Claims Can’t Be Construed Contrary to Specification, and then Invalidated for Being Contrary to Specification

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In Intellectual Ventures I LLC v. Motorola Mobility LLC, [2016-1795](September 13, 2017), the Federal Circuit affirm the district court’s judgment in part, reversed in part, and remanded for further proceedings
on the asserted claims of the ’462 patent.

A jury found the asserted claims of 7,810,144 and 7,120,462 infringed and not invalid, and the district court denied Motorola’s motion for judgment as a matter of law.  The Federal Circuit found substantial evidence supported the validity of the ‘144 patent, but not infringement, and that substantial evidence supported the validity and infringement of the ‘462 patent.

Motorola argued that the district court erred in denying judgment as a matter of law that the asserted claim of the ’144 patent was invalid for lack of written description.  In particular, Motorola contended that the specification of the ’144 patent excludes “long-term” or “permanent” storage of the data being transmitted on an intervening computing
device, while claim 41 covers embodiments that nevertheless
use such long-term or permanent storage, in violation of the written description requirement.

The Federal Circuit noted that the claim language neither plainly includes nor plainly excludes long-term or permanent storage, finding that the limitations must be construed in view of the specification.  The Federal Circuit noted that paradoxically, Motorola contends that the specification excludes long-term or permanent storage from the scope of the invention, while simultaneously arguing that claim 41 should be read to cover such storage.  The Federal Circuit instructed that the proper result is not that claim 41 fails for lack of written description but that it should be construed “in view of the specification” to be limited.  The Federal Circuit reiterated its precedent that it is incorrect to construe the claims contrary to the specification, and then to hold the claims invalid because they are contrary to the specification.

After concluding that substantial evidence supports the jury’s verdict of no invalidity with respect to the claim of the ’144 patent, the Federal Circuit turned to the question of whether there was substantial evidence of direct infringement under 35 U.S.C. § 271(a).  The Federal Circuit said that to use a system for purposes of infringement, a party must put the invention
into service, i.e., control the system as a whole and obtain benefit from it.  The Federal Circuit found that the district court erred when it found an infringing use based on the generalized benefit of using the accused system, rather than finding a benefit from each element of the system, and reversed the finding of infringement.

Foreign Suits Involving Foreign Patents Do Not Create a Case or Controversy in the U.S.

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In Allied Mineral Products, Inc. v. OSMI, Inc., [2016-2641] (September 13, 2017), the Federal Circuit affirmed the dismissal of Allied’s declaratory judgment action seeking a declaration that Stellar’s U.S. Patent No. 7,503,974 is invalid, and that Stellar committed inequitable conduct, for lack of subject matter jurisdiction.

This dispute centered on a Mexican infringement suit between Stellar and two of Allied’s Mexican distributors.  Allied manufactured the accused product in the United States, which are then sold in Mexico by Allied’s Mexican distributors.  The district court held that Stellar’s decision to enforce its Mexican patent under Mexican law against separate entities cannot, without further affirmative action by Stellar, create an
actual controversy with Allied with regard to its U.S. patent.

The Federal Circuit reasoned that the totality of the circumstances in this case does not rise to the level of a case of actual controversy. Declaratory judgment jurisdiction requires some affirmative act by
the patentee, and Stellar has not directed any actions towards Allied, nor has it litigated or threatened litigation in the United States or on its U.S.
patent.

Allied argued that it has been forced into an unwinnable business position; it can either continue to sell products in the United States knowing it may be the target of an infringement suit, or it can cease selling products it believes it has a right to sell. The Federal Circuit said that the fear of a future infringement suit is insufficient to confer
jurisdiction.  The Federal Circuit concluded that Allied has failed to establish a case or controversy regarding Stellar’s U.S. patent in the United States under Article III.

Accused Trade Secret Thief Failed to Make Uber Showing Required for Writ of Mandamus

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In Waymo LLC v. Uber Technologies, Inc., [2017-2235, 2017-2253] (September 13, 2017), the Federal Circuit denied intervenor  Levandowski’s petition for a writ of mandamus.  Waymo alleges
that its former employee, Levandowski, improperly downloaded thousands of documents related to Waymo’s driverless vehicle technology and then left Waymo to found Ottomotto, which Uber subsequently acquired.  Before the acquisition closed, counsel for Ottomotto and Uber (but not counsel for Mr. Levandowski) jointly retained a law firm to investigate  Ottomotto employees previously employed by Waymo, including Mr. Levandowski.  Waymo sought to obtain the report, which the court permitted, and Levandowski unsuccessfully attempted to block with a write of mandamus.  The Federal Circuit said that a petitioner has to show three things to be entitled to the writ:

First, the party seeking issuance of the writ must have no other adequate means to attain the relief he desires—a condition designed to ensure that the writ will not be used as a substitute for the regular appeals process. Second, the petitioner must satisfy the burden of showing that his right to issuance of the writ is clear and indisputable. Third, even if the first two prerequisites have been met, the issuing court, in the exercise of its discretion, must be satisfied that the writ is appropriate
under the circumstances.

The Federal Circuit found that Levandowski failed the first test — establishing he had no other adequate remedy.  While Levandowski argued that an appeal after the disclosure was in effect no remedy, the Federal Circuit concluded that a post-judgment appeal by either Uber or Levandowski would suffice to protect the rights of Levandowski and ensure the vitality of attorney-client privilege.  The Federal Circuit went on to find that Levandowski failed to show that his right to issuance of the writ was clear and indisputable.  Finally, the Federal Circuit said that  Levandowski had not persuaded it to exercise its discretion here and overrule the District Court.

When Your Background Dooms The Invention

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37 CFR 1.77(b)(7) suggests that a patent application should include a “Background of the Invention.”  However, the Background of the Invention  can cause trouble if the drafter is not careful.

The Background of the Invention, sometimes called the “fairy tale” by older practitioners (there are number of examples where the background actually contains the fairy tale beginning “once upon a time”– see U.S. Patent Nos. 7,715,960, 7,207,929, 5,537,417 and 4,206,568), not surprisingly sets for the background information and often identifies the problem(s) solved by the invention.

One of the greatest (although not necessarily the best) “backgrounds” in a U.S. patent is found in U.S. Patent No. 4,646,382 on a Lottery Ticket Scraper, where the background ties the subject ticket scraper to the rise of civilization from primitive cultures:

In contract, the best background is probably one that says as little as possible.  A background prepared after the invention (and they all are) can tend to make the invention look obvious, describing the problems of the prior art in such a way that the inventor’s solution almost seems obvious.  This appears to be the case in the Federal Circuit’s recent decision in Intercontinental Great Brands LLC v. Kellogg North American Co., discussed here, where the identification of the problem to be solved in background formed a part of the overall obviousness determination.

The Background of U.S. Patent No. 5,156,594 was used against the patent owner in Scimed Life Sys., Inc. v. Advanced Cardiovascular Sys., Inc., 242 F.3d 1447 (Fed. Cir. 2001), where criticisms of the prior art were used to narrow the claims.

In preparing the background of a patent application,

  • Discuss problems of “some” prior devices, rather than “all” prior art.
  • Avoid describing the problems of the prior art in a way that makes the invention seem like the obvious extension of the prior art.

Mere Quantification of the Results of a Known Process is Not Patentable

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In Southwire Co. v. Cerro Wire LLC, [2016-2287](September 8, 2017), the Federal Circuit affirmed the PTAB’s decision in an inter partes reexamination that the claims of U.S. Patent No. 7,557,301 on a method of making cable are unpatentable under 35 USC 103.

The invention related to the inclusion of lubricant in the plastic jacket of electrical cable that will migrate to the exterior of the sheath and lubricate the surface during installation.  The Board affirmed the Examiner’s rejection of the claims over prior art that included a fiber optic cable that can include a friction reducing additive that migrates to the surface of the cable jacket.  Although the prior art did not specifically teach some of the details, such as a 30% reduction in pulling force, the Board held that where the claimed and prior art products are produced by identical or substantially identical processes, a prima facie case of either anticipation
or obviousness has been established, and thus the claimed details were inherent.

The Federal Circuit found that the Board erred in relying on inherency in making its obviousness determination. The use of inherency in the
context of obviousness must be carefully circumscribed because that which may be inherent is not necessarily known and that which is unknown cannot be obvious.  While the Federal Circuit has recognized that inherency may supply a missing claim limitation in an obviousness
analysis, the limitation at issue necessarily must be present in order to be inherently disclosed by the reference.  The Federal Circuit noted that the Board cited no evidence that the claimed 30% reduction in the pulling force would necessarily result from the claimed process, which contains no steps that ensure such reduction.

Thus the Federal Circuit found that the Board erred in relying on inherency without finding that Summers necessarily would achieve the claimed 30% reduction in pulling force, but rather finding that it
merely renders that limitation obvious. However, the Federal Circuit concluded that the Board’s error was harmless because it did not need to invoke inherency.

The Federal Circuit said that none of the patented steps differs in any material way from the process disclosed in the prior art, and there was no evidence that the claimed 30% reduction in pulling force would have been unexpected or unattainable.  In fact, the Federal Circuit said there was no evidence that the process disclosed in the prior art the at least 30% reduction.  Simply because the prior art never quantified the reduction in pulling force achieved by its disclosed embodiments
does not preclude the possibility, or even likelihood, that its process achieved the claimed at least a 30% reduction, especially since its stated purpose was the same.  The Federal Circuit concluded that In the
absence of any evidence that the claimed 30% reduction would have been unexpected in light of the prior art, there is no indication that the limitation is anything other than mere quantification of the results of
a known process.

 

as that

Objective Indicia Were Properly Considered and Did Not Save Cookie Package Patent from Summary Judgment of Obviousness

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In Intercontinental Great Brands LLC v. Kellogg North American Co., [2015-2082, 2015-2084] (September 7, 2017), the Federal Circuit affirmed summary judgment that Kraft’s U.S. Patent No. 6,918,532 was invalid for obviousness, but was not unenforceable for inequitable conduct.

The district court found that the absence of a “convenient opening and reclosing arrangement” was a “known problem” for cookie packaging and that the prior art resealable, tray-included packaging for foods offered a skilled artisan a solution to the problem simply by replacing the existing “tray” with a “frame” i.e., a tray with higher sides.  The court considered the simple and clear teachings of the art, the importance of common
sense and ordinary creativity, and the conclusory character of Kraft’s expert’s assertions of nonobviousness.  the court concluded that Kraft’s evidence of objective indicia, though substantial, was not entitled to much weight in the ultimate legal assessment of obviousness.  On the issue of inequitable conduct, the court found that Kellogg had not presented evidence that could meet the standard for intent to deceive established in Therasense,

The Federal Circuit said that Kraft’s arguments that the district court treated the objective indicia as an “afterthought,” “writing off the patent before turning to objective indicia,” and “repeatedly not[ing] its finding of obviousness before considering the objective indicia,” mischaracterized the district court’s reasoning, finding that the district court drew its conclusion of obviousness only after, not before, considering the objective indicia.

The Federal Circuit held that the district court did not draw an ultimate conclusion of obviousness before considering the objective indicia, the . The contrary is not shown by the court’s “not uncommon” choice of words when conducting the ultimate weighing, namely, that the objective indicia “do not overcome Kellogg’s extremely strong prima facie showing.”

The Federal Circuit rejected Kraft’s argument that objective indicia must be considered before drawing a conclusion about whether a person of ordinary skill had motivation to combine the prior art, finding that the staged consideration undertaken by the district court, and reflected in its cases, makes sense within the motivation-to-combine framework.

The Federal Circuit also rejected Kraft’s argument that the district court failed to provide “explicit and clear reasoning providing some rational
underpinning” for its invocation of common sense in its motivation-to-combine analysis.  The Federal Circuit said that the court relied on the record demonstrating the “known problem” of an insufficiently “convenient opening and reclosing arrangement” for cookie packaging and the suggestion in the prior art that it was useful for a variety of items.

The Federal Circuit also found that that the “enhanced burden” when the prior art relied upon for invalidation was previously considered by the USPTO “provides no basis for a different result.”  First the Federal Circuit noted that there is no specific PTO determination of nonobviousness based on the particular prior art now at issue. Second, the Federal Circuit found the showing of obviousness to be sufficiently strong that no PTO contrary determination could alter the conclusion about summary
judgment.

On the cross-appeal of the finding of no inequitable conduct, the Federal Circuit no reversible error in the district court’s conclusion that Kellogg’s evidence was insufficient to permit a finding of the intent required for inequitable conduct based on Kraft’s reexamination arguments.  Kellogg alleged that an item in the prior art considered by the Board during reexamination contained a misprint, and that Kraft committed inequitable conduct by not so informing the Board. This sentence containing the misprint was material, because it resulted in the Board’s reversing the reexamination Examiner.  However, the Federal Circuit said that Kellogg also had to prove that  Kraft, in what it did not say about the sentence
that was the focus of the Board’s attention, had a “specific intent to mislead or deceive the PTO.”

The Federal Circuit said that the intent requirement is demanding, and citing Therasense said that the evidence must be “sufficient to require a finding of deceitful intent in the light of all the circumstances”; deceptive intent “must be the single most reasonable inference able to be drawn from the evidence”; and “when there are multiple reasonable inferences that may be drawn, intent to deceive cannot be found.”

The Board noted that there was no evidence of whether or not Kraft actually believed it was a misprint, just Kellogg’s argument of what Kraft had to have believed.  The Federal Circuit said that without more evidence of Kraft’s belief, one reasonable inference on the record—especially given Kellogg’s burden of persuasion—is that Kraft did not
believe that there was a misprint.

The district court’s obviousness analysis, approved by the Federal Circuit, relied upon the identification of the problem to be solved in the Background.  Prosecutors need to be careful in drafting the background section, so that it does not make the invention seem like the logical (and thus obvious) solution to the problem that perhaps only the inventor had the insight to identify in advance.

 

Knowledge of Ex-Employees Working for Accused Infringer Makes Inducement Claim Plausible

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In Lifetime Industries, Inc., v. Trim-Lok, Inc., [2017-1096] (September 7, 2017), the Federal Circuit reversed the district court’s dismissal of Lifetime’s complaint for infringement of U.S. Patent 6,966,590 failing to adequately allege that Trim-Lok either directly or indirectly infringed the patent.  Lifetime filed two amended complaints after Trim-Lok twice moved for dismissal for failure to identify the accused product. A Lifetime representative  discovered a two-part Trim-Lok seal installed on an RV with a slideout room at a plant run by a third party.  On Trim-Lok’s third motion, the district court determined that Lifetime had adequately
identified the accused product, but that Lifetime had not adequately pleaded its case.

The district court concluded that Lifetime had not adequately pleaded direct infringement because the claims require both a two-part seal and an RV, and Trim-Lok only manufactures seals.  The district court rejected Lifetime’s argument that Trim-Lok had “assisted with the installation, directed the installation, or directly installed” the Trim-Lok seal as confusing liability for direct infringement with liability for contributory infringement, which the court characterized as imposing liability “based on an offer to sell a component, material, or apparatus,” and dismissed the complaint for direct infringement.

As to indirect infringement, the district court concluded that Lifetime had not alleged any facts from which intent to infringe could be inferred in this case, and dismissed the complaint for indirect infringement as well.

The Federal Circuit found that Lifetime adequately alleged that Trim-Lok directly infringed, observing that one who “makes” a patented invention without authorization infringes the patent.  The Federal Circuit said that commercial manufacture is not the only way that a combination can infringe; limited internal manufacture and use can also infringe.  The Federal Circuit said that although Lifetime did not allege that Trim-Lok made the RV onto which it installed the seal, Lifetime did allege that Trim-Lok installed the seal onto the RV; that is, Lifetime alleged that Trim-Lok made an infringing seal-RV combination.  The Federal Circuit found that Trim-Lok’s demand for more detail “asks for too much,” noting that there is no requirement for Lifetime to prove its case at the pleading stage.

The Federal Circuit also found that Lifetime has plausibly alleged
that Trim-Lok induced infringement.  The Federal Circuit noted that the plausibility requirement is not akin to a probability requirement at the pleading stage; it simply calls for enough facts to raise a reasonable expectation that discovery will reveal that the defendant is liable for the
misconduct alleged.  The Federal Circuit found that specific allegations that former employees Busch and Torrey had knowledge of the patent and its scope when they joined Trim-Lok, making it plausable that Trim-Lok had knowledge of the patent.  The Federal Circuit also found adequate pleading of intent to infringe, noting that Lifetime alleged that after gaining knowledge of the patent and the products covered by the patent Trim-Lok assisted in the installation of the same time of seal on a RV, never having previously made or sold such seals.

The Federal Circuit also agreed with Lifetime that pleading contributory patent infringement only requires pleading knowledge of the patent, not also an intent to infringe the patent.

 

Follow-on IPR Petitions are Unfair to Patent Owners and an Inefficient Use of the Process

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In General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha,  IPR2016-01357,  Paper 19, (September 6, 2017), and IPR2016-01358, IPR2016-01359, IPR2016-01360, and IPR2016-01361, an expanded panel of the PTAB denied reconsideration of the Decision Denying Institution.

Petitioner filed a first set of petitions seeking inter partes review of U.S. Patent No. 9,046,820 and U.S. Patent No. 8,909,094, which were denied based upon the merits. Nine months after the filing of the first set of petitions, Petitioner filed five follow-on petitions, two against the ‘820 patent, and three against the ‘094 patent, all of which were denied pursuant to 35 U.S.C. § 314(a) and 37 C.F.R. § 42.108(a).

In exercising its discretion to deny each of the follow-on petitions, the Board considered the seven NVIDIA factors:

  1. Whether the same petitioner previously filed a petition directed to the same claims of the same patent;
  2. Whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
  3. Whether at the time of filing of the second petition the petitioner
    already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute
    review in the first petition;
  4. The length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
  5. Whether the petitioner provides adequate explanation for the time
    elapsed between the filings of multiple petitions directed to the same claims of the same patent;
  6. The finite resources of the Board; and
  7. The requirement under 35 U.S.C. § 316(a)(11) to issue a final
    determination not later than 1 year after the date on which the Director notices institution of review

Applying these factors to the follow-on petitions, the Board concluded that the circumstances did not warrant institution of inter partes reviews.  As to Factor 1, the Board noted that the same claims of the same patent were at issue in the follow-on petitions as in the denied petitions.  As to Factors 2 and 3, the follow-on petitions were all filed nine months
after the filing of the first-filed petitions, and after Patent Owner had filed its Preliminary Responses to the first-filed petitions, and after the Board had denied institution, without any meaningful explanation for the delay. With respect to Factors 4 and 5, Petitioner provided no explanation of any unexpected circumstances that prompted the new prior art searches, or for the delay in doing so.  With respect to Factor 6, the Board found that its resources would be more fairly expended on initial petitions, rather than follow-on petitions.

In addition the Board found that that Petitioner had modified its challenges in the follow-on petitions in an attempt to cure the deficiencies that the Board identified in its first-filed petitions, and that this shift tin Petitioner’s challenges was not the consequence of a position that Patent Owner surprisingly advanced or the Board surprisingly adopted.  The Board found that the filing of sequential attacks against the same claims, with the opportunity to morph positions along the way, imposes inequities on Patent Owner.

On rehearing the expanded Board rejected the arguments raised by petitioner.   The expanded board agreed that there is no per se rule precluding the filing of follow-on petitions, and noted that it has consistently considered a number of factors.  The Board recognized that an objective of the AIA is to provide an effective and efficient alternative to district court litigation, but also recognized the potential for abuse of the review process by repeated attacks on patents.  The Board said that multiple, staggered petitions challenging the same patent and same claims raise the potential for abuse. The absence of any restrictions on follow-on petitions would allow petitioners the opportunity to strategically stage their prior art and arguments in multiple petitions, using our decisions as a roadmap, until a ground is found that results in the grant of review.  This is unfair to patent owners and is an inefficient use of the inter partes review process and other postgrant review processes.

The Board recognized that there may be circumstances where multiple petitions by the same petitioner against the same claims of a patent should be permitted, said that the factors it uses represents a formulation of relevant considerations, and while there may be additional factors, the identified factors are a good baseline.  The Board reiterated that institution is committed the this discretion of the Commission, acting through the Board.  Reweighing the factors on rehearing, the Board found that six of the seven factors weigh against institution.

 

 

 

Federal Circuit’s Amicus Brief in Oil States

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Although the Federal Circuit already passed on the constitutionality of inter partes reviews, considering some of its recent decisions, it appears that the Federal Circuit questions the competence of the PTAB to conduct adjudicative proceedings.

In Nidec Motor Corporation discussed here, Judges Dyk and Wallach questioned the Patent Office’s court packing to achieve a desired outcome.  A few days later in Ultratec discussed here, the Federal Circuit questioned the Patent Office’s conduct of a proceeding, stating that a “reasonable adjudicator” would have wanted to review this evidence, and implying that the Patent Office was not a reasonable adjudicator.

Even if it turns out to be constitutional for the USPTO to conduct IPR and PGR proceedings, it appears that at least the Federal Circuit has lost confidence that they should.  Is it sending a signal to the Supreme Court?