MVS Filewrapper® Blog: New and Useful - April 23, 2013

·         In K-Tech Telecoms v. Time Warner Cable, the Federal Circuit confirmed that the standard for evaluating the adequacy of complaints alleging direct patent infringement remains Form 18 of the Appendix of Forms to the Federal Rules of Civil Procedure ("Form 18").  K-Tech filed separate complaints against Direct TV and Time Warner Cable (“TWC”) on the same day, alleging infringement of four patents.  Direct TV and TWC each moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), asserting the complaint, as filed, lacked sufficient factual specificity to state a cause of action for direct patent infringement.  K-Tech sought, and was grated, leave to amend the complaints.  After K-Tech filed its amended complaints, TWC and Direct TV again moved to dismiss under 12(b)(6).  The district court granted the motions to dismiss, stating that the amended complaints failed to cure the defects with the original complaint, namely that the complaints did not explain why K-Tech believed the defendants were utilizing the methods and products protected by the asserted patents, rather than using other noninfringing methods and products, and therefore failed to meet the standards articulated in Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009).  K-Tech appealed the dismissal two weeks before the Federal Circuit issued its decision in R+L Carriers, Inc. v. DriverTech LLC (In re Bill of Lading Transmission & Processing System Patent Litigation), 681 F.3d 1323 (Fed. Cir. 2012). The Federal Circuit consolidated the appeals.

On appeal, K-Tech argued that the amended complaints complied with Form 18 and that the district court applied the incorrect standard.  The defendants argued that sufficiency with respect to Form 18 must be interpreted in light of Twombly and Iqbal, and Ninth Circuit law, and that the amended complaints failed to meet either the plain language of Form 18 or the requirements of Twombly and Iqbal.  The court relied on its recent decision in R+L Carriers in reasserting the sufficiency of Form 18 for pleading patent infringement, and that to the extent any conflict exists between Form 18 and Twombly/Iqbal, the form controls.  Because Form 18 does not include any indication that a patent holder must explain why it believes that a defendant is utilizing the methods and products protected by the asserted patents, rather than using other noninfringing methods and products, such assertions are not required to survive a motion to dismiss.  Further, the court held that the failure of K-Tech to identify a particular allegedly infringing device or devices—by name, model number, or otherwise—did not bar K-Tech from filing a complaint in accordance with Form 18, stating, “A defendant cannot shield itself from a complaint for direct infringement by operating in such secrecy that the filing of a complaint itself is impossible. Nor is a defendant immune from a direct infringement claim because he does not make a ‘device’ but, rather, infringes through a system or method.” 

·         In Lazare Kaplan Int’l, Inc. v. Photoscribe Techs., Inc., the Federal Circuit reversed a decision by the U.S. District Court for the Southern District of New York granting summary judgment of invalidity of two claims of a patent owned by Lazare Kaplan (“LK”), and asserted against  Photoscribe Technologies, Inc. and the Gemological Institute of America (collectively “Photoscribe”).  The Federal Circuit also reversed the district court’s granting of a motion under Federal Rule of Civil Procedure 60(b) filed by Photoscribe that vacated the district court’s prior judgment finding the same claims not invalid.  LK sued Photoscribe alleging infringement of Lazare Kaplan’s patent covering systems and methods for microinscribing gemstones.  In the ensuing trial, the asserted claims of the LK patent were adjudged not invalid and not infringed, either literally or under the doctrine of equivalents.  LK appealed the judgment of noninfringement, but Photoscribe did not appeal the judgment that the asserted claims were not invalid.  On appeal, the Federal Circuit vacated the judgment as based on erroneous claim construction and remanded the case.  On remand, the district court retried both the invalidity and infringement issues, and granted Photoscribe’s motions for summary judgment of invalidity and for relief from the prior judgment under Rule 60(b) while denying LK’s motion for summary judgment of infringement.  LK again appealed the district court’s ruling.

The Federal Circuit, in the second appeal, reversed the grant of relief under Rule 60(b) and vacated the finding of invalidity, with instructions to the district court to reinstate the original judgment of non-invalidity.  The court concluded that the district court erred by allowing Photoscribe to address validity on remand despite its failure to file a cross-appeal from the adverse final judgment on validity in the original trial.  The court also concluded that under Second Circuit precedent, Rule 60(b) could not provide the relief granted by the district court.  The court then remanded the case again, with instructions for the district court to assess infringement under the construction the Federal Circuit had set forth in the prior appeal. 

 

Judge Dyk dissented in the opinion, arguing that the inconsistency of allowing the patentee to assert infringement based on a broad claim construction while defending against invalidity based on a narrower claim construction should be alleviated by Rule 60(b), notwithstanding the fact that Photoscribe did not appeal the original judgment that the asserted claims were not invalid. 

 

 

·         In Aspex Eyewear, Inc. v. Zenni Optical LLC, the Federal Circuit affirmed a decision by the US District Court for the Southern District of Florida holding that Aspex was collaterally estopped from pursuing the suit against Zenni based on earlier litigation between Aspex and Altair Eyewear, Inc. for infringement of the same patents.  The previous Altair litigation involved the same three patents, U.S. Patents No. 5,737,054 (the ’054 patent), No. 6,012,811 (the ’811 patent), and No. 6,092,896 (the ’896 patent), with many of the same claims asserted.  The district court in the Altair litigation held that the ’811 and ’896 patents were not infringed, and the asserted claim of the ’054 patent was invalid for obviousness.  The district court’s rulings were affirmed by the Federal Circuit. 

The district court applied the Altair rulings to the issues in the suit against Zenni, holding that the accused products were materially indistinguishable and the previous decisions settled the question of whether the accused Zenni product could infringe the asserted patents, and Aspex was therefore collaterally estopped from bringing suit against Zenni.  Aspex appealed the district court’s decision, arguing that the issues at stake were not identical because the claim terms that were construed and applied in the Altair litigation were not the same as the claim terms requiring construction in the Zenni suit. The Federal Circuit concluded that every claim asserted against Zenni contained the same limitation, in the same context, that was previously determined to be dispositive of non-infringement.  As a result, even though some of the claims asserted against Zenni were not construed of applied, this did not create a new issue to defeat preclusion.  The court further determined that Aspex had a full and fair opportunity to litigate the asserted patents, and the selection of additional claims for litigation and additional terms for construction could not override the holding of non-infringement.

MVS Filewrapper® Blog: New and Useful - April 10, 2013

·       In In re Hubbell the Federal Circuit confirmed the rejection of all of the pending claims in an application, filed with Jeffrey Hubbell, Jason Schense, Andreas Zisch, and Heike Hall as named inventors.  The invention disclosed in the application was based on research performed while all of the named inventors were at California Institute of Technology (CalTech). As a result, the application is assigned to CalTech.  Approximately five years before the CalTech application was filed, Hubbell left CalTech for Eidgenossische Technische Hochschule Zurich (ETHZ).  A second application filed based on research Hubbell and Schense conducted at ETHZ was filed less than a year before the CalTech application, which is assigned to ETHZ and Zurich University.  Aside from Hubbell and Schense, the two patents do not have identical inventive entities, or common owners or assignees.  The ETHZ application, which issued as a U.S. patent in 2009, was used as the basis for an obviousness-type double patenting rejection, which was upheld by the Board of Patent Appeals and Interferences.

Hubbell appealed the Board decision, arguing that the judicially created obviousness-type double patenting rejection should not apply where an application and a conflicting patent share common inventors, but do not have identical inventive entities, were never commonly owned, and are not subject to a joint research agreement.  Alternatively, Hubbell argued that should the court find the obviousness-type double patenting rejection is applicable, he should either be allowed to file a terminal disclaimer as an equitable measure, or the court should employ a two-way obviousness analysis for the rejected claims. 

 

The Federal Circuit affirmed the Board, finding that both the MPEP and Federal Circuit precedent supported application of the obviousness-type double patenting rejection to cases where an application and a conflicting patent have one or more inventors in common but the inventive entities are not identical and the applications were never commonly owned.  The court rejected Hubbell’s argument that the case precedent only involved applications that were once commonly owned by the same entity, and did not apply to his application because CalTech never controlled the ownership of the second application.  The court based its decision on the underlying concerns over the possibility of harassment by multiple assignees that exists when issued patents lack common ownership—if the claims of the ETHZ application were to issue, a potential infringer could be subject to suit from both CalTech and ETHZ.  The court also rejected Hubbell’s argument that a terminal disclaimer should be permitted, based on the fact that there is no statutory basis for doing so.  Finally, the court affirmed the Board’s rejection of Hubbell’s request to have the two-way obviousness analysis applied in the case.  The court concluded that Hubbell’s application did not meet the requirements to apply the narrow exception to the general rule of the one-way test.  

Judge Newman dissented in the opinion, concluding that the majority’s decision is a “flawed ruling on incorrect law.”  Specifically, Judge Newman concluded that because there are different inventive entities and that there is not common ownership, obviousness-type double patenting does not apply, but if there indeed is obviousness-type double patenting, then a terminal disclaimer is necessarily available. Judge Newman took issue with the circularity of the majority opinion—a terminal disclaimer is not available because there is not common ownership, yet if there is not common ownership or common inventorship, there cannot be double patenting. 

·       In Dawson v. Dawson, the Federal Circuit upheld the USPTO Board of Patent Appeals and Interferences (BPAI) decision determining that an earlier-filed patent application for topically treating and preventing infections of the eye, naming Dr. Chandler Dawson as inventor, had priority over a later-filed patent application, also naming Dr. Chandler Dawson as inventor.  The earlier-filed application was submitted by Dr. Dawson and Dr. Lyle Bowman and assigned to InSite Vision Incorporated.  The University of California San Francisco (UCSF) filed the later-filed application, without the involvement of Dr. Dawson but naming Dr. Dawson as the sole inventor, for the sole purpose of instituting an interference.  The BPAI determined that UCSF had not met its burden to show that Dr. Dawson had conceived of the invention prior to his collaboration with Dr. Bowman.   

On appeal to the Federal Circuit, UCSF asserted that the invention embodied in the InSite application was conceived of by Dr. Dawson while he was employed at UCSF and before he joined InSite, and therefore priority of the invention should rest in the UCSF later-filed application.  UCSF argued that the conception requirement was met by the time Dr. Dawson made a presentation at a WHO conference, as demonstrated by documents produced from that conference.  UCSF argued that even though the conference documents lacked the particular carrier and concentrations recited in the claims, conception was achieved because the documents showed that Dr. Dawson had formed the idea that of topical use of azithromycin would be effective for treating eye infections, and that the subsequent preparation of an effective ointment was merely corroboration of the idea.  

The court rejected UCSF’s arguments, reasoning that the WHO documents themselves demonstrated the lack of conception because they constituted “a ‘preliminary’ statement about a ‘possibility’ or ‘potential use,’ alongside a recommendation for continued work and a ‘report back’ in the future.”  The court concluded that this fell short of the requirement for a definite and permanent idea of the complete and operative invention, as it is to be applied in practice, as set out in Hybritech Inc. v. Monoclonal Antibodies, Inc.  The court further held that UCSF failed to make a sufficient showing with respect to the individual interference counts—the specific concentrations, the suspending agent, or the claimed “amount effective to treat infection in a tissue of the eye.”  Finally, the court rejected UCSF’s argument that the BPAI had improperly required a showing of reduction to practice in order to prove conception, concluding that UCSF’s argument was based on an erroneous view of what is needed to prove conception, and holding that “there is a critical difference between conceiving a way to make an idea operative and knowing that a completed invention will work for its intended purpose.” 

Judge Reyna dissented in the opinion, concluding that the record was sufficient to demonstrate that Dr. Dawson possessed a definite and permanent idea of his complete and operative invention when he was employed by UCSF, not InSite, and therefore UCSF had demonstrated prior conception.   

·       In Saffran v. Johnson &Johnson, Dr. Bruce N. Saffran (Saffran) sued Johnson & Johnson and Cordis Corporation (collectively “J&J”), alleging that J&J infringed a number of claims in Saffran’s U.S. patent.  The patent involved methods and apparatus that would sequester macromolecules within a defined area, for example a sheet that could be wrapped around a bone fracture that would keep growth factors from diffusing out of the fractured area.  The claims of the patent were also drawn to the additional capability of controlled release of a substance incorporated into the apparatus via a “means for release.”  The alleged infringing device was a drug-eluting stent comprising a metallic mesh with a microscopic layer of polymer that coats the surface of each strut, the polymer being mixed with a macromolecular drug that would gradually escape through gaps in the polymer matrix.  The U.S. District Court for the Eastern District of Texas held that J&J infringed the patent based on its construction of the terms “device” and “release means”.  J&J appealed to the Federal Circuit, arguing that the district courts construction of the two terms was erroneous, and that a proper construction precluded infringement. 

 

On appeal, the Federal Circuit construed the term “device”—as used in the preamble and body of independent claim 1, in the bodies of independent claims 8 and 15, and at least by reference in each of the dependent claims—to mean a continuous sheet and to exclude stents having open mesh holes.  The court came to this conclusion based on the prosecution history, during which the patentee sought to distinguish the prior art by asserting that the device used in the invention is a sheet rather than the structure disclosed in the prior art reference.  The court confirmed that this corresponded to the disclosure in the specification, and Saffran’s argument that the specification contained alternative embodiments did not persuade the court otherwise.   

The court confirmed that “[u]nder § 112, ¶ 6, the question is not what structures a person of ordinary skill in the art would know are capable of performing a given function, but what structures are specifically disclosed and tied to that function in the specification” and “a patentee cannot rely on claim differentiation to broaden a means-plus-function limitation beyond those structures specifically disclosed in the specification.”  Thus, the court construed “release means” to only include treating material attached to the substantially impermeable sheet via hydrolyzable bonds or an equivalent thereof.

Based on its construction of “device” and “release means” the court concluded that J&J did not infringe the asserted Saffran patent. 

MVS Filewrapper® Blog: Federal Circuit affirms importance of secondary indicia of non-obviousness

The Federal Circuit has recently decided the case of Power Integrations, Inc. v. Fairchild Semiconductor International, Inc.  Power Integrations, Inc. (Power) sued Fairchild Semiconductor International, Inc.  (Fairchild) in the U.S. District Court for the District of Delaware, alleging infringement of Power’s four patents covering chargers for mobile phones.   In a bifurcated trial, the claims of the patents were found valid, and Fairchild was found to have willfully infringed and assessed $33 million in damages, which was subsequently remitted to $12 million.  Fairchild appealed to the Federal Circuit, arguing that the district court’s claim construction of two terms—“frequency variation signal” and “soft start circuit”—was erroneous, and that the district court’s denial of its JMOL of non-obviousness was in error.  Power cross-appealed the district court’s determination that the jury’s original damages award of was contrary to law, seeking the original $33 million in damages. 

           

Claim Construction

Fairchild argued on appeal that the district court’s construction of the “frequency variation signal” language improperly imported limitations from the preferred embodiments provided in the patent specification.  Fairchild sought a much broader construction, based on what it argued was the plain and ordinary meaning, thereby eliminating any need to turn to the disclosures of the patent.  The Federal Circuit concluded that the testimony of Power’s expert that there was no plain and ordinary meaning and in the absence of contrary evidence from Fairchild, the expert opinion was dispositive.  The court then confirmed the district court’s reading of the specification, ultimately concluding the construction of “frequency variation signal” was proper.

           

Fairchild also argued that the district court’s construction of “soft start circuit” as a means-plus-function limitation was erroneous because the claim did not use the term “means” and provided sufficient structure to preclude application of 35 U.S.C. § 112, paragraph 6.  The court concluded that the recitation of a “circuit” in conjunction with a sufficiently definite structure for performing the identified function was adequate to bar means-plus-function claiming. 

           

Obviousness

With respect to obviousness, Fairchild argued that the Power patents were obvious in light of the prior art, because the only difference compared to the patents-in-suit was that the prior art included erasable programmable read only memory (EPROM) absent from the patents and it would have been obvious to a person of skill in the art to simply remove the EPROM.  The court found that a person of skill in the art would understand that the EPROM in the prior art was used to achieve a different result than, and was thus unnecessary for, the “frequency-jittering” achieved by the claimed invention of the patent-in-suit.   However, the court also found that there was substantial evidence of “objective considerations of non-obviousness”—that is, secondary indicia—to support the jury’s verdict that Power’s patent would not have been obvious to the ordinarily skilled artisan.  Specifically, the court focused on:

(1) testimony that the EPROM in the prior art added expense and imposed design constraints as “a good indication that removing the EPROM provided otherwise unexpected benefits”;

(2) testimony that “each and every one of [the prior art] references . . . included [EP]ROMs,”

(3) more than 11 years having passed between issuance of the obviousness reference and the filing of the patent-in-suit without anyone disclosing removing the EPROMs;

(4) testimony that no one in the industry was able to come up with the patented invention;

(5) evidence of commercial success; and significantly (6) Fairchild competed with Power by reverse engineering and copying of Power Integrations’ products.  

The court concluded that this evidence was sufficient to support the verdict of non-obviousness.

           

Damages

The court also considered the “underlying question [of] whether Power Integrations is entitled to compensatory damages for injury caused by infringing activity that occurred outside the territory of the United States.”  The court answered that question with an emphatic “No.” 

Finally, the court considered whether the district court improperly precluded Power from introducing evidence of price erosion that occurred prior to notifying Fairchild of its infringing activity.  The court held that the district court’s decision to exclude the evidence was incorrect because “a price erosion analysis relating to damages arising from post-notice infringement must measure price changes against infringement-free market conditions, and thus the proper starting point of such a price erosion analysis is the date of first infringement.”

The court remanded the case for the district court to construe those claims and determine what effects the new constructions have on validity and infringement, and for a new trial on damages resulting from Fairchild’s direct infringement.

MVS Filewrapper® Blog: New and Useful - April 5, 2013

·         In Power Integrations, Inc. v. Fairchild Semiconductor International, Inc. the Federal Circuit clarified several points relating to claim construction, determinations of non-obviousness, and calculation of damages.   The court confirmed that claiming a “circuit” in conjunction with a sufficiently definite structure for performing the identified function is adequate to bar means-plus-function claiming.  The court also confirmed that secondary considerations of non-obviousness could constitute evidence sufficient to support a finding of non-obviousness.  Finally, the court held that plaintiffs are not entitled to compensatory damages for injury caused by infringing activity that occurred outside the territory of the United States, regardless of any foreseeability of world-wide damages.  A more in-depth analysis of this case will be posted shortly.

·         In Rubin v. The General Hospital Corp., Dr. Berish Y. Rubin and Dr. Sylvia L. Anderson (collectively, Rubin) sued The General Hospital Corporation (GH Corp.) in the U.S. District Court for the District of Massachusetts requesting correction of inventorship of two patents assigned to GH Corp., or alternatively invalidation of the two patents.  Rubin alleged that the inventors named in the patents used confidential information—from a manuscript and abstract submitted by Rubin to the American Journal of Human Genetics—to complete the inventions described and claimed in the patents.   The district court granted summary judgment to GH Corp.

The Federal Circuit affirmed the grant of summary judgment, reasoning that the dispute was fundamentally a question of priority of the invention.  The court ultimately agreed with the district court, concluding that Rubin and Anderson could not be added as joint inventors or be substituted for the named inventors of the patents because they did not meet the requirements of 35 U.S.C. § 116 for joint invention or §256 for correction of inventorship, and that the issue of priority is appropriately determined by PTO interference proceedings.    

·         The U.S. District Court for the Southern District of N.Y. has handed down its decision in Capitol Records, llc. V. ReDigi Inc.  ReDigi considers itself the "world's first and only online marketplace for digital used music."   ReDigi's website "invites users to sell their legally acquired digital music files, and buy used digital music from others at a fraction of the price currently available on iTunes."   ReDigi's website sold various records belonging to Capitol Records.  Capitol Records brought an action against ReDigi, alleging direct copyright infringement, inducement of copyright infringement, contributory and vicarious copyright infringement.  In its defense, ReDigi asserted that the “first sale” doctrine precluded a finding of copyright infringement.  The district court disagreed, however, holding that the very nature of transferring digital files over the internet constituted copyright infringement because in order to transfer a file, a copy of the file must be made on the transferring computer.  Because the “first sale” doctrine does not protect against reproduction of copyrighted material, ReDigi could not successfully assert the defense for the present action.   

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