Compliance with PTAB’s Requirements for Motion to Amend Arbitrary and Capricious?

In Veritax Technologies LLC, v. Veeam Software Corp., [2015-1894] (August 30, 2016).  The Federal Circuit vacated the PTAB’s denial of the patent owner’s motion to amend in IPR2014-00090 as arbitrary and capricious.

The Board also denied the motion to amend without making an evidentiary determination of patentability of the proposed new claims.  The Board concluded only that the patent owner failed to address something the Board said must be addressed, namely, whether each newly added feature in each proposed claim, as distinct from the claimed combination of features, was independently known in the prior art.  The Federal Circuit said:

The Board concluded that the motion and the declaration of Veritas’s expert, Dr. Levy, do not discuss the features separately but discuss only “the newly added feature in combination with other known features.” Id. That conclusion, the sole basis for denying the motion to amend, is unreasonable and hence must be set aside as arbitrary and capricious.

The Federal Circuit said that the the patent owner’s submissions contained statements that the newly added features are not described in the prior art.  The Federal Circuit said that there is no reason to doubt that it is only the combination that was the “new feature,” a scenario recognized in a long line of Supreme Court and Federal Circuit
cases noting that novel and nonobvious inventions often are only a combination of known individual features.  The Federal Circuit said that “In this case, we fail to see how describing the combination is meaningfully different from describing what is new about the proposed claims, even in comparison to the unamended claims.”

Thus according to the Federal Circuit, a strict adherence to the PTAB’s stated requirement for a statement “whether the feature was previously known anywhere, in whatever setting, and whether or not the feature was known in combination with any of the other elements in the claim.” (Toyota Motor Corp. v. American Vehicular Sciences LLC, IPR2013-00419, slip op. at 4–5 (Paper 32) (PTAB March 7, 2014)), can be “arbitrary and capricious.”  One has to wonder what other PTAB requirements are similarly “arbitrary and capricious.”



Claim Narrowed by Specification is Saved from Indefiniteness but too Narrow to be Infringed

In Liberty Ammunition, Inc., v. U.S., [2015-5057, 2015-5061] (August 30, 2016), the Federal Circuit reversed the Court of Claims decision that that ammunition rounds used by the United States Army embody the claims of Liberty Ammunition, Inc.’s U.S. Patent No. 7,748,325 without authorization, violating 28 U.S.C. § 1498.

At issue was the construction of the term “reduced area of contact” in a claim for an improved bullet.  The Federal Circuit said there are no clues within the claim itself as to what the area of contact has been reduced from, but found that the specification saves the term from indefiniteness, explaining that the projectile has “a reduced contact area as compared to conventional projectiles.  This raised the question, “what constitutes a conventional projectile?”  The Federal Circuit again found the answer in the specification: the M855 round, the only conventional projectile mentioned in the specification.  The Federal Circuit allowed that contact area was dependent on size, so the Federal Circuit broadened the corresponding caliber NATO standard-issue round as of October 21, 2005.

The Federal Circuit criticized the Court of Claims’ construction, which did not tie the reduced area to the NATO rounds.  The Federal Circuit further observed that would not be definite had the trial court’s construction been correct because there would not be a sufficient objective boundary around the term of degree “reduced area of contact.”  The Federal Circuit said a term of degree fails to provide sufficient notice of its scope if it
depends on the unpredictable vagaries of any one person’s opinion.

The Federal Circuit also rejected the Court of Claims’ construction of “intermediate opposite ends,” which because it was lead by the term “including” the Court of Claims found could extend to the ends.  The Federal Circuit has many times warned against using terms such as “comprising,” or “including,” as “weasel word[s] with which to
abrogate claim limitations.”  The Federal Circuit noted that the Court of Claims’ construction goes against these admonitions and significantly diminishes the “intermediate opposite ends” limitation, almost to the point of rendering it a nullity.

Because the accused Army rounds meet neither the “intermediate opposite ends” limitation nor the “reduced area of conduct” limitation—one of which appears in all
asserted claims—we hold that the Government has not violated Liberty’s patent rights under § 1498.

Broad Original Claims Prevent Invalidity for Lack of Adequate Written Description

In Scriptpro LLC, v. Innovation Associates, Inc., [2015-1565] (August 15, 2016), the Federal Circuit reversed Summary Judgment that claims 1, 2, 4, and 8 of U.S. Patent
No. 6,910,601 were invalid for lack of written description.  The patent was directed to a “collating unit” used with a control center and an automatic dispensing system (“ADS”) to store prescription containers after a medication has been dispensed into the containers.

At issue was whether the patent’s specification limits the invention to a collating unit that sorts and stores prescription containers by patient-identifying information and slot availability. In the decision appealed from, the district court determined that the specification was limiting and that the asserted claims, which are not so limited,
are invalid for lack of written description.

The Federal Circuit agreed with the Patent Owner that the specification does not limit the claimed invention to sorting and storing prescription containers by patient-identifying information.  The patent expressly states that containers can be sorted and stored “by
patient, prescription, or other predetermined storage scheme without input or handling by the operator.”  Consistent with this express disclosure, the original claims filed as part of the application from which the patent issued were not limited to sorting and storing prescription containers by patient-identifying information.  Rather, these original claims, like the asserted claims, recite a collating unit that automatically stores prescription containers dispensed by an ADS. As we have explained, “[o]riginal claims are part of the specification and in many cases will satisfy the written description requirement.”

A specification’s focus on one particular embodiment or purpose cannot limit the described invention where that specification expressly contemplates other embodiments or purposes.  This is especially true in cases such as this, where the
originally filed claims are not limited to the embodiment or purpose that is the focus of the specification.  Similarly, mere recognition in the specification that an aspect of a
prior art system is “inconvenient” does not constitute “disparagement” sufficient to limit the described invention — especially where the same specification expressly
contemplates that some embodiments of the described invention incorporate the “inconvenient” aspect.

The Federal Circuit said that it is certainly reasonable that different claims could be directed to covering different aspects of the invention. Not every claim must contain every limitation or achieve every disclosed purpose. The original claims did not include
a requirement that sorting and storing be done by use of patient-identifying.  The Federal Circuit said that the district court erred when it determined that the specification limited the invention to storing prescription containers based on patient name and slot availability.

The Federal Circuit concluded that because the specification does not limit the scope of the invention in the manner the district court described, the asserted claims are
not invalid for lacking such a limitation.


District Court Correctly Added Inventors Who Contributed to at least one Claim Element

In Vapor Point LLC. v. Moorhead, [2015-1801, 2015-2003] (August 10, 2016), the Federal Circuit affirmed the district court’s correction of inventorship, dismissal of the infringement action, and denial of a attorneys’ fees.

A person who alleges that he is a co-inventor of the invention claimed in an issued patent who was not listed as an inventor on the patent may bring a cause of action to correct inventorship in a district court under 35 U.S.C. § 256.  Inventorship is a question of law entitled to de novo review by this court.  All inventors, even those who contribute to only one claim or one aspect of one claim of a patent, must be listed on that patent.

The Federal Circuit agreed that the district court’s findings were sufficient to support its inventorship judgment. Co-inventors need not physically work together or at the same time, make the same type or amount of contribution, or make a contribution to the subject matter of every claim of the patent.  Inventorship is determined on a claim-by-claim basis.

The Federal Circuit said that inventorship and ownership are separate
issues.  The patent owner waived the Federal Circuit’s review of whether the added inventors had an obligation to assign the invention by affirmatively representing to the district court that resolution of the inventorship issue would dispose of the infringement issue.


PTAB Misapplied Common Sense in Finding Claims Obvious

In Arendi S.A.R.L. v. Apple Inc., [2015-2073] (August 10, 2016) the Federal Circuit reversed the PTAB Final Written Decision that claims 1-2, 8, 14-17, 20-21, 23-24, 30, 36-39, and 42-43 of U.S. Patent No. 7,917,843 were obvious, finding that the PTAB misapplied common sense.

Petitioner argued, and the PATB agreed, that in order to avoid multiple entries of the same address, it would have been obvious that the first step in adding to an address book is to search the address book to determine if an entry already exists, and displaying any associated information that is located. Although the PTAB recognized that “a human being entering a contact into a paper address book would not be expected to search for duplicate telephone number entries,” the PTAB nevertheless, found that “it would have been obvious to the ordinary artisan to utilize a computerized search for duplicate telephone entries when entering a telephone number in an electronic address book.

The single question at issue was whether the Board misused “common sense” to conclude that it would have been obvious to supply a missing limitation in the
prior art to arrive at the claimed invention.  The Federal Circuit said that common sense and common knowledge have their proper place in the obviousness
inquiry, at least if explained with sufficient reasoning.

In view of the Supreme Court’s instruction in KSR, consider common sense, common wisdom, and common knowledge are considered in analyzing obviousness. But the Federal Circuit noted three caveats: First, common sense is typically invoked to provide a known motivation to combine, not to supply a missing claim limitation.  Second, where common sense is invoked to supply a
limitation that was admittedly missing from the prior art, the limitation in question must be unusually simple and the technology particularly straightforward.  Third, the use of “common sense”—whether to supply a motivation to combine or a missing limitation—cannot be used as a wholesale substitute for reasoned analysis and evidentiary support, especially when dealing with a limitation
missing from the prior art references specified.

The Federal Circuit said that based on its precedent, while “common
sense” can be invoked, even potentially to supply a limitation missing from the prior art, it must still be supported by evidence and a reasoned explanation. In cases in which “common sense” is used to supply a missing limitation, as distinct from a motivation to combine, moreover, our search for a reasoned basis for resort to common sense must be searching.

Because the PTAB’s presumption that adding a search for phone numbers would be “common sense” was conclusory and unsupported by substantial evidence, the missing limitation is not a “peripheral” one, and there is nothing in the record to support the PTABs conclusion that supplying the missing limitation would be obvious to one of skill in the art, the Federal Circuit reversed the Board’s
finding of unpatentability.

Federal Circuit Vacates and Remands PTAB Obviousness Determination Not Supported by Adequate Reasoned Explanation

In In re Warsaw Orthopedic, Inc., 2015-1050, 2015-1058 (August 9, 2016), the Federal Circuit affirmed in part, vacated in part, and remaned, the PTAB’s decision in IPR2013-00206 and IPR2013-00208 that claims 1–8 and 17–23 of U.S. Patent No. 8,251,997, were obvious and therefore invalid.

The Federal Circuit largely affirmed the PTAB obviosuness determination.   However, the Federal Circuit noted the PTAB has an obligation to make the necessary findings and to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.  As for its reasoning, the PTAB must articulate ‘logical and rational’ reasons for its decisions.

The Federal Circuit said it could affirm the PTAB’s findings if it can reasonably discern that that the PTAB followed a proper path, even if that path is less than
perfectly clear.  However with respect to the obviousness determination of claim 17, the Federal Circuit could not reasonably discern that the PTAB’s decision.  The Federal Circuit complainted that the PTAB’s narrative
in support of its finding with respect to claim 17 consists of a single sentence, which “does not equate to the reasoned explanation needed to support its conclusion.”  Thus the Federal Circuit vacated and remanded for additional explanation.


BRI Does Not Apply if Patent Expires Any Time During Reexamination Proceeding

In In Re CSB-System International, Inc., [2015-1832] (August 9, 2016), the Federal Circuit held that the PTAB erred in applying a broadest reasonable interpretation claim construction, instead of a Phillips claim construction, to claims that expired during the course of the ex parte reexamination, but nonetheless affirmed the rejection of claims as obvious under the correct, narrower, standard.

The Federal Circuit said that during reexamination proceedings of unexpired patents, however, the Board uses the broadest reasonable interpretation
consistent with the specification standard, or BRI.  The rationale for permitting
this broader standard in reexaminations is that a patent owner before the Patent and Trademark Office with an unexpired patent may amend claims to narrow their scope, negating any unfairness that may otherwise result from adopting the BRI standard.  However, when an expired patent is subject to reexamination, the traditional Phillips construction standard attaches.

In the instant case, the patent expired after the Examiner issued a final rejection but before consideration of the appeal by the PTAB.  The PTAB applied BRI becaue the patent owner had the opportunity to amend its patent claims while they were pending before the examiner in the reexamination, as the patent had yet to expire.

The Federal Circuit disagreed with the Board’s approach, stating that when a patent expires during a reexamination proceeding, the PTO should thereafter apply the Phillips standard for claim construction, even if this means that the Board applies a different standard than the examiner.

The Federal Circuit held that:

BRI is not a monolithic standard that the Board can use even after a patent expires. Rather, consistent with our prior precedent and customary practice, we reaffirm that once a patent expires, the PTO should apply the Phillips standard for claim construction.

Sale and Offer for Sale Determined by Where “Substantial Activities of the Sales Transactions” Occur

In Halo Electronics, Inc. v. Pulse Electronics, Inc., [2013-1472, 2013-1656](August 5, 2016), on remand from the Supreme Court, which held that 35 USC 284 gives district courts the discretion to award enhanced damages in egregious cases of misconduct beyond typical infringement, the Federal Circuit vacated the district court’s unenhanced damages award with respect to products that were delivered in the United States, and remand for further proceedings consistent with the Supreme Court’s opinion on enhanced damages. The Federal Circuit otherwise adopted its prior opinion on all other issues in the appeal.

In particular the Federal Circuit again agreed that the district court did not err in granting summary judgment of no direct infringement with respect to those products that Pulse manufactured, shipped, and delivered outside the United States because those products were neither sold nor offered for sale by Pulse within the United States.

The Federal Circuit said that although the place of contracting may be one of several possible locations of a sale to confer personal jurisdiction, it has not deemed a sale to have occurred within the United States for purposes of liability under §271(a) based solely on negotiation and contracting activities in the United States when the vast majority of activities underlying the sales transaction
occurred wholly outside the United States. For such a sale, one must examine whether the activities in the United States are sufficient to constitute a “sale” under §271(a), recognizing that a strong policy against extraterritorial
liability exists in the patent law.

The Federal Circuit noted that the patent statute does not define “sale” for purposes of §271(a).  The Federal Circuit pointed out that the ordinary meaning of a sale includes the concept of a transfer or title or property, and that Article 2 of the Uniform Commercial Code, which is recognized as persuasive authority on the sale of goods, provides that a sale consists in the passing of title from the seller to the buyer for a price.

The Federal Circuit found that substantial activities of the sales transactions at issue, in addition to manufacturing and delivery, occurred outside the United States. While Halo did present evidence that pricing negotiations and certain contracting and marketing activities took place in the United States, which
purportedly resulted in the purchase orders and sales overseas, such pricing and contracting negotiations alone are insufficient to constitute a “sale” within the United States.  Any doubt as to whether Pulse’s contracting activities in the United States constituted a sale within the United States under § 271(a) was resolved by the presumption against extraterritorial application of United States laws.

The Federal Circuit also affirmed there was no offer for sale, noting that in order for an offer to sell to constitute infringement, the offer must be to sell a patented
invention within the United States.


Markush Group Closed to Unlisted Elements, but Open to Blends of Listed Elements

In Multilayer Stretch Cling Film Holdings, Inc., v. Berry Plastics Corp., [2015-1420, 2015-1477] (August 4, 2016) the Federal Circuit reversed the claim construction, and thus vacated summary judgment of non-infringement that was predicated on that claim construction.

At issue was U.S. Patent No. 6,265,055, related to multi-layer stretch
cling films having at least seven individual layers, which claimed:

each layer being selected from the group consisting of linear low density polyethylene, very low density polyethylene, ultra low density polyethylene, and metallocene-catalyzed linear low density polyethylene resins;

The district court construed this language as requiring each layer must contain only one class of the listed resins, and no other resins, thereby excluding blends of more than one type of listed resin and all unlisted resins.

The parties agreed that the claim language was an Markush group.  The Federal Circuit agreed with the district court that the group is closed to resins other than those listed in the group.  The Federal Circuit said that what was critical the transitional phrase “consisting of,” a term of art in patent law with a distinct and well-established meaning that creates a very strong presumption that that claim element is “closed.”

The Federal Circuit rejected the patent owners argument that dependent claims expanded the scope of the Markush group, noting that while other claims can be valuable sources of enlightenment as to the meaning of a claim term, the language of a dependent claim cannot change the scope of an independent claim whose meaning is clear on its face, observing:

The dependent claim tail cannot wag the independent claim dog.

However the Federal Circuit disagreed with the district court over whether the claims permitted mixtures of the four plastics set forth in the Markush group.  The Federal Circuit noted that under Abbott, the Markush group is therefore presumed closed to blends. The question is whether that presumption is overcome by a combination of other claim language and the specification itself.  The Federal Circuit found that the intrinsic evidence of the patent is unequivocal that the inner layers described in claims 1 and 28 are open, not closed, to blends of the recited resins.  The Federal Circuit noted that the resins listed do not constitute four entirely different species but instead overlap to some
extent.  Moreover, claim 24 recites that at least one layer comprises a blend of at least two of said resins.  Finally, the Federal Circuit observed that the specification similarly supports construing the element as open to blends, as it repeatedly and consistently references blends in describing any and all resins, including the four resins of the claim.

In the light of this strong intrinsic evidence, the Federal Circuit held that the Markush group must be read as open to blends of the four listed resins.


Denial of Preliminary Injunction because of Stay Still Requires the Court to State Findings and Conclusions

In Murata Machinery USA v. Daifuku Co., Ltd., [2015-2094] (August 1, 2016), the Federal Circuit affirmed the district court’s refusal to lift a stay pending inter partes review, but vacated the denial of a preliminary injunction because the district court failed to state findings and conclusions supporting denial of a preliminary injunction as required by Rule 52(a)(2) of the Federal Rules of Civil Procedure.