A Claim to an Abstract Idea does not Automatically Become Eligible Merely by Adding a Mathematical Formula

Posted on by

In Recognicorp, LLC v. Nintendo Co., Ltd., [2016-1499](April 28, 2017), the Federal Circuit affirmed the district court’s grant of judgment on the pleadings that U.S. Patent No. 8,005,303 on a method and apparatus
for building a composite facial image using constituent parts was directed to the abstract idea of encoding and decoding image data.

At Alice step one, the district court concluded that the asserted claims are “directed to the abstract idea of encoding and decoding composite facial images using a mathematical formula.”  At Alice step two, the district court found that the ’303 patent contains no inventive concept, stating that “the entirety of the ’303 Patent consists of the encoding algorithm itself or purely conventional or obvious pre-solution activity and post-solution activity insufficient to transform the unpatentable abstract idea into a patent-eligible application.”

The Federal Circuit agreed that claim 1 is directed to the abstract idea of
encoding and decoding image data, noting that it claims a method
whereby a user displays images on a first display, assigns image codes to the images through an interface using a mathematical formula, and then reproduces the image based on the codes.  The Federal Circuit rejected the argument that, like the claims in Enfish, the claim was being parsed at too high a level of abtractions.  The Federal Circuit found Digitech Image Technologies more analogous.

At step two of the Alice inquiry, the Federal Circuit found that nothing
“transforms” the abstract idea of encoding and decoding into patent-eligible subject matter.  The Federal Circuit said that claims that are directed to a nonabstract idea are not rendered abstract simply because they use a mathematical formula, but that the converse is also true: A claim directed to an abstract idea does not automatically become eligible merely by adding a mathematical formula.

The Federal Circuit concluded that the claims of the ’303 patent are directed to encoding and decoding image data, an abstract idea, adding that the claims provide no inventive concept to render them eligible under
§ 101.

Posted in 101

§317(b) Resurrects Claims Invalidated in Reexamination, That Were Found Not Invalid in Litigation

Posted on by

In Fairchild Corporation v. Power Integrations, Inc., [2017-1002] the Federal Circuit remanded the appeal from a PTAB decision in an inter partes reexamination, with direction to vacate certain aspects of its final
decision in the underlying inter partes reexamination and issue a reexamination certificate.

Fairchild sued Power Integrations for infringement of U.S. Patent No. 7,259,972. The jury’s verdict rejected Power Integrations’s argument that the ’972 patent claims were invalid under 35 U.S.C. § 103, and found that the patent claims had been infringed. On appeal, the Federal Circuit affirmed the jury’s non-obviousness determination but reversed its findings on infringement, and remanded for further proceedings unrelated to the ’972 patent claims.

While the litigation was pending, Power Integrations requested inter partes reexamination of the ‘972 patent.  The Examiner rejected all of the claims in the reexamination under §103(a), and the Board affirmed, resulting in the instant appeal.

Fairchild argued that the results of the reexamination proceeding should be vacated under §317(b) because the final decision in the litigation bars the maintenance of the reexamination.  The Federal Circuit agreed, noting that the time for petitioning for certiorari had passed, and thus the district court’s holding that the patent was not invalid barred the maintenance of the reexamination as to the claims challenged in the litigation.

 

IPR Estoppel: Ripe for Gamesmanship?

Posted on by

In Douglas Dynamics LLC, v. Meyer Products LLC, [14-cv-886-jdp] (D. Wisc. Document # 68 April 18. 2017), the district court considered the scope of estoppel after an IPR. The Court identified three categories of potentially estopped grounds:

  1. Grounds not petitioned.
  2. Grounds petitioned but not instituted
  3. Grounds instituted.

As to the instituted grounds, these are clearly estopped.  As to the grounds petitioned but not instituted, after weighing the competing policy considerations, the court concluded that these were not estopped, citing Verinata Health, Inc. v. Ariosa Diagnostics, Inc., No. 12-cv-5501, 2017 WL 235048, at *3 (N.D. Cal. Jan. 19, 2017) (collecting cases). Finally with respect to the grounds not petitioned, the court concluded that these were grounds that could have been raised, and thus were estopped.  The Court cited SAS Inst., Inc. v. ComplementSoft, LLC., 825 F.3d 1341, 1354 (Fed. Cir. 2016) (Newman, J., dissenting), as well as Precision Fabrics Grp., Inc. v. Tietex Int’l, Ltd., No. 13-cv-645, 2016 WL 6839394, at *9 (M.D.N.C. Nov. 21, 2016); Clearlamp, LLC v. LKQ Corp., No. 12-cv-2533, 2016 WL 4734389, at *8 (N.D. Ill. Mar. 18, 2016).

The impact of this decision, is that the PTAB’s decision not to institute on a particular grounds actually hurts the patent owner, because estoppel does not apply.  A patent owner would be much better off if the ground were instituted, and denied.  Then, the challenger could not re-raise the grounds in court.

While the district court’s decision that the grounds that were not included in the petition were grounds that “could have been raised” and thus estopped, this determination creates a perverse incentive for patent challengers.  A patent challenger is much better off including these grounds in the IPR petition, perhaps in a way that essentiall guarantees they won’t be instituted, thereby insulating these grounds from the application of estoppel.  The district court noted that it is not bound by a refusal to institute, and while it will consider the PTAB’s reasoning “to the extent it is persuasive”, if the reason for not instituting is that the grounds were not completely developed, a district court likely would allow the challenger not only to re-present the grounds, but to more fully develop it.

While the PTAB has the discretion not to institute an IPR, when they do so, they aren’t doing any favors for a Patent Owner.  The PTAB should liberally institute IPRs on the grounds that challengers present.  Denying the grounds in the final written decision instead of the institution decision better protects the  Patent Owner.

 

Little Words That Can Make a Big Difference: i.e. Versus e.g.

Posted on by

The difference between i.e. (id est — that is) and e.g. (exempli gratia — for example) from time to time comes up in patent cases.  While the difference is not always clear to some practitioners, it is clear to the Federal Circuit.  Recently, in Rembrandt Wireless Technologies, LP v. Samsung Electronics Co., Ltd., [2016-1729] (April 17, 2017), the Federal Circuit held that patentee’s use of i.e. during prosecution was definitional, finding that “two types of modulation methods, i.e., different families of modulation techniques” defined “two types” as involving different families of modulation techniques.  The Federal Circuit noted precedent where i.e. was treated as definitional:

A patentee’s use of “i.e.,” in the intrinsic record, however, is often  definitional.   Edwards Lifesciences LLC v. Cook Inc., 582 F.3d 1322, 1334 (Fed. Cir. 2009) (“[U]se of ‘i.e.’ signals an intent to define the word to which it refers.”); see also Abbott Labs. v. Novopharm Ltd., 323 F.3d 1324, 1330 (Fed. Cir. 2003) (holding that a patentee “explicitly defined” a term by using “i.e.” followed by an explanatory phrase).

The Federal Circuit explained that “the term ‘i.e.’ is Latin for id est, which means ‘that is.’”  The Federal Circuit added that whether a statement to the PTO that includes “i.e.” constitutes a clear and unmistakable disavowal of claim scope depends on the context, citing Braintree Labs., Inc. v. Novel Labs., Inc., 749 F.3d 1349, 1355 (Fed. Cir. 2014).

Samsung pointed to instances were i.e. was found not to be definitional, such as where it would be internally inconsistent as in Pfizer, Inc. v. Teva Pharm., USA, Inc., 429 F.3d 1364, 1373 (Fed. Cir. 2005) or where it would read out preferred embodiments, as in Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1326 (Fed. Cir. 2012).  But the Federal Circuit did not agree that interpreting “i.e.” as definitional, as it normally is, would result in inconsistency.

The difference between i.e. and e.g. was highlighted by the Federal Circuit in Interval Licensing LLC v. AOL, LLC., [2013-1282, -1283, -1284, -1285] (September  10, 2014).  In considering the definiteness of the claim limitation “unobtrusive manner that does not disturb the user,” the Federal Circuit noted that:

Had the phrase been cast as a definition instead of as an example—if the phrase had been preceded by “i.e.” instead of “e.g.”—then it would help provide the clarity that the specification lacks. But as the specification is written, we agree with the district court that a person of ordinary skill in the art would not understand the “e.g.” phrase to constitute an exclusive definition of “unobtrusive manner that does not distract a user.”

The Federal Circuit said that given a lone example, rather than a definition, a skilled artisan is still left to wonder what other forms of display are unobtrusive and non-distracting. The Federal Circuit concluded that the phrase “unobtrusive manner that does not distract a user” was indefinite.

Failure of Licensee to Mark May Upend $15.7 Million Damage Award

Posted on by

In Rembrandt Wireless Technologies, LP v.  Samsung Electronics CO., LTD., [2016-1729] (April 17, 2017), the Federal Circuit affirmed the district court’s claim construction and denial of JMOL, but vacated $15.7 million in damages and remanded because of a lack of patent marking.

In affirming the claim construction, the Federal Circuit found unambiguous statements in the prosecution history defined the meaning of “different types” of modulation, and Samsung’s arguments to the contrary do not diminish the unambiguous statements in
the prosecution history.  Samsung also attacked the use of the term “i.e.,” which Samsung argued introduces an exemplary item in a set, but the Federal Circuit found that the use of i.e. was “i.e., is often definitional, noting that i.e. is Latin for id est, which means “that is.”  The Federal Circuit also rejected Samsung’s reference to the broader construction in a related IPR, noting that the construction is not binding, and that IPR proceedings operates under a broader claim construction standard than the federal
courts.

In affirming the non-obviousness determination, the Federal Circuit rejected Samsung’s argument that it was a claim construction issue of the scope of “different types,” and characterizing it as a factual question of whether the reference disclosed “different types” of modulation. The Federal Circuit found that there was substantial evidence to support the jury’s presumed finding underpinning the non-obviousness determination.

On the marking issue prior to trial, Samsung moved to limit Rembrandt’s potential
damages award based on its failure to mark products covered by previously-asserted claim 40 of the ’580 patent.  Specifically, Rembrandt had licensed the ’580 patent to Zhone Technologies, Inc., and the license agreement between Rembrandt and Zhone did not require Zhone to mark its products with the patent number. Pursuant to the patent marking statute, 35 U.S.C. § 287, Samsung sought to limit Rembrandt’s damages to those incurred after Samsung received notice of Rembrandt’s patents, which, according to Samsung, occurred when Rembrandt filed its complaint. Eight days later, Rembrandt withdrew claim 40 from its infringement allegations and filed a statutory disclaimer pursuant to 35 U.S.C. § 253(a) and 37 C.F.R. § 1.321(a), disclaiming claim 40 in the U.S. Patent and Trademark Office. The court accepted
Rembrandt’s argument that any prior obligation to mark products embodying claim 40 vanished once it disclaimed claim 40.

The Federal Circuit held that Rembrandt cannot use disclaimer to avoid the marking requirement in 35 U.S.C. § 287, and vacated the judgment of the district court as it relates to marking.  While marking under 35 U.S.C. § 287 is permissive, there is a consequence if the patent owner chooses not to mark:

In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.

The Federal Circuit said that the marking statute protects the public’s ability to exploit an unmarked product’s features without liability for damages until a patentee provides
either constructive notice through marking or actual notice.  The Federal Circuit added that allowing Rembrandt to use disclaimer to avoid the consequence of its failure to mark undermines the marking statute’s public notice function.  While a disclaimer can disclaim the rights of the patent owner, the Federal Circuit said it has never held that a patent owner’s disclaimer relinquishes the rights of the public.  Considering the rights held by the public, the Federal Circuit held that disclaimer cannot serve to retroactively dissolve the § 287(a) marking requirement for a patentee to collect pre-notice damages.

Before the district court, Rembrandt argued, consistent with its disclaimer position, that the marking requirement is determined on a claim by claim basis, rather than on a patent-by-patent basis.  The Federal Circuit left this question for the district to determine in the first instance on remand.

Issue Preclusion: Patent Owner Does Not Get a Do Over to Assert the Claims Against Similar Products

Posted on by

In Phil-Insul Corp. v. Airlite Plastics Co., [2016-1982] (April 17, 2017), the Federal Circuit affirmed summary judgment of non-infringement of U.S.
Patent No. 5,428,933.  In prior litigation in which Phil-Insul asserted the patent against a different defendant, the district court construed the claims, granted summary judgment, and the Federal Circuit summarily affirmed.  In the present action, Airlite successfully argued to the district court that the accused products have the same design as the products found noninfringing in the prior litigation. The district court agreed, and granted Airlite’s motion for summary judgment of noninfringement.

Airlite raised collarateral estoppe, and Phil-Insul countered that (1) it did not have a full and fair opportunity to litigate the issues in the prior litigation because it now alleges infringement of Claim 2, rather than Claim 1; (2) the district court’s claimconstruction in the prior litigation was incorrect; and (3) the defense of collateral estoppel is not available in this case because the claim construction was not essential to the court’s noninfringement rulings.

In granting summary judgment, the district court found that all of the elements for collateral estoppel were satisfied for both the claim construction and noninfringement issues presented. Specifically,
the district court found that Phil-Insul had a “full and fair
opportunity to litigate” the claim constructions, and that those constructions resulted in a finding of noninfringement. The district court
further found that the infringement issues were “essentially indistinguishable” from those in the prior litigation, and that the accused Airlite products have the same design as the products in the prior litigation.

Collateral estoppel “precludes a plaintiff from relitigating identical issues by merely ‘switching adversaries’” and prevents a plaintiff from “asserting a claim that the plaintiff had previously litigated and lost against another
defendant.”  The Federal Circuit said that regional circuit law applies to the application of collateral estoppel, but Federal Circuit law applies to aspects peculiar to patent law.  In particular in determining whether a later infringement claim is the same as an earlier claim, the products must be “essentially the same,” in other words the differences between them are merely colorable or unrelated to the limitations in the claim of the patent.

Phil-Insul argued that the district court erred when it (1) gave collateral estoppel effect to a Rule 36 judgment; (2) relied on the oral argument transcript from the prior appeal; and (3) failed to construe claim 2.   We
address each argument in turn.  The Federal Circuit found that a Rule 36 affirmance is a valid and final judgment, and can support claim or issue preclusion.  As to the reliance on oral argument transcript, the Federal Circuit found that district court did not err in relying on the transcript to confirm the scope of what was at issue in the prior litigation.  Finally, as to the need to construe claim 2, the Federal Circuit first noted that the parties selected the terms and the claims to be construed, so Phil-Insul complaint is without merit.  The Federal Circuit further noted that claim 2 contains the same terms “adjacent” and “dimension” terms that the court construed in the prior litigation, and that these terms were dispositive, and noting that it is well-established that claim terms are to be construed consistently throughout a patent, citing Rexnord Corp. v. Laitram Corp., 274 F.3d 1336, 1342 (Fed. Cir. 2001).

 

An Omitted Inventor Can’t Correct Inventorship of a Patent Owned by a Government Agency

Posted on by

In a non-precedential opinion in Ali v. Carnegie Institution of Washington, [2016-2320] (April 12, 2017), the Federal Circuit affirmed the dismissal, on grounds of soverign immunity,  of Ali’s lawsuit to be added as a co-inventor on several of defendants’ patents. The district of Oregon court dismissed UMass on the ground that it is entitled to sovereign immunity under the Eleventh Amendment of the U.S. Constitution and transferred the case to the U.S. District Court for the
District of Columbia, where the court dismissed the case for want of an indispensible party.

Ali argued that the Oregon court erred in refusing to conclude that UMass waived sovereign immunity when, in return for federal funding under the Bayh-Dole Act.  The Federal Circuit noted that the question of Eleventh Amendment waiver is a matter of Federal Circuit law, and that a district court’s decision on sovereign immunity is subject to de novo review.  The Federal Circuit said that UMass waives sovereign immunity under only two circumstances: first, if the state on its own initiative invokes the jurisdiction of the federal courts; and second, upon a clear declaration by the state of its intent to submit to federal jurisdiction.  The Federal Circuit said that UMass’s alleged agreement to be subject to suit by the federal government under a contract controlled by and consistent with the Bayh-Dole Act did not operate as a “clear declaration” that it waived its sovereign immunity
as to Mr. Ali’s suit against it for damages arising from his alleged omission as a co-inventor of the patents-in-suit.

The net result is that it is impossible for an omitted inventor to correct inventorship of a patent that is at least partially owned by a government entity.

 

 

 

Just Because the Board Didn’t Say It; Doesn’t Mean that the Board Didn’t Think It

Posted on by

In Novartis AG v. Torrent Pharmaceuticals Limited, [2016-1352] (April 12, 2017), the Federal Circuit affirmed the PTAB’s determination that the challenged claims of U.S. Patent No. 8,324,283, and Novaritis’ proposed substitute claims, were unpatentable as obvious.

On appeal, Novaritis that it was denied due process under the APA when the the Board used a reference that it rejected as being anticipatory in the institution decision, as additional evidence of the reason to combine.

The Federal Circuit noted that under the APA, and an agency
may not change theories in midstream without giving respondents reasonable notice of the change and ‘the opportunity to present argument under the new theory.  The Federal Circuit disagreed that the Board ruled the reference out of the case entirely in the Institution Decision.  Th Federal Circuit said that the Board merely used the reference to reinforce its finding of obviousness, and that the Board’s discussion of the reference in the Final Written Decision was not inconsistent with its review of the reference in the Institution Decision.  The Federal Circuit further noted that the parties debated the reference at length throughout the proceeding and in the same context that it was discussed by the Board in the Final Written
Decision.  The Federal Circuit concluded that it is quite clear that
Novartis had more than sufficient notice and opportunity to be heard the reference’s potential relevance, and in fact actively and repeatedly attempted to distinguish the reference to defeat the very argument relied on by the Board in the Final Written Decision.

Novartis also argued that the Board further erred in its motivation to combine analysis because it failed to read the prior art as a whole and overlooked critical evidence of the combination’s known disadvantages.  Where the prior art contains apparently conflicting teachings (i.e., where some references teach the combination and others teach away from it) each reference must be considered for its
power to suggest solutions to an artisan of ordinary skill, considering the degree to which one reference might accurately discredit another.  The Federal Circuit noted that the Board expressly discussed the negative properties in the Final Written Decision, and noted that, despite this potentially discouraging characteristic, it was still commonly used.  In the end, the Federal Circuit was not persuaded that Novartis presented its arguments in such a way that it would be appropriate to find fault in the Board’s arguably limited treatment of those arguments in the Final Written Decision.

Although the prior art must be considered as a whole and the disadvantages of a reference must be considered in addition to the benefits, there is no requirement that the Board expressly discuss each and every negative and positive piece of evidence lurking in the record to evaluate a cursory argument. Given that the Board cited to the relevant pages of Novartis’ Patent Owner Response, we find no reason to assume the Board failed to consider the cited negatives simply because they were not recited at length in the Board’s Final Written Decision.

With respect of objective indicia of non-obviousness,  the Board rejected Novaritis argument of unexpected results because it was not commensurate with the scope of the claims.  On appeal Novaritis argued that the evidence nonetheless applied to the narrower dependent claims, but the Federal Circuit found that Novaritis did not separately argue the dependent claims, and therefore waived the argument.

Novaritis further argued that the invention enjoyed commercial success, industry praise, and met a long-felt but previously unsolved need.  For objective indicia evidence to be accorded substantial weight, a nexus must exist between the evidence and the merits of the claimed invention.  Where the objective indicia actually results from something other than what is both claimed and novel in the claim, there is no nexus to the merits of the claimed invention.  The Federal Circuit agreed that Novartis’ proffered evidence is not probative of the
nonobviousness inquiry, because other products were known with the same feature, even though had not yet been approved by the FDA.

 

 

Don’t Exalt Slogans over Real Meaning; Find the Claim Construction that Naturally Aligns with the Specification and Prosecution History

Posted on by

In The Medicines Company v. Mylan, Inc., [2015-1113, 2015-1151, 2015-1181] (April 6, 2017), the Federal Circuit affirmed summary judgment of non-infringement of U.S. Patent No. 7,598,343, and reversed a bench trial determination of infringement of U.S. Patent No. 7,582,727.

The district court reasoned that the accused product did not infringe the ‘343 patent because this patent required “efficient mixing,” and concluded that the accused product infringed the ‘727 patent because the claims did not include the “efficient mixing” requirement.  The Federal Circuit found that the claims of both patents include a “batches” limitation, which according to the patents requires efficient mixing, thus both patents require “efficient mixing.”

The Federal Circuit noted that both patents included the “batches” limitation, that set a maximum impurity level for the product.  The Federal Circuit said that the claims could not be construed to cover any batch that met the impurity level, because it would cover the prior art, rendering the claim invalid.  Rather, properly construed, what the batches limitation requires is the use of a process that achieves batch
consistency.  The Federal Circuit noted that the patent owner agreed that Medicines agrees that batch consistency is the result of following the patents in suit and is what distinguishes them from the prior art.

The Federal Circuit found a claim construction that covered any process that achieved the impurity standard and was not limited to the disclosed “efficient mixing” was unworkable, because an infringer would not know whether it infringed until all of the batches were completed, and thus would not provide reasonable certainty regarding the claim scope.  This reasoning seems faulty because if the infringer used a process which, like the disclosed process, reliably achieved the claimed impurity level, there would be no uncertainty.

The Federal Circuit also noted that during prosecution the applicant characterized the invention as being the process: “[i]n the
present invention, various embodiments relate to a less
subjective and more consistent process.”  The applicant also took care to distinguish its post-critical date sales from its pre-critical date sales because they were “prepared by the new process of the present invention.”

Finally the Federal Circuit noted that the patent owner distiguished the invention to the district court based upon the process disclosed in the specification, telling the court that it was readily apparent that the definition of pharmaceutical batches refers to the compounding processes described in the patents-in-suit.

After a detailed review of the language of the specification, the Federal Circuit found that the specification teaches efficient mixing as a necessary and sufficient condition for achieving batch consistency, and the prosecution history confirms that achieving batch consistency requires efficient mixing. The Federal Circuit concluded that to attribute to the claims a meaning broader than any indicated in the patents and their prosecution history would be to ignore the totality of the facts of the case and exalt slogans over real meaning.

The Federal Circuit went on to find that the required “efficient mixing” was not met by the accused products, and reversed the district court’s finding of infringement.

 

 

 

Dependent Claims Anticipated, While Independent Claims Were Not

Posted on by

In Duncan Parking Technologies, Inc. v IPS Group, Inc., [IPR2016-00067] (March 27, 2017) the PTAB found that claims 8 and 10 of U.S. Patent No. 7,854,310 were anticipated under 102(e), while claims 1–5, 7, and 9, including the claim 1 from which claim 8 depended and claim 9 from which claim 10 depended were not anticipated.  This peculiar result stemmed from the fact that the cited reference, the King ’054 patent, named King and Schwarz as inventors, while the ‘310 patent named King, Hunter, Hall, and Jones.  Petitioner urged that the King  ‘054 patent was “by another” inventive entity, qualifying it as prior art under §102(e).  The patent owner argued that King was the sole inventor of the subject matter claimed in claims 1–5, 7, and 9 of the the ‘310 patent, and as disclosed in the ‘054 patent, and thus the ‘054 did not represent work “by another” with respect to the subject matter of claims 1–5, 7, and 9.  The PTAB rejected petitioner’s arguments that Schwarz was a co-inventor of the relevant disclosure in King ‘054 or that Jone was a co-inventor of the subject matter in claims 1–5, 7, and 9.

Noting that the touchstone of inventorship is conception, the PTAB concluded that the record as a whole adequately established that King had mentally conceptualized the invention, and athough King engaged a third party to implement various mechanical aspects of the invention, the record conveys that the third party’s role in such implementation was more tantamount to perfection or reduction to practice of King’s conceived invention, rather than amounting to acts of conception with respect to claims 1–5, 7, and 9. The PTAB concluded that such perfection does not negate King’s claim of sole inventorship.

With respect to claims 8 to 10, the PTAB found that the record created a clearer picture that the inventive entity of claims 8 and 10 of the ’310 patent is different than the entity that created the same content of King ’054.