Neither Express Agreement, nor Implied Agreement, Clearly Deprived a Putative Inventor of Standing to Challenge Inventorship of a Patent Under 35 USC 256

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In James v. J2 Cloud Services LLC, [2017-1506] (April 20, 2018), the Federal Circuit reversed the dismissal of James’ claim for correction of inventorship for lack of jurisdiction.

James alleged that he is the sole inventor of the subject matter claimed in U.S. Patent
6,208,638, on systems and methods for accepting an incoming message
over a circuit switched network and transmitting it over a packet switched network, which names Rieley and Muller as the inventors.  On defendant’s motion the district court dismissed the complaint for lack of Article III standing, concluding that James failed to allege facts sufficient to show that he has an ownership or financial interest in the patent.

To have Article III standing, a plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.  The Federal Circuit said that if Mr. James were to prevail on his allegations he would stand to gain concretely, whether through securing an entitlement to seek damages for past acts of infringement or otherwise.
Such a gain would be directly related to the merits of the claim and would redress the asserted injury of being deprived of allegedly rightful ownership.  The Federal Circuit said that in the absence of other facts, that is enough to give James Article III standing.

However, the district court found that James assigned away, or entered into an enforceable agreement to assign away, any ownership rights he may have had in
the patent.  However, the Federal Circuit concluded that he did not.  The Federal Circuit could not conclude that the Software Development Agreement precludes James from
retaining ownership rights in patents on his inventions, finding it “amenable to the construction that it does not assign, or promise to assign, patent rights that would
otherwise accrue to Mr. James as an inventor.”  The Federal Circuit reviewed the sections addressed by the district court or argued by the parties, and when considered in the light favorable to James, as they must be on a motion to dismiss, do not deprive James of constitution standing.

The Federal Circuit the addressed the the “hired to invent” doctrine of United States v. Dubilier Condenser Corp., 289 U.S. 178, 187 (1933), and Standard Parts Co. v. Peck, 264 U.S. 52, 59–60 (1924), under which an employer may “claim an employee’s inventive work where the employer specifically hires or directs the employee to exercise inventive faculties.”  The “hired-to-invent” rule is “firmly grounded in the principles of contract law,” and “[t]o apply this contract principle, a court must examine the employment relationship at the time of the inventive work to determine if the parties entered an implied-in-fact contract to assign patent rights.”  Whether the doctrine is viewed as a matter of federal law or a matter of the state law of implied-in-fact contracts, its applicability in a given case depends on the terms of the contractual relationship of the parties.  The Federal Circuit noted what it found an important distinction: the agreement was not with James personally, but with GSP.  Thus James was not himself an “employee” of, or personally hired by, defendant’s predecessor in interest.  Moreover, because the Software Development Agreement largely or even wholly defines the terms of the alleged “hiring” of James (actually of GSP),there is at least a factual dispute about any implied assignment or promise to assign.  Accordingly, the Federal Circuit found that it was improper to dismiss the case under Rule 12(b)(1) for lack of standing based on the hired-to-invent principle.

Counting Votes is a Abstract Idea, and Simply Automating the Process Doesn’t Make it Patentable

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In Voter-Verified, Inc., v. Election Systems & Software LLC, [2017-1930] (April 20, 2018), the Federal Circuit affirmed the district court’s determination that claims of
U.S. Reissue Patent RE 40,449 were directed to patent-ineligible subject matter and are thus invalid under 35 U.S.C. § 101.

The Reissue patent in suit was directed to voting methods and systems that provide for
“auto-verification” of a voter’s ballot.  The parties have previously litigated the validity and infringement of the patent prior to Alice v. CLS Bank, and thus a threshhold issue was whether Alice was a “substantial change” in the law such that issue preclusion does not apply.  The Federal Circuit held that Alice was not a substantial change in the law (noting that it was a mere application of Mayo), but nonetheless concluded that issue preclusion did not apply because §101 invalidity was never “actually litigated” — and in fact was “barely considered,” and in any event the issue of invalidity under §101 was not necessary to the judgment in the first district court action.

Have decided that consideration of §101 was not barred, the Federal Circuit turned to whether the claims of RE 40,449 did in fact claim patentable subject matter.  Election Systems argued that the claims are directed to the abstract idea of “voting and checking
the accuracy of a paper election ballot,” which represents only a well-established human activity. Because the patent only discloses use of general purpose computers, and the invention is essentially automating a fundamental human activity, Election Systems argued that this was insufficient to transform the the claimed abstract idea into
patent-eligible subject matter.

The Federal Circuit agreed that the claims were directed to patent ineligible subject matter.  Even though the claims encompassed both methods and systems, the Federal Circuit found no distinction between them for § 101 purposes, as “they simply recite the same concept.”  The Federal Circuit said that the claims as a whole are drawn to the concept of voting, verifying the vote, and submitting the vote for tabulation, and noted that humans have performed this fundamental activity that forms the basis of our democracy for hundreds of years.  The Federal Circuit concluded that these steps were therefore nothing more than abstract ideas.  The Federal Circuit further found that there was no inventive concept in the claims sufficient to transform them into patent-eligible subject matter. Neither party disputed that the claims recite the use of general purpose computers that carry out the abstract idea, and the case law has consistently held that
use of standard components are not sufficient to transform abstract claims into patent-eligible subject matter.

 

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While §315(b) Determinations are Appealable, in the Case the Board Got it Right

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In Wi-Fi One, LLC v. Broadcom Corporation, [2015-1944] (April 20. 2016), the Court of Appeal for the Federal Circuit, after deciding en banc that the PTAB’s decisions relating to §315(b) time-bars were appealable, affirmed the PTAB’s  determination that the petitioner in three related IPR’s were not time-barred.

The Federal Circuit said that a review of the Board’s decisions, in the context of the arguments Wi-Fi made at each stage, show that the Board did not apply a legally erroneous standard in deciding the “real party in interest, or privy” issue.  The Board correctly found that petitioner Broadcom was not in privity with the parties in the prior litigation.

The Federal Circuit also affirmed the Board’s denial of additional discovery on the issue of privity, noting that the Board explored the discovery issue in detail and applied the proper legal test for finding privity or real party in interest status under section 315(b).  Under these circumstances, the Federal Circuit declined to hold that the Board abused its discretion when it concluded that additional discovery was not warranted in this case.  Finally, the Federal Circuit rejected the patent owner’s contention that the Board did not adequately explain its rulings on the §315(b) issue, noting the Board’s multiple and detailed discussions of the section 315(b) issue, the Federal Circuit said that the “Board cannot fairly be accused of not providing an adequate explanation for its decision on that question.”

 

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There is no Transitive Property of Priority Claims; a Patent Must Contain a Specific Reference to Each Prior-Filed Application

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In Droplets, Inc., v. E*Trade Bank, [2016-2504, 2016-2602] (April 19, 2018), the Federal Circuit affirmed the Board’s decision finding all claims of U.S. Patent No.
8,402,115 invalid as obvious over a published grandparent application due to an improper priority claim.

This application claimed priority to it’s immediate parent application, and to its ultimate  great grand parent application, but failed to mention a priority claim between the parent application the grand parent application, or between the grand parent application and the great grand parent application:

One might think that if B claims priority to A, C claims priority to B, and D claims priority to C, that this is sufficient for D to get credit for the filing date of A. D After all should D be entitled to priority of C, C should get the priority of B and B should get the priority of A.  However, that is not how the Federal Circuit interpreted Sections 119 and 120 in this case, nor how it has interpreted these statutes in the past.

The Federal Circuit noted that consistent with 35 U.S.C. § 120 and 37 C.F.R. § 1.78,
MPEP § 201.11 III.C. provides detailed guidance on how to claim priority from multiple prior-filed applications. It states that the reference to the prior applications must identify
all of the prior applications and indicate the relationship (i.e., continuation, divisional, or continuation-in-part) between each nonprovisional application in order to establish copendency throughout the entire chain of prior applications.

The Federal Circuit rejected Droplets’ characterization of the issue as “hypertechnical.”  The Federal Circuit also rejected Droplets’ more creative argument that the priority claim was incorporated by reference from the application whose priority was properly claimed, finding §120’s “specific reference” requirement does not contemplate incorporation by reference.

The Federal Circuit reiterated that a patent must contain a specific reference to each prior-filed application to be entitled to those applications’ earlier filing dates, and added that incorporation by reference cannot satisfy this statutorily mandated specific reference requirement. Because the patent at issued contained only a reference to its immediate parent, and not its grand parent, or great grand parent, the Federal Circuit affirmed the Board’s decision finding all claims of the patent invalid as obvious.

Reexamined Claims were Sufficiently Different that Equitable Estoppel Did Not Apply

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in John Bean Technologies Corp. v. Morris & Associates, Inc., [2017-1502] (April 19, 2018), the Federal Circuit reversed the district court’s grant of summary judgment based on its finding of equitable estoppel, and remanded for proceedings consistent with this opinion.

In 2002, Morris wrote Bean that its recently issued U.S. Patent 6,397,622 was invalid over certain prior art, and demanding cessation of statements regarding infringement of the patent to Morris’ customers.  Eleven years later, Bean filed a request for ex parte reexamination, which after amending the existing claims to overcome the art identified by Morris, and adding new claims, issued in 2014.

Bean sued Morris on the reexamined U.S. Patent 6,397,622, and the district court granted Morris summary judgment based upon equitable estoppel.  Equitable estoppel which is an absolute bar to a patentee’s infringement action, consists of three elements: (1) the patentee engages in misleading conduct that leads the accused infringer to reasonably infer that the patentee does not intend to assert its patent against the accused infringer; (2) the accused infringer relies on that conduct; and (3) as a result of that reliance, the accused infringer would be materially prejudiced if the patentee is allowed to proceed with its infringement action.

The Federal Circuit noted the unusual nature of the case — namely that the finding of equitable estoppel was based on conduct before the issuance of the rights being asserted — the reexamination claims.  However relying upon the principles undergirding
the issuance of reexamination claims, i.e. that (1) reissue claims cannot be broader than the original claims; and (2) a patentee cannot assert reexamination claims to obtain damages prior to the issuance date of the reexamination certificate (unless they are identical in scope).  The Federal Circuit found that the amendments made during reexamination were both substantial and substantive. The Federal Circuit concluded that because the asserted claims did not exist at, or were substantively altered since, the time Morris wrote to Bean, Bean could not have engaged in misleading conduct or silence with respect to those claims.

The Federal Circuit allowed that there may be cases where the reexamined
claims contain fewer amendments such that the reexamined claims do not differ in
scope from the original claims, and might be considered identical for purposes of applying equitable estoppel, but found that is not the situation in the present case, and thus the district court abused its discretion in applying equitable estoppel to bar Bean’s infringement action.

It Costs $440,000 to Dismiss a Case for Lack of Standing, but Plaintiff Had to Pay it

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In Raniere v. Microsoft Corp., [2017-1400, 2017-1401] (April 18, 2018), the Federal Circuit held that the district court did not err in finding that Microsoft and AT&T were the prevailing parties under 35 U.S.C. § 285  (2012), and did not abuse its discretion in awarding attorneys’ fees and costs.

Raniere sued for infringement of a total of five patents (U.S. Patent Nos. 6,373,936, 6,819,752, 7,215,752, 7,391,856, and 7,844,041), and Microsoft and AT&T challenged Raniere’s standing.  Rainiere and the other inventors assigned the underlying inventions to Global Technologies, Inc.  In May 1996, GTI was administratively dissolved.  In December 2014, Raniere executed a document on behalf of GTI, claiming to be its president and “sole owner,” that purportedly transferred the asserted patents from GTI to himself.

Microsoft challenged Raniere’s standing, and the district court ordered Raniere to produce documentation proving his representations. The district court found that the documents produced by Raniere failed to indicate that Raniere had an ownership interest in GTI at any time or that Raniere had the right to assign the patents at issue from GTI to himself.  Given Raniere’s failure to produce evidence to support his standing, the district court permitted Appellees to conduct limited discovery into the standing issue and stayed the cases pending its resolution.  The parties suspended discovery when they began negotiating terms of settlement, but Raniere refused
to finalize the settlement. AT&T then filed a motion for an order to show cause why the action should not be dismissed under Federal Rule of Civil Procedure 41(b) for
lack of standing.

The district court found that Raniere’s testimony surrounding the alleged transfer contradicted Raniere’s earlier representations and was “wholly incredible and untruthful. Moreover, the district court found that Raniere’s conduct demonstrated “a clear
history of delay and contumacious conduct.”  In a subsequent fees motion the district court award fees.  AT&T submitted evidence that it incurred $395,050.30 in attorney fees and $13,917.10 in costs, and Microsoft submitted evidence that it incurred
$176,166.40 in attorney fees and $2,073.68 in costs.  The district court found Appellees were not entitled to fees spent on certain matters after the district court issued its stay order. And, the district court reduced the lodestar for both Appellees by twenty percent due to duplication of efforts between Microsoft and AT&T attorneys. In view of these determinations, the district court awarded $300,295.71 to AT&T and $143,719.26 to Microsoft in attorney fees and costs.

The Federal Circuit agreed that the Appellees were the prevailing parties, and that the district court did not abuse its discretion finding the case exceptional and awarding fees. The Federal Circuit, noting that the district court was in a better position to determine whether a case is exceptional, had no reason to disturb the district court’s well-reasoned determination.  The Federal Circuit also concluded that the district court’s discretionary determination of fees and costs is well-supported and reflects the court’s careful consideration of the relevant billing rates, invoices, and records.

 

Lack of Corroboration Caused Claim of Prior Invention to Fail

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In Apto Miitors APS v. Kamstrup, [2017-1681] (April 17, 2018) the Federal Circuit affirmed the Board’s determination that U.S. Patent No. 8,893,559 was anticipated by Nielsen, U.S. Patent App. Pub. No. 2012/0006127, finding substantial evidence supported the Board’s finding that Apator failed to sufficiently corroborate the
inventor testimony of earlier conception.

An inventor can swear behind a reference by proving he conceived his invention before the effective filing date of the reference and was diligent in reducing his invention to practice after that date.  However, that when a party seeks to prove conception
through an inventor’s testimony the party must proffer evidence corroborating the inventor’s testimony.  The sufficiency of the proffered corroboration is determined
by a “rule of reason” analysis in which all pertinent evidence is examined, but even under the rule of reason analysis, the evidence of corroboration must not depend solely on the inventor himself.

The evidence of prior conception included emails sent by the inventor transmitting drawings and presentations, but the only identification of the attachments was by the inventor.  The Federal Circuit noted the catch-22 of corroboration: Apator attempts to corroborate the inventor’s testimony with the emails and the drawings, but the emails and drawings can only provide that corroboration with help from the inventor’s
testimony.

The Federal Circuit concluded that a reasonable mind could conclude that Apator
failed to proffer evidence corroborating the inventor’s testimony regarding conception, and accordingly held that substantial evidence supports the Board’s finding
that Apator has not established prior conception.

Claim Covered at least the Depicted Enantiomer

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In Sumitomo Dainippon Pharma Co., Ltd. v. Emcure Pharmaceuticals Limited, [2017-1798, 2017-1799, 2017-1800] (April 16, 2018) affirmed determination of infringement of the claim which depicted the enantiomer that was the active ingredient.   While the district court construed the claim as covering both enantiomers and mixtures thereof, the Federal Circuit said that it need not determine what else falls within the claim’s ambit to resolve the dispute.

The plain claim language and specification demonstrate that, at a minimum, the claim covers what it depicts, which suffices to resolve the parties’ dispute because Appellants conceded that the district court’s judgment can be affirmed if the claim at least covers the depicted enantiomer.   Noting a lack of anything in the claim language limiting its scope to a “racemate” or “racemic mixture,” or some indication in the specification
or prosecution history to the contrary, the Federal Circuit held that the plain and ordinary meaning of the claim covers at least the specific enantiomer depicted in the claim itself.

Hold the Mayo: Specific Method of Treatment for Specific Patients using a Specific Compound at Specific Doses to Achieve a Specific Outcome Is Patent-Eligible Subject matter

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In Vanda Pharmaceuticals Inc. v. West-ward Pharmaceuticals International Limited, [2016-2707, 2016-2708] (April 16. 2018), the Federal Circuit affirmed the district court;s determination that claims 1–9, 11–13, and 16 of U.S. Patent 8,586,610 (infringed and not invalid.

The Federal Circuit noted that inducement can be found where there is evidence of active steps taken to encourage direct infringement, which can in turn be found in advertising an infringing use or instructing how to engage in an infringing use.  Thus ican be found where there is evidence of active steps taken to encourage
direct infringement, which can in turn be found in advertising an infringing use or instructing how to engage in an infringing use.  The Federal Circuit rejected West-ward’s argument that the proposed label was insufficient to find inducement, without an underlying direct infringer, because in an ANDA case infringement is statutorily defined as filing or amending the application, not by selling a product.

The Federal Circuit also found that the district court did not clearly err in finding that the proposed label recommends performance of all the claimed steps, finding that potential noninfringing uses do not preclude a finding of specific intent to induce infringement.

Regarding subject matter eligibility, the Federal Circuit rejected West-ward’s argument that the claims were similar to the the claims found patent ineligible in Mayo.  First, the claims in Mayo were not directed to a novel method of treating a disease. Instead, the claims were directed to a diagnostic method based on the relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm.  This relation was a consequence of the ways in which thiopurine compounds are metabolized by the body—entirely natural processes. And so a patent that simply describes that relation sets forth a natural law.  in contrast, the Federal Circuit found the instant claims were directed to “a new way of using an existing drug” that is safer for patients.

Second, the Federal Circuit found that unlike the claim in Mayo, the present claims do not tie up the doctor’s subsequent treatment decision.  The claim in Mayo did not go beyond recognizing  a need to increase or decrease a dose — it could be infringed even if the doctor did not actually change the treatment.  In other words, the claim in Mayo did not involve using the natural relationship. In contrast, the claims in suit recite the steps of carrying out a dosage regimen based on the results of genetic testing.  Thus the claims do not broadly tie up the doctor’s subsequent treatment decisions.

The Federal Circuit analogized the case to CellzDirect, where the claims were not directed to an observation or detection, but to a method of preserving cells. There, the natural ability of the subject matter to undergo the process did not make the claim “directed to” that natural ability. The Federal Circuit also distinguished Myriad, where the court noted that method claims and patents on new applications of knowledge about particular  genes were not implicated by its decision, noting the claims fall squarely  within categories of claims not implicated by its decision.

The Federal Circuit concluded that the claims were directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome. They are different from Mayo because they recite more than the
a natural relationship; instead, they recite a method of treating patients based on this relationship.

The Federal Circuit affirmed that the district court clearly erred in finding that the  patent sufficiently discloses the claimed invention.

Finally, the Federal Circuit agreed that 35 U.S.C. § 271(e)(4) supports the injunctive relief granted by the district court.

 

 

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PTAB is not Bound by prior Litigation-Based Claim Constructions Provided They are Appropriately Considered

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In Knowles Electronics. v. Iancu, [2016-1954] (April 6, 2018), the Federal Circuit affirmed the PTAB’s affirmance of the Examiner’s determination that claims 1–2, 5–6, 9, 11–12, 15–16, and 19 of U.S. Patent No. 8,018,049 were anticipated, and claims 21–23 and 25–26 would have been obvious.

The claims were directed to a silicon condenser microphone and manufacturing method.  Knowles argued that the PTAB erred by improperly construing “package,” including by failing to consider the Federal Circuit construction of package in a related patent, and by improperly relying on a new ground of rejection to sustain the Examiner’s obviousness findings.

The Federal Circuit noted that it has held that, in some circumstances, previous
judicial interpretations of a disputed claim term may be relevant to the PTAB’s later construction of that same disputed term. While the PTAB is not generally bound by a previous judicial interpretation of a disputed claim term does not mean that it has no obligation to acknowledge that interpretation or to assess whether it is consistent with the BRI.  The Federal Circuit found that the PTAB considered a previous interpretation of the term and properly determined its claim construction was consistent with the term’s BRI, and the PTAB adequately explained its adoption a claim construction
relative to the prior construction.

On the question of whether the Board relied upon a new ground of rejection, the Federal Circuit said that the PTAB is not limited to reciting and agreeing with the examiner’s rejection in haec verba, and can further explain the examiner’s rejection and thoroughly respond to an applicant’s argument. Knowles argued that the the PTAB’s finding regarding the motivation to combine, based upon the principles of operation of the references, does not appear anywhere in the Examiner’s decision.  However, after examining the decisions of the Examiner and the Board, the Federal Circuit found taht the PTAB’s rejection relied on the same reasons provided by the Examiner, albeit using slightly different verbiage.  The Federal Circuit noted that Knowles was given, and actually used its opportunity to respond to the theory of unpatentability before the Board.