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

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”

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

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

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

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.

Among Other Things, the Federal Circuit Affirms Viability of Assignor Estoppel

In Mentor Graphics Corporation v. EVE-USA, Inc., [2015-1470, 2015-1554, 2015-1556] (March 16, 2016), the Federal Circuit:

  • affirmed the jury verdict of infringement of U.S. Patent Nos. 6,240,376, the denial of JMOL, and the award of $36,000,000 in damages, and that that assignor estoppel bars Synopsys from challenging the validity of the patent.
  • reversed summary judgment that U.S. Patent No.
    6,132,109 is indefinite.
  • affirmed summary judgment that U.S. Patent No. 7,069,526 lacks patent-eligible subject matter.
  • vacated the motion in limine precluding Mentor from
    presenting evidence of willful infringement.
  • reversed summary judgment that U.S. Patent No. 6,947,882 lacks
    written description.
  • reverse summary judgment that Mentor’s infringement allegations
    regarding U.S. Patent Nos. 6,009,531 and 5,649,176 are barred by
    claim preclusion.

Regarding Assignor Estoppel, the Federal Circuit rejected Synopsys argument that the Supreme Court abolished the doctrinal underpinnings of assignor estoppel in Lear, Inc. v. Adkins.

Regarding the Damage Award, the Federal Circuit noted that the facts of this case are remarkably simple for a patent damages appeal and Synopsys does not dispute any of them.

The jury found, and Synopsys does not dispute on appeal, that Mentor
satisfied all of the Panduit factors with regard to the sales to Intel for which the jury awarded lost profits:
(1) there was a demand by Intel for the patented product; (2) there were no non-infringing alternative emulator systems acceptable to Intel; (3) Mentor had the manufacturing and marketing capability to satisfy Intel’s demand; and, (4) Mentor established the amount of profit it would
have made if Synopsys had not infringed.  Synopsys argued that the lost profits shuold be apportioned to cover only the patentee’s inventive contribution.  The Federal Circuit agreed with Synopsys that apportionment is an important component of damages law generally, and we believe it is necessary in both reasonable royalty and lost
profits analysis.  However, the Federal Circuit said that Panduit’s requirement that patentees prove demand for the product as a whole and the absence of non-infringing alternatives ties lost profit damages to specific claim limitations and ensures that damages are commensurate with the value of the patented features.

Regarding indefiniteness, the Federal Circuit said that “a method for displaying the results of synthesized circuit analysis visually near the
HDL source specification that generated the circuit” was not indefinite.The Federal Circuit held that the term “near” informs a person of ordinary skill in the art about the scope of the invention with
reasonable certainty, noting that a skilled artisan would understand “near” requires the HDL code and its corresponding circuit analysis to be displayed in a manner that physically associates the two.

Regarding patentable subject matter, the Federal Circuit held that claims containing “machine-readable medium” renders the claimed
subject matter invalid under 35 U.S.C. § 101.  The specification defined machine-readable medium as including carrier waves, found to be unpatentable in In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007).

With respect to willful infringement, the Federal Circuit found the district court erred in barring evidence of willful infringement.  Specificaly, the Federal Circuit rejected a rigid rule that post-filing willful infringement cannot be presented unless the party moves for a preliminary injunction.

With respect to written description, the Federal Circuit found that there was adequate written description.  The Federal Circuit found that the very language of claim 1 which the court held was not supported by the specification was present in the originally-filed claims. Original claims are part of the original specification and in many cases will satisfy the written description requirement.

Finally, with respect to claim preclusion, the Federal Circuit said that claim preclusion does not bar later infringement allegations with respect to accused products that were not in existence at the time of the previous actions for the simple reason that claim preclusion requires that in order for a particular claim to be barred, it is necessary that the claim either was asserted, or could have been asserted, in the prior action.


IPR – The Odds Still Favor Petitioners, and Greatly Favor Smart Petitioners

The USPTO’s most recently published IPR statistics show that the odds still greatly favor the patent challenger:

Given that a settlement (presumably), a request for adverse judgment, and a finding of patentability are all good outcomes for the patent challenger, patent challengers have “won” 58.4% of the time, and when you add in invalidation at least some of the time, then the patent challenger improves its situation 63.9% of the time.

The odds are even better for petitioners who do their homework and present a grantable petition.  For petitions for which trial is instituted, the challengers win 77.8% of the time, and at least improve their situation 86.4% of the time.


Oh Diehr Me, Another Case With Patent Eligible Subject Matter

In Thales Visionix, Inc., v. U.S., [2015-5150](March 8, 2017), the Federal Circuit reversed the Court of Claims determination that the claims of U.S. Patent No. 6,474,159 were directed to patent ineligible subject matter.

The Federal Circuit observed that the Supreme court “has not established a definitive rule to determine what constitutes an ‘abstract idea.'”  Because all inventions at some level embody, use. reflect rest upon or apply laws of nature, natural phenomenon, or abstract ideas, the Federal Circuit said it was important to articulate what the claims are directed to with sufficient specificity to ensure that the step one inquiry is meaningful.  The Federal Circuit looked to Rapid Litigation Management, Enfish, and Diamond v. Diehr, and concluded that for purposes of evaluating patent eligibility, the claims in the ‘159 patent were nearly indistinguishable from the claims at issue in Diehr, explaining that just as the claims in Diehr reduced the likelihood that the rubber molding process would result in over curing or under curing, the claims at issue result in a system that reduces errors in an inertial system that tracks an object on a moving platform.

The Federal Circuit also (and less aptly) analogized to Rapid Litigation, stating that just as claims directed to a new and useful technique for defining a database that runs on general-purpose computer computer equipment are patent eligible, so too are claims directed to a new an useful technique for using sensors to more efficiently track an object on a moving platform.  Editorial comment: the similarity of these two cases is hard to see.

In a line that is sure to be quoted by applicants (and patent owners), the Federal Circuit said:

That a mathematical equation is required to complete the claimed method and system does not doom the claims to abstraction.

The Federal Circuit explained that far from claiming the equations themselves, the claims seek to protect only the application of physics to the unconventional configuration of sensors as disclosed, and concluded that the claims pass Step 1 of the Alice test.

Posted in 101

It Was Over Before the Fat Lady Sang; Collateral Estoppel Applies to Partial Summary Judgment under §101

In Intellectual Ventures I LLC v. Capital One Financial Corp., [2016-1077] (March 7, 2017), the Federal Circuit affirmed judgment that all claims of U.S. Patent Nos. 7,984,081 and 6,546,002 ineligible under 35 U.S.C. § 101, and barring Intellectual Ventures from pursuing claims based on U.S. Patent No. 6,715,084.  The district court granted Summary Judgment of invalidity of the ‘081 and ‘002 patents, and on the strength of a partial summary judgment order of ineligibility under § 101 for the ’084 patent in a separate proceeding in New York, granted summary judgment as the ‘084 patent under a collateral estoppel theory.

The Federal Circuit observed that the Fourth Circuit has established five requirements for collateral estoppel: (1) the issue in the prior proceeding be identical, (2) actually determined, (3) necessary, (4) final, and (5) that the affected party was afforded a full and fair opportunity to litigate the issue. However the parties only dispute the finality requirement, for which the Fourth Circuit requires a “final and valid” judgment, Intellectual Ventrues arguing that the district court erred because it based its collateral estoppel findings on a partial summary judgment order, rather than a final judgment.  The Federal Circuit concluded that under Fourth Circuit law, collateral estoppel attaches in light of the partial summary judgment order, because
this particular issue has reached such a stage that the
district court would see no really good reason for permitting
it to be litigated again.


The Federal Circuit agreed that the claims of the ‘081 and ‘002 patents failed step 1 of the Alice/Mayo test.

Don’t Take Your Eye Off the Ball or Your Patent Assignment Will End Up in the Dirt

In Intellectual Ventures I LLC v. Erie Indemnity Company, [2016-1128, 2016-1132] (March 7, 2017), the Federal Circuit affirmed in part, vacated in part, and remanded in part the district court’s decision finding all claims of U.S. Patent Nos. 6,510,434, 6,519,581 and 6,546,002 ineligible under 35 U.S.C. § 101, and the infringement claim of the ’581 patent for lack of standing.

Lack of Standing

The rights of the parent application of the ‘581 patent, together with “all continuations” (including the ‘581 patent application, which was pending at the time, were assigned to then assigned various patent (including the parent of the ‘581 patent) to Alset.  Although this agreement expressly identified the various patents and pending applications subject to assignment—including
the ’581 parent and several of its pending foreign patent application counterparts—it did not explicitly list the ’581 patent’s then-pending application.  The assignment generally provided:

The Federal Circuit concluded that the Alset Agreement did not include an assignment of rights to the ’581 patent and affirmed the district court’s Rule 12(b)(1) dismissal.  The Federal Circuit rejected the argument that the language implicitly included the ‘581 patent application.  Applying California contract law, the Federal Circuit agreed with the district court’s conclusion that there is no ambiguity within the Alset Agreement that could render it reasonably susceptible to an interpretation that the ‘581 patent application was transferred.  The fact that Alset recorded the assignment at the PTO, represented in a terminal disclaimer that it owned all the rights to the ’581 patent, and filed updated power of attorneys and paid the ’581 patent’s issuance fee.  The Federal Circuit said that although this evidence may lead one to reasonably conclude that Alset believed it owned the ’581 patent application at some later point in time, it would be error to rewrite the parties’ agreement to include that which was plainly not included.  The fact that other pending applications were expressly listed also did not help plaintiff’s cause.

Because the Federal Circuit agreed that plaintiff lacked standing to sue under the ‘581 patent, it vacated the finding that the ‘581 patent was invalid under §101.

Don’t Take Your Eye Off the Ball

Conveying a pending patent application should be routine.  And perhaps because it was so routine is the reason that things went wrong.  If you want to assign a pending application, it is a probably a good idea to specifically identify that application.  If you want to include all continuations, divisionals, and continuations in part, than it is a good idea idea to say “including all continuations, divisionals, and continuations in part” rather than “together with the goodwill of the business symbolized by said patents and applications and registrations thereof.”

Invalidity Under §101

As to the ‘434 patent, which contained twenty-eight claims relating to methods and apparatuses that use an index to locate desired information in a computer database:  Under step one of the Mayo/Alice test the Federal Circuit agreed with the district court that the invention is drawn to the abstract idea of “creating an index and using that index to search for and retrieve data.  The Federal Circuit noted that it had previously held patents ineligible for reciting similar abstract concepts that merely collect, classify, or otherwise filter data.  Under step two of the Mayo/Alice test the Federal Circuit agreed with the district court that they lack an “inventive concept” that transforms the abstract idea of creating an index and using that index to search for and retrieve data into a patent-eligible application of that abstract idea.  The fact that the claimed invention employed an index of XML tags was not significant in view of the patent’s admission that such tags are known.  Moreover limiting an abstract idea to a particular field does not make the idea any less abstract.  The Federal Circuit concluded that the claimed computer functionality can only be described as generic or conventional.

As to the ‘002 patent, which contained 49 claims relating to systems and methods for accessing a user’s remotely stored data and files:

Under step one of the Mayo/Alice test the Federal Circuit agreed with the district court that the claims are drawn to the idea of “remotely accessing user specific information.  Under step two of the Mayo/Alice test, the Federal Circuit concluded that the claims recite no “inventive concept” to transform the abstract idea of remotely accessing user-specific information into a patent eligible application of that abstract idea. Rather, the Federal Circuit said that the claims merely recite generic, computer implementations
of the abstract idea itself.