Tag Archives: Federal Circuit En Banc

Nystrom v. Trex: Take Two

Patent, Patent Cases 2005, ,

Nystrom v. Trex Co. (Fed. Cir. 2005). This summer’s Phillips v. AWH decision shifted the focus of claim construction from extrinsic evidence (e.g. dictionaries) to the patent specification. After agreeing to rehear the Nystrom v. Trex appeal to address the effects of Phillips, a Federal Circuit panel (Mayer, Gajarsa, and Linn) has withdrawn its June 28, 2004 opinion (in which Gajarsa had dissented) and has substituted a new unanimous opinion that reaches a different claim construction, resulting in a different case outcome.

Nystrom’s patent related to a design for deck boards that are shaped to shed water. The main claim construction issue related to whether the claim term “board” was limited to boards made of “wood cut from a log” or whether a broader dictionary definition (e.g. “a flat piece of wood or similarly rigid material adapted for special use”) would apply.  In its pre-Phillips opinion, the panel relied on the dictionary definition and claim differentiation (a dependent claim specifically called for “wood cut from a log,” while broader claims did not) to determine that “board” was to be construed broadly.

In its post-Phillips opinion, the same panel noted that Nystrom’s specification and the prosecution history consistently described boards made of wood cut from a log.  The panel dismissed claim differentiation as a basis for its previous broad construction: “[d]ifferent terms or phrases in separate claims may be construed to cover the same subject matter where the written description and prosecution history indicate that such a reading of the terms or phrases is proper.” Regarding the broad dictionary definition previously relied on, the panel noted:

What Phillips now counsels is that in the absence of something in the written description and/or prosecution history to provide explicit or implicit notice to the public – i.e., those of ordinary skill in the art – that the inventor intended a disputed term to cover more than the ordinary and customary meaning revealed by the context of the intrinsic record, it is improper to read the term to encompass a broader definition simply because it may be found in a dictionary, treatise, or other extrinsic source.

Importantly, there was no clear disavowal of claim scope in this case – Phillips doesn’t require as much – but nothing in the intrinsic record supported a construction broader than “wood cut from a log.”

Marcus Thymian is still a Minnesota Vikings fan and has been involved with several recent litigations in which claim construction turned on intrinsic extrinsic.  He is a partner at McDonnell Boehnen Hulbert & Berghoff LLP in < ?xml:namespace prefix = st1 />Chicago.  [Marcus Thymian’s Bio]

Appeals Court Affirms Unenforceability of Lemelson’s Patents Due to Prosecution Laches

Patent, Patent Cases 2005

PatSeminar053Symbol v. Lemelson (Fed. Cir. 2005).

Lemelson’s patents have priority dates of 1954 and 1956, but through skillful use of the patent rules, several patents have still not expired. 

In an infringement suit against Symbol, the district court found that the patents were unenforceable under the doctrine of prosecution laches — holding that the “18 to 39 year delay in filing and prosecuting the asserted claims . . . was unreasonable and unjustified.”

On appeal, the Court of Appeals for the Federal Circuit affirmed, finding that the lower court did not abuse its discretion in holding the patents unenforceable.

The court listed several “legitimate grounds” for filing a continuation in a patent:

  • Filing a divisional application in response to a restriction requirement (even if you defer filing the divisional until just before the parent issues);
  • Refiling rejected claims in order to present newly found evidence of unexpected advantage;
  • Filing a continuation to support broader claims; and
  • Refiling for other reasons that are “not unduly successive or repetitive.”

However, the panel found that refiling an application solely containing previously-allowed claims for the business purpose of delaying their issuance can be considered an abuse of the patent system — and can constitute laches.

The court was careful to note that a single delay in one particular application would not merit the extraordinary relief of unenforceability. However, a history of a series of delay may trigger laches. “Patent applications should normally be permitted to issue when they have been allowed and the statutory requirements complied with.”

Comment:

  • Important inventions generally involve at least one continuation application — when filing a continuation, the attorney should consider whether it is justified under one of the listed legitimate grounds.
  • Because of the 1995 change in the law, this issue is becoming largely moot. Now patents have a 20–year term from the filing date rather than the old 17–years from issuance. 

 Links:

RIM, with the support of Canada and Intel, Ask Court for Another Review of BlackBerry Patent Case

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RIMDesignPatentNTP v. Research-in-Motion (en banc review).
(Printable Version)

A new flurry of appeal briefs further complicates this closely watched case involving the fundamental question of how the U.S. patent laws can be asserted against foreign activities.  Canada based Research-in-Motion (RIM) was at the losing-end of a 2003 patent infringement trial that resulted in a permanent injunction against its popular BlackBerry system.  That judgment is stayed pending a series of appeals that have included two appellate court opinions.  Now, RIM is asking the Court of Appeals for the Federal Circuit (CAFC) to hear the appeal as an en banc panel of all twelve judges.

Background

In August, 2005, the CAFC released a second appellate opinion in the case.  The new opinion focused on the extent that a patent must be practiced within the U.S. to fall under the guise of § 271 of the Patent Act and specifically highlighted on the difference between system claims and method claims with relation to international activities.  A system, the court held, is used “within the United States” so long as the United States “is the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and beneficial use of the system obtained.”  A method, however, is only used “within the United States” if “each of the steps is performed within this country.” 

As such, RIM (RIMM) was able to avoid infringement of NTP’s method claims but not the system claims because “RIM’s customers located within the United States controlled the transmission of information and benefited from the resulting exchange of information.”

The court also opined on the inapplicability of other portions of 271 to method claims:

  • Sale: The CAFC found it unlikely that a method claim could infringe through the sale provision of 271(a).
  • Component: Distinguishing Eolas, the CAFC implied that a method claim would rarely if ever trigger 271(f).
  • Section 271(g): The import provision only applies to physical articles — and thus cannot be used to find infringement of a method for transmitting information (as claimed by NTP).

Rehearing en Banc

In the wake of the revised appellate opinion, RIM has renewed its request for an en banc rehearing – hoping that a full panel of appellate judges will eliminate the “control and beneficial use” standard for transnational infringement.  NTP opposes the rehearing. 

RIM’s Petition for Rehearing

RIMBriefDiagramIn its brief, RIM questioned the panel decision that “use” of a “patented invention” occur can “within the United States” under 35 U.S.C. 271(a) even if significant components or acts specified by the claims are outside the United States.  RIM further argued that the panel’s distinction between method and system claims was not given any justification and is “untenable.”

The Panel erred on multiple grounds. First, the Panel fails to follow the plain statutory language extraterritorially limiting  § 271(a) liability to “uses . . . within the United States.” As a result, the Panel makes an unsupported distinction between method claims and system claims creating a generic rule for all system claims that fails to consider the nature of the actual patented invention. Second, the Panel ignores basic cannons of statutory construction that forbid extending the patent statute extraterritorially absent clear Congressional direction. Third, the Panel erroneously finds § 271(a) liability based on Decca, a case decided under 28 U.S.C. 1498, the statutory language and purpose of which are entirely different from § 271(a). Fourth, the Panel misapplied that analysis and decided fact issues that should be left for the jury.

NTP’s Opposition to the Rehearing

In its opposition brief, NTP continues its barrage on RIM for its “attempts to delay purely for delay purposes.”

The Panel properly focused on the only pertinent activities for the 271(a) question presented: the acts of millions of U.S.-located BlackBerry users that put into service their U.S.-located BlackBerry handhelds to send and receive wireless emails millions of times each day using U.S.-located transceivers and US.-located email systems equipped with thousands of U.S.-located email gateway redirectors sold by RIM. The only pertinent RIM activities are those establishing inducement and contributory liability – activities conceded by RIM on appeal. Other acts that RIM raises are irrelevant. Indeed, under RIM’S reasoning, use by BlackBerry customers in other countries negates the tort of infringement arising from use in the United States. Such analysis lacks any basis in law, precedent, or reason.

NTP argued that the longstanding principles of the Decca case clearly guide this case, and that “unless [the CAFC] sua sponte intends to overturn Decca and Decca II in a manner that the Supreme Court and Congress have refused, RIM presents no issue that warrants further review.”

Microsoft’s Amicus Brief in Support of the Petition

Microsoft took time to point-out the inconsistencies between the NTP decision and the handful of other recent cases involving extraterritorial application of U.S. patent laws, and the software giant asked the court to rehear this case in conjunction with its own pending AT&T v. Microsoft to ensure a “uniform and consistent body of case law concerning the territorial reach of 35 U.S.C. § 271.” 

  • NTP v. Research in Motion, (271(f) “component” does not apply to method claims).
  • AT&T v. Microsoft, 414 F.3d 1366 (Fed. Cir. Jul. 13,2005) (271(f) “component” applies to method claims and software being sold abroad);
  • Eolas v. Microsoft, 399 F.3d 1325 (Fed. Cir. Mar. 2,2005) (271(f) “component” applies to method claims);
  • Pellegrini v. Analog Devices, 375 F.3d 1113 (Fed. Cir. 2004) (271(f) “component” does not cover export of plans/instructions of patented item to be manufactured abroad);
  • Bayer v. Housey Pharms, 340 F.3d 1367 (Fed. Cir. 2003) (271(g) “component” does not apply to importation of ‘intangible information’).

Regarding policy, Microsoft argued that limiting 271(a) U.S. patent law to not include any foreign actions, would create “an incentive for American companies to locate certain aspects of their systems outside the United States, primarily to avoid infringement liability. Such an outcome would likely result in loss of jobs, skilled workers, capital, and information technology, abroad.” On the other hand, Microsoft argued that allowing infringement for export of components under 271(f) creates “an incentive to move their research aid development abroad.”

Canadian Government’s Amicus Brief in Support of the Petition

In a rare move, the Government of Canada filed a brief supporting the petition for rehearing en banc.  The brief notes that the panel opinion does not include any discussion of the principles of comity and international law that should be considered when determining the extent that U.S. laws should be interpreted to limit activities taken on foreign soil.

Canadian%20flag“The reissued panel opinion lacks any acknowledgment or discussion of the effect of, or the effect upon, long-established international understandings and agreements regarding national jurisdiction over intellectual property. Because the decision of the panel was neither explained nor justified in terms of contemporary, internationally-accepted principles of national jurisdiction, the opinion raises questions concerning fundamental principles upon which this international intellectual property system has harmoniously been based for well over a century.”

The brief recognized that the eventual conclusion may well be that patent laws should extend transnationally.  However, the the thrust of this brief is that an expansion of extraterritorial application of the law should include a thorough analysis of the international implications.

Canadian Chamber of Commerce in Support of the Petition

The group of Canadian businesses argue that the standards created by the RIM opinion create confusion by the artificial distinction between system and process claims. Further, the group argue that the court should respect the rule of comity when construing a statute.

As the Supreme Court recently stated, courts “ordinarily construe[] ambiguous statutes to avoid unreasonable interference with the sovereign authority of other nations.” F. Hoffman-La Roche v. Empagran, 542 U.S. 155 (1994).

Seven Networks, Inc. Brief in Support of the Petition

Seven Networks argues simply that patents are “national in scope.” And, without congressional action, patents should remain national in scope.

On its face, 35 U.S.C. §271(a) is national in scope, and the statute has no extraterritorial reach. It applies to “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States”. When a statute is silent as to its extraterritorial application, the presumption is that the statute does not have extraterritorial effect.

With reference to “control and beneficial use” standard derived from Decca, Seven argued that Decca’s decision required ownership of the foreign-located system elements.  Because RIM customers do not own the Routers located in Canada, they cannot be said to have control or be beneficially using that element.

Information Technology Association of Canada Brief in Support of the Petition

The ITAC brief takes the stance that method and system claims should be treated consistently. ITAC correctly points out that it is often quite easy to draft a “system” claim that contains the same limitations as a parallel “method” claim.

NTP’s Consolidated Response to the Amicus Briefs

  1. No amici disputes the fact that one of the patents does not even give rise to the issue of territoriality (NTP wants to avoid this altogether and just get paid).
  2. The Canadian Gov’t Brief confirms that U.S. patent laws apply when the RIM system is used Within the U.S.
  3. Microsoft supports the decision finding infringement of the system claims.
  4. The Canadian Chamber of Commerce seeks an improper advisory opinion (on product-by-process claims).
  5. The ITAC brief, prepared by RIM’s patent firm (Kirkland & Ellis) merely rehashes RIM’s old arguments.
  6. Seven Networks hopes to avoid infringement by placing its own routers abroad.

Intel’s Amicus Brief in Support of the Petition

In a brief supporting an en banc rehearing, Intel first noted that this issue is of great importance to today’s economy where many thousands of businesses operate multinationally.  Like RIM, Intel could find no “principled or policy basis” for the outcome of a multinational infringement case to depend on the form of the preamble of the claim. 

There is no reason to hold that practicing every step is essential to infringement of a claimed process, yet hold that use of every component is not essential to infringement of a claimed system.

Regarding 271(f), Intel discussed the fact that, although the four recent Federal Circuit cases discussing 271(f) purport to distinguish one another, “the ultimate holdings are difficult to square, and they lack a common analytical approach.”(See, Eolas, AT&T, Pellegrini, & NTP). “The Court has yet to take a consistent and holistic view of infringement liability in the transnational context.” 

Finally, Intel asked the court to place the burden on patent drafters — arguing that it is possible to draft claims to virtually any invention that avoids the need to extend 271(a) to cover extraterritorial activities.

In a brief filed specifically in response to Intel’s brief, RIM argued (i) that it had been filed after the deadline and thus should be considered untimely; (ii) that Intel does have a financial interest in the case; and (iii) that Intel’s brief simply rehashes old arguments.

Documents:

Links:

  • Link: Discussion of the NTP v. RIM CAFC Replacement Opinion, August 3, 2005.
  • Link: Discussion of RIM/NTP Settlement Problems, June 26, 2005.
  • Link: Expanding reach of U.S. patent law, March 6, 2005.
  • Link: Eolas v. Microsoft, March 2, 2005.
  • Link: Canada Challenges NTP ruling, January 18, 2005
  • Link: Discussion of Original NTP v. RIM decision, December 14, 2004.

Supreme Court: FTC confronts decision that liberally allows brand-generic patent settlements

Patent,

PatSeminar026FTC v. Schering-Plough (on Petition for Cert).

After losing at the 11th Circuit, the FTC has filed a petition for certiorari asking the Supreme Court to hear its appeal.  In a March 2005 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers regarding the patented blood pressure drug K-Dur.  The FTC had concluded that the settlement was an “unreasonable restraint of trade.”  The 11th Circuit, however, disagreed, finding that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law. Accordingly, the court SET ASIDE the decision of the Federal Trade Commission and VACATED its cease and desist order.

In its petition for certiorari, the FTC presents two questions to the Court:

1. Whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade.

2. Whether the court of appeals grossly misapplied the pertinent “substantial evidence” standard of review, by summarily rejecting the extensive factual findings of an expert federal agency regarding matters within its purview.

In its supporting brief, the FTC argues that agreements between competitors should not be per se lawful simply because they are within the “potential” reach of a patent claim. The Public Patent Foundation (PubPat) supported the FTC at the Eleventh Circuit and will likely file an Amici Brief in support of the FTC’s petition.

Links:

Patently-O Tidbits

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  • PatentlyOImage045Antitrust: The U.S. Government has filed a brief in support of petitioner in the Illinois Tool Works case. The Government argues that the court “should not presume that a patent confers the market power necessary to establish that is unlawful per se.” File Attachment: Gov’t Brief (178 KB).
  • Claim Construction: Last week, attorneys Kenneth Bass and Edward Manzo presented a discussion on the recent claim construction decision in Phillips v. AWH.  A pdf document outlining the decision was prepared by Mr. Manzo and is available here: File Attachment: Phillips En Banc.pdf (209 KB).
  • Patent Reform: An amendment has been proposed to the Patent Act of 2005 that would alter the law on venue for patent infringement.  File Attachment: New Patent Act.doc (27 KB).
  • Trademark: Link – Professor Goldman (Marquette) discusses the recent follow-up opinion in Geico v. Google holding that the use of a trademarked term in sidebar ads may create customer confusion in violation of the Lanham Act.
  • In-House: Todd Mayover has a new blog discussing patent law from the perspective of an in-house counsel. http://ipcounsel.blogspot.com/.
  • Hatch-Waxman: Philip Brooks points us to the Jeremy Burlow’s interesting paper on The Gaming of Pharmaceutical Patents [pdf].

Claims definite unless “insolubly ambiguous.”

Patent, Patent Cases 2005

PatentlyOImage043Marley Mouldings v. Mikron Industries (Fed. Cir. 2005).

At summary judgment, the district court (N.D.Ill.) found Marley’s patent invalid for indefiniteness.  On appeal, the Court of Appeals for the Federal Circuit (CAFC) reversed, holding that the claims were not “insolubly ambiguous” and thus not indefinite under 35 U.S.C. 112.

Marley’s patent is directed to a method of forming a foam composite as a wood replacement.  The claims specify the volume of various materials use to create the composite.  The district court found the volume requirements to be indefinite because the specification did not include any means to calculate the percent volume — “a critical determination to discerning” infringement.

Mikron also argued that “measurement of components by weight, not by volume, is the standard practice in the field of polymer processing, and [thus,]that the patentee’s failure to conform to this practice is further support for the indefiniteness of the claims.”

The CAFC disagreed, finding that “non-conformity is not of itself indefiniteness.”

We conclude that the district court erred in law, in requiring that the specification describe the relationship between volume and weight of the wood filler used or usable in the process. When a claim “is not insolubly ambiguous, it is not invalid for indefiniteness.” (quoting Bancorp Servs, 359 F.3d 1367).

Remanded.

NOTES:

  • This case attempts to distinguish Honeywell v. ITC, 341 F.3d 1332, 1339-40 (Fed. Cir. 2003) (claim indefinite because yarn melting parameter included without stating which of four known methods of preparing and testing the yarn should be used).

BlackBerry Case Makes Major Precedential Changes

Patent, Patent Cases 2005, ,

PatentlyOImage009

NTP v. Research-In-Motion (Fed. Cir. 2005)

The CAFC has released a new appellate opinion that modifies the court’s analysis of Section 271 of the Patent Act but leaves the decision against RIM largely intact.

In December 2004, the Federal Circuit released its original opinion that pushed against the territorial bounds of patent law.  In that opinion, the CAFC found that U.S. patent law covers instances where infringing elements are located abroad — so long as the “control and beneficial use” of the infringing system is within U.S. territory.  This legal finding meant that RIM’s BlackBerry business, which spanned across the U.S. and Canadian borders, could be found to infringe NTP’s patent.  Soon thereafter, RIM filed a motion for rehearing and rehearing en banc as well as other legal pleadings at the CAFC, district court, and PTO. 

Rather than taking up the question in an en banc hearing, the original three-member panel (Judges Michel, Schall, and LINN) granted the petition for rehearing and revised portions of the opinion that discussed Section 271 — and thus withdrawing the December 14 opinion.

The new 75 page opinion takes a fresh look at the extent that a patent must be practiced within the U.S. to fall within the guise of 271(a).

35 U.S.C. 271(a): . . . whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States . . . infringes the patent.

The major dispute revolved around the phrase “within the United States:”

The grammatical structure of the statute indicates that “within the United States” is a separate requirement from the infringing acts clause.  Thus, it is unclear from the statutory language how the territoriality requirement limits direct infringement where the location of at least a part of the “patented invention” is not the same as the location of the infringing act. (opinion at 52).

In an affirmative step, the court decided that locating a component outside the U.S. does not necessarily preclude infringement under 271(a). However, the court found that the analysis will depend upon the type of infringing act (use, make, sell) and the type of claim (system, method, product).

  • USE of SYSTEM: The site of the use of a patent is “the place at which the system as a whole is put into service, i.e., the place where control of the system is exercised and  beneficial use of the system obtained.”
  • USE of METHOD: Each step must be performed in the U.S. “We therefore hold that a process cannot be used ‘within’ the United States as required by section 271(a) unless each of the steps is performed within this country.”
  • OFFERS to SELL and SELLING: You likely cannot infringe a method claim through sale! “It is difficult to envision what property is transferred merely by one party performing the steps of a method claim in exchange for payment by another party.  Moreover, performance of a method does not necessarily require anything that is capable of being transferred.” NOTE — The court did not explicitly rule on this issue. Rather they only implied what their ruling would be.

Referring to 271(f), the court found that supplying U.S. customers with products does not fall within the clause even if those customers plan to perform a method with the product that would be infringing if performed wholly within the U.S.

Settlement: In the wake of the December opinion, NTP & RIM reportedly reached a settlement that included $450 million for NTP.  The original settlement announcement was based on a 1/2 page term-sheet reportedly signed by the parties.  As would be expected, 50 square inches of paper turned out to create a whole new level of disagreement between the parties who have been working through court mediation to flesh out the agreement. 

In early June, the settlement issue came to a head and the parties staked out their positions on paper.  In a motion filed with the CAFC, RIM argues that the term-sheet was a settlement of the case, and, as such, the case is now moot.  RIM asked the CAFC to stay its decision on the for rehearing and remand the case to the district court to decide whether there has been a settlement.  On the other hand, NTP has argued that the term-sheet was not a settlement and that there was never a “meeting of the minds.” 

Now that the CAFC has remanded, the settlement issue will likely be resolved by the district court. (assuming the CAFC’s decision is not appealed to the Supreme Court).

Reexamination: In a parallel action, the patents at issue in the case (owned by NTP) are undergoing reexamination at the USPTO.  As occurs in almost all inter partes and director-ordered reexaminations, the patent office has issued a non-final rejection in each NTP case that it has examined.  Although this first rejection is a good sign for RIM, a final decision in the reexam will not be any time soon. (i.e., years).  NTP has the opportunity to file a response to the non-final rejection.  The PTO may then issue a final rejection, at which point NTP may ask for reconsideration, appeal to the PTO’s internal board (BPAI), and then appeal to the federal courts (i.e., the courts that have already determined that the patents are valid).

Patent Drafting In the Wake of Phillips v. AWH — Initial Thoughts

Claim Drafting Tips, Patent,

ScreenShot021In a few months, we will know more about how the en banc Phillips v. AWH decision will be used precedentially.  However, there are a few key points to take-home today. 

1) The game is no longer about careful claim drafting — now, you must carefully draft the entire patent document.* 

2) Be absolutely consistent between the claims and the specification.  A stray modifier of a claim term in the specification can easily lead to unintended consequences.

3) Every word in the claims will be read in the context of the specification.  Therefore the desired scope of every claim term must be fully supported in the specification.

4) Your initial reaction may be to make the ensure that the specification contains no limiting features. — That approach may not be the best.  Your patent will be worthless if it attempts to cover the entire world of technology.  Focused patents that stay within their bounds can be extremely powerful.

5) Give the courts 6–months to sort out some details. — But, set-up a docket reminder for January 15, 2006 for a review of all pending applications to (i) ensure that current claim terms are properly defined within the specification and (ii) whether any preemptive amendments are be in order.

Notes:

  • * Of course, you were doing this already.
  • University of Pennsylvania law professor Polk Wagner has been writing extensively about claim construction for the past several years.  His thoughtful comments and criticism of my tips are available here.
  • Profs Wagner and Joe Miller (Lewis & Clark) have proposed that patent drafters should “leave nothing to chance” and present a glossary of claim terms in the specification.  This “clear thinking” approach would be helpful down the road when you are trying to spot infringers as well. Comment?

 

Claim Construction — Dictionaries are Still OK.

Patent, Patent Cases 2005,

PatentlyOImage035North American Container v. Plastipak (Fed. Cir. 2005).

Although this case may be too close on the heels of Phillips v. AWH to serve as a predictor.*  The CAFC affirmed a trial court’s reliance on the Online Oxford English Dictionary when construing the disputed claim term “generally.”  Based on a mostly-proper claim construction by the district court, the CAFC affirmed-in-part a grant of summary judgment of noninfringement. 

* This case did not cite the recent Phillips case.

En Banc Federal Circuit Panel Changes The Law of Claim Construction

Patent, Patent Cases 2005, , ,

Phillips v. AWH Corp. (Fed. Cir. 2005) (en banc).

[PRINTABLE PDF VERSION] In a much anticipated opinion, the CAFC has refocused its approach to claim construction — moving away from extrinsic evidence offered by dictionaries and encyclopedias toward a more detailed analysis of the patent specification.  In the process, the majority en banc panel rejected the claim construction approach of Texas Digital Systems v. Telegenix (Fed. Cir. 2002) and its progeny.

In Texas Digital, the court noted that “dictionaries, encyclopedias and treatises are particularly useful resources to assist the court in determining the ordinary and customary meanings of claim terms.” . . .  Although the concern expressed by the court in Texas Digital was valid, the methodology it adopted placed too much reliance on extrinsic sources such as dictionaries, treatises, and encyclopedias and too little on intrinsic sources, in particular the specification and prosecution history. . . . That approach, in our view, improperly restricts the role of the specification in claim construction.

The court logically found that the problem of using dictionaries in claim construction is that they focus the inquiry on the abstract meaning of words rather than on the meaning of claim terms within the context of the patent.

Yet heavy reliance on the dictionary divorced from the intrinsic evidence risks transforming the meaning of the claim term to the artisan into the meaning of the term in the abstract, out of its particular context, which is the specification.

Interpreting 35 U.S.C. 112, the CAFC determined that the statute requires that the specification inform the claim construction.

In light of the statutory directive that the inventor provide a “full” and “exact” description of the claimed invention, the specification necessarily informs the proper construction of the claims.

The majority acknowledged that this decision does not fully clarify claim construction jurisprudence.  Leaving the real analysis to be done on a case-by-case basis.

In the end, there will still remain some cases in which it will be hard to determine whether a person of skill in the art would understand the embodiments to define the outer limits of the claim term or merely to be exemplary in nature. While that task may present difficulties in some cases, we nonetheless believe that attempting to resolve that problem in the context of the particular patent is likely to capture the scope of the actual invention more accurately than either strictly limiting the scope of the claims to the embodiments disclosed in the specification or divorcing the claim language from the specification.

In addition to the majority opinion, a dissent and a dissent-in-part were filed. In dissent, Judges Mayer and Newman continued their longstanding vocal objections to the rule that claim construction is a “matter of law” that should be decided de novo.

Now more than ever I am convinced of the futility, indeed the absurdity, of this court’s persistence in adhering to the falsehood that claim construction is a matter of law devoid of any factual component. Because any attempt to fashion a coherent standard under this regime is pointless, as illustrated by our many failed attempts to do so, I dissent.

Bottom Line:

  • Careful patent drafting is now more important than ever.  Under Phillips, the specification “necessarily” informs proper claim construction.  Whether a patent drafter acts intentionally or not, the specification is now likely to shape the meaning of the claims.  Best make it intentional.

  • Textual analysis will be key: for example, because claims referred to “steel baffles,” a court may draw an inference that, in general, baffles can be made a non-steel materials.

  • District court claim construction decisions will continue to be overturned on a regular basis.

Links:

BlackBerry Patent Lawsuit Rises Again; NTP Responds to Patent Office Rejections

Patent, Patent Cases 2005,

PatentlyOImage009NTP v. Research-In-Motion (BlackBerry lawsuit).

In December 2004, the Federal Circuit released its opinion that pushed against the territorial bounds of patent law.  In that opinion, the CAFC found that U.S. patent law covers instances where infringing elements are located abroad — so long as the “control and beneficial use” of the infringing system is within U.S. territory.  Soon thereafter, RIM filed a motion for rehearing en banc that is still pending. 

The CAFC’s decision, strongly in favor of NTP, paved the way for a March 2005 “settlement” that reportedly included $450 million for NTP.  The original settlement announcement was based on a 1/2 page term-sheet reportedly signed by the parties.  As would be expected, 50 square inches of paper turned out to create a whole new level of disagreement between the parties who have been working through court mediation to flesh out the agreement.

Settlement Breakdown: In early June, the settlement issue came to a head and the parties staked out their positions on paper.  In a motion filed with the CAFC, RIM argues that the term-sheet was a settlement of the case, and, as such, the case is now moot.  RIM asked the CAFC to stay its decision on the for rehearing and remand the case to the district court to decide whether there has been a settlement.  On the other hand, NTP has argued that the term-sheet was not a settlement and that there was never a “meeting of the minds.”  The filed motions are attached below:

Reexamination: In a parallel action, the patents at issue in the case (owned by NTP) are undergoing reexamination at the USPTO.  As occurs in almost all inter partes and director-ordered reexaminations, the patent office has issued a non-final rejection in each NTP case that it has examined.  Although this first rejection is a good sign for RIM, a final decision in the reexam will not be any time soon. (i.e., will not be for several years).  NTP has the opportunity to file a response to the non-final rejection.  The PTO may then issue a final rejection, at which point NTP may ask for reconsideration, appeal to the PTO’s internal board (BPAI), and then appeal to the federal courts (i.e., the courts that have already determined that the patents are valid).

This week, NTP filed its first response to a rejection in the reexamination for Patent No. 5,631,946. In the response, NTP made no amendments to existing claims, but did add over 100 new claims — including many multiple dependent claims.  The filed papers are attached below (THESE ARE BIG FILES):

Bottom Line: Unless the parties come to another settlement agreement, this case will continue for several more years.

On Remand: Knorr-Bremse District Court Finds Willfulness Even Without Adverse Inference Rule

Patent,

KnorrBremseBrakeKnorr-Bremse v. Dana Corp. (E.D. Va. 2005).

In a 2004 landmark decision, an en banc panel of Federal Circuit judges found that “no adverse inference that an opinion of counsel was or would have been unfavorable flows from an alleged infringer’s failure to obtain or produce an exculpatory opinion of counsel.”Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., et al., 383 F.3d 1337 (Fed. Cir. 2004).  Because the adverse inference comprised a portion of the district court’s decision, the CAFC vacated the original finding.

On remand, Judge T.S. Ellis, III in the Eastern District of Virginia took a new look at the issues of treble damages for willful infringement and attorney’s fees under the “exceptional case” standard.  In doing so, the court found that even absent the prohibited adverse inference, there were sufficient factors supporting the finding of willful inference.

[T]he totality of the circumstances presented here — and wholly without the now-proscribed adverse inference — still compels the conclusion that defendants’ use of the Mark II air disk brake, and indeed their continued use of the Mark II air disk brake throughout the instant litigation, amounted to willful infringement of the ‘445 patent.

Regarding attorney fees, the court noted that “an award of attorney’s feed does not automatically follow from a finding of willful infringement.”  In this case, the court determined that Knorr had “failed to establish by clear and convincing evidence that defendants engaged in any bad faith litigation or inequitable conduct” and the defendant’s willful infringement was “not so egregious . . . as to justify an award of attorney’s fees.”

SmithKline Beecham v. Apotex: A Conclusion?

Patent, Patent Cases 2005,

SmithKline Beecham Corp. (SKB) v. Apotex Corp. (Fed. Cir. 2005).

Case History:

  • 2003.03.03 Judge Richard Posner, sitting by designation, found the patent valid but either (i) not infringed or (ii) if infringed, the infringement excused under Posner’s newly created equitable defense.
  • 2004.04.23 CAFC (RADER, J.) affirms, but on other grounds — finding that the drug (PHC hemihydrate) had been in public use during clinical trials.  Specifically, the court found that the clinical trials tested only the safety and efficacy of PHC hemihydrate as an anti-depressant and did not qualify as an experimental use. In concurrence Judge Gajarsa derided the Majority’s approach, saying that it has created "unfortunate precedent that will complicate future considerations of the experimental use doctrine."
  • 2005.04.08 Without opinion, en banc CAFC vacates the experimental use portion of the original panel decision.  Judge Newman’s dissent from the order declining to hear the case en banc was essentially a written as a dissent from the new panel decision issued the same day.
  • 2005.04.08 The original CAFC panel issues a new opinion dropping the experimental use issue and basing the decision on “inherent anticipation.”
  • 2005.06.15 CAFC denies a petition for an en banc rehearing of the new panel decision, but does not issue any opinion.

Links:

  • File Attachment: SKB Apotex en banc order (49 KB)
  • File Attachment: SKB Apotex Panel Decision (230 KB)
  • SKB Apotex Original Panel Decision (From Georgetown Law Center)
  • File Attachment: SKB Apotex District Court.pdf (2443 KB)
  • Discussion of the original panel opinion: Part I, Part II, Part III, and part IV.
  • Discussion of the en banc order and new appellate opinion: Part V, Part VI.
  • Howard Bashman provides an excellent commentary on the case via one of his readers.

    • Pain for Purdue Pharma: CAFC affirms inequitable conduct finding

    Patent, Patent Cases 2005,

    Surprisingly DiscoveredPurdue Pharma L.P. v. Endo Pharms. Inc. (Fed. Cir. 2005).

    by Marcus Thymian

    The Federal Circuit affirmed a finding by the District Court for the Southern District of New York that Purdue’s Oxycontin patents-in-suit are unenforceable due to inequitable conduct that occurred during prosecution of the patents.  The decision, if it withstands further appeal efforts, would open the door to generic equivalents of Purdue’s popular controlled-release pain treatment medication.  According to various news stories on the Federal Circuit ruling, Purdue has indicated it plans to request en banc review of the 3-judge panel decision by the full 12-judge Federal Circuit. 

    The inequitable conduct determination was based primarily on variations of the following Purdue statement:

      It has now been surprising discovered that the presently claimed controlled release oxycodone formulations acceptably control pain over a substantially narrower, approximately four-fold [range] (10 to 40 mg every 12 hours — around the clock dosing) in approximately 90% of patients.  This is in sharp contrast to the approximately eight-fold range required for approximately 90% of patients for opioid analgesics in general.

    The district court found that Purdue repeatedly referred to this “surprising discovery” during prosecution, but did not inform the PTO that the “discovery” was based on “insight” without “scientific proof.”  The Federal Circuit decided that the district court did not error in finding the two elements of inequitable conduct: materiality and intent.

    Materiality was based on the district court’s examination of the entire record.   Purdue had repeatedly argued that the four-fold dosage range distinguished the invention over prior art, according to the district court.  The district court found that Purdue’s use of language that “implied, if not suggested” experimental results, when in reality the “discovery” was based solely on inventor “insight,” constituted withholding material information from the PTO.

    Intent was inferred from the context in which Purdue’s statements were made.  Purdue’s “carefully chosen language suggests that it had obtained clinical results, and that suggestion was left unclarified by any disclosure that discovery of the four-fold dosage range for oxycodone was based on insight.”  The Federal Circuit agreed that Purdue had engaged in a “clear pattern of misdirection throughout prosecution of Purdue’s controlled release oxycodone patents.”

    This case is an interesting exercise in standards of review and burdens of proof and persuasion.  Inequitable conduct requires a showing by “clear and convincing evidence,” which is quite high (patent infringement requires only a showing by a “preponderance of the evidence”).  The Federal Circuit conducted a deferential review of the district court’s inequitable conduct ruling.  This heightened standard involves reviewing the materiality and intent factual findings for “clear error” and reviewing the ultimate inequitable conduct conclusion for an “abuse of discretion.”  So, while an initial inequitable conduct showing is a tough burden, if a district court’s ruling is well supported, it may be relatively tough to overturn. 

    Marcus Thymian is a partner at McDonnell Boehnen Hulbert & Berghoff LLP in Chicago.  Concentrating primarily on the electrical, software, and mechanical arts, he is experienced in planning, creating, enforcing, and defending against patent portfolios. [Marcus Thymian’s Bio]

    [Copyright 2005 – Originally published at www.patentlyo.com]

    Government Opposes Supreme Court Review in Festo Remix

    Patent, Patent Cases 2005,

    CompressorHoneywellHoneywell v. Hamilton Sundstrand (on petition for certiorari).

    Following Festo, some attorneys stopped “amending” claims. Rather, they would cancel claims and add new ones with additional limitations.  In 2004, an en banc Federal Circuit panel held that such rewriting would still create a presumption of prosecution history estoppel that would bar use of the doctrine of equivalents.

    [R]ewriting of dependent claims into independent form coupled with the cancellation of the original independent claims creates a presumption of prosecution history estoppel.,

    Honeywell has petitioned for a writ of certiorari at the Supreme Court, asking the court to determine whether the CAFC was correct in its interpretation of Festo.

    Upon invitation, the Solicitor General has filed a brief for the United States as an amicus curiae.  In the brief, the Government opposes the petition, arguing that the CAFC “correctly applied Festo to the facts of this case.” 

    Links:

    PATENT REFORM: Preventing Inequitable Results Under Knorr-Bremse Willfulness

    Patent,

    This post is part of our continuing series discussing a US House of Representatives working draft of patent legislation, by Marcus Thymian, Jennifer Swartz, and Dennis Crouch.

    In the landmark decision of Knorr-Bremse v. Dana Corp., an en banc panel of Federal Circuit judges recently held that no adverse inference is to be drawn from the absence of an opinion of counsel in willfulness determinations.  This ruling overruled the Court’s earlier precedent in Quantum and was a dramatic change.  The proposed legislation attempts to balance this swing in jurisprudence by adding a section on willfulness that incorporates the Knorr-Bremse holding while carving out broad exceptions.  

    The proposed changes repeat the Knorr-Bremse holding that “[t]he absence of an opinion of counsel shall not create an inference that the infringement was willful.”  Further, the legislation makes mere knowledge of a patent or its contents insufficient for a finding of willfulness against the defendant.

    The legislation diverges from Knorr-Bremse by listing “other factors” that may be considered in increasing damages against an infringer.  Included as one such factor is intentional copying by a defendant who has specific knowledge he is infringing patented subject matter.  However, unlike Knorr-Bremse, the defendant must rebut proof of specific knowledge by proffering evidence of an “informed good faith belief” that the patent is invalid, not infringed, or unenforceable (i.e. an opinion).  Thus, while no adverse inference of willfulness will be drawn in the absence of an opinion under the proposed changes, the defendant will still have the onus to provide an opinion in cases in which the plaintiff proves the defendant’s specific knowledge of infringement.

    Finally, the legislation also proposes adding to the statute for increased damages the “factor” of prior litigation between the parties for substantially similar infringement.  Thus, in a later action between parties for colorably similar infringing conduct, willfulness may be based on the knowledge the infringer has maintained since the earlier litigation.< ?xml:namespace prefix ="" o />

    Antitrust: FTC confronts decision that liberally allows patent settlements

    Patent, Patent Cases 2005

    PatentlyOImage030Schering-Plough v. FTC (11th Cir. 2005) (on petition for en banc review).

    In a March 8 decision, the 11th Circuit Court of Appeals set aside an FTC order that barred Schering-Plough from settling an infringement suit with generic makers over the patented blood pressure drug K-Dur.  The FTC had concluded that the settlement was an “unreasonable restraint of trade.”  The 11th Circuit disagreed, finding that because the suit involved patented products, neither a per se nor a rule of reason analysis would be appropriate.

    By their nature, patents create an environment of exclusion, and consequently, cripple competition. The anticompetitive effect is already present. “What is required here is an analysis of the extent to which antitrust liability might undermine the encouragement of innovation and disclosure, or the extent to which the patent laws prevent antitrust liability for such exclusionary effects.” Therefore, in line with Valley Drug, we think the proper analysis of antitrust liability requires an examination of: (1) the scope of the exclusionary potential of the patent; (2) the extent to which the agreements exceed that scope; and (3) the resulting anticompetitive effects.

    Applying their rule to the facts, the Court concluded that payment from a patent holder to a generic competitor cannot be the sole basis of a violation of antitrust law. Accordingly, the court SET ASIDE the decision of the Federal Trade Commission and VACATED its cease and desist order.

    Petition en banc: Now, the FTC has filed a petition for rehearing of the case en banc. In the petition, the Commission raises three primary contentions:

    • Not every patent infringement litigation settlement should be shielded from antitrust scrutiny, so long as entry of the allegedly infringing product is not precluded at any time subsequent to expiration of the patent;
    • That the decision subverts the goals of Hatch-Waxman; and
    • That the decision used an improper standard review of critical disputed facts.

    If this petition for rehearing fails, the Government is expected to appeal to the Supreme Court.

    Links:

    Full Panel Denies Rehearing in Fosamax Patent Case

    Patent, Patent Cases 2005,

    Merck & Co. v. Teva Pharmaceuticals (Fed. Cir. 2005) (on petition for rehearing).

    Merck & Co. owns the patent on the best-selling drug Fosamax.  Teva, a generic manufacturer lost an infringement case at the district court after the court found the patent valid and infringed.  In January 2005, the Court of Appeals for the Federal Circuit reversed the district court — vacating the lower court’s finding of validity and infringement. 

    Merck, with the amicus support of PhRMA, subsequently filed a petition for rehearing en banc.  The CAFC has denied that the request, thus maintaining the panel decision. 

    DISSENT: In a two-page dissent, Judge Lourie, supported by Chief Judge Michel and Judge Newman, argued that the panel decision erroneously concluded that commercial success was not probative to obviousness in this case and by linking commercial success with the failure of others.

    Commercial success is a fact question, and, once it is established, as found here by the trial court, the only other question is whether the success is attributable to the claimed invention (“nexus”), rather than to other factors such as market power, advertising, demand for all products of a given type, a rising economy that “lifts all boats,” etc. It is not negatived by any inability of others to test various formulations because of the existence of another patent. Success is success. The panel’s rule is especially unsound in the context of an improvement patent, as here, because it holds in effect that commercial success for an improvement is irrelevant when a prior patent dominates the basic invention.

    Commercial success is also independent of any “failure of others,” as that is another, separate secondary consideration.

    Respectfully, the full court should have reheard the appeal to eliminate the confusion in the law that the panel opinion creates.

    Interestingly, Judge Rader dissented in the three-judge panel opinion, but now agrees with the majority that the case should not be reheard.

    The case will be remanded to the district court on April 28, 2005.

    A REUTERS article indicates that Merck & Co. plans to petition the Supreme Court to hear an appeal from the CAFC decision.

    Links:

    SmithKline Beecham v. Apotex part VI

    Patent, Patent Cases 2005,

    PatentlyOImage017In the CAFC’s April 8 decision of SmithKline Beecham v. Apotex, the en banc panel vacated the original appellate court’s opinion relating to the experimental use exception to the public use bar of 102(b). The lower court had, somewhat controversially, found that experimental use may only be used to negate a 102(b) public use if the purpose of the experimental use was to assist in designing or testing of a claimed feature. Thus, because the “clinical trials tested only the safety and efficacy of PHC hemihydrate as an anti-depressant,” the original appellate panel found that those trials were not an experimental use of the chemical compound as claimed in claim 1.

    Rather than offering any opinion, the CAFC en banc decision simply vacated the court’s decision.  At the same time that the en banc order was released, the three-member appellate panel released their rewritten opinion that avoided the experimental use issue entirely by finding an alternative grounds for finding the patent invalid.  Specifically, the court (J. Rader) found that the patent was “inherently anticipated.”

    What makes the case even more odd is that, Judge Newman’s dissent from the order declining to hear the case en banc was essentially a written as a dissent from the new Rader decision.  Judge Newman criticized the new opinion’s expansion of the doctrine of inherent anticipation, arguing that the “breadth of the panel’s theory of inherent anticipation contravenes long-established precedent.”  According to the dissent, if a compound’s existence “is not reasonably known to persons of skill in the field, its later discovery cannot be retrospectively ‘inherently anticipated.’”

     According to the new decision, however, inherent anticipation does not require a person of ordinary skill in the art to recognize the inherent disclosure in the prior art at the time the prior art is created.  Thus, it appears that a defendant, in order to invalidate a patent, must simply show that, more likely than not, a natural result flowing from an operation taught in the prior art would result in the claimed product.

    In this case, the recreated panel found that the prior art was sufficient because it disclosed the manufacture of PHC anhydrate that naturally results in the production of the claimed compound (PHC hemihydrate).  However, the court stated that a mere possibility of inherency is not sufficient for anticipation. (Citing Schering Corp.).

    In concurrence, Judge Gajarsa found that the manufacture of PHC hemihydrate could be “a natural physical process” occurring “under normal climactic conditions and with no human intervention,” and thus found that it was an unpatentable process of nature.

    In short, patent claims drawn broadly enough to encompass products that spread, appear, and “reproduce” through natural processes cover subject matter unpatentable under Section 101–and are therefore invalid.

    Gajarsa’s concurrence is a foreshadow to the next few years where patentable subject matter will become a controversial area once again.

    Links: