Board Should Fix Obvious Claim Errors in Order to Make a Decision on the Merits

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In Fitbit, Inc. v. Valencell, Inc., [2019-1048] (July 8, 2020), the Federal Circuit vacated the PTAB decision that Claims 3-5 of U.S. Patent No. 8,923,941 were not unpatentable on a method of generating data output containing physiological and motion-related information.

The Board held that claim 3 is not unpatentable, based solely on the Board’s rejection of Fitbit’s proposed construction of the term “application-specific interface (API).” The Board did not review patentability of claim 3 on the asserted grounds of obviousness.

The Federal Circuit agreed with the Board’ s construction, rejecting Fitbit’s broader construction. The Federal Circuit observed however that the difference between an application-specific interface and an application programming interface may have no significance.

The Board did not review the patentability of claim 3, as construed, on the asserted grounds of obviousness. The Board held that, by rejecting Fitbit’s position on the meaning of “application-specific interface (API),” the patentability inquiry ended, and by Final Written Decision the Board held claim 3 not unpatentable.

The Federal Circuit held that the Board erred in holding that since it did not adopt Fitbit’s claim construction, that decided the question of patentability. It was improper to hold claim 3 “not unpatentable” by Final Written Decision, without determination of the asserted grounds of obviousness.

As to claims 4 and 5, the Board held claims 4 and 5 not unpatentable in its Final Written Decision, on the ground that the Board could not determine the meaning of the claims because the term “the application” lacked antecedent basis. The Board did not apply the cited prior art references, on which there were evidence and argument, instead stating that the meaning of the claims were “speculative.”

Both parties agreed that the lack of antecedent basis arose from an error in renumbering the claims, which the Board refused to correct. The Federal Circuit said that although the Board states that the intended meaning of the claims is “subject to reasonable debate,” it perceived no debate. Rather, the parties to this proceeding agree as to the error and its correction. The Board erred in declining to accept the parties’ uniform position and correct the error that claim 4 depend from claim 3. With this correction, the rejection of claims 4 and 5 for absence of antecedent basis for “the application” dis-appears.

The Federal Circuit concluded that the Agency’s treatment of this error as the basis of a Final Written Decision of patentability is not a reasonable resolution, and does not comport with the Agency’s assignment to resolve patentability issues.

The Federal Circuit has previously pressed the PTAB to reach a decision even where the claims were difficult to construe. Here the Court went further to require the Board to fix obvious defects in the claims rather than avoid reaching a decision on the merits.

42 U.S.C. § 262(l)(8) Simply Requires 180 Day Notice before Sale of a Biosimilar Product

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In Genentech, Inc. v. Immunex Rhode Island Corp., [2019-2155] (July 6, 2020), the Federal Circuit affirmed the denial of Genentech’s motion for a TRO based upon Immunex Rhode Island Corporation’s and Amgen Inc.’s (collectively, Amgen) alleged failure to comply with the notice requirement of 42 U.S.C. § 262(l)(8)(A).

On October 6, 2017, Amgen sent a letter pursuant to 42 U.S.C. § 262(l)(8)(A) notifying Genentech of its intent to commercially market Mvasi — a biosimilar version of Avastin — starting no earlier than 180 days from the date of the letter. In August 2018, after two prior supplements, Amgen filed a third sup-plement to its Mvasi application to add a manufacturing facility and a fourth supplement to change its drug label. By July 8, 2019, Amgen decided it would commercially launch Mvasi, intending to market it immediately.

Genentech filed two motions i seeking to preclude Amgen from commercially marketing Mvasi until such time as Amgen provides notice of its intent to commercially market such product pursuant to 42 U.S.C. § 262(l)(8) and 180 days have elapsed. Genentech argued that Amgen’s third and fourth supplements resulted in new and distinct applications that require new notices under Section 262(l)(8)(A). The district court denied both motions, reasoning that Amgen’s October 2017 commercial marketing notice for Mvasi satisfied Section 262(l)(8)(A)’s notice requirements, and Genentech appealed.

The Federal Circuit said that the statute makes clear that the biosimilar applicant must provide notice to the reference product sponsor prior to commercially marketing the biological product. Section 262(l)(8)(A) expressly requires prior notice regarding commercial marketing of the “biological product,” the definition of which makes no reference to licensing under Section 262(k). Section 262(l)(8)(A) relates to timing. The Federal Circuit said this interpretation is consistent with the Supreme Court’s decision in Sandoz Inc. v. Amgen Inc., 137 S. Ct. 1664 (2017).

The Federal Circuit concluded that Amgen’s October 6, 2017, letter, which notified Genentech of Amgen’s intent to commercially market Mvasi at least 180 days before its July 2019 launch, satisfied Section 262(l)(8)(A), and affirmed the district court.

Past History is as Relevant as Current Conduct in Attorneys’ Fee Award

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In Electronic Communication Technologies, LLC v. SHOPPERSCHOICE.COM, LLC, [2019-2087] (July 1, 2020) the Federal Circuit vacated and remanded the district court’s denial of an award of defendant’s attorneys’ fees.

After its motion for judgment on the pleadings that the asserted claim of U.S. Patent No. 9,373,261 was not patent eligible, defendant filed a motion for an award of its attorneys fees. In “considering the totality of the circumstances,” the District Court determined the case was not exceptional, citing the Lanham Act, 15 U.S.C. § 1117), and denied the motion.

The Federal Circuit agreed with defendant that the district court abused its discretion in weighing relevant factors, and by applying the incorrect attorney fee statute. The Federal Circuit held that the District Court clearly erred by failing to address ECT’s manner of litigation and the broader context of ECT’s lawsuit against ShoppersChoice. The Federal Circuit pointed out that there was evidence that ECT sent standardized demand letters and filed repeat patent infringement actions to obtain low-value “license fees” and forcing settlements, and that ECT, under its former name Eclipse, filed lawsuits against at least 150 defendants, alleging infringement of claims in the ’261 patent and in other patents in the ’261 patent’s family. ECT’s demand for a low-value settlement—ranging from $15,000 to $30,000—and subsequent steps—such as failure to proceed in litigation past claim construction hearings—indicates the use of litigation to achieve a quick settlement with no intention of testing the strength of the patent or its allegations of infringement. The Federal Circuit also pointed to a prior California district court decision awarding attorneys fees against ECT, for its in terrorem enforcement tactics, and the fact that the principals of ECT where also associated with “one of the most prolific” non-practicing entity plaintiffs in the United States.

The Federal Circuit complained that there was no mention of the manner in which ECT litigated the case or its broader litigation conduct, saying “[s]Such conduct is a relevant consideration.” While a district court need not reveal its assessment of every consideration of § 285 motions, it must actually assess the totality of the circumstances, and by not addressing the adequate evidence of an abusive pattern of ECT’s litigation, the District Court failed to conduct an adequate inquiry and so abused its discretion. The Federal Circuit instructed that a pattern of litigation abuses characterized by the repeated filing of patent infringement actions for the sole purpose of forcing settlements, with no intention of testing the merits of one’s claims, is relevant to a district court’s exceptional case determination under § 285.

The Federal Circuit also said that the district court failed to sufficiently address the objective weakness of Claim 11.

The Federal Circuit vacated and remanded the case for the district court to consider, in a manner consistent with its opinion, ECT’s manner of litigation and the objective unreasonableness of ECT’s infringement claims, and further reference the correct attorneys’ fees provision (35 U.S.C. § 285), rather than the parallel statute for trademark cases (15 U.S.C. § 1117).

Common Sense Dooms Airplane Bathroom Patents

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In B/E Aerospace, Inc. v. C&D Zodiac, Inc., [2019-1935, 2019-1936] (June 26, 2020), the Federal Circuit affirmed the PTAB’s determination that the challenged claims of U.S. Patent Nos. 9,073,641 and 9,440,742 relating to aircraft lavatories, were not valid for obviousness.

The Federal Circuit tipped its hand early in the opinion, declaring “The technology involved in this appeal is simple” — not a good sign in an obviousness case.

The invention related to maximizing the space in an aircraft lavatory while accommodating passenger seats, by providing recesses for the seat back and for the seat base.

The Federal Circuit said there was no dispute that Betts’s contoured wall design meets the “first recess” claim limitation. Nor do the parties dispute that a skilled artisan would have been motivated to modify the Admitted Prior Art with Betts’s contoured wall because skilled artisans were interested in maximizing space in airplane cabins. The Federal Circuit agreed with the Board’s conclusion that the challenged claims would have been obvious because modifying the Admitted Prior Art/Betts combination to include a second recess for the seat base was nothing more than the predictable application of known technology: a person of skill in the art would have applied a variation of the first recess and would have seen the benefit of doing so.

The Federal Circuit also affirmed the Board’s conclusion that the challenged claims would have been obvious because “it would have been a matter of common sense” to incorporate a second recess in the Admitted Prior Art/Betts combination.

While B/E asserted that the Board legally erred by relying on “an unsupported assertion of common sense” to “fill a hole in the evidence formed by a missing limitation in the prior art,” the Federal Circuit disagreed:

In KSR, the Supreme Court opined that common sense serves a critical   role in determining obviousness. 550 U.S. at 421. As the Court explained, common sense teaches that familiar items may have obvious uses beyond their primary purposes, and in many cases a person of ordinary skill will be able to fit the teachings of multiple patents together like pieces of a puzzle.

  

Federal Circuit explains when you can ignore the words before the “:”

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In Shoes by Firebug LLC v. Stride Rite Children’s Group, [2019-1622, 2019-1623] (June 25, 2020), the Federal Circuit affirmed the PTAB’s determination that the challenged claims of U.S. Patent Nos. 8,992,038 and 9,301,574, directed to illumination systems for footwear, were obvious.

The most interesting part of the case is one that made no difference to the outcome: when a preamble limits a claim and when it doesn’t. A preamble limits a claim if it recites essential structure or steps, or if it is necessary to give life, meaning, and vitality to the claim. Conversely, a preamble is not limiting where a patentee defines a structurally complete invention in the claim body and uses the preamble only to state a purpose or intended use for the invention.

The body of claim 1 of the ’038 patent recites a structurally complete invention, and therefore the preamble’s recitation of an “internally illuminated textile footwear” is merely an intended purpose that does not limit the claims. A preamble is not limiting ‘where a patentee defines a structurally complete invention in the claim body and uses the preamble only to state a purpose or intended use for the invention. Unlike claim 1 of the ’038 patent, claim 1 of the ’574 patent does not reintroduce “footwear” in the body of the claim but instead relies on the instance of “footwear” introduced in the preamble for “antecedent basis.”

But it makes no difference: Although the Board did not construe the preamble as limiting, the prior “suggests using a woven, porous material in a light diffusing, internally illuminated part of footwear,” making the claims of both patents obvious.

Small differences in working can make a big difference in interpretation; decide whether you want the preamble to be a limitation and word the application and specification accodingly.

Acknowledging Juneteenth

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While there were certainly inventors who were slaves, the patent system was unavailable to them. In an interesting case from 1857, a slave named Ned invented a “double plow and scraper,” which enabled a farmer to plow and scrape both sides of a row of cotton simultaneously. Ned was “owned” by Oscar J.E. Stuart, a lawyer and planter from Mississippi. Stuart tried to patent the invention first in Ned’s name and then in his own, but was denied by the Commissioner of Patents because Ned, as a slave, could not execute the required oath, and neither could Stuart, because he was not the inventor. Stuart, apparently having no sense or irony, complained that it would violate “equal protection” if slave owners could not patent the inventions of their slaves. Read more about this in Frye, Invention of a Slave, 68 Syracuse Law Review 181 (2018)

According to the Report of the Commissioner of Patents for the Year 1857, the invention of a slave could not be patented because a slave inventor could not take the patent oath, and in any event could not receive, own, or transfer a property right. This latter point was actually consistent with the laws in some states (e.g., Louisiana) that prohibited slaves from owner property, even if they could obtain it.

The Confederate States patent laws express permitted the owner to apply to patent the invention of slave, although it is not clear whether any slave owner took advantage of this during the short tenure of the Confederate States Patent Office. This provision may have been initiated by Confederate President’s Jefferson Davis, who, with his older brother Joseph Emory Davis, previously unsuccessfully attempted to get a U.S. patent on an improved propeller invented by Benjamin Thornton Montgomery, then a slave owned by Joseph.

155 years ago today, on June 19th, 1865, Major General Gordon Granger, landed at Galveston, Texas, and with his General Order 3, completed the elimination of slavery in the United States begun by Republican President Abraham Lincoln’s September 22, 1862, Emancipation Proclamation. The inability to get a patent seems trivial in comparison with the injustice of slavery; but this embarrassment of the patent system ended 155 years today.

The Federal Circuit extends the Kessler Doctrine to Dismissals with Prejudice

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In In re Personalweb Technologies LLC, [2019-1918] (June 17, 2020), the Federal Circuit affirmed the dismissal of Personalweb’s suits against Amazon’s customers, because they were barred as a result of a prior lawsuit brought by PersonalWeb against Amazon, which was dismissed with prejudice.

The district court held that claim preclusion barred PersonalWeb’s claims regarding acts of infringement occurring prior to the final judgment in the Amazon action, and that the Kessler Doctrine, first adopted by the Supreme Court in Kessler v. Eldred, 206 U.S. 285 (1907), barred PersonalWeb’s claims of infringement after the final judgment in the Amazon action.

The Kessler Doctrine resulted from the Supreme Court’s decision in Kessler v. Eldred, 206 U.S. 285 (1907), to fill the gap left by claim preclusion and issue preclusion. Claim preclusion does not apply to acts of alleged infringement that occur after a final judgment in an earlier suit. Issue preclusion does not apply unless there is (1) a final judgment on the merits, (2) privity of parties, and (3) identity of issues. When neither claim preclusion nor issue preclusion apply, the Kessler doctrine may protect an adjudged non-infringer from repeated harassment for continuing its business.

The Kessler Doctrine had previously only been applied to issues that were actually litigated, but the Federal Circuit expanded the doctrine to include an earlier dismissal with prejudice, which it termed an abandonment of PersonalWeb’s claims without reservation and therefore stands as an adjudication that Amazon was not liable for infringement: “The scope of that right is not limited to cases involving a finding of non-infringement that was necessary to the resolution of an earlier lawsuit, but extends to protect any products as to which the manufacturer established a right not to be sued for infringement.”

A Clear Explanation of Reasons Needed for a Fee Award

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In Munchkin, Inc. v. Luv N’ Care, Ltd., [2019-1454] (June 8 2020), the Federal Circuit vacated the award of attorneys fees under 35 U.S.C. § 285 and 15 U.S.C. § 1117(a) after Munchin’s dismissal of its patent claims after losing an IPR, and its voluntary dismissal of its non-patent claims.

The Federal Circuit said it generally gives great deference to a district court’s exceptional-case determination, a district court nonetheless must provide a concise but clear explanation of its reasons for the fee award. However when the bases of an attorney’s fee motion rest on issues that had not been meaningfully considered by the district court, a fuller explanation of the court’s assessment of a litigant’s position may well be needed when a district court focuses on a freshly considered issue than one that has already been fully litigated.

The Federal Circuit said that none of these issues was fully adjudicated before the court on the merits, and given the limited arguments Luv N’ Care made in support of its fee motion, it held that the district court abused its discretion in granting the motion and reversed the exceptional-case determination.

It’s Not Always Nice to Share

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Joint ownership of a patent creates complications for the joint owners. Pursuant to 35 USC 262 “each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners.” This means that each of the joint owners can use the patent or license the patent to someone else, and not have to ask the other joint owners, and not have to share any of the proceed with the other joint owners. A consequence of this statute is that the particular percentage of ownership is irrelevant: the joint owner of 1% of a patent has the same rights as the joint owner of 99% of the patent.

A second problem with joint ownership is splitting the costs of obtaining and maintaining the patent. If one or more of the joint owners doesn’t want to contribute to the costs, the remaining co-owners have to pick up the slack. Even if everyone pays their fair share, what happens if there is disagreement over strategy.

Finally, when it comes time to enforce the patent, the Court of Appeals for the Federal Circuit requires that all of the joint owners participate in the law suit. Moreover the Federal Circuit has indicated that you cannot force joint owners to join a suit.

There are at least two solutions to the problems of shared patent ownership. The first solution is to eliminate shared ownership by forming a entity, such as a limited liability company, to hold all of the patent rights. This allows all of the problems of joint ownership to be resolved by the operating agreement of the entity.

The second solution is to have the joint owners sign an agreement that they will share the costs and benefits of the patent. This solves the problems of joint ownership though a negotiated agreement. Key provisions of such an agreement include:

  • A mechanism for making decisions about prosecution of the patent.
  • A mechanism for making decisions about enforcement of the patent.
  • An apportionment of costs of obtaining, maintaining, licensing, and enforcing patents.
  • A mechanism for addressing joint owners who do not pay their share of costs.
  • An apportionment of revenue from using, licensing, and enforcing the patent.
  • A duty to join in infringement actions.

IPR Attorneys’ Fees are not Awardable under Section 285

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In Amneal Pharmaceuticals LLC v. Almirall, LLC [2020-1106] (June 4, 2020), the Federal Circuit denied Almirall’s motion for attorneys fees and costs after Amneal dismissed its appeal from an adverse ruling in an IPR, including fees for conducting the IPR.

The Federal Circuit said that generally, our legal system adheres to the “American Rule” under which “each party in a lawsuit ordinarily shall bear its own attorney’s fees.” However, Section 285 changes this.

The Federal Circuit said that regardless of whether it can award fees for work on appeal from a decision in an IPR, Section 285 does not authorize this court to award fees for work that was done before the agency on appeal from an IPR.