The Purpose of a Motion to Dismiss is to Test the Sufficiency of the Complaint, not to Decide the Merits

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In Nalco Co. v. Chem-Mod, LLC, [2017-1036] (February 27, 2018), the Federal Circuit reversed the district court’s dismissal of Nalco’s infringement claims, and remanded for further proceedings.

Nalco asserted U.S. Patent No. 6,808,692 on a method for the removal of elemental mercury, a toxic pollutant, from the flue gas created by combustion in coal-fired power plants. Among other things, the claims require “injecting a bromide compound that is a thermolabile
molecular bromine precursor into said flue gas.” The district court granted the motion to dismiss on direct infringement because “the Chem-Mod Solution differs from the ’692 Patent in both the location and method of application.”

The Federal Circuit, however, agreed with Nalco, that the fourth amended complaint plausibly alleges direct infringement, noting Nalco is entitled to all inferences in its favor on its theory that, when treated coal is injected into the furnace, this constitutes the required injection of the bromine precursor.  The Federal Circuit further noted taht But The Federal Circuit found that defendants’ arguments boil down to objections to Nalco’s proposed claim construction for “flue gas,” a dispute not suitable for resolution on a motion to dismiss.

The Federal Circuit noted that the disputes between the parties hinge on where “flue gas” may be located within the power plant and what limitations are appropriate on where “injecting” may occur. It is not appropriate to resolve these disputes, or to determine whether the method claimed in the ’692 patent should be confined to the preferred embodiment, on a Rule 12(b)(6) motion, without the benefit of claim construction.  The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits.

The Federal Circuit also reversed the dismissal of the joint infringement claim, noting that direct infringement under § 271(a) occurs where all
steps of a claimed method are performed by or attributable to a single entity.  The key inquiry where more than one actor is involved in practicing the steps is whether “the acts of one are attributable to the
other such that a single entity is responsible for the infringement.  The Federal Circuit noted that it looks for evidence that a third party hoping to obtain access to certain benefits can only do so if it performs certain steps identified by the defendant, and does so under the terms prescribed by the defendant.  After reviewing Nalco’s allegations, the Federal Circuit concluded that these allegations adequately plead
attribution of the testing activities to defendants.

Regarding the allegations of infringement under the doctrine of equivalents, the Federal Circuit found that Nalco explicitly incorporated detailed infringement contentions explaining its doctrine of equivalents claim, and in particular how Defendants’ use of the Chem-Mod
Solution method satisfies the “injecting” claim element, in the fourth amended complaint.  The Federal Circuit said that Defendants have failed to explain why these allegations do not adequately state a claim
under the doctrine of equivalents, and we see no reason why these allegations are insufficient to plead infringement by equivalents, and conluded that Nalco’s doctrine of equivalents claim adequately states a claim for infringement under the Twombly and Iqbal pleading standard.

 

Even Under a Narrower Construction Because of Disclaimer; The Board was Correct that the Claims were Obvious

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In Arendi S.A.R.L. v. Google LLC, [2016-1249] (February 20, 2018), affirmed the PTAB’s determination that all of the claims of U.S. Patent No. 6,323,853 were obvious.  The PTAB presented two alternative claim construction, one rejecting prosecution disclaimer and one adopting prosecution history disclaimer.

The Federal Circuit held that the construction rejecting prosecution disclaimer was incorrect, but found the alternative construction based upon prosecution disclaimer correct. The Federal Circuit noted that applicant amended the claims and explained what was changed and why, and the examiner confirmed the reasons why the amended claims were deemed allowable.  However, even under this narrow construction, the Federal Circuit agreed with the PTAB that the claims were unpatentable for obviousness.

 

Board’s Construction of the Claims was Unreasonably Broad and Inconsistent with the Specification

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In In re Hodges, [2017-1434] (February 12, 2018), the Federal Circuit reversed the Board’s anticipation determinations, vacate
its obviousness determinations, and remand for further
proceedings.  The application is directed to a valve assembly
for draining contaminants, condensation, and other fluids that adversely affect the efficiency and function of a pressurized system.

The Federal Circuit found that the Board’s Finding that the claims were anticipated was unsupported by substantial evidence.  A prior art reference anticipates a patent’s claim when the four corners of the document “describe every element of the claimed invention, either expressly or inherently, such that a person of ordinary skill in the art could practice the invention without undue experimentation.  At issue was the positioning of a valve in the prior art relative to the claimed invention.  The Board found the positioning “similar,” but the Federal Circuit found that the Board neither supported its assertion of
similarity, nor explained how the positioning of the valve in the prior art would enable a skilled artisan to “practice the invention without
undue experimentation.”

As to anticipation by another reference, the Board affirmed a rejection that a piston stem and piston head collectively constitute the claimed “sensor” because they sense pressure insofar as they move in response to the pressure applied thereto.  The Federal Circuit noted that the Patent Office did not attempt to defend this finding on appeal “for good reason” as the Board’s anticipation finding was predicated on an erroneous construction of “signal,” and the reference did not disclose a sensor.  The Federal Circuit found the Board construction of the claims to be unreasonably broad and inconsistent with the specification.  The Federal Circuit said that under any reasonable construction of “signal,”
the prior art’s piston stem and head combination cannot fairly
be characterized as a sensor that generates a signal.  The Federal Circuit reversed the rejection, not wanting to give the Patent Office “a second chance to reject the claims on grounds that it is unwilling or unable to defend on appeal.”

On the obviousness rejections, the Board concluded in a “single paragraph” that the claims would have been obvious, but did not explain how the reference could be modified.  The Federal Circuit also noted that the Board made no findings on any of the Graham factors.  The Federal Circuit said that the Board must “explicate its factual conclusions, enabling us to verify readily whether those conclusions are indeed supported by ‘substantial evidence’ contained within the record,” but that the Board failed to do so, so the Federal Circuit remanded the case.

 

 

Happy 209th Birthday President Lincoln

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February 12 is Abraham Lincoln’s birthday, which not that long ago warranted its own holiday.  Abraham Lincoln is the only president to earn a patent — U.S. Patent No. 6469 on Buoying Vessels of Shoals:

Lincoln was also the author of one of the pithier quotes about the patent system, : “added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.”

However this was not Lincoln’s only brush with the patent system, and he has been celebrated in several patents that are worth dusting off on his 209th Birthday:

U.S. Patent No. D2983 protects this sculpture of Abraham Lincoln with General Grant and Secretary Stanton:

U.S. Patent No. 9403 protects an embroidery pattern featuring Lincoln:

U.S. Patent No. 22304 protects this spoon design featuring Lincoln’s home in Springfield, Illinois, and his tomb:

U.S. Patent No. D12634 protects the design of this drinking vessel, on which Lincoln shares the limelight with Garfield, the second president to be assassinated:

Anda Your Patent is Not Infringed

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In Merck Sharp & Dohme Corp. v. Amneal Pharmaceuticals LLC, [2017-1560] (February 9, 2018), the Federal Circuit affirmed the district court, finding that it did not abuse its discretion in denying Merck’s request for additional samples and a new trial, that it did not err in finding that Merck failed to demonstrate that Amneal’s ANDA product, which formed the basis for the district court’s noninfringement finding, was not representative of Amneal’s final commercial product, and that district court did not clearly err in finding that three Raman peaks were required to prove infringement.

On the denial of additional discovery issue, the Federal Circuit reviews a district court’s denial of additional discovery under regional circuit law, and the Third Circuit will not disturb a denial of additional discovery
absent an abuse of discretion and “a showing of actual and substantial prejudice.  The Federal Circuit found the question “a close one.” The Federal Circuit noted that Amneal’s failure to abide by the standing discovery order resulted in a trial situation that was “less than ideal.”  However the Federal Circuit concluded that the district court did not abuse its discretion in denying the additional discovery, noting that the district court took adequate steps to ensure that proceeding with trial would not prejudice Merck.

The Federal Circuit said that the ultimate determination of infringement is a question of fact, which is reviewed for  clear error. The Federal Circuit rejected Merck’s argument that the district court improperly determined infringement of an intermediate product, rather than the final product, as imposing a heightened evidentiary standard in ANDA cases not supported by case law.  The Federal Circuit said that regardless of the type of sample (e.g., commercial or batch), the critical inquiry is
whether it is representative of what is likely to be approved and marketed.

Finally, the Federal Circuit discerne no clear error in the district court’s
fact-finding of noninfringement.  The district court found Amneal’s expert
evidence “at least as consistent and credible” as Merck’s expert and concluded that Merck failed to prove infringement by preponderant evidence.  Amneal’s expert testified that although a single peak can be used at times, three Raman peaks are typically used to absolutely confirm the presence of molecules in complex mixtures like MFM. Because the noninfringement finding was supported by this evidence in the record, the Federal Circuit concluded that the district court did not clearly err in its noninfringement finding.

Board’s Obvious Analysis Improperly Relied Upon Hindsight

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In Polaris Industries, Inc. v, Arctic Cat, Inc., [2016-1807, 2016-2280] (February 9, 2018), the Federal Circuit affirmed in part, vacated in part, and remanded the PTAB’s determination in an IPR that claims of U.S. Patent No. 8,596,405 were invalid, and affirmed the PTAB’s determination is a separate IPR that the claims of the same patent were not invalid.

After being sued for infringing claims of the ’405 patent, Arctic Cat filed two petitions for inter partes review, challenging the patentability of claims 1–38 as obvious in view of combinations of certain prior
art references, including Denney, Furuhashi, and Hickey.  In one petition, Arctic Cat argued that all relevant claims were obvious in view of the combination of Denney and Furuhashi, and in the other that all of the claims were obvious in view of Hickey and at least one other reference.

Polaris attacked the invalidation of the claims on three grounds: First, that the Board’s obvious analysis was predicated on an improper claim
construction or was too cursory. Second, that the Board relied on impermissible hindsight in combining the prior art, failing to articulate a valid motivation to combine these references and applying a “subjective preferences” analysis that finds no basis in this court’s precedents. Third, it contends that the Board erred in rejecting the undisputed evidence that Polaris introduced regarding the commercial success.

On the first grounds, the Federal Circuit rejected Polaris’ claim construction, noting that claims are given their broadest reasonable interpretation, and finding Polaris’ construction too restrictive.  Regarding Polaris’ argument about the cursory nature of the Board’s analysis, the Federal Circuit noted that although the Board’s reasoning could have been more thorough, it did not find fault in the Board’s arguably limited treatment of Polaris’s arguments where the Board’s treatment “was at least commensurate with Polaris’s presentation of this issue.

On the issue of hindsight, the Federal Circuit agreed with Polaris, the Board failed to analyze whether the prior art taught away from the claim limitations.  The Federal Circuit noted that the Board said that “one of ordinary skill has the ability to weigh the various benefits  and disadvantages based on subjective preferences in an analysis largely unrelated to obviousness,” and said that it has never articulated a framework for analyzing whether claims would have been obvious that includes the phrase “subjective preference” or that permits a tribunal
to wholly disregard the significance of prior art teachings based on such a characterization.  The Federal Circuit identified three problems with the Board’s “subjective preference” analysis: First, by completely disregarding certain teachings as ill defined “subjective preferences,” the Board’s approach invited the “distortion caused by hindsight bias” into the fold.  The Federal Circuit also noted that the Board improperly focused on what a skilled artisan would have been able to do, rather than what a skilled artisan would have been motivated to do at the time of the
invention.  Finally, the Federal Circuit found that the Board’s analysis encourages the fact-finder to outright discard evidence relevant both to “teaching away” and to whether skilled artisans would have been
motivated to combine references.

Finally, the Federal Circuit agreed that the Board erred when it declined to accord substantive weight to the Polaris’ undisputed evidence that its product is the invention disclosed in certain claims because it characterized the Polaris’ evidence as “conclusory,” noting that Artic Cat presented no contrary evidence.  The Federal Circuit said that the Board must assess the import of this evidence after presuming
that a nexus between the claims and the commercial success exists, unless and until that presumption is adequately rebutted.

 

 

Walker Process Monopolization Claim Does not Depend upon Resolution of a Substantial Question of Federal Patent Law

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In Xitronix Corp. v. Kla-Tehcor Corp., [2016-2746] (February 9, 2018), the Federal Circuit transferred an appeal of a Walker Process claim to the United States Court of Appeals for the Fifth Circuit, which has appellate jurisdiction over cases from the District Court for the Western District of Texas.

Xitronix raised a Walker Process monopolization claim under § 2 of the Sherman Act and §§ 4 and 6 of the Clayton Act based on the alleged fraudulent prosecution of a patent.

Xitronix asserted that the Federal Circuit had jurisdiction over the appeal pursuant to 28 U.S.C. § 1295(a)(1), and KLA-Tencor did not dispute this assertion, but the Federal did.  The Federal Circuit said the question is whether the monopolization allegation necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.  Applying the well-pleaded complaint rule, in light of the Supreme Court’s guidance and rationale in Gunn, the Federal Circuit held that monopolization does not depend upon resolution of a substantial question of federal patent law.

The Federal Circuit said that there is nothing unique to patent law about allegations of false statements.  While a determination of the alleged misrepresentations to the PTO will almost certainly require some application of patent law, but consistency with the federal question jurisdiction statute requires more than mere resolution of a patent issue in a “case within a case.”  Something more is required to raise a substantial issue of patent law sufficient to invoke our jurisdiction under 28 U.S.C. § 1295(a)(1).

The underlying patent issue in this case, while important to the parties and necessary for resolution of the claims, does not present a substantial issue of patent law.  The Federal Circuit noted that patent claims will not be invalidated or revived based on the result of this case. Because Federal Circuit law applies to substantive questions involving its exclusive jurisdiction, the fact that at least some Walker Process claims may be appealed to the regional circuits will not undermine its uniform body of patent law.  The Federal Circuit noted that the fact that its law applies to Walker Process claims does not mean that it has exclusive jurisdiction over appeals of such claims.

 

Process Limitations are Presumed to Impart Structural Limitations, Even Where it is not Clear What those Limitations Are

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In In re Nordt Development Co., LLC, [2017-1445] (February 8, 2018), the Federal Circuit rejected the Board’s claim construction of “injection
molded” as a process limitation with no patentable weight, vacated the Board’s finding of anticipation, and remanded.

The application was directed to an elastic knee brace.   The claims required “an injection molded strut component and injection molded first and second arm components” and “an elastically stretchable framework
injection molded about the strut and arm components of the hinge mechanism.”  The Examiner rejected the claims over as anticipated, and the Board affirmed, after finding that the applicant did not persuasively explain what structural limitation is imparted by “injection molded.”

The Federal Circuit said that when considering the patentability
of product claims that contain process limitations, claim scope is generally based on the product itself, not the process. The Federal Circuit noted that If the process limitation connotes specific structure and may be considered a structural limitation, however, that structure should be considered.

Nordt argued that the Board erred in presuming that “injection molded” was a product-by-process limitation, and the Federal Circuit agreed, stating that in presuming “injection molded” to be a process limitation, the Board confounded two somewhat distinct inquiries—the first being whether “injection molded” is a process or structural limitation, the second being the precise meaning of the limitation if structural.

As to the first inquiry, the Federal Circuit found that “injection molded”
connotes structure. Although the application describes “injection molded” as a process of manufacture, neither the Board nor the examiner disputed Nordt’s assertion that “there are clear structural differences” between a knee brace made with fabric components and a knee brace made with injection-molded components.  The Federal Circuit examined the specification and concluded that, at a minimum, the specification demonstrates that “injection molded” connotes an integral
structure.

The Federal Circuit also noted that a default rule that where words of limitation that can connote with equal force a structural characteristic
of the product or a process of manufacture, they are commonly
and by default interpreted in their structural sense, unless the patentee has demonstrated otherwise.  The Federal Circuit then cited numerous examples where such limitations to convey structure even when they also describe a process of manufacture.  The Federal Circuit that not only does the specification itself convey a structural meaning to “injection molded,” but the applicant has repeatedly represented that it does.

Acknowledging that Nordt failed to persuasively or precisely explain
what structural limitation is imparted by “injection molded,” the Federal Circuit nonetheless said that the failure to identify that structure,
does not affect the conclusion, as the structural nature of “injection molded” can be gleaned from the plain claim language and the specification itself.

The Federal Circuit remanded so that the Board could construe the “injection molded” limitation, noting that the specification supports an interpretation that requires an integral structure, and saying it is up to the Board to determine whether this claim language requires any additional structure.

 

Incorporation by Reference (May Have) Saved the Day

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In Paice LLC v. Ford Motor Company, [2017-1387, 2017-1388, 2017-1390, 2017-1457, 2017-1458, 2017-1406](February 1, 2018), the Federal Circuit affirmed in part, reversed in part, and remanded Final Written decisions of the PTAB in six IPR’s involving U.S. Patent Nos. 7,237,634 and 8,214,097.  In particular, the Federal Circuit vacated the Board’s obviousness determinations as they relate to the ’634 patent’s “electrical” claims and remanded for the Board to determine whether those claims find written description support in the priority applications and the references incorporated therein, but otherwise affirmed the Board’s obviousness determinations as to all other claims.

Paice raised two principal arguments on appeal — first that the prior art did not disclose the claim limitations, and second that one of the references was not prior art to the claims.  The Federal Circuit made quick work of the first argument, finding that the Board correctly determined that the reference met the claim limitation.  However, Paice’s second argument met with more success.  Paice argued that one of the references, the ’455 PCT publication, was not prior art to some of the electrical claims because they claim priority to an application (U.S. Patent Application No.
09/264,817)  that predates the ’455 PCT publication.

The Federal Circuit noted that the priority date for later-added patent claims depends
on when the claimed subject matter first appeared in the chain of patent applications from which the claims arose.  The Federal Circuit said that for claims to be entitled
to a priority date of an earlier-filed application, the application must provide adequate written description support for the later-claimed limitations.  Paice argued that the application incorporated by reference a prior application that provided the requisite written description support.  The Board disagreed, holding that the application did not adequately incorporate the prior application, and that the claim limitations lack written description support in the prior application.

The Federal Circuit said that incorporation by reference provides a method for integrating material from various documents into a host document by citing such material in a manner that makes clear that the material is effectively part of the
host document as if it were explicitly contained therein.  The Federal Circuit said that to incorporate material by reference, the host document must identify with detailed
particularity what specific material it incorporates and clearly indicate where that material is found in the cited document, which the Federal Circuit found Paice did with this language:

This application discloses a number of improvements over and enhancements to the hybrid vehicles disclosed in the inventor’s U.S. Pat. No. 5,343,970 (the “’970 patent”) [Severinsky], which is incorporated herein by this reference. Where differences are not mentioned, it is to be understood that the specifics of the vehicle design shown in the ’970 patent are applicable to the vehicles shown herein as well.

The Federal Circuit rejected the Board’s interpretation of the last sentence of incorporation phrase limited the scope of the incorporation.  The Federal Circuit said this sentence had no bearing on the extent of incorporation, finding that it only refers to the applicability of certain features of the disclosure, instructing that: “The applicability of a document’s disclosed features and the incorporation of the document itself are distinct
concepts, and one does not imply the other.”

However this did not end the saga for Paice.  The Federal Circuit said that to prevail on its argument that the ’455 PCT publication is not prior art to the claims, Paice must show that its ’817 application, with the incorporated material, provides sufficient written description support for those claims.  Because the Board improperly excluded the incorporated material, the Federal Circuit remanded the case for an initial Board determination.

Second and Third Bites at the Apple; Subsequent IPR Losses undo IPR Win

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In Maxlinear, Inc. v. CF Crespe LLC, [2017-1039] (January 25, 2018), the Federal Circuit we vacated and remanded the PTAB’s determination that dependent claims were not unpatentable  in view of the Federal Circuit’s intervening affirmance of a second IPR that claims 1 and 17 unpatentable.

The case involved U.S. Patent No. 7,075,585 on a broadband television signal
receiver for receiving multi-standard analog television signals, digital television signals and data channels.  The Board found the only two independent claims 1 and 17 were not shown to be unpatentable, and thus did not reach the patentability of the dependent claims.

The Federal Circuit held that the two IPR’s that found claims 1 and 17 unpatentable, were binding “as a matter of collateral estoppel” in this case.  The fact that the other IPR’s became final while this case was pending on appeal is irrelevant.  The preclusive effect of the prior adjudications, and subsequent affirmations, has finally resolved the issue of the unpatentability of independent claims 1 and 17 and dependent claim 20 in this proceeding. Thus, the sole
remaining question at issue is whether the dependent claims 4, 6-9, and 21, not addressed in the earlier IPRs, are unpatentable.

Since the patentability of claims 1 and 17 was the sole basis for the Board’s decision in this IPR, and the Board had not separately addressed the dependent claims, the Federal Circuit set aside the decision as to the dependent claims and remanded for further consideration.