MVS Filewrapper® Blog: New and Useful - January 31, 2013

·       In Soverain Software LLC v. Newegg Inc. the Federal Circuit vacated in part and reversed in part an Eastern District of Texas decision finding Newegg Inc. liable for infringement of U.S. Patent Nos. 5,715,314, 5,909,492, and 7,272,639, all relating to electronic commerce.  The Federal Circuit offered clarifying insight on the obviousness doctrine.  The background facts are as follows:  Soverain Software purchased three software patents through bankruptcy proceedings and then proceeded to sue seven different entities for infringing the patents.  Six of the defendants settled and entered paid up license agreements with Soverain.  The seventh defendant, Newegg, refused to settle and argued that the asserted patents are all invalid and even if valid, Newegg’s system is different and non-infringing.  At trial, the district court refused to permit Newegg to present its obviousness argument to the jury and ruled that the patents were valid as a matter of law.  The jury found that Newegg had infringed two of the patents but not the third; the district court, however, entered judgment as a matter of law that Newegg infringed the third patent.  Newegg appealed and the Federal Circuit found all three patents obvious.  The federal circuit had three major discussion points:  (1) each element of the disputed claims was found in the prior art, (2) combining those elements would be obvious to one of skill in the art, and (3) licenses entered in settlement to a lawsuit do not constitute evidence of commercial success. 

 

·       In Rexnord Industries, LLC v. Kappos the Federal Circuit reversed a BPAI decision holding claims for a mechanical conveyor belt patentable.  The patent in question was asserted by Habasit Belting, Inc. against Rexnord Industries in an infringement suit in Delaware district court.  Rexnord filed a request for inter partes reexamination.  The examiner in the reexamination found all of the claims to be unpatentable for anticipation or obviousness. Habasit appealed the examiner’s findings, and the BPAI reversed, concluding that the claims of the patent were not anticipated by any of the references cited in the reexamination, and were unobvious over the cited references.  Rexnord appealed the BPAI decision to the Federal Circuit, arguing that the BPAI erroneously refused to review all of the arguments that Rexnord had presented as grounds for unpatentability.  The PTO countered that the BPAI only needed to consider the issue raised by Habasit on appeal, and had no obligation to consider other grounds that had been presented during reexamination, relying on a BPAI rule that “bars the presentation of new arguments outside appellant’s opening brief.”  The Federal Circuit noted that Rexnord was not the appellant before the BPAI since Habasit appealed the examiner’s decision, and concluded that the alternative bases for obviousness raised in the reexamination were properly raised on appeal to the Federal Circuit because they were fully raised in the reexamination and were not an issue for patentability until after the Board reversed the examiner.  The court then found the claims obvious on these additional grounds.

       

·       In Hall v. Bed Bath & Beyond, the Federal Circuit affirmed a Southern District of New Your district court’s dismissal of counts against Bed Bath & Beyond (BB&B) executives and counterclaims filed by BB&B, but concluded that the district court’s dismissal of Hall’s design patent infringement, unfair competition, and misappropriation claims for failure to state a claim on which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).  BB&B argued in its motion to dismiss, and the district court agreed, that the complaint was insufficient because if failed to include any claim construction, but the Federal Circuit held the complaint met the requirements for pleading design patent infringement previously set out by the court in Phonometrics, Inc. v. Hospitality Franchise Systems, Inc.  Specifically, the court found the complaint (i) alleged ownership of the patent, (ii) named each defendant, (iii) cited the patent that was allegedly infringed, (iv) stated the means by which the defendant allegedly infringed, and (v) pointed to the sections of the patent law invoked, and in doing so met its burden to withstand a motion to dismiss under Rule 12(b)(6), Twombly and Iqbal. 

 

·       In LG Display Co. v. Obayashi Seikou Co., 2013 U.S. Dist. LEXIS 10785 (D.D.C. 2013) The district court for the District of Columbia issued a ruling in a case between LG and Obayashi Seikou Co., LTD that goes back nearly a decade, centering on LG’s allegations that a former employee stole proprietary information and passed it along to Obayashi Seikou Co., who then obtained several patents on the technology.  Prior to the U.S. litigation, the parties had entered into a settlement agreement, and after the settlement failed, litigated the settlement agreement in the Korean courts.  In the Korean litigation LG secured a judgment from Korea’s highest court holding that the settlement agreement was valid, and the defendants were required to transfer their patents to LG, under the terms of the agreement.  LG then filed suit in the District of Columbia seeking recognition of the Korean judgment, as well as claiming misappropriation of trade secrets, conversion, and unjust enrichment.  The district court granted in part LG’s motion for partial summary judgment, recognizing the Korean judgment, but concluded that ownership of two related patents involved factual disputes and was not ready for summary judgment. 

New and Useful - January 23, 2013

·         In Wax v. Amazon Techs., the Federal Circuit upheld the TTAB’s denial of registration of the mark AMAZON VENTURES.  Applicant filed and intent-to-use application to register the mark for “investment management, raising venture capital for others, . . . and capital investment consultation.”  Amazon Technologies, Inc.—online retailer and owner of several AMAZON.COM marks—opposed the registration.  The TTAB concluded that Amazon Technologies, Inc. had priority in the AMAZON.COM marks, and that there was a likelihood of confusion between Amazon Technologies’ marks and those of the applicant.  The Applicant challenged the TTAB’s findings that (1) Amazon Technologies’ marks are famous, (2) the similarity of Amazon Technologies’ mark to AMAZON VENTURES, and (3) the similarity of the parties' services and channels of trade.  The Federal Circuit confirmed the TTAB’s findings, based in part on the wide latitude of protection afforded to Amazon Technologies’ on account of its fame within the buying public.  

·         The Eighth Circuit Court of Appeals affirmed a district court’s judgment and damages for Hallmark Cards, Inc. against a former employee for breach of contract and misappropriation of trade secrets.  The district court entered the jury’s award of damages in the amount of $860,000.  The Eight Circuit affirmed $735,000 of the damages as they related to breach of contract and disclosure of trade secrets, but overturned $125,000 the former employee earned in compensation from a competitor. 

·         The Federal Circuit has dismissed as moot an appeal from a patent infringement suit.  Allflex U.S.A., Inc. sued Avid Identification Systems, Inc. seeking a declaratory judgment that six of Avid’s patents were unenforceable due to inequitable conduct.  The district court granted partial summary judgment in favor of Allflex, at which time the parties entered into a settlement agreement that resolved all of the claims and issues between the parties upon payment of $6.55 million from Avid to Allflex, except for a provision that allowed Avid to appeal three specific issues.  The agreement further provided that Allflex could contest any appeal on the merits, but could not dispute the existence of a live case or controversy, and that if Avid were successful on any issue on appeal, the payment to Allflex would be reduced by $50,000.  The district court accepted the settlement agreement and entered a stipulated order of final judgment that stated the case was dismissed with prejudice with the exception of findings the court considered “final and ripe for appellate review.”  Avid then appealed to the Federal Circuit, but Allflex declined to file a brief defending the judgment of the district court. 

The Federal Circuit concluded that the appeal was moot.  Avid argued that, although the case would be moot if it were not for the $50,000 contingency payment, that payment ensured that there was a real controversy between the parties.  The court dismissed Avid’s argument, concluding that while the district court’s decision was effectively final and therefore appealable, Allflex no longer had a legally cognizable interest in any of the issues in the case, and the payment was insufficient to create any interest

·         The USPTO has announced the new fee schedule.  The changes, initiated under the Leahy-Smith America Invents Act, are set to take effect March 19, 2013.  Among the notable changes are:

o   A 75% reduction in most fees for micro entities, including Universities.

o   Increase in basic filing fee:  $1,600 (large entity); $800 (small entity); $400 (micro entity)

o   Increase in appeal fees, due in large part to a new “Appeal Forwarding Fee for Appeal in Examination or Ex Parte Reexamination Proceeding or Filing a Brief in Support of an Appeal in Inter Partes Reexamination”:  $2,800 (large entity); $1,400 (small entity); $700 (micro entity)

o   Decrease in issue fees:  $960 (large entity); $480 (small entity); $240 (micro entity)

o   Increase in maintenance fees:

§  First (3.5 years):  $1,600 (large entity); $800 (small entity); $400 (micro entity)

§  Second (7.5 years):  $3,600; $1,800; $900

§  Third (11.5 years):  $7,400; $3,700; $1,850

o   Decrease in supplemental examination fees:  $16,500 (large entity); $8,250 (small entity); $4,125 (micro entity)

The complete finalized rules are available here.

Federal Circuit Addresses Obviousness Rationales and Counterarguments

Recently, the Federal Circuit issued its opinion in CW Zumbiel v. Kappos.  The Federal Circuit affirmed the Board of Patent Appeals and Interferences’ (“BPAI”) finding that multiple claims in U.S. Patent No. 6,715,639 (“the ’639 patent”) were obvious and therefore invalid.  The 639 patent is directed to a “carton with an improved dispenser.”  The carton is for holding cans or bottles and the improved dispenser is a flap that permits dispensing of the cans or bottles without compromising the structure of the carton so that the remaining cans or bottles are secure within the container.  The 639 patent issued to Graphic Packaging International, Inc. (“Graphic”).  Upon issuance CW Zumbiel Co., Inc. (“Zumbiel”) challenged the validity of the 639 patent by instituting an inter partes reexamination.  During the inter partes reexamination, the Examiner rejected multiple claims for obviousness, while maintaining the patentability of other claims.  Graphic appealed the Examiner’s rejections to the BPAI, which subsequently affirmed the patentability of some claims and the rejection of the other claims based on obviousness over Ellis, U.S. Patent No. 3,178242, in view of German Gebrauchsmuster No. G85 14718.4.  Zumbiel appealed the BPAI’s finding that some claims were patentable and Graphic cross-appealed the finding that other claims were obvious.

One limitation that was found obvious was the “finger-flap,” which opens across the top panel of the carton.  Graphic argued that the limitation would not be obvious over the combination of references because they open in different ways—Ellis is laid on its side and opens on the back while the German patent opens from the top.  The Federal Circuit affirmed the BPAI’s finding of obviousness quoting the BPAI, which stated, “‘providing the finger opening on the top wall of the carton would be a predictable variation that enhances user convenience, as evidenced by German ’718, and is within the skill of a person of ordinary skill in the art.’”

Another limitation that was found obvious was the “fold-line” limitation, which provides a fold-line so that the flap can be folded back to cover the opening.  Graphic argued that the German reference did not teach such a flap, but rather was directed to a container allowing simultaneous removal and replacement of bottles through an opening that could either be a perforated line or a fold line.  The Federal Circuit affirmed the BPAI’s finding that the fold-line limitation was obvious over the cited references as the combination teaches that a tear-line can be replaced by a fold-line, which would be obvious to one of skill in the art. 

Zumbiel disputed the BPAI’s determination that claim 2 was not obvious.  Claim 2 was directed to the placement of the finger-flap between the first and second cans.  Zumbiel argued that the placement would have been obvious in light of the combination of references.  The Federal Circuit, however, affirmed the BPAI’s finding that the prior art reference at issue—Palmer, U.S. Patent No. 2,718,301—only taught where to place a handle formed by the perforated tear-line on the container, not where to place perforation for an opening.  Moreover, the Federal Circuit noted that one of the references actually taught away from the placement of the tear-line in claim 2.  Therefore, the combination of references could not render claim 2 obvious.

Ultimately the Federal Circuit affirmed the BPAI’s findings in whole.  The opinion demonstrates examples teaching away, predictable variations in light of the knowledge of one skilled in the art of the invention, and a proper combination of references.

Dissent

Judge Prost dissented in part arguing that claim 2 should have been found obvious based in light of the KSR decision and the applicability of common sense in the obviousness determination.  The dissent, quite candidly, sets out the invention of the ’639 invention, its common sense understanding, and the teachings of the prior art that had existed for “almost fifty years.”  Judge Prost took issue with the finding that placement of the tear-line was unobvious:

The secret lies in the proper positioning of the tear line.  That is, according to the Board, ordinary box makers would not have put the tear line between the first two cans in the top row.  Where else could have they put it? There are just four other options: (1) above the first can, (2) above the second can, (3) in front of the first can, (4) behind the second can.  The first two alternatives are just offensive to common sense: With the cans right below, there would be no room to push the flap through (the flap is positioned at the center of the tear line). The third and fourth options are not quite as illogical, but even without expertise in box making, one may intuit that they make awkward designs (the third opens too little, the fourth too much).  More importantly, however, whether some of the alternatives would work just as well or not, the patentee’s choice of tear-line-placement involves no more than the exercise of common sense . . . .

As such, Judge Prost concludes that the invention of claim 2 would have been obvious, particularly when viewed in light of the prior art.

The full text of the Federal Circuit opinion is available here.  

New and Useful - Janurary 14, 2013

·         The Supreme Court handed down its decision in Already, LLC v. Nike, Inc.  The Court held that Nike’s covenant not to sue Alreadyfor alleged infringement of Nike’s AIR FORCE 1 trademark—entered into after Nike had filed suit and Already had filed a counterclaim challenging the mark’s validity—rendered both Nike’s claims and Already’s counterclaims moot.  The Court held that because Already failed to show that it engages in or has sufficiently concrete plans to engage in activities that would arguably infringe Nike’s trademark yet not be covered by the covenant not to sue, its claims could not survive Nike’s motion to dismiss. 

 

·        The USPTO has issued a Request for Comments and Notice of Roundtable Events for Partnership for Enhancement of Quality of Software-Related Patents.  The notice provides two separate roundtable events with the same agendas, one occurring in Silicon Valley on Tuesday February 12, 2013, beginning at 9 a.m. and the second occurring in New York City on Wednesday, February 27, 2013 beginning at 9 a.m. (both local time).  Topics on the agenda include: (1) how to improve clarity of claim boundaries that define the scope of patent protection for claims that use functional language; (2) identification of additional topics for future discussion by the Software Partnership; and (3) opportunity for oral presentations on the Request for Comments on Preparation of Patent Applications. Written comments are requested in response to the first two discussion topics. Written comments on the third discussion topic must be submitted as directed in the forthcoming Request for Comments on Preparation of Patent Applications.  Registration for the events is requested by February 4, 2013.  For additional information see the official notice.

·       The USPTO has also extended a pilot program allowing an applicant to request a twelve-month time period to pay the search fee, the examination fee, any excess claim fees, and the surcharge (for the late submission of the search fee and the examination fee) in a nonprovisional application, under specific conditions.  The program has been extended until December 31, 2013, with the possibility of further extension.  To qualify, the applicant must satisfy the following conditions: (1) Applicant must submit a certification and request to participate in the Extended Missing Parts Pilot Program with the nonprovisional application on filing, (2) the application must be a nonprovisional utility or plant application filed within the duration of the pilot program; (3) the nonprovisional application must directly claim the benefit under 35 U.S.C. 119(e) and 37 CFR 1.78 of a prior provisional application filed within the previous twelve months (the specific reference to the provisional application must be in an application data sheet); and (4) applicant must not have filed a nonpublication request. Additional information is available here.

 

·       The Second Circuit Court of Appeals affirmed in part and remanded in part a decision by the Southern District of New York finding willful infringement on the part of a retailer for infringing the Fendi trademark by selling allegedly counterfeit Fendi-branded products.  The district court awarded $12,324,062.66 in trebled damages, prejudgment interest, costs, and attorneys' fees, including disgorgement of Ashley Reed's based on a finding of willful infringement.  The Second Circuit affirmed the district court’s finding of infringement and willfulness, but remanded for clarification of the period of disgorgement. 

 

·        The Federal Circuit has issued a new opinion on determining obviousness.  A more thourough examination of the dicision in The C.W. Zumbiel Company, Inc. v. Kappos will be available soon here at Filewrapper. 

Another Billion Dollar Patent Verdict

Another billion dollar verdict has been handed out in a patent case.  Read the verdict in Carnegie Mellon University v. Marvell Technology Group, LTD. here.  This latest case continues a string of billion dollar verdicts highlighted by Jonathan Kennedy in the latest edition of MVS Briefs. 

Carnegie Mellon brought suit alleging infringement of two of its patents, Patent No. 6,201,839 and Patent No. 6,438,180, relating to integrated circuits for computer memory systems.  Marvell asserted that it did not infringe the patents, and in the alternative, the patents were invalid because they were anticipated or rendered obvious by the prior art.

The jury in the case found for Carnegie Mellon on all counts of infringement—including indirect infringement—and invalidity.  In addition to the large damages award, the jury determined that Marvell had engaged in willful infringement of two patents held by Carnegie Mellon because Marvell knew of the asserted patents before the lawsuit, had no reasonable defense for its actions, and knew or should have known that its actions would infringe the asserted patents.  The determination of willfulness by the jury could allow the presiding judge, U.S. District Judge Norra Barry Fischer, to triple the damages award. 

 A final judgment in the case is expected in May 2013, pending post-trial motions from both sides.  Marvell has already announced its intent to appeal the verdict should its post-trial motions prove unsuccessful. 

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