In its recent en banc decision in CLS Bank v. Alice Corp, the Federal Circuit has affirmed the finding of subject matter ineligibility of Alice Corp's method and software for management of risk in financial transactions through use of a third party intermediary.  The ten-member panel produced seven different decisions, but did not produce any majority opinion.  However, seven judges agreed that the method and computer-readable medium claims were patent ineligible.  Additionally, eight of the ten determined that the claims should rise or fall under § 101 regardless of claim type.

In the plurality opinion written by Judge Lourie, the court examined Supreme Court precedent on the issue of patent eligible subject matter.  Utilizing these precedents, the Federal Circuit proposed an "integrated approach" to § 101 problems—patents should not be allowed to preempt the fundamental tools of discovery; courts should avoid overly formalistic approaches to subject-matter eligibility that invites manipulation by patent applicants; courts should use a flexible, claim-by-claim approach that avoids rigid line-drawing.  The analysis asks the following questions:

-          Does the claimed invention fall into one of the four statutory classes (process, machine, manufacture, composition of matter)?

-          Does the claimed invention meet a judicial exception to patent eligibility (law of nature, natural phenomena, abstract idea)?

-          What is the fundamental concept at issue in the claim?

-          Will the patenting of the idea preempt the whole idea or does the claim provide enough limitations to limit the scope of the patent grant?

-          Is the human contribution more than a trivial addition or tangential, routine, well-understood, conventional limitation?

Under this analysis, the plurality determined that the abstract idea claimed in Alice Corp's patent was not rendered patent eligible because the added limitations were nothing more than "insignificant post-solution activity."  They refused to reward the clever use of extravagant language to make the claims sound more limited with terms like "shadow record."  Ultimately, the five judge plurality concluded that adding existing computer technology to an abstract idea does not render it patent eligible.

Judge Rader's opinion, concurring-in-part and dissenting-in-part, differed slightly in his proposed analysis for subject matter eligibility.  He focused on whether the limitations in the claim restrict the abstract idea to a concrete reality or actual application of the idea.  He noted that if the claim covers all practical applications of an abstract idea, it is not meaningfully limited.  In contrast to Judge Lourie's opinion, Judge Rader found that when a claim is limited by the requirement for a computer, that is an important indication of patent eligibility.  Ultimately, where the claim is tied to a computer in such a way that the computer plays a meaningful role in the performance of the claimed invention and the claim does not preempt virtually all uses of an underlying abstract idea, the claim is patent eligible.  For these reasons, Judge Rader deemed Alice Corp's system claims to be patent eligible.

Judge Newman filed an opinion concurring with the majority that the claims should rise or fall together, but dissenting in her opinion that all of the claims are patent eligible. She indicated her concern over the uncertainty surrounding subject matter eligibility, which she believed was not remedied by this en banc decision. She proposed that the court return to the time-tested principles of patent law and abandon its failed § 101 ventures into abstractions, preemption, and meaningfulness. In response to the concern of preemption of experimentation and innovation, Judge Newman stated that the court should reaffirm the long-standing rule that study and experimentation are not infringement.

There continues to be uncertainty regarding the patentability of various types of software inventions. The fragmented opinions of the en banc panel indicate that despite their desire for a clear, consistent approach to section 101 that provides certainty and guidance to applicants and examiners alike, the issue of software patent eligibility is far from resolved.

The Supreme Court has handed down its much anticipated decision in Bowman v. Monsanto Co., holding that the defense of patent exhaustion does not apply to the practice of planting and harvesting patented seeds through planting and harvesting without the patent holder's permission.

The case centers on the Roundup Ready gene, which confers resistance to glyphosate herbicides such as Roundup. Monsanto owns U.S. Patent Nos. 5,352,605 and RE39,247E, which cover the Roundup Ready gene, as well as seeds incorporating the gene. The Roundup Ready gene stably integrated into the genomic material of soybeans sold by Monsanto, which means that once the seeds are planted, the plants that grow from those seeds and any seeds produced by that plant also have the Roundup Ready gene.

Monsanto markets both the Roundup Ready seeds and the Roundup herbicide to farmers. However, the seeds are sold subject to a licensing agreement that permits a grower to plant the purchased seed in only one growing season-the grower in prohibited from saving any of the harvested seed for replanting in a subsequent growing season. Growers are permitted under the agreement to consume the seeds or to sell the seeds as a commodity for eventual consumption. Due to the popularity of Roundup Ready seeds, a significant proportion of commodity seeds are Roundup Ready.

Vernon Bowman purchased Roundup Ready seeds from a licensed seller each year for his first planting of the growing season. Bowman also made a second planting each season, for which he used seed that was not purchased from a licensed seller. Instead, Bowman purchased commodity seed, planted the seed, treated the plants with glyphosphate herbicide, and harvested the seed from the surviving plants, which he then used for second plantings in subsequent growing seasons. Because these seeds survived the glyphosphate herbicide treatment, they necessarily possessed the Roundup Ready gene. Ultimately, Bowman harvested eight crops through this system of growing and replanting, effectively generating a homogenous Roundup Ready source of seed that was not purchased from Monsanto.

Monsanto sued Bowman in the U.S. District Court for the Southern District of Indiana, alleging that Bowman's harvesting and replanting of Roundup Ready seeds infringed its patents. In his defense, Bowman asserted that the doctrine of patent exhaustion prevented Monsanto from controlling his use of the seeds because they were the subject of a prior authorized sale. The trial court rejected Bowman's patent exhaustion defense, finding for Monsanto. On appeal, the Federal Circuit affirmed, concluding that the patent exhaustion defense was not available to Bowman because he had created newly infringing articles through the harvesting and replanting-Bowman had replicated Monsanto's patented technology by planting the seeds and thereby creating newly infringing plants and seeds.

The Supreme Court, like the district court and the Federal Circuit, concluded that Bowman could not rely on the doctrine of patent exhaustion. The Court held that while the patent exhaustion doctrine restricts a patentee's right to control what others can do with a particular article sold, it does not affect the patentee's ability to prevent a buyer from making new copies of a patented item. Thus, the Court determined that the patent exhaustion doctrine enabled Bowman to resell the patented commodity soybeans he purchased, or consume the beans, or feed them to his animals without interference from Monsanto, but it did not enable Bowman to make additional patented soybeans without Monsanto's permission.

The Court relied on its precedent in J.E.M. Ag. Supply, Inc. v. Pioneer Hi-Bred Int'l, Inc., where the Court explained that only a patent holder, and not the holder of a certificate issued under the Plant Variety Protection Act, could prohibit a farmer who legally purchases and plants a protected seed from saving harvested seed for replanting. The Court also dismissed Bowman's argument that patent exhaustion should apply in this case because soybeans naturally self-replicate, and therefore the seeds themselves-and not Bowman-were responsible for producing copies. Such a "blame-the-bean" defense was unpersuasive in light of the Bowman's active role in purchasing, planting, selecting, harvesting, and replanting the infringing seeds for eight successive crops.

The Court took care to limit its holding to the situation before it, stating that it is a closer question as to whether the patent exhaustion doctrine would apply where an article's self-replication occurs outside the purchaser's control, or is necessary by incidental step in using the item for another purpose.

In Biosig Instruments, Inc. v. Nautilus, Inc., the Federal Circuit reversed a decision by the U.S. District Court for the Southern District of New York finding a patent invalid for indefiniteness, relying on intrinsic evidence.  Biosig Instruments, Inc. (“Biosig”) is the assignee of U.S. Patent No. 5,337,753 (“the ’753 patent”).  The ’753 patent is directed to a heart rate monitor for use with exercise equipment and exercise procedures.  Biosig sued Nautilus, Inc. (“Nautilus”) for patent infringement alleging that claims 1 and 11 of the ’753 patent were infringed by Nautilus’s exercise equipment that has a mounted heart rate monitor. 

In the late 1990s, Biosig was in negotiations with Stairmaster Company—Nautilus’s predecessor—regarding Biosig’s patented technology, but the companies failed to reach an agreement.  Stairmaster, and eventually Nautilus, started to sell exercise equipment with mounted heart rate monitors.  Biosig sued Nautilus in August 2004, alleging that the equipment infringed its patent.  Following reexaminations and re-filed patent infringement suits, the District Court for the Southern District of New York eventually conducted a Markman hearing on the asserted claims of the ’753 patent in September 2011.  Among the terms the court construed was the term “spaced relationship.”  The district court construed the term to mean that “there is a defined relationship between the live electrode and the common electrode on one side of the cylindrical bar and the same or a different defined relationship between the live electrode and the common electrode on the other side of the cylindrical bar.”  Following the district court’s claim construction, Nautilus moved for summary judgment of non-infringement and invalidity for indefiniteness.

In February 2012, the district court ruled on the summary judgment motions, denying the motion for summary judgment of non-infringement and granting the motion for invalidity based on indefiniteness.  The district court’s holding of invalidity for indefiniteness was founded on the conclusion that the term “spaced relationship” was ambiguous, despite the fact that the court had construed the term in its Markman order.  Biosig appealed the district court’s grant of summary judgment, with the sole issue on appeal being the indefiniteness of “spaced relationship.” 

On appeal, the Federal Circuit’s analysis began with a summary of the standards of indefiniteness, stating “[a] claim is indefinite only when it is ‘not amenable to construction’ or ‘insolubly ambiguous.’”  The Court went on to discuss words of degree, for which “the court must determine whether the patent provides ‘some standard for measuring that degree.’”  In this instance, the Court concluded that the term was not indefinite, as it “was amenable to construction,” whereas “indefiniteness . . . would require a showing that a person of ordinary skill would find ‘spaced relationship’ to be insolubly ambiguous—that it fails to provide sufficient clarity delineating the bounds of the claim to one skilled in the art.”  The Federal Circuit specifically relied on the intrinsic evidence that the district court used in construing the term in its Markman order.  In doing so, the Federal Circuit noted that the specification described the “spaced relationship” of the electrodes in terms of their function, and cited the evidence submitted during the reexamination, including a declaration by the inventor, used to traverse a rejection by the USPTO.  In light of the specification and intrinsic evidence, the Federal Circuit held that the term “spaced relationship” was not indefinite; and therefore, that the grant of summary judgment was in error.  Accordingly, the Federal Circuit reversed the district court’s invalidity determination and remanded the case for further proceedings.

·         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.

·       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. 

·         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.   

• In Brilliant Instruments, Inc. v. GuideTech, LLC, the Federal Circuit reversed a district court’s order granting summary judgment of non-infringement of three related patents.  The three asserted patents relate to circuits that measure the timing errors of digital signals in high-speed microprocessors.  The inventor of the three patents left employment with the plaintiff, GuideTech, and founded the defendant Brilliant Instruments.  Plaintiff alleged that two of Brilliant’s products infringed its patents.  The district court granted summary judgment of non-infringement GuideTech argued that the district court erred in concluding no genuine issue of material fact existed with respect to infringement of the three patents, particularly in light of GuideTech’s expert reports describing the defendant’s products and delineating a theory of literal infringement and infringement under the doctrine of equivalents.  Ultimately, the Federal Circuit concluded that the evidence, particularly the expert reports, provided a sufficient basis for a genuine issue of material fact.

•           In Move, Inc. v. Real Estate Alliance, Ltd., the Federal Circuit vacated the district court’s grant of summary judgment of non-infringement.  Plaintiff owns a patent directed to methods for locating available real estate properties using a zoom-enabled map on a computer.  Defendant operates and maintains multiple interactive real estate websites.  In granting summary judgment of non-infringement the district court held that the “search by map” and “search by zip code” functions on the defendant’s websites did not meet the “selecting” steps required by the asserted claim.  The Federal Circuit agreed that there was no genuine issue of material fact regarding literal infringement; however, the Court faulted the district court for not analyzing induced infringement under 35 U.S.C. § 271(b).  The Federal Circuit highlighted its precedent in Akamai noting that a lone defendant can still be liable for induced infringement.

• In Radio Sys. Corp. v. Lalor, the Federal Circuit affirmed in-part and reversed in-part a district court’s order granting summary judgment of non-infringement.  The plaintiff is the owner of two patents directed to improvements on electronic animal collars—the ’014 patent and ’082 patent.  Based on the claim construction, the district court awarded summary judgment of non-infringement of the ’014 patent.  The Federal Circuit agreed with the claim construction and affirmed the non-infringement based on the claim construction.  The Federal Circuit also affirmed the district court’s holding that the plaintiff was equitably estopped from asserting ’014 patent, due to the fact that the plaintiff had previously sent the defendant a cease and desist letter based on the ’014 patent and then remained silent for some years.  The Federal Circuit, however, disagreed with the district court’s finding that the plaintiff was equitably estopped from asserting the ’082 patent, which had not issued at the time the first cease and desist letter was sent.  Thus, the Federal Circuit held that the elements of equitable estoppel had not been met with respect to the ’082 patent

In an unanimous decision in Gunn v. Minton, the United States Supreme Court clarified:  (1) 28 U.S.C. § 1338(a) does not necessarily deprive state courts of subject matter jurisdiction for cases dealing with patent law, such as a legal malpractice claim asserted against an attorney representing someone in patent litigation; and (2) a state-based malpractice claim asserted a patent attorney does not necessarily evoke federal subject matter jurisdiction. 

Gunn represented Minton in a patent infringement suit.  During that suit Minton’s patent was held invalid as violating the “on sale” bar in 35 U.S.C. § 102(b) for leasing the subject matter of the patent more than one year prior to the date of the patent application.  Minton argued, in a motion for reconsideration, that the lease was part of testing and fit within the experimental use exception to the on sale bar.  The district court denied the motion and the Court of Appeals for the Federal Circuit affirmed the district court’s ruling.  Subsequently, Minton sued his attorneys for legal malpractice claiming that they failed to timely raise the experimental use argument, which resulted in the improper invalidation of his patent and loss of the patent infringement lawsuit.  This malpractice lawsuit was brought in Texas state court.  The attorneys that represented Minton in the patent infringement suit argued that regardless of the timing of the experimental use argument, it would have failed.  The Texas trial court agreed.  Minton appealed the ruling to the Texas Supreme Court.  On appeal Minton argued that the Texas court did not have proper subject matter jurisdiction because this claim properly fits under federal question jurisdiction pursuant to 28 U.S.C. § 1338(a), which provides exclusive federal jurisdiction thereby depriving state courts of jurisdiction.  The Texas Supreme Court ruled in favor of Minton’s argument and Gunn appealed the holding to the United States Supreme Court.

·         In U.S. Polo Assoc., Inc. v. PRL USA Holdings, Inc., the Second Circuit Court of Appeals found that the natural zone of expansion doctrine did not permit the United States Polo Association (“USPA”) to expand its offerings into a line of fragrances and affirmed the district court’s entry of a permanent injunction prohibiting such use.  The USPA filed a declaratory judgment to approve use of its Double Horseman mark, accompanied by the words “U.S. POLO ASSN.,” “USPA,” and/or “1890,” in the sale of men’s fragrances.  PRL counterclaimed, seeking entry of a permanent injunction precluding such use—which the district court granted.  USPA’s argument was centered on the, so called, natural zone of expansion doctrine.  USPA argued that its history of selling branded apparel provided it with the right to expand into related markets, i.e., apparel sales give rise to the right to expand into fragrances.  The district court gave little weight to USPA’s survey and found that PRL’s survey gave strong evidence of a likelihood of confusion.  The Second Circuit found that the district court’s holdings regarding the survey evidence did not abuse its discretion and that the previous litigation and USPA’s history did not support USPA’s argued natural right to expand.

·         In Function Media, L.L.C. v. Google, Inc., the Federal Circuit Court of Appeals held that the denial of a pre-trial motion for summary judgment of non-infringement is not sufficient to show that the district court delegated claim construction to the jury.  Function Media (“FM”) sued Google for infringement of three patents directed at “facilitate[ing] advertising on multiple advertising outlets such as newspapers and websites.”  Slip op. at p. 2.  The district court held that one patent was invalid for being indefinite “because the specification did not disclose sufficient structure for its sole independent claim’s means plus function term ‘means for transmitting.’”  Id. at pp. 5–6 (citations omitted).  A jury found the asserted claims in other two patents invalid and not infringed.  FM moved for judgment as a matter of law (“JMOL”) that the claims were not invalid, which the district court granted with respect to four claims.  This did not alter the jury verdict of non-infringement. 

FM appealed on a number of grounds, including an assertion that the district court gave the claim interpretation to the jury.  The argument was based on the fact that the district court denied Google’s motion for summary judgment of non-infringement. FM argued that the denial of summary judgment demonstrated that there were unresolved issues regarding claim scope, which were subsequently left to the jury rather than construed by the court.  The Federal Circuit did not agree that the district court improperly gave the claim interpretation to the jury, the Federal Circuit stated, “We hold that the denial of a pre-trial motion for summary judgment of non-infringement does not, by itself, show that the district court delegated claim construction to the jury.  This is especially true where, as here, the jury was instructed to apply the district court's claim constructions.”  Id. at pp. 21–22. 

·         In Cephalon, Inc. v. Watson Pharma., Inc. , the Federal Circuit Court of Appeals reversed a district court’s holding of invalidity for lack of enablement stating, “Watson failed as a matter of law to show with clear and convincing evidence that Cephalon’s patents require undue experimentation to practice the invention.”  Slip op. at p. 2.  Throughout the discussion of enablement, the Federal Circuit highlighted that the burden is on Watson to show lack of enablement—undue experimentation—and to do so by clear and convincing evidence.  The district court’s analysis was that, “the disclosures lacked teachings directed to formulating and co-administering two separate dosage forms . . . to achieve an effervescent reaction.  The lack of disclosure of such methods of co-administration would, according to the court, necessitate undue experimentation to practice the invention.”  Id. at p. 11 (citations omitted).  Watson merely provided “[u] nsubstantiated statements indicating that experimentation would be ‘difficult’ and ‘complicated.’”  Id. at pp. 15–16.  The Federal Circuit found that these statements did not meet the standard of clear and convincing evidence to establish undue burden as opposed to reasonable experimentation.  As such, the Federal Circuit reversed the district court’s holding of invalidity and remanded.

·         The United States Patent and Trademark Office published the final rules and guidelines governing First-Inventor-to-File.  (http://www.uspto.gov/news/pr/2013/13-10.jsp)  There were two separate Federal Register publications and each is briefly discussed below.  A more thorough discussion of each is forthcoming.

o   Changes to Implement First Inventor to File Provisions of Leahy-Smith America Invents Act

This publication sets forth the changes that will be necessary to implement the First-Inventor-to-File standards.  It addresses changes regarding each of the following:

§  The addition of definitions in the AIA to the rules of practice;

§  The submission of affidavits or declarations regarding:  disclosures in priority disputes under the first-to-file standards and prior public disclosures;

§  Standards regarding a U.S. Patent or Published Applications having a prior art effect as of the filing date of a foreign priority application;

§  Elimination of the provisions regarding statutory invention registrations; and

§  Adoption of requirements for nonprovisional applications filed on or after March 16, 2013, that claim priority to or the benefit of the filing date of an application filed prior to March 16, 2013.

o   Examination Guidelines for Implementing First Inventor to File Provisions of Leahy-Smith America Invents Act

This publication sets forth the changes the changes to the examination guidelines under the First-Inventor-to-File standard.  The publication is also meant to clarify and respond to questions provided during the public comment period regarding whether there is a requirement that the mode of disclosure by an inventor or joint inventor be the same as the mode of disclosure of an intervening disclosure.

In Semiconductor Energy Lab. Co., Ltd. v. Yujiro Nagata, the Federal Circuit weighed in on federal subject matter jurisdiction and provided two important reminders:

(1)       Just because a cause of action originates from a patent, standards in the patent statute, or even from other patent litigation, it is the present cause of action and claims that dictate whether subject matter jurisdiction is proper; and

(2)       Subject matter jurisdiction, in this case federal question, must be sufficiently pled.

The background of this case is as follows:  Semiconductor Energy Laboratory (“SEL”) owns U.S. Patent 6,900,463 (“the ’463 patent”).  Dr. Yujiro Nagata (“Dr. Nagata”) is a named co-inventor of the ’463 patent.  Dr. Nagata assigned his rights in any applications and patents related to the ’463 patent to SEL’s founder in 1991.  He later signed a substitute Declaration and Assignment of those applications and patents.  Dr. Nagata assisted SEL in a patent infringement lawsuit during the span of 2002 and 2003. 

SEL sued Samsung for infringement of the ’463 patent in 2009.  Dr. Nagata was contacted by Samsung to serve as a fact witness, which he agreed to do.  Subsequently, SEL contacted Dr. Nagata assuming that he would cooperate with them during the litigation, as he had previously done.   During the litigation, Dr. Nagata testified that he did not sign the 1991 Declarations and Assignments, but that his signature was forged.  Samsung then argued that the ’463 patent was unenforceable because of inequitable conduct.  Due to Dr. Nagata’s testimony the lawsuit was settled for less money than SEL otherwise would have considered.

SEL went on to sue Dr. Nagata in federal court, with five claims:  (1) Declaratory Judgment – Violation of Federal Patent Law; (2) Declaratory Judgment – Anticipatory Breach of Contract; (3) Slander of Title; (4) Quiet Title; and (5) Unjust Enrichment.  SEL asserted that the claim for declaratory judgment of violation of federal patent law was a federal question—one of the two bases for federal subject matter jurisdiction—and sought supplemental jurisdiction for the other causes of action.  Dr. Nagata moved to have the case dismissed for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).  The district court granted the motion and dismissed the case with prejudice.  SEL appealed. 

In order to invoke federal subject matter jurisdiction under federal question, the “complaint must either plead a federal cause of action or necessarily implicate a substantial issue of federal law.”  SEL v. Nagata, Slip op., at p. 5.  SEL’s argument in support of its “Declaratory Judgment – Violation of Federal Patent Law” claim was based on the doctrine of assignor estoppel.  The Federal Circuit summarized the doctrine of assignor estoppel as, “an equitable doctrine that prohibits an assignor of a patent or patent application, or one in privity with him, from attacking the validity of that patent when he is sued for infringement by the assignee.”  Id. at p. 6.  SEL argued that the doctrine should be extended to apply not only as a defense limiting arguments by assignors, but offensively to estop assignees from undermining the validity of a patent as well.  The Federal Circuit went on to note SEL did not plead or offer any precedent establishing that assignor estoppel is a federal cause of action.  As such, the Court concluded,

SEL thus effectively invites us to create a new federal cause of action recognizing a supposed violation of the assignor estoppel doctrine under the Declaratory Judgment Act. . . .  Despite SEL’s contentions, assignor estoppel is a form of estoppel, and with rare exception, estoppel is a shield; it is an affirmative defense, not a claim for relief on its own.

Id. at p. 7 (citations omitted).  In light of this, the Court held that the doctrine of assignor estoppel as applied to patent law was not at issue in this case, since here it was the assignee, Dr. Nagata, who was undermining the validity of the patent.  The court held that the underlying dispute in this case was an evidentiary one in the original case and the proper remedy were through the laws of evidence that permit impeachment and other methods of countering the credibility of a witness.  Therefore, the district court’s dismissal of the case was affirmed. 

This case raises two important points to consider when contemplating litigation.  The first is that the present cause of action and claims dictate whether subject matter jurisdiction is proper, despite the fact that the dispute may have evolved from the patent statute or even patent litigation.  The second is that the plaintiff’s complaint controls the litigation, or lack thereof when the case is dismissed under FRCP 12(b)(1).  In this case, this meant that although there was arguably a basis to seek extension of a federal law doctrine, the insufficiency of the pleadings precluded the federal court from fully addressing the issue.