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.

Second Circuit: If you want a court to order the USPTO, ask in your pleadings, not after you win

In a recent decision, the Second Circuit affirmed a district court's decision in a trademark case not to enter an order pursuant to 15 U.S.C. § 1119§ 1119 permits a court to enter an order regarding registrability and cancellation of marks at the USPTO.  The prevailing defendant asked the district court to order the USPTO to dismiss a related cancellation proceeding.  The party had not requested an order under § 1119 in its counterclaims, but instead sought it by way of a Rule 59(e) motion to amend the final judgment in the case.  The district court denied the motion, concluding the defendant could simply raise the issue as a matter of issue preclusion.

The Second Circuit affirmed.  The court held there was no abuse of discretion in denying the Rule 59(e) motion.  Further, the court noted § 1119 is permissive, such that the court was not required to grant such relief.

More detail of Empresa Cubana del Tabaco v. Culbro Corp. after the jump.


Today's lesson for litigators: make sure you present all your arguments to the district court

In a decision Tuesday, the Federal Circuit affirmed a district court's holding that two patents were invalid under the on-sale bar of 35 U.S.C. § 102(b).  The inventor filed a declaration during prosecution that the invention was reduced to practice before the critical date of the patents, and thereafter sold the claimed method, also before the critical date.  The post-reduction to practice sales could not be considered experimental use, as once an invention is reduced to practice, experimental use is no longer possible.  Further, there was insuffucient evidence to call the inventor's declaration into question.  On this point, the plaintiff attempted to rely upon additional evidence not presented to the district court in opposition to the defendants' summary judgment motion.  The Federal Circuit rebuffed this attempt, limiting the plaintiff on appeal to the evidence presented to the district court in opposition to the summary judgment motion.  As a result, the court affirmed the finding of invalidity.

The Federal Circuit further affirmed the district court's dismissal of the plaintiff's trade secret claims as barred under the statute of limitations.  The court held the plaintiff had sufficient information to allege trade secret misappropriation at least as early as 1996, but did not file suit until 2005, well outside the applicable 3-year limitations period.  Accordingly, dismissal of the trade secret claims was proper.

More concerning In re Cygnus Telecomms. Tech., LLC, Patent Litig. after the jump. 


When exclusion order based on multiple patents, failure to appeal under each may render appeal moot

In a decision last week, the Federal Circuit affirmed the United States International Trade Commission's finding of infringement and validity. 

The claims were brought under three patents that all claimed priority to a common parent application, and thus would ordinarily all expire on the same day.  However, one of the three patents was subject to a 108 day term extension under 35 U.S.C. § 154(b).  The final determination was only appealed as to two patents, one of which was the one subject to the extension.  As the exclusion order was supportable for the full term of both the non-extended patents based on infringement of the non-appealed patent, the determination regarding the non-extended patent was moot, given it would have no effect on the exclusion order.  The extended patent, however, would extend the order beyond the expiration of the non-appealed patent, making the appeal as to that patent not moot.

Turning to the merits, the court affirmed the ITC's finding that the patents were not invalid under the written description requirement of § 112.  The patentee substituted the generic word "clearance" for other terms in the claims, but the court held this insufficient to show lack of possession of the invention as of the parent application's filing date.

More detail on Yingbin-Nature Wood Indus. Co. v. Int'l Trade Comm'n after the jump.



Reverse doctrine of equivalents still a losing argument at the Federal Circuit

In a decision Wednesday, the Federal Circuit affirmed a district court's finding of patent validity and patent infringement.  The Federal Circuit found no error in the district court's holding that the reverse doctrine of equivalents was inapplicable and that claim preclusion prohibited the defendant from raising other validity challenges.  

Specifically, the defendant did not establish a prima facie case of noninfringement under the reverse doctrine of equivalents because it relied exclusively on the declaration of its expert witness to determine the principle of the invention instead of properly determining the principle from the specification, prosecution history, and prior art.  The Federal Circuit added that the reverse doctrine of equivalents is rarely applied (and that it has never affirmed a finding of non-infringement under the doctrine).

The Federal Circuit further agreed with the district court that the defendant's other claims were precluded by earlier litigation.  The accused products in both the first and second litigations were encompassed by the claims of the patent, so they constituted the "same claim" for purposes of claim preclusion.  The defendant also argued that because of KSR, there should be a "change of law" or fairness exception to claim preclusion.  The Federal Circuit disagreed, stating that although there may be rare exceptions in cases involving "momentous changes in important, fundamental constitutional rights," KSR involved no such right.

More detail of Roche Palo Alto LLC v. Apotex, Inc. after the jump.


No claim preclusion unless second accused product essentially the same as product in first suit

In a Tuesday decision, the Federal Circuit reversed a district court finding that a patent infringement suit was barred by claim preclusion.  At issue was whether a claim for patent infringement was barred under the doctrine of claim preclusion when that claim could have been brought in a prior case.  The patentee sued for infringement on the basis of one product, and during that lawsuit, learned of a second product that was the subject of the second infringement suit.  The district court held the claim precluded because a claim of infringement based on the second product could have been added in the first case, and that the Federal Circuit's "essentially-the-same" test for preclusion only applied where the second claim could not have been brought in the first action.

The Federal Circuit reversed, and the court disagreed with the district court's interpretation that the "essentially-the-same" test was limited to cases where the accused device could not have been included in the prior action.  The proper test of claim preclusion, according to the court, is that a claim for patent infringement based on a second accused product or method can only be barred where the second product or method is essentially the same as an accused product or method in a prior action.  The accused infringer admitted this was not the case here, so the court reversed the finding of preclusion.

More concerning Acumed LLC v. Stryker Corp. after the jump.


Hybrid vehicle patent not infringed; invalidity issues need not be reached on appeal from ITC

In an appeal from the International Trade Commission, the Federal Circuit affirmed the Commission's determination of noninfringement of a patent.  The court, however, did not consider the ITC's finding of nonenablement on appeal.  While in the context of a district court case a counterclaim for invalidity is not mooted by a finding of noninfringement, the court held that because invalidity can only be raised at the ITC as an affirmative defense, the court was not required to consider the issue of indefiniteness on appeal once it had affirmed the finding of noninfringement.  Accordingly, the court sidestepped the issue of enablement with regard to the asserted patent, instead affirming on the grounds of noninfringement alone.

More concerning Solomon Techs., Inc. v. Int'l Trade Comm'n after the jump.


Party defaulting before district court and enjoined cannot attack registration via cancellation

In a decision this week, the Federal Circuit held that a party against whom a default judgment was entered in a trademark infringement case before a district court cannot thereafter petition to cancel the registration at issue before the TTAB.  The TTAB held the claim barred by res judicata.  The court held that res judicata did not apply, because an invalidity counterclaim in the district court was not compulsory under Rule 13, and therefore the party now seeking cancellation was not required to assert the invalidity counterclaim before the district court.  However, the court held that the cancellation would be an impermissible collateral attack on the previous judgment, and affirmed the TTAB's decision on that basis.

Judge Newman, concurring in the judgment, would have affirmed on the same grounds as the TTAB, namely that because the issue of the registration's validity was decided before the district court, res judicata applied to prevent relitigation of the issue.

More detail of Nasalok Coating Corp. v. Nylok Corp. after the jump.


Fourth Circuit: Claim preclusion prevents new determination of actual damages against licensees

Yesterday, the Fourth Circuit decided another copyright infringement case based on use of the logo for the Baltimore Ravens football team.  The court had previously affirmed two cases involving the same logo, where copyright infringement was found but no damages were issued.  In this case, several hundred licensees were sued for using the infringing logo.

The court again affirmed there was infringement of the plaintiff's copyright, and again affirmed the decision to award no damages. Statutory damages were not granted due to a failure to register his copyright before infringement began, and actual damages were not granted based on the doctrine of claim preclusion. The court stated that the plaintiff "had his day in court on his [infringement] claim against the Ravens and [National Football League Properties]."  Because the defendants in this case were all licensees of one of those two organizations, damages were also precluded in this case.

More detail of Bouchat v. Bon-Ton Dep't Stores, Inc. after the jump.


Infringement and royalty rate affirmed; dismissal of willful infringement claim reversed

In a recent decision, the Federal Circuit affirmed-in part a district court's grant of summary judgment of infringement of a patent, finding that the claims were properly held to include measuring devices that either directly or indirectly compare two signals to determine the proper measurement.  The court reversed-in part the district court's damages award.  The district court properly determined the reasonable royalty rate, but improperly included sales from a company with no corporate relationship to the defendant in the royalty base.  

Additionally, the Federal Circuit reversed the district court's dismissal of the plaintiffs' willful infringement claim, finding the dismissal for failure to prosecute improper, as the district court's grounds for the dismissal was just that the plaintiff did not move for summary judgment on the issue.  Finally, the court affirmed the dismissal of a licensee of the patent as a party, as it did not have standing.

More details of Mitutoyo Corp. v. Cent. Purchasing, L.L.C. after the jump.


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