Monthly Archives: December 2020

Late Request For Leave to Amend Complaint to try to Save Patent on Ineligible Subject Matter Denied

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In Simio, LLC, v. Flexsim Software Products, Inc., [2020-1171](December 29, 2020), the Federal Circuit affirmed the dismissal of Simio’s action for infringement of U.S. Patent No. 8,156,468 System and Method for Creating Intelligent Simulation Objects Using Graphical Process Descriptions, and denial of Simio’s motion for leave to amend its Complaint.

The district court found that (1) the claims are directed to “the decades-old computer programming practice of substituting text[-]based coding with graphical processing,” which the court determined was an ineligible abstract idea and (2) considering the claim elements both individually and as an ordered combination, FlexSim “met its burden of showing no inventive concept or alteration of computer functionality sufficient to transform the system into a patent-eligible application.”

The Federal Circuit said that the ’468 patent showcases its key advance: using graphics instead of programming to create object-oriented simulations.  However, the Federal Circuit also noted that the ’468 patent acknowledges that using graphical processes to simplify simulation building has been done since the 1980s and 1990s.  The Federal Circuit said that “[s]imply applying the already-widespread practice of using graphics instead of programming to the environment of object-oriented simulations is no more than an abstract idea.”  The Federal Circuit said that the claim is directed to the use of conventional or generic technology i.e., graphical processing generally in a well-known environment i.e., object-oriented simulations, without any claim that the invention reflects an inventive solution to any problem presented by combining the two.

The Federal Circuit rejected Simio’s argument that the claimed invention “improves on the functionality of prior simulation systems through the use of graphical or process modeling flowcharts with no programming code required.” The Federal Circuit said that “improving a user’s experience while using a computer application is not, with-out more, sufficient to render the claims directed to an improvement in computer functionality.”  Citing Customedia, the Federal Circuit added: claiming the improved speed or efficiency inherent with applying the abstract idea on a computer is insufficient to render the claims patent eligible as an improvement to computer functionality.

At Step 2 of the Alice analysis, the Federal Circuit found that a claim directed to the idea of using graphics instead of programming to create object-oriented simulations—maybe a new idea, but it was still an abstract one—and lacking any inventive concept, any meaningful application of this idea, sufficient to save the claim’s eligibility.

On the issue of whether the district court properly denied Simio leave to amend its complaint, the Federal Circuit affirmed the court’s futility-based denial.  The Federal Circuit further found that nothing in the Complaint prevented resolving eligibility as a matter of law.  While Simio  argued that the district court erred by determining ineligibility without first conducting claim construction, Simio failed to explain how it might benefit from any particular term’s construction under an Alice § 101 analysis.

The Federal Circuit also affirmed because Simio failed to show good cause for seeking to leave to amend only after the scheduling order’s deadline.

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A Preference for Something Else is not a Teaching Away

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In General Electric Company v. Raytheon Technologies Corporation, [2019-1319] (December 23, 2020), the Federal Circuit vacated the Board’s decision finding Raytheon Technologies Corporation’s U.S. Patent No. 8,695,920 on a gas turbine engine not unpatentable for obviousness, and remanded the case for further consideration because the Board lacked substantial evidence for its conclusions.

The Board found that prior art disclosed all of the elements of the claimed invention, but then found that by expressly considering at least some of the one-stage versus two-stage tradeoffs and specifically chosing the one-stage option, the reference taught away from the combination asserted by GE. The Board alternatively held that, even if the reference did not teach away from the proposed combination, the evidence presented did not persuasively demonstrate a motivation to combine.

The Federal Circuit found that the Board lacked substantial evidence for its finding that reference taught away form the combination. The Federal Circuit said a reference does not teach away if it merely expresses a general preference for an alternative invention but does not criticize, discredit, or otherwise discourage investigation into the invention claimed.

The Federal Circuit also found that the Board lacked substantial evidence for its conclusion that GE did not establish a motivation to combine the references. The Federal Circuit said that the Board made certain findings that, on their own, could establish obviousness. The Federal Circuit said that these findings set forth reasons that an artisan might seek to modify the prior art, and a reasonable expectation of success in doing so.

Finally, the Board lacked substantial evidence for holding that GE did not establish the obviousness of claim 10 “as a whole.” The Federal Circuit said that the law has always evaluated the motivation to combine elements based on the combination of prior art references that together disclose all of the elements of the invention. The Federal Circuit said that

the Board’s approach would require a motivation to com-bine each element of the claim—even those present together in a reference. This analysis unduly dissects prior art references into collections of individual elements, requiring a party showing obviousness to re-do the work al-ready done in the prior art reference. The claimed invention and an invention in the prior art must both be analyzed as a whole for the same reason: an invention is more than the sum of its individual elements.

Because the Board lacked substantial evidence for its underlying factual conclusions from which it found the claims non-obvious, the Federal Circuit vacated the Board’s decision and remanded the case to the Board for further proceedings.

Breach of Confidentiality Agreement Required Transfer for Resulting Patents

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In Sionyx, LLC, v. Hamamatsu Photonics KK, [2019-2359, 2020-1217] (December 7, 2020), the Federal Circuit affirmed the district court’s judgment that (1) Hamamatsu breached its Non-Disclosure Agreement SiOnyx”; (2) Hamamatsu willfully infringed U.S. Patent 8,080,467; (3) SiOnyx is entitled to $796,469 in damages and $1,091,481 of pre-judgment interest for breach of the NDA; (4) SiOnyx is entitled to $580,640 in damages and $660,536 of pre-judgment interest for unjust enrichment; (5) SiOnyx is entitled to post-judgment interest at the statutory rate for its breach of contract and unjust enrichment claims; (6) Dr. James Carey is a co-inventor of U.S. Patents 9,614,109; 9,293,499; 9,190,551; 8,994,135; 8,916,945; 8,884,226; 8,742,528; 8,629,485; and 8,564,087; (7) SiOnyx is entitled to sole ownership of the Disputed U.S. Patents; (8) SiOnyx is entitled to an injunction prohibiting Hamamatsu from practicing the Disputed U.S. Patents for breach of the NDA; and (9) SiOnyx is entitled to an injunction prohibiting Hamamatsu from practicing the ’467 patent for infringement; and rreversed the district court’s denial of SiOnyx’s motion to compel Hamamatsu to transfer ownership of the corresponding foreign patents to SiOnyx.

Eric Mazur discovered a process for creating “black silicon” by irradiating a silicon surface with ultra-short laser pulses. In addition to turning the silicon black, the process creates a textured surface, and the resulting black silicon has electronic properties different from traditional silicon. After discovering the process for making the material, Mazur worked with his students, including Carey, to study its properties and potential uses. Based on this work, Mazur and Carey filed patent applications which resulted in the issuance of several patents, including U.S. Patent No. 8,080,467.

Mazur and Carey founded SiOnyx to further develop and commercialize black silicon. SiOnyx met with Hamamatsu, a producer of silicon-based photodetector devices, enteringg an NDA to allow the parties to share confidential information relating to “evaluating applications and development opportunities of pulsed laser process doped photonic devices.

After the NDA was terminated, Hamamatsu continued to develop new photodetector devices, filing patent applications and introducing products,. SiOnyx met with Hamamatsu to discuss ownership of the disputed U.S. and Foreign patents, but the parties did not reach an agreement, so SiOnyx sued Hamamatsu claiming (1) breach of contract; (2) unjust enrichment; (3) infringement of the ’467 patent; and (4) change of inventorship of the Disputed U.S. Patents.

After a jury verdict in SiOnyx’s favor, Hamamatsu appealed. Hamamatsu first argued that the claim was barred by the statute of limitations, which Hamamatsu argued was triggered by its failure to return confindential information as required by the NDA, and by Hamamatsu emailing SiOnyx a diagram of a photodiode that SiOnyx perceived to be identical to the parties’ 2007 work. SiOnyx argued that Hamamatsu’s failure to return SiOnyx’s confidential information was an immaterial breach that did not begin the limitations period, or that Hamamatsu concealed its later use of SiOnyx’s confidential information through its repeated assurances that its new products did not infringe SiOnyx’s intellectual property. The Federal Circuit agreed with the district court that a reasonable juror could have determined that SiOnyx was not harmed by Hamamatsu’s failure to return the confidential information and that the breach was therefore immaterial and did not cause SiOnyx’s claims to accrue, as to the email disclosures, the Federal Circuit perceived no reason to upset the jury’s verdict here.

Hamamatsu also argued that the district court erred in awarding pre-judgment interest for unjust enrichment and breach of contract claims. The Federal Circuit agreed with the district court that pre-judgment interest was avaialble for both claims.

Hamamatsu challenged the injunction against infringement of SiOnyx’s ‘467 patent, arguing that SiOnyx argues primarily that SiOnyx failed to demonstrate irreparable harm and an inadequate remedy at law. SiOnyx responded that its products compete with Hamamatsu’s, and that it will suffer irreparable harm from Hamamatsu’s continued sales. The Federal Circuit was not convinced that the district court clearly erred in finding that the accused products are competitive with SiOnyx’s products, and Hamamatsu did not refute the demonstration of irreparable harm.

Hamamatsu also challenged the injunction for breach of contract. However, due to the similarity of the legal standard, the parties’ arguments were substantially similar to those made with respect to the injunction for patent infringement, and the Federal Circuit reached the same conclusion.

Hamamatsu filed a post-trial motion for judgment as a matter of law that SiOnyx is not owed damages for the breach of contract and unjust enrichment claims after the confidentiality period of the NDA expired. SiOnyx responded that the jury reasonably could have inferred that Hamamatsu continued to benefit from its breach beyond the expiration of the confidentiality period. The Federal Circuit agreed that the jury’s verdict could be reasonably construed to incorporate a finding that Hamamatsu continued to reap the benefit of their earlier breach by selling products that it had designed using SiOnyx’s confidential information, and declined .” Id. slip op. at 3. We agree that such an inference is reasonable, and we de-cline to alter the jury’s damages award.

On appeal, Hamamatsu argues that the district court erred in granting SiOnyx sole ownership of the disputed U.S. Patents because the jury’s finding of co-inventorship necessarily implied that the jury found that Hamamatsu also contributed to the patents. The NDA provided that “a party receiving confidential information acknowledges that the disclosing party claims ownership of the information and all patent rights “in, or arising from” the information.” Thus the Federal Circuit found that the district court’s decision transferring ownership of the patents according to the terms of the NDA was an equitable remedy which is reviewed for abuse of discretion (under Massachusetts law). The Federal Circuit said that absent evidence that Hamamatsu contributed confidential information to the patents under the NDA, it was not entitled to co-ownership of the patents under the agreement.

On appeal, Hamamatsu maintained that its infringement was not willful, challenging the adequacy of the evidence presented at trial to support the jury’s finding. However, the Federal Circuit said that given that the district court awarded no enhanced damages based on willfulness, it is not apparent what effect the jury’s finding of willfulness had on the district court’s judgment, and it is likewise not apparent what the effect a reversal by this court would be. Hamamatsu was in effect requesting an advisory opinion, which the Federal Circuit lacks the authority to provide.

On SiOnyx’s cross appeal, SiOnyx aruged that the district court should have granted it ownership of the corresponding foreign patents as well. The Federal Circuit agree with SiOnyx that the evidence that established SiOnyx’s right to sole ownership of the disputed U.S. Patents also applied to the disputed foreign patents. Because the district court erroneously perceived that it lacked authority to compel the transfer of ownership, the Federal Circuit said it was an abuse of discretion to distinguish between the two groups of patents. The Federal Circuit stated that the district court had authority to transfer foreign patents owned by the parties before it.