application of the DOE.  In its 2002 Festo decision, the Supreme Court noted three exceptions that would allow for DOE infringement even after a narrowing amendment: (1) the equivalent was unforeseeable; (2) the reason for the narrowing amendment was only tangentially related to the equivalent; or (3) “some other reason…”.

    Foreseeable Equivalent: In this case, Festo’s amendment was narrowing, but the patentee argued that SMC’s equivalent was unforeseeable to one of ordinary skill at the time of the amendment. The question was whether the accused product’s aluminum sleeve was a foreseeable alternative of the claimed magnetizable sleeve.  Aluminum sleeves were already well known in the art, but Festo argued unforeseeability because no PHOSITA knew that the aluminum sleeve would serve as a magnetic shield (the function of the sleeve). This unknown function — according to Festo — made the use of aluminum unforeseeable. In its briefs, Festo attempted to find a requirement for functional foreseeability in the function/way/result test of DOE.

    The CAFC rejected Festo’s argument and instead found that foreseeability should be broadly interpreted — finding “that an alternative is foreseeable if it is disclosed in the pertinent prior art in the field of the invention.  In other words, an alternative is foreseeable if it is known in the field of the invention as reflected in the claim scope before amendment.” This result follows the court’s 2003 en banc decision that later developed and nonanalogous technology are “usually not foreseeable” — but that equivalents already known in the relevant field are generally foreseeable.

    Here, the CAFC went a step further — implying that the question of whether a PHOSITA could have known the suitability of a particular a alternative is not relevant to the question of foreseeability.

    “An equivalent is foreseeable if one skilled in the art would have known that the alternative existed in the field of art as defined by the original claim scope, even if the suitability of the alternative for the particular purposes defined by the amended claim scope were unknown.”

    Consequently, the aluminum sleeve was seen as foreseeable – and thus prosecution history estoppel applies to block the doctrine of equivalents.

    Dissent: Judge Newman dissents – noting that the opinion is “confound[ing]”, “incorrect”, and “futher erodes the residue of the doctrine of equivalents.”

    Tribunal Theory

    Patent, ,

    Patent.Law007The tri prefix of tribunal may evoke an image of three judges sitting jointly at the bench.  In practice, however, tribunal refers to any sitting judicial body – regardless of the number of judges.

    The Court of Appeals for the Federal Circuit (CAFC) normally convenes in three judge tribunals to hear appeals. Motion practice, such as an emergency motion for a stay of an injunction, is often heard by a single judge.  According to statute, en banc panels usually consist of all (twelve) active members of the court. 28 USC 46(c).

    A larger panel is thought to provide more stability and predictability, while a smaller panel theoretically provides a greater variance.

    To see how panel size might alter litigation practice, lets take an example case where the lower court issues a permanent injunction that will be enforced within ten days. Question: Should the losing defendant hope for (1) a three judge panel to hear its emergency appeal or (2) a lone appellate judge? 

    The answer, after several assumptions including independence, is that the appellant’s favored panel size varies with the strength of its argument.  If the appellant has a high (greater than 50%) chance of convincing each expected judge, then it is better off with a larger panel.  On the other hand, if the appellant has a low (less than 50%) chance of convincing each judge then he would likely get better results from a single judge.

    This is easy to work out a computational example: For the first case, if we expect that the appellant has a 65% chance of convincing each judge of its case, the probability of convincing at least two judges rises to 72%. Thus, the appellant would be better off with a panel (72% chance of winning) rather than a single judge (65% chance of winning). On the other hand, if the appellant thought that its appeal had only a 35% chance of convincing each judge, the probability of convincing at least two judges drops to 28%.  Thus, the appellant who expected to lose would be worse off with a panel (28% chance of winning) rather than a single judge (35% chance of winning).  The larger panel also helps smooth over variance amongst the judges — tilting the scales further in favor of an expected winner.  A long shot case would hope for the squirrelly judge on a small (solo) panel.

    In a May 6, 2007 distribution, Hal Wegner suggested a series of “Mini en banc” panels with seven (or five or nine) members — especially in the area of obviousness.  As the panel size increases, good cases theoretically win more often and should be losers lose more often.

    Four Judge Panels: One simple step that could make a tremendous difference regarding stability of appellate determinations would be to shift the normal panel size from three judges to four judges.  The CAFC has power to make this change under 28 USC 46, which states that “the Federal Circuit may sit in panels of more than three judges if its rules so provide”.

    On appeals, a split judgment is equivalent to an affirmance of the lower court decision. Thus, an appellant arguing to a four judge tribunal must convince three of the four judges of its case — creating a much larger, super-majority hurdle for the appealing party. The problem with the four judge approach is that it also creates an outcome skewed toward affirmance — something that could be seen as unfair. However, I expect that claim construction decisions reviewed de novo by a four member panel would help us return from our long vacation (or at least reduce the number of claim construction opinions being vacated).

    The four judge approach would also violate Federal Circuit Rule 47.2, that requires “a panel consisting of an odd number of at least three judges.”

    In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal

    Patent

    In re Seagate questions the scope of privilege and work-product waiver associated with an opinion-of-counsel defense to willfulness. In a new article, Joseph Casino and Michael Kasdan attempt to re-focus the debate by arguing for a "temporal limitation on the scope of waiver which is not hinged on retaining separate [opinion and litigation] counsel."  In addition, the article delves further into the CAFC’s Quantum dicta, which encourages bifurcation of trials for liability and willfulness issues.

    In In re Seagate Technology, L.L.C., the en banc Federal Circuit has the opportunity (and, it seems, the desire) to squarely address the troubling issues that have arisen in connection with the doctrine of willfulness. The manner in which the Court resolves these issues could have far-reaching impact on accused infringers’ practice of obtaining opinions of counsel and on their practical ability to rely on these opinions to defend against a charge of willful infringement without exposing their ongoing communications with and the work-product of their trial counsel.

    The Federal Circuit should adopt a waiver doctrine that encourages the procurement and reliance upon opinions of counsel when one becomes aware of a pre-suit infringement assertion. In such cases, the solution of adopting a temporal cut-off to the waiver of attorney work-product and communications that occur after the litigation has been initiated strikes the proper balance for both patentees and accused infringers. However, it would be a mistake to seek a similar result by creating a bright-line rule that depends on the use of separate trial and opinion counsel to insulate post-litigation communications with counsel from discovery. Further, mandating bifurcation of willfulness issues until after a determination of liability would ease waiver concerns no matter what waiver framework is adopted by the Federal Circuit.

    Read the article: [HTML] [PDF]. Preferred Citation: Joseph Casino and Michael Kasdan, In re Seagate Technology: Willfulness and Waiver, a Summary and a Proposal, 2007 Patently-O Patent L.J. 1, https://patentlyo.com/lawjournal/2007/05/in_re_seagate_t.html.