Estoppel Under 317(b) Always Applies on a Claim by Claim Basis, Just Like the Statute Says

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In In Re Affinity Labs of Texas, LLC, [2016-1092, 2016-1172] (May 5, 2017) the Federal Circuit affirmed the Board’s affirmance of a reexamination determination that all of the claims of U.S. Patent No. 7,324,833 was invalid.

The Board merged two inter partes reexaminations (one of which brought by Volkswagen) and an ex parte reexamination of U.S. Patent No. 7,324,833.Volkswagen subsequently received an adverse final judgment in a parallel district court proceeding, upholding the validity of claims 28 and 35 of Affinity’s ’833 patent. In response, Affinity petitioned the PTO to vacate the entire merged reexamination proceeding, arguing that the estoppel provision in pre-America Invents Act (AIA) 35 U.S.C. § 317(b)1 extends to all parties, not just Volkswagen, and all claims challenged in the three reexaminations, not just litigated claims 28 and 35.  The PTO
denied Affinity’s termination request, but it severed the Volkswagen reexamination from the merged proceeding and held that no rejection could be maintained in that reexamination as to the claims at issue in the district court.  The Examiner evaluated the Volkswagen reexamination separately from the merged King/Apple reexamination and ultimately issued a Right of Appeal Notice in each proceeding, rejecting numerous
claims of the ’833 patent as unpatentable, and the PTAB affirmed.

Affinity argued that the PTO erred in maintaining the reexaminations in light of the final decision that Volkswagen failed to prove invalidity of two of the patent’s claims, which were asserted in the co-pending litigation and, therefore, the Board’s decisions in the reexaminations should be reversed pursuant to the section 317(b) estoppel provision.

Affinity also argued that, assuming the reexaminations were properly maintained, the Board’s decisions are based on misreadings of the
asserted prior art and a misevaluation of Affinity’s objective indicia evidence of nonobviousness.

Because the plain language of pre-AIA section 317(b) precludes Affinity’s
estoppel argument and because the Board found no error in the Board Decision upholding the Examiner’s findings of unpatentability as to all claims at issue, the Federal Circuit affirmed.

Affinity argued that the decision not to terminate all three reexaminations frustrated section 317(b)’s underlying policy goal of preventing duplicative, harassing actions. The Federal Circuit concluded that a
straightforward reading of the plain language of section 317(b) precludes Affinity’s overly broad conception of the estoppel provision, and found no grounds to reverse the Board’s final decisions based on section 317(b).

The Federal Circuit observed that Section 317(b) bars a party from using the inter partes reexamination process after a final decision has been
entered against that party in a civil action. The Federal Circuit noted that (1) it applies to the party in the civil action that loses its validity attack against “any patent claim” as well as the party’s privies; (2) it applies to validity issues raised in the civil action or that could have been raised in
that action; (3) unlike section 317(a), it speaks in terms of any “patent claim,” as opposed to the “patent;” (4) it prohibits the losing party and its privies from requesting an inter partes reexamination “of any such patent claim;” and (5) “on the basis of such issues,” it prohibits the PTO from “maintain[ing]” any inter partes reexamination requested by the losing party.  The Federal Circuit disagreed with Affinity’s proposed interpretation that the estoppel provision applied differently to maintaining a pending reexamination versus requesting a new reexamination.  The Federal Circuit held that section 317(b) was plainly limited the scope of estoppel in all circumstances to only those claims actually challenged and for which the requesting party received an adverse final decision in the district court proceeding.  The Federal Circuit further found no basis in the statute for Affinity’s argument that the final decision in the Volkswagen litigation should have preclusive effect on the reexaminations requested by third parties.

The Federal Circuit concluded that substantial evidence supports the Board’s unpatentability findings as to all challenged claims in the merged third party reexaminations, and because the claims at issue in the
Volkswagen reexamination comprised only a subset of the claims in the merged third party reexamination, it declined to address the alternative grounds of unpatentability at issue in the Volkswagen reexamination appeal.

Semicolons Strongly Indicate Each Step is Separate and Distinct; Confuse Most Non-Patent Lawyers

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In In re Affinity Labs of Texas, LLC, [2016-1173] (May 5, 2017), the Federal Circuit affirmed the Board’s decision that §317(b) did not bar the reexamination, and that the reexamined claims were in valid.

Affinity sued Apple for infringement of U.S. Patent No. 7,440,772, and Apple requested reexamination of the ‘772 Patent.  Apple and Affinity settled the lawsuit and filed a joint stipulation of dismissal.  Apple also filed a notice of non-participation in the reexamination, and Affinity petitioned to terminate the reexamination under 35 U.S.C. § 317(b), whihc prohibits the USPTO from maintaining an inter partes reexamination after the party who requested the reexamination has received a final decision against it in a civil action.  The USPTO denied Affinity’s petition because because the district court’s dismissal,
without prejudice did not meet section 317(b)’s required condition for terminating the reexamination.  The reexamination resulted in invalidation of all of the claims, which was affirmed by the PTAB.

The claims  the claim included a dual download feature, inter alia, requiring:

in response to receiving the request, making a first version of the piece of selectable content available for downloading to the wireless user device and a second version of the piece of selectable content available for downloading to a personal computer of the user, wherein the first version has the specific format and the second version has a different format playable by the personal computer;
sending the first version of the piece of selectable content to the wireless user device; and
sending the second version of the piece of selectable content to the personal computer.

Affinity argued that the two sending steps must occur automatically, without intervening steps, after the “in response to” language.  The Federal Circuit disagreed, noting that each of the five steps of method claim 4 —including the three steps of the dual download feature— are offset by semicolons. The Federal Circuit said: “This punctuation choice strongly indicates that each step is separate and distinct.” It would, therefore, be reasonable to conclude the fourth and fifth steps—the sending steps—are not tied to the “making . . . available” step and
not performed “in response to” the same request found in
the “making . . . available” step, as Affinity argued.  The Federal Circuit also found that while portions of specification were consistent with automatically downloading, they certain did not require it, and in fact some embodiments did not have automatic downloads.  The Federal Circuit thus affirmed the broad claim construction by the Board, and the invalidation of those broad claims.

Because the Federal Circuit agreed that the estoppel provision of § 317(b) did not prohibit the PTO from maintaining the reexamination
of the ’772 Patent’s claims, and the Board’s construction of the claims was consistent with the broadest reasonable interpretation, the Federal Circuit affirmed the Board’s decision.

 

The Federal Circuit Holds that a Public, Non-Disclosing Sale is Prior Art; But Do the 102(b)(1) Exceptions Apply?

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In Helsinn Healthcare S.A. v. Teva Pharmaceuticals USA, Inc., [2016-1284, 2016-1787] (May 1, 2017), the Federal Circuit reversed the district court’s determination that U.S. Patent Nos.  7,947,724, 7,947,725, 7,960,424, and 8,598,219, were not anticipated, finding that the patents-in-suit were subject to an invalidating contract for sale prior to the critical date, and the AIA did not change the statutory meaning of “on sale.”  The product covered by the patents was subject to a Supply and Purchase Agreement, contingent on FDA approval of the formulation, the terms of which were public except for the price and the specific dosage formulation covered by the agreement.

As to the ’724, ’725, and ’424 patents, the district court found that pre-AIA law applied under § 102(b) and that the Supply and Purchase Agreement was a contract for a future sale of a commercial product embodying the
0.25 mg dose and therefore constituted a sale under (old) §102(b). But, the district court found that the claimed invention was not reduced to practice before the critical date, and therefore was not ready for patenting
under the second prong of Pfaff.

As to the ’219 patent governed by the AIA, the court held that the AIA changed the meaning of the on-sale bar and § 102(a)(1) now “requires a public sale or offer for sale of the claimed invention.” The district court concluded that, to be “public” under the AIA, a sale must publicly disclose the details of the invention, and thus the Supply and Purchase Agreement did not constitute a public sale or commercial offer for sale because, although it disclosed the sale agreement and substance of the transaction, it failed to publicly disclose the 0.25 mg dose. The district court also found that the invention was not ready for patenting before the critical date.

On the issue of the post-AIA meaning of “on sale,” the Federal Circuit acknowledged the arguments that the statutory language “otherwise available to the public” and various statements by individual members of Congress, meant that “on sale” in post-AIA 102 does not include non-disclosing sales.  After first noting that “floor statements are typically not reliable,” the Federal Circuit distinguished these statements as directed to non-disclosing public uses, not non-disclosing offers for sale.  The Federal Circuit noted that the comments did not identify any sale cases that would be overturned by the amendments, and noted that even if they were intended to overrule prior secret sale cases, the comments still did not apply because the case before it involved a public but non-disclosing sale.

The Federal Circuit said that requiring disclosure as a condition of the on-sale bar would work a “foundational change” in the theory of the statutory on-sale bar.  The Federal Circuit noted that both the Supreme and its own precedent had rejected the requirement that the sale be disclosing:

[O]ur prior cases have applied the on-sale bar even when there is no delivery, when delivery is set after the critical date, or, even when, upon delivery, members of the public could not ascertain the claimed invention.

The Federal Circuit found no indication in the floor statements that these
members intended to overrule these cases, and in fact the Federal Circuit found the statements to be consistent.  The Federal Circuit found no floor statements suggesting that the sale or offer documents must themselves publicly disclose the details of the claimed invention before the critical
date, and said that if Congress intended to work such a sweeping change to our on-sale bar jurisprudence and wished to repeal these prior cases legislatively, it would do so by clear language.

The Federal Circuit concluded that “after the AIA, if the existence of the sale is public, the details of the invention need not be publicly disclosed in the terms of sale.”  Thus the Supply and Purchase Agreement constituted a sale of the claimed invention before the critical
date, and therefore both the pre-AIA and AIA on-sale bars apply.

Finally, the Federal Circuit found the invention was ready for patenting, so that the pre-filing sales did, in fact, invalidate the four patents in suit.

The Federal Circuit’s construction makes some sense, relying on the addition of a clause, and some remarks of a few Congressmen does not seem a proper way to over rule a century of cases surrounding the meaning of “on sale.”  However, the overall structure of the statute raises a further question — assuming that the Federal Circuit is correct, does the statute provided any any grace period for non-disclosing sales?  In the rearrangement of Section 102 by the AIA, the grace period was separated into its own section (§102(b)(1)), and by its express terms, only applies to disclosures:

(b)(1) Disclosures made 1 year or less before the effective filing date of the claimed invention.—A disclosure made 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under subsection (a)(1) if—

(A) the disclosure was made by the inventor or joint inventor or by another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor; or

(B) the subject matter disclosed had, before such disclosure, been publicly disclosed by the inventor or a joint inventor or another who obtained the subject matter disclosed directly or indirectly from the inventor or a joint inventor.

It would seem either a non-disclosing offer for sale or sale is a disclosure, which does not make linguistic sense, or a non-disclosing offer for sale or sale is an absolute bar to patentability because there is no exception for non-disclosures. which does not make practical sense.  The result would be that a public non-disclosing sale is an immediate bar to patentability, but a public disclosing sale is not.

It is possible that the §102(b)(1) exception could be found to apply by treating the disclosure of the offer for sale or sale as a disclosure that triggers the exception, but such an interpretation strains the language of the statutory exceptions, which refer to “subject matter.”  It also raises further questions, such as: Does the public disclosure of a non-disclosing offer for sale or sale, count as a disclosure that bars third parties from filing on the undisclosed subject matter?  Does the public siclosure of a non-disclosing offer for sale or sale count as a §102(b)(1)(B) disclosure that would remove subsequent third party disclosures of the subject matter as prior art?

If a public, non-disclosing offer for sale, is in fact a disclosure, it would seem that this would provide a peculiar incentive for inventors to make a public but non-disclosing offer for sale of an invention immediately, the subject matter of which would be prior art to all subsequent third parties under 102(a), and would remove the prior art effect of subsequent third party disclosures under 102(b)(1)(B), all without actually disclosing what was invented.

The definitions of what is and what is not patentable, and what is and what is not prior art, are fundamental to a patent system.  It is disappointing that something optimistically titled the America Invents Act could not have been better thought out.

 

 

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Lack of Proof That Infringement was But For Cause of Lost Sales or Price Erosion Defeats Permanent Injunction

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In Nichia Corp. v. Everlight Americas, Inc., [2016-1585, 2016-1618] (April 28, 2017), the Federal Circuit affirmed the district court’s judgment that U.S. Patent Nos. 8,530,250, 7,432,589, and 7,462,870, directed to LED devices, were valid and infringed, as well as the district court’s denial of a permanent injunction.

The Federal Circuit affirmed the district court’s construction of “lead,” rejecting the argument that it should have been construed to mean “the conductive portion of the device that makes an electrical connection to a structure outside of the device” rather than “the portion of the device that conducts electricity.”  The Federal Circuit also affirmed the district court’s construction of “planar,” rejecting the argument that it should have been construed to mean “no measurable surface variation,” rather than “in a substantially same plane.” Thus the Federal Circuit affirmed the finding of infringement.

With respect to validity, the Federal Circuit found substantial evidence supported the district court’s conclusion that some of the references asserted were not analogous, that claim elements were missing from other references, and that there was a lack of motivation to combine,  and thus that the patents were not proven obvious.

As to Nichia’s appeal, the district court held that Nichia failed to show that it had suffered irreparable harm and that remedies at law provided Nichia inadequate compensation.  The Federal Circuit agreed that Nichia failed to show irreparable harm, and thus did not reach the adequacy of compensation issue.  The Federal Circuit said that an injunction in patent law must be justified like any other: the moving party must satisfy the court that relief is needed. Applying “well established principles of equity” the Federal Circuit found the showing of irreparable harm lacking.

The district court noted the absence of meaningful competition between the parties.  The district court also found that Nichia had failed to establish past irreparable harm, or the likelihood of irreparable harm in the future based on lost sales” or “based on price erosion.”  The district court further found that Nichia’s licensing of the patents to major competitors suggested that harm from “infringement of the patents-in-suit is not irreparable.”  Finally, the district court found that Nichia’s licensing practices have made multiple low-priced non-infringing alternatives from competitors available to replace the accused Everlight products if such products were not available.

The Federal Circuit deferred to the district court because the court heard these arguments as the original finder of fact and concluded to the contrary, carefully weighing both parties’ evidence.  The Federal Circuit agreed that that parties sold in different markets, and Nichia failed to prove that any competition between the parties was meaningful.  The Federal Circuit noted that Nichia failed to show the infringement was the “but for” cause of even one lost sale, or the “but for” cause of price erosion.

The Federal Circuit rejected a rule that the patentee’s licensing activities automatically barred injunctive relief, but had no problem with considering licensing activities as a factor.  Because Nichia failed to establish one of the four equitable factors, the court did not abuse its discretion in denying Nichia’s request for an injunction.

It is interesting that principles of equity can defeat the Constitutionally established “exclusive rights” to inventions and discovery, yet principals of equity are insufficient to extend laches to patent cases.

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

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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.

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

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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?

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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.

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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

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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

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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).