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).

 

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

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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

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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

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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

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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.

Prior Art that must be Distorted from its Obvious Design does not Anticipate

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In re Chudik, [2016-1817] (March 27, 2017), the Federal Circuit reversed the PTAB’s determination that claims 1, 15, 18, and 33–40 of U.S. Patent Application 11/525,631 on an implant for shoulder replacement surgery were anticipated.

The rejected claims required “a shell having a protruding surface on a first side arranged to engage the surface of a cavity formed in a glenoid extending between peripheral glenoid surfaces.  The PTAB affirmed the rejection because claims did not require the recited surfaces engage the specified glenoid regions; rather they require only that the recited surfaces be arranged for such engagement.

A patent claim is invalid for anticipation under 35 U.S.C. § 102 when a prior art reference describes each and every claim limitation and enables one of skill in the art to practice an embodiment of the claimed invention without undue experimentation.  However, a prior art reference that must be distorted from its obvious design does not anticipate a patent claim.

 

The Board found that because the surfaces of element of the prior art “can still be arranged to” engage the glenoid regions, it anticipated the claims.  However the Federal Circuit rejected this finding, noting that while the claim language could imply that the protruding surface on the flat side need not always actually engage the glenoid cavity surface, it must be at least capable of doing so.  The Federal Circuit found that the prior art ’s protruding surface cannot be arranged to engage the glenoid cavity surface without reconfiguration.  The Federal Circuit said that prior art that “must be distorted from its obvious design” does not anticipate a new invention.

The Federal Circuit reached a similar result with respect to a second reference because this endeavor would constitute a significant and impermissible modification of the prior art.

 

 

Inventorship Claims That Took $8 Million to Defeat Were Not “Exceptional”

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In University of Utah v. Max-Planck-Gesellschaft Zur Foerderung der Wissenschaften E.V., [2016-1336] (March 23, 2017), the Federal Circuit affirmed the district court’s finding that the case was not exceptional March 23, 2017, within the meaning of 35 U.S.C. § 285 and denying Max Planck’s motion for $8 million in attorney fees.

Dr. Thomas Tuschl and his colleagues published an article describing their various discoveries in the field of RNAi. Less than a month later,
Dr. Brenda Bass, of the University of Utah published a mini-review that summarized the state of RNAi research, focusing on Dr. Tuschl’s
article.  Dr. Tuschl read Dr. Bass’ minireview, recognized her hypothesis that 3’ overhangs may be relevant to RNAi, and tested that hypothesis, and made the claimed invention.

The University of Utah sued Max Plank claiming that its employee, Dr. Bass was a co-inventor.  The claim of joint inventorship turned on
alleged collaboration between Dr. Bass and the Tuschl that occurred over several conversations at various academic conferences.  The Federal Circuit listed a number of admissions during Dr. Bass’ deposition that directly contradicted the University of Utah’s allegations that Dr. Bass collaborated with the Tuschl II inventors. The Federal Circuit noted that the only supported allegation was that Dr. Bass and Dr. Tuschl met for dinner during a conference.

The district court reasoned that there was no evidence to support a finding of collaboration between Dr. Bass and Tuschl.  While Dr. Bass’ mini-review was integral to the Tuschl inventors’ research, the mini-review was in the public domain by the time Tuschl relied on it. The district court concluded that Tuschl’s reliance on the mini-review could not, on its own, support a finding of collaboration, and was not included to find that the discussions at an academic conference could constitute the collaboration needed to establish joint inventorship.

Max Planck sought eight million dollars in attorneys’ fees pursuant to 35 U.S.C. § 285, arguing that the case was “exceptional” because (1) in light of Dr. Bass’ deposition testimony, the University of Utah lacked any meaningful basis for filing its correction of inventorship suit; (2) the University of Utah’s delay in withdrawing its sole inventorship claim until the eve of summary judgment indicates that it knew its claim was meritless; and (3) the University of Utah’s claimed damages
were extortionately high.

The district court found that it was clear that Dr. Bass’ review played some role in the invention, rejecting the first grounds.  One the second point the district court actually credited the University for withdrawing its sole inventorship claim early.  On the last point the district court declined to find anything exceptional about the University of Utah’s position: “Although Utah may have been asking for pie in the sky, that does not differentiate this case from most patent cases.”

The Federal Circuit found that the district court provided a thorough explanation for why it did not find this case to be exceptional.  Noting that there is no precise Octane Fitness frame-work, the Federal Circuit said that the district court explained why the University of Utah’s position did not stand out from other patent cases, and Octane Fitness does not require anything more.  The Federal Circuit concluded:

The trial judge was in the best position to understand and weigh these issues. She had no obligation to write an opinion that reveals her assessment of every consideration. This court will not second guess her determination.

Although it played no role in the appeal, one has to wonder whether the $8 million in attorneys’ fees requested by Max Plank, which the district court called “jaw-dropping,” figured into the district court’s evaluation of the claim.  When the district court said that “it is not grossly unjust to require Max Planck to bear its own costs,”  was the court thinking that if it really took $8 million to defeat the University’s claims on Summary Judgment, were they really so exceptional?

 

Patent Owner Cannot Create New Claim Construction Issues After the Jury Verdict

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In TVIIM, LLC v. McAfee, Inc., [2016-1562] (March 21, 2017), the Federal Circuit affirmed jury verdicts that U.S. Patent No.
6,889,168 was invalid and not infringed because substantial evidence supported the jury’s findings, and the district court did not abuse its discretion in denying a new trial.

TVIIM argued that the jury rendered an inconsistent verdict of infringement and invalidity because the claim terms “as a result of/in response to,” “various utility functions,” and “reporting the discovered
vulnerabilities” have more than one ordinary meaning.  However, the Federal Circuit noted that TVIIM did not seek construction of any of the terms, and never asserted that the terms had multiple meanings.  The Federal Circuit said that TVIIM cannot be allowed to create a new claim construction dispute following the close of the jury trial.  THe Federal Circuit went on to find that substantial evidence supported the jury verdict.

 

Sitback, Make the Popcorn, and Watch, Patent Owners, You Have Six Years to Bring Your Infringement Claim

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In SCA Hugiene Products Aktiebolag v. First Quality Baby Products, LLC, [15–927] (March 21, 2017), the Supreme Court reversed the Federal Circuit and held that laches cannot be invoked as a defense against a claim for damages brought within 35 U.S.C. §286’s six-year limitations period.

The Supreme Court followed the reasoning in Petrella v. Metro-Goldwyn-Mayer, Inc., where it eliminated the laches defense for copyright infringement claims brought within the Copyright Act’s 3-year limitations period.  The Court said that a statute of limitations reflects a Congressional decision that timeliness is better judged by a hard and fast rule instead of a case-specific judicial determination. The Court further said that applying laches within a limitations period specified by Congress would give judges a “legislation-overriding” role that exceeds the Judiciary’s power.

Although the Copyright Statute 17 U.S.C. §507(b) is worded as a true statute of limitations, requiring action “within three years after the claim accrued,” while the Patent Statute 35 U.S.C. §286 is a damages limitation, barring recovery of damages “more than six years prior to the filing of the complaint,” the Supreme Court found the statutes similar enough to apply the reasoning of Petrella.

The Supreme Court also rejected the Federal Circuit’s interpretation of 35 U.S.C. §282 as retaining a laches defense to patent infringement.

In closing, the Supreme Court indicated that the Doctrine of Equitable Estoppel may still be available, and in fact may apply to SCA Hugiene Products’ claims, but that laches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by §286.

An Objectively Reasonable Case Can Still be Exceptional

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In Bayer Cropscience AG v. Dow Agriscience LLC, [2015-1854] (March 17, 2017), the Federal Circuit affirmed affirmed the award of attorneys’ fees under 35 USC 285 to Dow, holding that the district court did not abuse its discretion in finding the case exceptional.

In its decision awarding attorney fees, the district judge found that Bayer’s arguments were “fallacious” because they were “implausible” and “made no business sense” in light of the facts surrounding the agreements and their negotiation.  The Federal Circuit noted the conflicting testimony of one of Bayer’s executives, and inconsistent emails to Bayer’s position that Dow was not licensed to commercially exploit Bayer’s genetically modified soybeans.

The Federal Circuit noted that abuse of discretion is a highly deferential standard.  It said that the district court applied the correct legal test under § 285, examining the totality of the circumstances to determine whether the case stood out from others. The Federal Circuit found that the district court’s opinion thoroughly demonstrated the totality-of-the circumstances approach, detailing the reasons why Bayer’s positions on the merits and litigation tactics coalesced in making this case, in its judgment, exceptional.

The Federal Circuit rejected the argument that Bayer had an objectively reasonable case on the merits, noting that Octane Fitness established that whether a party’s merits position was objectively reasonable is not dispositiveunder § 285. The Federal Circuit noted that the district court considered factors beyond the merits—including Bayer’s litigation conduct—and emphasized that Bayer’s conduct in litigating this case in the face of evidence that contradicted its contorted reading of the Agreement was objectively unreasonable.  In the words of the district court “Bayer marched onward with a view of its case that was not supported by its witnesses.”

The Federal Circuit  approved pre-suit diligence as a factor in the totality-of the-circumstance approach, and found that the district court did not abuse its discretion in concluding that Bayer failed to perform a diligent presuit investigation of its claims against Dow.  Rejecting Bayer’s other arguments, the Federal Circuit affirmed the district court.