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CAFC Vacates §102(b) Rejection as No Evidence Showed When Reference Was Publicly Accessible in Databases

September 22, 2009

The U.S. Court of Appeals for the Federal Circuit on Sept. 25 vacated the rejection of a patent application under Section 102(b) of the Patent Act because there was no evidence of whether a prior art reference relied upon by the examiner was publicly accessible in databases containing Copyright Office information more than a year before the patent application was filed (In re Lister, Fed. Cir., No. 2009-1060, 9/22/09).

The court acknowledged that the manuscript disclosing the claimed golf handicapping method was on file at the Copyright Office, but it said that there was no evidence of exactly when that manuscript was made publicly accessible to an interested researcher making keyword searches of titles in the Westlaw or Dialog databases of Copyright Office information.   
T Handicap Golf Method Rejected Under §102(b).

Dr. Richard Lister is a clinical psychologist who created a method of playing golf (T Handicap) that generally involves the unrestricted use of teeing the ball after the first shot, except in hazards and greens. He received a copyright registration from the Copyright Office for his manuscript describing the method on July 18, 1994, but later learned that he needed to obtain a patent rather than a copyright in order to protect the invention. Lister then filed a patent application (Serial No. 08/692,201) with the Patent and Trademark Office on August 5, 1996.

However, the patent examiner relied on Lister’s own manuscript to reject the application under Patent Act Section 102(b), 35 U.S.C. §102(b), which precludes the patenting of inventions that were described in a printed publication more than one year prior to the applicant’s filing date.

The Board of Patent Appeals and Interferences affirmed the rejection, and Lister appealed.

Public Accessibility Is Key to §102(b) Bar.

The Section 102(b) bar to patentability “is grounded on the principle that once an invention is in the public domain, it is no longer patentable by anyone,” the appellate court began, quoting In re Hall, 781 F.2d  897 (Fed. Cir. 1986). To qualify as a printed publication within the meaning of § 102, a reference “must have been sufficiently accessible to the public interested in the art,” Judge Sharon Prost observed, quoting In re Cronyn, 890 F.2d 1158 (Fed. Cir. 1989). She noted that cataloging and indexing have played a significant role in Hall, Cronyn, and other cases involving library references, but pointed to authority indicating that neither cataloging nor indexing is a necessary condition for a reference to be publicly accessible. In re Klopfenstein, 380 F.3d 1345 (Fed. Cir. 2004). “In short, we must consider all of the facts and circumstances surrounding the disclosure and determine whether an interested researcher would have been sufficiently capable of finding the reference and examining its contents,” Prost said.

No Evidence of When Manuscript Was Publicly Accessible.

Within that framework, the parties here could not agree as to when, if ever, the manuscript was listed in a catalog or index that would have permitted an interested researcher to learn of its existence and locate it for inspection. Of the three relevant databases, the court noted that the Copyright Office’s automated catalog was not sorted by subject matter and could only be searched by either the author’s last name or the first word of the title of the work. It went on to conclude that the Lister manuscript was publicly accessible as of the date that it was included in either Westlaw or Dialog, the databases that permitted keyword searching of titles.

However, for purposes of the §102(b) bar, the court here could not find evidence that Lister’s manuscript was included in either database more than a year before his filing date of August 5, 1996. First, it said that the government had not identified any evidence of the general practice of the Copyright Office, Westlaw, or Dialog with regard to database updates. “Absent such evidence, we have no basis to conclude that the manuscript was publicly accessible prior to the critical date,” it stated.

Nor did the court agree that the government had made a prima facie showing that the manuscript was included in the commercial databases shortly after the Copyright Office granted registration, and that the burden had shifted to Lister to present evidence that the work was not in either database before the critical date. Prost reasoned as follows:

We do not agree that the government has established a prima facie case that warrants shifting the burden to Dr. Lister. Essentially, the evidence shows that at some point in time Westlaw and Dialog incorporated the Copyright Office’s automated catalog information about the Lister manuscript into their own databases. There is no indication as to when that occurred or whether it was prior to the critical date. We see little difference between the evidence in this case and a situation in which an examiner comes across an undated reference that discloses an invention for which an applicant is seeking the patent. We surely would not view the mere existence of the reference in the latter scenario as prima facie evidence that it was available prior to the applicant’s critical date.

The rejection by the Board of Patent Appeals and Interferences was vacated and remanded.

The opinion was joined by Judges Richard Linn and Arthur J. Gajarsa.

Peter M. Midgley Jr. of Zarian Midgley & Johnson, Boise, Idaho, represented Lister. The Patent and Trademark Office, Arlington, Va., was represented by Joseph G. Piccolo, associate solicitor.

Read the In re Lister opinion.


Plaintiff Who Lacks Substantial Rights in Patents Is Not a ‘Patentee’ With Standing to Sue for Infringement

September 18, 2009

Harvard’s licensee to patents for detecting malignant carcinoma is not a “patentee” with standing to sue an alleged infringer under Section 281 of the Patent Act because it never received all the substantial patent rights under the license, the U.S. Court of Appeals for the Federal Circuit ruled Sept. 18 (AssymetRx Inc. v. Biocare Medical LLC, Fed. Cir., No. 2009-1094, 9/18/09).

Vacating and remanding a judgment in favor of the infringement defendant, the court said that the Harvard retained so many rights under the license that it never conveyed “the entire right to enforce the patents.” 

Licensing of Carcinoma Detection Patents.

Two U.S. patents (6,946,256 and 7,030,227) relating to the p63 antibodies and methods for using them to detect malignant carcinoma are owned by the President & Fellows of Harvard College. Harvard’s 2002 agreement with Biocare to make, use, and sell the p63 antibodies did “not include a license under any U.S. or foreign patents,” and the ’256 and ’227 patents were pending but had not issued prior to the agreement’s effective date.
Under a 2004 “exclusive commercial license” with AsymmetRx, Harvard retained many rights: (a) the right to make and use the p63 antibodies for academic research purposes as well as the right to grant non-exclusive licenses for the p63 antibodies to other non-profit or governmental institutions for academic research purposes; (b) the right to render the AsymmetRx License non-exclusive if AsymmetRx did not meet certain benchmarks in terms of commercial use and availability to the public within three years or if AsymmetRx did not meet certain FDA filing milestones;  (c) the right to suggest who received a sublicense (and to a portion of  sublicensing income); (d) the promise of AsymmetRx’s full cooperation in the  preparation, filing, prosecution, and maintenance of the patents; (e) the right to join any action brought by AsymmetRx, and the right to jointly control that action; and (f) the right to withhold written approval of any settlement, consent judgment, or other voluntary final disposition of any action brought by AsymmetRx.

After AsymmetRx filed  suit against Biocare Medical LLC, the district court granted judgment in favor of Biocare, reasoning that it had an implied license to sell the p63 antibodies.

AsymmetRx appealed.

Harvard Retained All Substantial Rights in Patents.

Though neither party nor the district court raised the issue, Judge Alan D. Lourie said that AsymmetRx’s standing to bring suit without Harvard joining is the at the center of this case. “[A]n appellate court must satisfy itself that it has standing and jurisdiction whether or not the parties have raised them, he said, citing Mentor H/S Inc. v. Med. Device Alliance Inc., 240 F.3d 1016 (Fed. Cir. 2001). He noted that if standing and jurisdiction of a trial court are lacking, an appellate court may vacate a decision that was rendered on the merits at the trial level or, in rare instances, order joinder of a necessary party at the appellate level.

Despite the “broad conveyance of rights to AsymmetRx,” the appellate court held that Harvard retained all the substantial interests in the patents and that AsymmetRx does not have the right to sue for infringement as a “patentee” under 35 U.S.C. §281. Accordingly, the court vacated and remanded the judgment below.

Citing Waterman v. Mackenzie, 138 U.S. 252 (1891), and subsequent cases, Lourie noted that the key determination regarding a party’s ability to sue in its own name “is whether an agreement transferring patent rights to that party is, in effect, an assignment or a mere license.” Determining whether an assignment of patent rights was made requires a court to “examine whether the agreement transferred all substantial rights” to the patents and “whether the surrounding circumstances indicated an intent to do so,” he said, quoting Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A., 944 F.2d 870 (Fed. Cir. 1991). The Vaupel  court found the right to sue “particularly dispositive” and concluded that this right had been granted in its entirety under the disputed agreement, subject only to the obligation to inform the patent owner of the existence of the suit. Lourie then pointed to Speedplay Inc. v. Bebop Inc., 211 F.3d 1245 (Fed. Cir. 2000), in which a licensee was found to have standing under a license that did not grant the original patent owners “the right to participate in an infringement action brought by [the licensee], nor [did] it limit [the licensee’s] management of any action.”

Lourie found the present case unlike Vaupel and Speedplay and more like Abbott Labs. v. Diamedix Corp., 47 F.3d 1128 (Fed. Cir. 1995), which found that the patent owner had retained too great an interest in the patents to enable the licensee to sue for infringement on its own. He explained:

Although the AsymmetRx License effected a broad conveyance of rights to AsymmetRx, Harvard retained substantial interests under the ’256 and ’227 patents, including the right to sue for infringement, and AsymmetRx therefore does not have the right to sue for infringement as a “patentee” under the patent statute.

Under the AsymmetRx License, Harvard also retained the right to make and use the p63 antibodies for its own academic research purposes, as well as the right to provide the p63 antibodies to non-profit or governmental institutions for academic research purposes. In addition, Harvard retained a great deal of control over aspects of the licensed products within the commercial diagnostic field, such as requiring AsymmetRx to meet certain commercial use, availability, and FDA filing benchmarks; specifying that manufacture had to take place in the United States during the period of exclusivity; and maintaining input on sublicensing and receiving a share of those royalties. AsymmetRx was required to grant sublicenses suggested by Harvard, provided they were not contrary to sound and reasonable business practices and materially increased the availability to the public of the licensed products. The agreement also specified that AsymmetRx was to cooperate with Harvard to maintain the patent rights, so as to enable Harvard to apply for, to prosecute, and to maintain patent applications and patents in Harvard’s name. Retention of all of those rights is inconsistent with an assignment of the patents.

Moreover, although AsymmetRx was given the right of first refusal in suing alleged infringers, the AsymmetRx License provides that if AsymmetRx elects not to exercise its right to sue, Harvard has the right to bring its own infringement action. Thus, as in Abbott, although AsymmetRx has the option to initiate suit for infringement, “it does not enjoy the right to indulge infringements, which normally accompanies a complete conveyance of the right to sue.” … In addition, even if AsymmetRx exercises its option to sue for infringement, it is obligated under the AsymmetRx License to consider Harvard’s views and the public interest, and Harvard’s approval is necessary for any settlement of suit. Such consideration of Harvard’s views is akin to the licensee in Abbott being required “not to ‘prejudice or impair the patent rights in connection with such prosecution or settlement.’” …  Finally, if AsymmetRx does commence an infringement action, Harvard may elect to join as a party in that action and, if Harvard does join such an action, it jointly controls the suit with AsymmetRx. In short, Harvard did not convey the entire right to enforce the patents to AsymmetRx. When viewing the retention of the right to sue in conjunction with all of the other rights retained by Harvard, it is clear that Harvard conveyed less than all substantial rights under the ’256 and ’227 patents. While any of these restrictions alone might not have been destructive of the transfer of all substantial rights, their totality is sufficient to do so.

Accordingly, the court concluded that “AsymmetRx lacks statutory standing, on its own, to bring an infringement suit against Biocare.”
The district court’s ruling was vacated and remanded.

The opinion was joined by Judge Randall R. Rader and Judge Ron Clark of the U.S. District Court for the Eastern District of Texas, sitting by designation.

Steven M. Bauer of Proskauer Rose, Boston, represented AsymmetRx.
Douglas B. Otto of Morrison Mahoney, Boston, represented Biocare Medical.
Read the AsymmetRx Inc. v. Biocare Medical LLC opinion.


Methods of Calibrating Drug to Treat Crohn’s Disease Are ‘Transformative’ Patentable Subject Matter Under §101

September 16, 2009

Methods of calibrating the proper dosage of a drug to treat Crohn’s disease squarely fall within the realm of patentable subject matter under Section 01 of the Patent Act because they “transform an article into a different state or thing,” and this transformation is “central to the purpose of the claimed process,” the U.S. Court of Appeals for the Federal Circuit ruled Sept. 16 (Prometheus Laboratories v. Mayo Collaborative Services, Fed. Cir., No. 2008-1403, 9/16/09).

Drawing from the U.S. Supreme Court’s ruling in Diamond v. Diehr and its own decision in In re Bilski, the appellate court reversed a summary judgment holding that the method steps were invalid under Section 101 as simply reciting natural phenomena—correlations between certain thiopurine drug metabolite levels and therapeutic efficacy and toxicity. Rather than merely claiming natural correlations and data-gathering steps, these claims “are in effect claims to methods of treatment, which are always transformative when a defined group of drugs is administered to the body to ameliorate the effects of an undesired condition,” the court wrote.    

Thiopurine Treatments Found Invalid.

Prometheus is the exclusive licensee of two patents (6,355,623 and 6,680,302) claiming methods for calibrating the proper dosage of thiopurine drugs, which are used for treat inflammatory bowel diseases (“IBD”) such as Crohn’s disease and ulcerative colitis.

Prometheus brought a patent infringement suit against Mayo Collaborative Services, which filed a motion for summary judgment of invalidity on the ground that the patents are invalid for claiming unpatentable subject matter under 35 U.S.C. § 101. Particularly, Mayo insisted that the patents impermissibly claim natural phenomena—the correlations between, on the one hand, thiopurine drug metabolite levels and, on the other hand, efficacy and toxicity—and that the claims wholly preempt use of the natural phenomena.

The district court agreed and granted summary judgment to Mayo. It found that the claims have three steps: (1) administering the drug to a subject; (2) determining metabolite levels; and (3) warning that an adjustment in dosage may be required. To the court, the “administering” and “determining” steps are merely necessary data-gathering steps for any use of the correlations,” and the final step—the “warning’ step” —is only a mental step. The district court stated that the warning step does not require any actual change in dosage and that natural phenomena is claimed because “it is the metabolite levels themselves that ‘warn’ the doctor that an adjustment in dosage may be required.”

Prometheus appealed.

Defining a Patentable ‘Process’ Under § 101.

The Patent Act at 35 U.S.C. § 101 states:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent thereof, subject to the conditions and requirements of this title.

According to § 100(b), “[t]he term ‘process’ means process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or materials.” Noting that this definition of “process” itself uses the word “process,” the Federal Circuit looked to the case law for guidance on what constitutes statutory subject matter under § 101.

Judge Alan D. Lourie observed the Supreme Court’s ruling in Diamond v. Chakrabarty, 447 U.S. 303 (1980), which construed § 101 broadly in stating that Congress intended statutory subject matter to “include anything under the sun that is made by man.” Despite this broad reading, the Supreme Court said elsewhere that “Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity.”  Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948). Moreover, it held in Diamond v. Diehr, 450 U.S. 175 (1981) that a claim to a process is not patent-eligible if it claims “laws of nature, natural phenomena, and abstract ideas.” Under Gottschalk v. Benson, 409 U.S. 63 (1972),  “[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.”

Lourie then noted that the Federal Circuit’s en banc ruling in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) cert. granted, 129 S. Ct. 2735 (June 1, 2009) quoted Diehr in recognizing an important distinction: “while a claim drawn to a fundamental principle”—i.e., a law of nature, natural phenomenon, or abstract idea—“is unpatentable, ‘an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.’”  Turning to the facts here, Lourie said the key issue for patentability is whether a claim is drawn to a fundamental principle or an application of a fundamental principle.

Lourie related that Bilski followed the Supreme Court in setting forth a “definitive test” for determining whether a process is patent-eligible under § 101:

“A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” … The machine-or-transformation test is a “two-branched inquiry,” i.e., the patentee “may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article.”

Under this framework, the Federal Circuit said that the inquiry under § 101 here turns on “whether these methods meet the Supreme Court’s machine or transformation test articulated in Benson and Diehr, and applied in Bilski, and, if so, whether the machine or the transformation is central to the purpose of the claims.”  Lourie found that the claimed methods indeed satisfied this standard, stating:

We conclude that the methods of treatment claimed in the patents in suit squarely fall within the realm of patentable subject matter because they “transform an article into a different state or thing,” and this transformation is “central to the purpose of the claimed process.” … The transformation is of the human body following administration of a drug and the various chemical and physical changes of the drug’s metabolites that enable their concentrations to be determined. Because the claimed methods meet the transformation prong under Bilski, we do not consider whether they also meet the machine prong.

Final Points of Emphasis.

In closing, Lourie added the following points:

1.   The administering / determining steps are transformative. Transformations operate by natural principles, but the transformation here is the result of the physical administration of a drug to a subject to transform—i.e., treat—the subject, which is itself not a natural process. “It is virtually self-evident that a process for a chemical or physical transformation of physical objects or substances is patent-eligible subject matter,” the court said, quoting Bilski. Under that case, the administering step is not merely data-gathering but a significant transformative element of Prometheus’s claimed methods of treatment that is “sufficiently definite to confine the patent monopoly within rather definite bounds.” The determining step, which is present in each of the asserted claims, is also transformative and central to the claimed methods since measuring metabolite levels is what enables possible adjustments to thiopurine drug dosage to be detected for optimizing efficacy or reducing toxicity during a course of treatment. “The determining step, by working a chemical and physical transformation on physical substances, likewise sufficiently confines the patent monopoly, as required by Bilski.

2.   The administering / determining steps are not merely data-gathering.
This case, which involves performing clinical tests on individuals that are transformative, is distinguishable from In re Grams, 888 F.2d 835 (Fed. Cir. 1989), where the essence of the claimed process was “merely an algorithm combined with a data-gathering step.” Here, unlike Grams, the administering and determining steps in Prometheus’s claimed methods are not “merely” data-gathering steps or “insignificant extra-solution activity”; they are part of treatment regimes for various diseases using thiopurine drugs.

3.   The presence of a mental step does not detract from patentability.
“A subsequent mental step does not, by itself, negate the transformative nature of prior steps. Thus, when viewed in the proper context, the final step of providing a warning based on the results of the prior steps does not detract from the patentability of Prometheus’s claimed methods as a whole.”
The summary judgment of invalidity was reversed, and the case was remanded.

The opinion was joined by Chief Judge Paul Michel and Judge Ron Clark of the U.S. District Court for the Eastern District of Texas, sitting by designation.

Prometheus was represented by Richard P. Bress of Latham & Watkins, Washington, D.C. 
Jonathan E. Singer of Fish & Richardson, Minneapolis, represented Mayo.

Read the Prometheus Laboratories v. Mayo Collaborative Services opinion.

CAFC Orders Trial on Whether Three of Amgen’s EPO Patents Are Invalid for Obviousness-Type Double Patenting

September 15, 2009

A new trial is necessary to determine whether three Amgen erythropoietin patents are invalid for obviousness-type double patenting because a district court incorrectly found that they were shielded by the safe harbor of 35 U.S.C. § 121, the U.S. Court of Appeals for the Federal Circuit ruled Sept. 15 (Amgen Inc. v. F. Hoffman-La Roche Ltd., Fed. Cir., No. 2009-1020, 9/15/09).

The court found that these three patents were not immune from a double patenting challenge because they descended from only continuation applications. “The statute on its face applies only to divisional applications, and a continuation application, like a continuation-in-part application, is not a divisional application,” the court wrote. The court recognized that its 1996 ruling in Applied Materials and 1991 ruling in Symbol Technologies allowed safe harbor protection where the continuation applications descended from divisional applications, but said that this case was different because these three patents “descended from continuation applications exclusively, and not from divisional applications.”

Among other rulings, the appellate court affirmed the determination that two other asserted patents were infringed and not invalid.       

Amgen’s Erythropoietin Patents.

Amgen Inc. owns several patents 5,441,868, 5,547,9335,618,698, 5,756,349, and 5,955,422 relating to the production of the protein erythropoietin (EPO) using recombinant deoxyribonucleic acid (DNA) technology. All five patents share a common specification and descend from Application No. 06/675,298 (“the ’298 application”), which issued as now-expired U.S. Patent No. 4,703,008.
In 2005, Amgen brought a declaratory judgment action against F. Hoffman-La Roche Ltd, Roche Diagnostics GMBH, and Hoffman-La Roche Inc., alleging that their MIRCERA® product would infringe the five patents if imported into the United States.

Roche responded with affirmative defenses and counterclaims that asserted invalidity and noninfringement. In 2008, the district court entered judgment that the ’868, ’933, ’698, and ’422 patents were infringed and not invalid, and that the ’349 patent was neither invalid nor infringed. Accordingly, it granted Amgen declaratory relief and permanently enjoined Roche from marketing MIRCERA® in the United States.

Roche appealed the rulings that none of the claims-in-suit was invalid for obviousness-type double patenting and that Claim 1 of the ’422 patent was neither anticipated nor indefinite and infringed. Roche also challenged the district court’s rulings sustaining the jury’s verdict that Claims 3, 7, and 8 of the ’933 patent were neither anticipated nor indefinite, and that Claims 3, 7, and 8 of the ’933, Claims 1 and 2 of the ’868, and Claims 6-9 of the ’698 patent were literally infringed.

Amgen cross-appealed the rulings that Claim 7 of the ’349 patent and claims 9, 11, and 14 of the ’933 patent were not infringed. It also cross-appealed the ruling vacating the jury’s verdict that Claim 12 of the ’933 patent was infringed under the doctrine of equivalents.

§ 121 Double-Patenting Safe Harbor Protects Divisionals.

The Patent Act at 35 U.S.C. § 121, entitled “Divisional applications,” provides in its third sentence:

A patent issuing on an application with respect to which a requirement for restriction under this section has been made, or on an application filed as a result of such a requirement, shall not be used as a reference either in the Patent and Trademark Office or in the courts against a divisional application or against the original application or any patent issued on either of them, if the divisional application is filed before the issuance of the patent on the other application.

The district court concluded that the ’933, ’422, and ’349 patents were entitled to the § 121 safe harbor because they had descended from two applications—the ’178 and ’179 applications—both of which had been filed in response to a PTO-imposed restriction requirement. Thus, the court deemed the ’933, ’422, and ’349 patents immune from a charge of obviousness-type double patenting over the ’008, ’868, and ’698 patents.

However, citing its ruling in Pfizer Inc. v. Teva Pharmaceuticals USA Inc., 518 F.3d 1353 (Fed. Cir. 2008), the Federal Circuit here found that the ’933, ’422, and ’349 patents were not shielded from an obviousness-type double patenting challenge by § 121. The Pfizer court, faced with a patent that issued from a continuation-in-part application, looked at the language of §121 and the statute’s legislative history and concluded that “the protection afforded by section 121 to applications (or patents issued therefrom) filed as a result of a restriction requirement is limited to divisional applications.”

Relying on Pfizer, Judge Alvin A. Schall stated:

We are persuaded by the reasoning in Pfizer that the § 121 safe harbor provision does not protect continuation applications or patents descending from only continuation applications. The statute on its face applies only to divisional applications, and a continuation application, like a continuation-in-part application, is not a divisional application. ... We recognize that, unlike a continuation-in-part application, a continuation application can satisfy the definition of a “divisional application” in MPEP § 201.06. That is because a continuation-in-part application adds subject matter not disclosed in the earlier application, ... , whereas continuation and divisional applications are limited to subject matter disclosed in the earlier application … . This distinction, however, does not justify departing from a strict application of the plain language of § 121, which affords its benefits to “divisional application[s].”

Continuing, the appellate court distinguished this case from Applied Materials Inc. v. Advanced Semiconductor Materials America Inc., 98 F.3d 1563 (Fed. Cir. 1996) and Symbol Technologies Inc. v. Opticon Inc., 935 F.2d 1569 (Fed. Cir. 1991). In those cases, the court affirmed § 121 protection of patents which issued directly from continuation applications that descended from divisional applications filed as a result of restriction requirements. “Our decisions in Applied Materials and Symbol Technologies thus establish that a patent need not have issued directly from a divisional application to receive § 121 protection,” Schall said, noting that “intervening continuation applications do not render a patent ineligible for § 121 protection so long as they descended from a divisional application filed as a result of a restriction requirement.” He said that, “[u]nlike the patents at issue in Applied Materials and Symbol Technologies, the ’933, ’422, and ’349 patents issued from continuation applications, which descended from continuation applications exclusively, and not from divisional applications.”

Accordingly, the court ordered a trial on whether the ’933, ’422, and ’349 patents are invalid for double-patenting.

Takada Rule Clarified.

Further, the court rejected Roche’s reading of Takeda Pharmaceutical Co. v. Doll, 561 F.3d 1372 (Fed. Cir. 2009). To Roche, that case indicates that, if a patentee can benefit from art that arises after the invention date, as an accused infringer such as itself should be able to rely on evidence arising up to the time of filing of the “secondary application[s]” —June 7, 1995, for the ’933 patent; August 2, 1993, for the ’422 patent; and June 6, 1995, for the ’349 patent—to show on remand that the claims of the ’933, ’422, and ’349 patents are not patentably distinct over the claims of the ’008, ’868, and ’698 patents.

The Federal Circuit found that reading Takeda this way would ignore 35 U.S.C. § 120, which provides that a qualifying “application for patent for an invention . . . shall have the same effect . . . as though filed on the date of the prior application.” Schall noted that the “effect” described in Section 120 is the benefit of the earlier filing date—i.e., the benefit for purposes of priority and section 112. “Thus, § 120 requires continuation applications to receive, at the very least, the benefits provided by the earlier filing date,” he said, adding:

We cannot read Takeda in the manner for which Roche advocates without violating the plain language of 35 U.S.C. § 120. Section 120 requires that all five of Amgen’s asserted patents (’933, ’422, ’349, ’868, and ’698) benefit from the effect of having been filed on the filing date of the ’298 application, which is November 30, 1984. That means that Amgen’s patents cannot be invalidated based on art arising after November 30, 1984. Consequently, we must reject Roche’s contention that it should be able to show patentable indistinctiveness by relying on evidence up to the filing date of “secondary application[s].” … Because of § 120, we read Takeda to stand for the limited proposition that an applicant can only rely on subsequent developments in the art up to the filing date of the “secondary application” in order to show that alternative processes to make the product render the product and the process for making that product patentably distinct.

’868 and ’698 Patents Infringed and Not Invalid.

The parties, however, had agreed that the § 121 safe harbor did not apply to Claims 1 and 2 of the ’868 patent and Claims 6–9 of the ’698 patent. Finding that these claims were patentably distinct over Claim 27 of the ’008 patent, the Federal Circuit affirmed the district court’s JMOL that they are not invalid for obviousness-type double patenting.

The court also vacated the judgment of noninfringement of Claim 7 of the ’349 patent and ordered a new trial on that issue on remand. It affirmed the judgments of infringement as to Claims 3, 7, and 8 of the ’933 patent, Claim 1 of the ’422 patent, Claims 1 and 2 of the ’868 patent, and Claims 6–9 of the ’698 patent. Further the court affirmed the judgment of noninfringement as to Claims 9, 11, 12, and 14 of the ’933 patent.

The appellate court also left the permanent injunction in place.

The district court’s ruling was affirmed in part, vacated in part, and remanded.

The opinion was joined by Judges Haldane Robert Mayer and Raymond C. Clevenger.

Amgen was represented by Lloyd R. Day Jr. of Day Casebeer Madrid & Batchelder, Cupertino, Cal. Leora Ben-Ami of Kaye Scholer, New York, represented Roche.

Read the Amgen Inc. v. F. Hoffman-La Roche Ltd. opinion.

Supreme Court Is Asked to Weigh Legality of ‘Redskins’ Trademark Used by Washington’s Pro Football Team

September 14, 2009

Years of litigation over whether the “Redskins” name for a professional football team is disparaging under the Lanham Act may soon be finally resolved  if the U.S. Supreme Court decides to grant certiorari to a petition filed Sept. 14 by Native American plaintiffs (Harjo v. Pro-Football Inc., U.S., No. 09-326, filed 9/14/09).

High Court Asked to Address One Question.

For almost two decades, Native American Suzan S. Harjo has battled Pro-Football Inc., owner of the Washington Redskins professional football team, seeking cancellation of the “redskins” mark on the ground that its is a disparaging term. In what may be the final round of this fight, Harjo has asked the U.S. Supreme Court to overturn a decision by the U.S. Court of Appeals for the District Columbia holding that the suit was barred by laches.

Section 14(3) of the Lanham Act, 15 U.S.C. § 1064(3), provides for cancellation of a registration “at any time,” if the subject mark was registered
“contrary to the provisions” of Section 2(a) of the Act. Pursuant to Section 2(a), 15 U.S.C. §1052(a), no mark shall be registered if it consists of or comprises “matter which may disparage . . . persons, living or dead, . . . or bring them into contempt, or disrepute …”

Harjo’s petition poses one question:

1. Whether the doctrine of laches is applicable
to a cancellation petition filed pursuant to Section
1064(3) of the Lanham Act despite the plain
meaning of the statutory language stating that such
a petition may be filed “at any time.”

Harjo contends that Pro-Football Inc. “has chosen this racial epithet as its team name.” The team’s marks should never have been registered, and the registrations were therefore void ab initio, justifying immediate cancellation,” Harjo argued. Interestingly, her petition finds support in a Third Circuit decision written by Judge Samuel A. Alito, now a justice at the Supreme Court. Marshak v.Treadwell, 240 F.3d 184 (3d Cir. 2001).

Harjo’s petition was filed by Philip J. Mause of Drinker Biddle & Reath, Washington, D.C. 

All of the rulings below and the Marshak v. Treadwell opinion are included in Harjo’s 431 page filing.

Sparse Evidence on Damages Prompts CAFC to Vacate $357 Million Jury Award in Lucent’s Suit Against Microsoft

September 11, 2009

The U.S. Court of Appeals for the Federal Circuit on Sept. 11 vacated a $357 million jury award against Microsoft Corp. and ordered a new damages trial because Lucent Technologies failed to show evidence supporting a patent infringement lump-sum payment of that amount (Lucent Technologies Inc. v. Gateway Inc., Fed. Cir., No. 2008-1485, 9/11/09.

The court upheld the rulings that the computer graphics interface at issue was infringed and not invalid for obviousness, but said that Lucent provided no evidence that the infringement of such a minimally used feature would have led to an agreement between Microsoft and Lucent for a lump-sum royalty payment of approximately 8% of Microsoft’s revenues for the sale of its Outlook software program.

Graphics Interface Patent.


Lucent Technologies Inc. is the assignee of a patent (4,763,356) issued to Benjamin Day and others (Day patent) generally directed to a method of entering information into fields on a computer screen without using a keyboard.

Although the Day patent has expired, this appeal stems from a 2002 infringement suit by Lucent against Gateway Inc., in which Microsoft subsequently intervened.

A jury found that Microsoft Money, Microsoft Outlook, and Windows Mobile indirectly infringed Claim 19 of the Day patent, and that Windows Mobile indirectly infringed Claim 21.

The jury verdict, without distinguishing among the three products or between inducement and contributory infringement, awarded a single lump-sum of more than $357 million against Microsoft for all products involved.

Microsoft appealed the jury award and the denial of its post-trial motions, while Lucent cross-appealed the district court’s summary judgment of noninfringement as to Claims 1, 2, 6, 7, 10-12, 15, and 16 of the Day patent.

Limitations Not Shown in 1984 Magazine Article.

In challenging the district court’s denial of its motion for a judgment as a matter of law of invalidity for obviousness under Section 103 of Patent Act, Microsoft relied on a 1984 article by Michael Tyler in Datamation magazine entitled “Touch Screens: Big Deal or No Deal?”

However, the appellate court found that Microsoft failed to put forth clear and convincing evidence of obviousness. In looking at the evidence as to all four limitations in Claim 19, Chief Judge Paul R. Michel said that “the jury would have been within its reasonable boundaries in finding the Datamation article to be lacking at least one of the limitations and in concluding that no sufficient reason existed to modify the prior art.”  Accordingly, the appellate court found no error in the denial of the Microsoft’s motion for a JMOL of obviousness.

“Microsoft’s invalidity position for claim 21 fares no better,” Michel continued, finding no evidence that the Datamation article teaches a computer system that can accept “information by writing on a touch sensitive screen using a stylus,” as required under the district court’s claim construction. Thus, the appellate court found no error in the denial of Microsoft’s motion for a JMOL of obviousness as to Claim 21.

Direct Infringement Evidence ‘Barely Sufficient’.

To infringe a method claim, a person must have practiced all steps of the claimed method. Microsoft argued that Lucent failed to prove direct infringement, a necessary predicate for proving indirect infringement. Further, Microsoft argued that the only direct evidence of infringement was testimony by Lucent’s expert.

The Federal Circuit conceded that “Lucent’s direct evidence of infringement was limited,” but found that expert testimony and evidence of Microsoft’s distribution of manuals teaching the claimed method made a “barely sufficient” case under Moleculon Research Corp. v. CBS Inc., 793 F.2d 1261 (Fed. Cir. 1986).

Michael explained:

In Moleculon, the district court held that the patentee “had met its burden of showing infringement under section 271(b) with circumstantial evidence of extensive puzzle sales, dissemination of an instruction sheet teaching the method of restoring the preselected pattern with each puzzle, and the availability of a solution booklet on how to solve the puzzle.” … Similarly, in the present case, the jury reviewed evidence relating to the extensive sales of Microsoft products and the dissemination of instruction manuals for the Microsoft products. The jury also heard corresponding testimony from Lucent’s infringement expert. The circumstantial documentary evidence, supplementing the experts’ testimony, was just barely sufficient to permit the jury to find direct infringement by a preponderance of the evidence. As in Moleculon, the jury in the present case could have reasonably concluded that, sometime during the relevant period from 2003 to 2006, more likely than not one person somewhere in the United States had performed the claimed method using the Microsoft products. . . ‘Circumstantial evidence is not only sufficient, but may also be more certain, satisfying and persuasive than direct evidence.’” . . .

Accordingly, the Federal Circuit was not persuaded that the district court erred in denying Microsoft’s JMOL motion on infringement. Similarly, it found substantial evidence for the jury’s finding as to direct infringement by the use of Microsoft Money and Windows Mobile.

Having shown direct infringement, to prevail on its contributory infringement claim, Lucent had to then show that Microsoft knew that the combination for which its components were especially made was both patented and infringing and that Microsoft’s components have no substantial non-infringing uses. “Here, the infringing feature for completing the forms, i.e., the date-picker tool, is suitable only for an infringing use,” the Federal Circuit found. “Because Microsoft included the date-picker tool in Outlook, the jury could reasonably conclude, based on the evidence presented, that Microsoft intended computer users to use the tool—perhaps not frequently—and the only intended use of the tool infringed the Day patent,” it stated, citing Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

As to Microsoft’s liability for inducement infringement under 35 U.S.C. §271(b), the court said that, while “the evidence is not strong,” “we are not persuaded that the jury was unreasonable in finding that Microsoft possessed the requisite intent to induce at least one user of its products to infringe the claimed methods.” Accordingly, the Federal Circuit court affirmed the district court’s denial of Microsoft’s motion for a JMOL of no inducement infringement.

Damages Award Is Vacated.

Moving to the damages award, the Federal Circuit said it had to determine “whether substantial evidence supports the jury’s implicit finding that Microsoft would have agreed to, at the time of the hypothetical negotiation, a lump-sum, paid-in-full royalty of about $358 million.” In its analysis, it focused on the infringement by the use of Microsoft Outlook, which constituted the vast majority of the award, and the relevant factors set forth in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970).

The Federal Circuit concluded that “the jury’s damages award is not supported by substantial evidence, but is based mainly on speculation or guesswork.” It noted that frequently used inventions are generally more valuable, and thus command a larger lump-sum payment. “Conversely, a minimally used feature, with all else being equal, will usually command a lower lump-sum payment.” Here, it said, Lucent provided no documentary evidence or testimony showing the parties’ expectations as to usage of the claimed method, and no evidence that the patented date-picker feature would have commanded such a payment. Michel continued:

When the evidence is viewed in toto, the jury’s award of a lump-sum payment of about $358 million does not rest on substantial evidence and is likewise against the clear weight of the evidence. The evidence does not sustain a finding that, at the time of infringement, Microsoft and Lucent would have agreed to a lump-sum royalty payment subsequently amounting to approximately 8% of Microsoft’s revenues for the sale of Outlook (and necessarily a larger percentage of Outlook’s profits). …

We admit that the above analysis focuses on Microsoft Outlook, not the other two software programs. Because the damages award with respect to infringement by Outlook is not supported by the evidence but is against the clear weight of the evidence, a new trial on damages is necessary. We therefore need not specifically address the evidence as it relates to Microsoft Money and Windows Mobile. We leave that to the jury or court to assess on remand. We acknowledge that the factual findings based on the pertinent Georgia-Pacific factors may not be identical for all three products. For example, the tools that practice the infringing method may be incorporated more (or less) extensively throughout Windows Mobile and Microsoft Money than in Outlook.

Creating a licensing agreement for patented technology is, at best, an inexact science. In actual licensing negotiations, willing parties negotiating at arms-length do not necessarily generate and analyze precise economic data concerning the perceived value of a patented invention. A complicated case this was, and the damages evidence of record was neither very powerful, nor presented very well by either party. 

Still, Microsoft asked for reversal of the damages award altogether because the jury erroneously applied the entire market value damages rule.

If the jury did apply the entire market value rule, the award would legally erroneous because application of this rule requires the patentee to prove that “the patent-related feature is the ‘basis for customer demand,’” Michel said, quoting Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538 (Fed. Cir. 1995). There is no evidence showing the patented method of the Day patent as the basis—or even a substantial basis—of the consumer demand for Outlook, he said. Rather, “the only reasonable conclusion supported by the evidence is that the infringing use of the date-picker tool in Outlook is but a very small component of a much larger software program.” While conceding that a jury might reach a different conclusion as to Windows Mobile and Microsoft Money, the court said that it did not have to decide these issues here.

In vacating the damages award, Michel advised that on remand “it may be helpful to analyze the three infringing software products independently.”

The district court’s ruling was affirmed in part, vacated in part, and remanded.

The opinion was joined by Judges Pauline Newman and Alan D. Lourie.

Lucent was represented by John M. Desmarais of  Kirkland & Ellis, New York. Microsoft was represented by Constantine L. Trela of Sidley Austin, Chicago. Edward R. Reines of Weil, Gotshal & Manges, Redwood Shores, Cal., represented amicus curiae Apple Inc. James W. Dabney of Fried, Frank, Harris, Shriver & Jacobson, New York, represented amicus curiae Bank of America Corp. Donald R. Dunner of Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., represented amicus curiae 3M Company.

Read the Lucent Technologies Inc. v. Gateway Inc.opinion.


‘Dubious Validity’ of Baxter Hemodialysis Machine Patents Ignites CAFC Debate Over Staying Suits Pending Reexam

September 10, 2009

The U.S. Court of Appeals for the Federal Circuit on Sept. 10 ruled that two of three Baxter International patents covering hemodialysis are invalid and vacated and remanded a permanent injunction and royalty award based on that ruling (Fresenius USA Inc. v. Baxter International Inc., Fed. Cir., No. 2008-1306, 9/10/09).

However, the concurring judges disagreed on whether the case should be stayed on remand by the district court pending a reexamination of the claims of the third patent.

Judge Timothy B. Dyk said that he joined the majority opinion “on the understanding that it does not foreclose the district court in its discretion from staying further proceedings pending the outcome of the reexamination,” and that it is entirely possible that the Patent and Trademark Office will conclude that those claims “of dubious validity” are indeed invalid. Judge Pauline Newman, however, argued that the PTO process is often fraught with delays, and that “[a] stay of finality, after the issues of validity and infringement have been litigated and decided by the district court and appealed to the Federal Circuit, is a distortion of the role of reexamination.”

Hemodialysis Devices.

Baxter International Inc. has three patents (5,247,434, 5,744,027, and 6,284,131) which disclose and claim a hemodialysis machine integrated with a touch screen user interface. At the time of the filing of the parent application from which these patents derive, touch screens were known and had been used on other medical devices, such as a heart-lung machine, but a touch screen had not been integrated with a hemodialysis machine.

Fresenius USA Inc., which also makes a hemodialysis machines with a touch screen interface, brought suit against Baxter in 2003, seeking a declaratory judgment that the ’027, ’131, and ’434 patent claims are invalid and not infringed by its devices. Baxter counterclaimed against Fresenius, alleging infringement of  Claims 7, 11, and 14–16 of the ’027 patent, Claims 1–3 and 13–16 of the ’131 patent, and Claims 26–31 of the ’434 patent.

The district court granted partial summary judgment that Fresenius infringed Claim 1 of the ’131 patent and Claim 26 of the ’434 patent.

A jury trial on validity found Claims 7 and 14–16 of the ’027 patent invalid as anticipated under Section 102 of the Patent Act and all asserted claims invalid as obvious under Section 103 of the Patent Act.

However, the district court determined that substantial evidence did not support the jury’s obviousness verdict and granted Baxter a judgment as a matter of law of no invalidity.

After a trial on damages, the jury awarded Baxter a total of $14,266,000 in damages.

The court then entered a permanent injunction against Fresenius and imposed royalties.

Fresenius appealed the district court’s grant of the JMOL, entry of a permanent injunction, royalty award, and claim constructions. Baxter cross-appealed the jury’s determination that the asserted ’027 patent claims are invalid as anticipated.

Baxter Waived Anticipation Argument.

The Federal Circuit refused to weigh Baxter’s argument that the jury finding of anticipation as to the ’027 patent lacked substantial evidence. “By failing to properly raise that argument before the district court, Baxter has waived it, and we decline to consider it,” Judge Arthur J. Gajarsa said, citing Golden Bridge Tech. Inc. v. Nokia Inc., , 527 F.3d 1318 (Fed. Cir. 2008).

JMOL Upheld as to ’434 Patent.

The Federal Circuit then went on to reverse the district court’s grant of Baxter’s JMOL motion, except as to Claims 26–31 of the ’434 patent.  To the court, there was substantial evidence allowing a reasonable jury to conclude that all of the limitation elements of the other asserted patents were existing in the prior art. However, Claims 26–31 contain means-plus-function limitations, and all require a “means for delivering the dialysate to a dialysate compartment of a hemodialyzer.”

Just as a patentee who seeks to prove infringement must provide a structural analysis by demonstrating that the accused device has the identified corresponding structure or an equivalent structure, a challenger who seeks to demonstrate that a means-plus-function limitation was present in the prior art must prove that the corresponding structure—or an equivalent—was present in the prior art, Judge Arthur J. Gajarsa said. He found that “Fresenius failed to present any evidence—let alone substantial evidence—that the structure corresponding to the means for delivering dialysate limitation, or an equivalent thereof, existed in the prior art.”

Thus, the appellate court affirmed the JMOL as to Claims 26–31 of the ’434 patent.

However, in reversing the district court’s JMOL as to the asserted claims in the ’131 patent, the Federal Circuit found that, in addition to the elements of those claim limitations existing in the prior art, there was a motivation for a skilled artisan to combine these elements as claimed and render the patent obvious under Section 103.

Gajarsa said that “it remains appropriate” to determine whether there was an apparent reason to combine the known elements as claimed in the patent at issue after the Supreme Court’s ruling in KSR International Co. v. Teleflex Inc., 550 U.S. 398 (2007). He found that the jury here was shown evidence of motivation in a prior art publication discussing the integration of a touch screen interface with an anesthesia-delivery system.

Gajarsa continued as follows:

Under KSR, “if a technique has been used to improve one device, and a person of ordinary skill in the art would recognize that it would improve similar devices in the same way, using the technique is obvious unless its actual application is beyond his or her skill.” …  In addition, “[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” … Here, the jury implicitly found that the prior art suggested combining a touch screen with known elements of a hemodialysis machine. That finding is supported by substantial evidence because a reasonable jury could conclude that Dr. Rau’s publication contained an explicit suggestion to combine the disclosed benefits of a touch screen interface with a hemodialysis machine. In addition, the jury could reasonably conclude, based on Dr. Phares’s testimony, that an ordinarily skilled artisan would have known how to make that combination. Thus, substantial evidence supports the jury’s findings that the limitations of the ’131 patent claims were known in the prior art, that the prior art suggested combining those elements to arrive at the claimed invention, and that the ordinarily skilled artisan would have known how to make that combination. …

Permanent Injunction, Royalty Award, and Debate Over of Stays.

Continuing, the Federal Circuit found no error in the district court’s determination that injunctive relief was appropriate. Still, it vacated and remanded the permanent injunction for revision or reconsideration in light of the reversal of the district court’s JMOL on the ’027 and ’131 patents.

Similarly, it vacated and remanded the royalty award.

The district court’s ruling was affirmed in part, reversed in part, vacated in part, and remanded.

The opinion was joined by Judges Pauline Newman and Timothy B. Dyk, who wrote separate concurring opinions.

Dyk said that he joined the majority opinion “on the understanding that it does not foreclose the district court in its discretion from staying further proceedings pending the outcome of the reexamination before the U.S. Patent and Trademark Office.”  Though Fresenius did not prove Claims 26–31 of the ’434 patent before the district court, he said, “those claims on their face are of dubious validity in light of our holding that claims 1–3 and 13–16 of the ’131 patent and claim 11 of the ’027 patent are invalid. It is entirely possible that the U.S. Patent and Trademark Office will finally conclude that claims 26–31 of the ’434 patent are also invalid.”

However, Newman argued that now is hardly the time for a reexamination, which is prone to long delays, and especially given that validity and infringement have been litigated in district court and appealed to the Federal Circuit. She added:

The relationship between reexamination and litigation is not new to the courts, and precedent reflects the variety of responses in particular situations, as summarized in Slip Track Systems, Inc. v. Metal Lite, Inc., 159 F.3d 1337, 1341 (Fed. Cir. 1998) with respect to concurrent proceedings including PTO reexamination and PTO interference proceedings. It is established that a “court is not required to stay judicial resolution in view of the reexaminations.” Viskase Corp. v. American Nat’l Can Co., 261 F.3d 1316, 1328 (Fed. Cir. 2001). The corollary rule is that the PTO has no authority to stay reexamination pending the outcome of district court litigation. Ethicon, Inc. v. Quigg, 849 F.2d 1422 (Fed. Cir. 1988). A stay of finality, after the issues of validity and infringement have been litigated and decided by the district court and appealed to the Federal Circuit, is a distortion of the role of reexamination.

I remain a strong supporter of the principle of reexamination. It can be a useful and powerful tool for the benefit of both patentees and those interested in restricting or eliminating adversely held patents. However, if routinely available to delay the judicial resolution of disputes, the procedure is subject to inequity, if not manipulation and abuse, through the delays that are inherent in PTO activity.

Juanita R. Brooks of Fish & Richardson, San Diego, Cal., represented Fresenius USA. William F. Lee of Wilmer Cutler Pickering Hale and Dorr, Boston, Mass., represented Baxter International.

Read the Fresenius USA v. Baxter International opinion.


Patentee Who Failed to Assert Equivalents Infringement in First Suit Is Barred From Doing So in Subsequent Suit

September 08, 2009

A patentee who “forfeited his right” to bring a claim for equivalents  infringement in a previously adjudicated patent suit is barred from doing so in a subsequent suit by the doctrine of res judicata, the U.S. Court of Appeals for the Federal Circuit ruled Sept. 8 (Nystrom v. Trex Co. Inc., Fed. Cir., No. 2009-1026, 9/08/09). 

The court reasoned that since the same claim limitations and the same accused devices were at issue in the first case, the patentee should not now be allowed “a second bite at the apple” in asserting equivalents infringement.    

Two Suits Over Deck Board Patent.

Ron Nystrom has a patent (5,474,831) on an outdoor wood-flooring board shaped to shed water from its upper surface while still maintaining a comfortable surface on which to walk. While the top of Nystrom’s board is in a convex shape so that water will flow from its middle to its sides, the bottom of the board is concave so that other boards can be stacked below it.

In Nystrom’s first suit against Trex Co. Inc., the district granted a summary judgment of noninfringement based on its reading of the disputed “board,”  “manufactured to have,” and “convex top surface” claim limitations. 

On appeal, the Federal Circuit affirmed the district court’s constructions of “board” and “manufactured to have,” but reversed on the “convex top surface” limitation. Nystrom v. Trex Co., 424 F.3d 1136 (Fed. Cir. 2005).

On remand, Nystrom attempted to pursue his infringement claim under the doctrine of equivalents. However, noting that Nystrom had previously stipulated to “non-infringement” without reference to equivalents, the district court held that Nystrom had waived the argument. While Nystrom again appealed, a per curiam Federal Circuit affirmed the district court’s holding that Nystrom had waived his infringement claim based on the doctrine of equivalents.

Nystrom then filed this suit against Trex, Home Depot, and Snavely Forest Products (Trex), alleging infringement by a second-generation of Trex products (Trex II) solely under the doctrine of equivalents.

The district court granted summary judgment to Trex based on claim vitiation and argument-based estoppel, but it denied Trex’s motion for summary based on res judicata. Nystrom appealed.

Only `Colorable Changes’ From First Case.

Here, the Federal Circuit found that the district court erred in denying the summary judgment based on res judicata, and it affirmed the ruling in favor of Trex on this alternative ground. Nystrom, it ruled, had “forfeited his right to bring an infringement claim in a previously adjudicated patent suit.

Res judicata precludes the relitigation of a claim, or cause of action, or any possible defense to the cause of action which is ended by a judgment of the court. “This aspect of res judicata, known in modern parlance as ‘claim preclusion’, applies whether the judgment of the court is rendered after trial and imposed by the court or the judgment is entered upon the consent of the parties,” the Federal Circuit began, quoting Foster v. Hallco Mfg. Co., 947 F.2d 469 (Fed. Cir. 1991).

Relying on Foster and other authority, Judge Randall R. Rader continued:

For claim preclusion in a patent case, an accused infringer must show that the accused product or process in the second suit is “essentially the same” as the accused product or process in the first suit. Foster, 947 F.2d at 480. “Colorable changes in an infringing device or changes unrelated to the limitations in the claim of the patent would not present a new cause of action.” Id. Where an accused infringer has prevailed in an infringement suit, “the accused devices have the status of noninfringements, and the defendant acquires the status of a noninfringer to that extent.” Young Eng’rs, Inc. v. U.S. Int’l. Trade Comm’n, 721 F.2d 1305, 1316 (Fed. Cir. 1983).

For purposes of its summary judgment motion and this appeal, the defendants conceded material differences between the Trex I boards and the Trex II boards. However, they pointed out that the only two limitations leading to the judgment of noninfringement in the first suit—“board” and “manufactured to have”—are in all material respects the same in the Trex I boards and the Trex II boards.

With that, Rader noted that this case “presents a slightly new angle on claim preclusion”—whether the accused infringer may assert claim preclusion when the sole claim limitations at issue in the first suit remain unchanged in the second suit. He said that while Foster emphasized that the focus for claim preclusion should be on “material differences” between the two accused devices, the Federal Circuit has not addressed directly whether the focus of the “material differences” test is on the claim limitations at issue in each particular case.  On this issue, he noted that the judgment of noninfringement in the earlier case as to the Trex I boards “applies to both literal infringement and, as a result of Nystrom’s waiver, infringement by equivalents.” To succeed on the infringement claim against the Trex II boards here, Nystrom will have to prove infringement of each claim limitation, he stressed, citing Catalina Mktg. Int’l Inc. v., Inc., 289 F.3d 801 (Fed. Cir. 2002).

Still, Nystrom insisted that the Trex II boards at issue here had different features such as added simulated wood grain, profile and top surface changes for an enhanced wood board look, and color changes for a more wood-like shading.

However, the appellate court found that Nystrom’s suit here was an attempt to prove infringement of the same claim limitations as to the same features of the accused devices. “As such, this case presents the exact situation that res judicata seeks to prevent. Res judicata thus bars this second attempt to adjudicate the same issues,” the Federal Circuit stated.

The court continued as follows:

These changes, however, do not alter the application of claim preclusion. Nystrom’s alleged differences fall squarely within the “colorable changes” category that this court has highlighted in the past. . . . The record demonstrates that the composition of the Trex II board is the same as the Trex I board—approximately fifty to sixty percent wood fibers and forty to fifty percent recycled plastic. Simply adding a wood grain and changing the board’s color does not materially alter the infringement analysis of the “wood cut from a log” limitation.

Similarly, Nystrom’s alleged differences do not directly speak to the “manufactured utilizing wordworking techniques” construction. That is, the process used to make the Trex II board is the same process used to make the Trex I board. The addition of wood grain or a change in color does not alter this limitation either in any way material to the infringement inquiry.

In sum, Nystrom made a tactical decision in his initial suit to forego any infringement theory based on the doctrine of equivalents. That choice did not pay off. Given that the Trex II boards remain materially identical to the Trex I boards with respect to the pertinent claim limitations at issue, this court cannot under res judicata permit Nystom to have a second bite at the apple

Rader’s ‘Additional Views’ on Claim Vitiation.

In a section of the opinion labeled “additional views,” Rader expounded on the role of the doctrine of claim vitiation in equivalents infringement cases.

“The doctrine of equivalents permits a finding of infringement, despite the missing limitation, because the deficit is not substantial,” Rader observed. “Claim vitiation bars infringement because the same deficit is substantial,” and “by definition, simply rewinds and replays the doctrine of equivalents test for substantiality of a missing claim limitation.” A finding of insubstantial difference to show equivalency obviates any further vitiation analysis since a wholly insignificant equivalent would not vitiate the claim. On the other hand, a finding of substantial difference renders vitiation unnecessary. “Thus, the vitiation doctrine is really subsumed within the test for equivalents itself,” Rader reasoned.

Still, Rader expressed concern that equivalency and vitiation can conflict because they are governed by two different decision makers, and that conflict is apparent in this case. He explained:

Judges decide vitiation; juries decide equivalents. Although the tests are the same, the testers are different, which could produce different results in application of the same rules. This case can serve to illustrate this situation. Trex argued to the district court that a finding of equivalents on a product comprised of forty to fifty percent wood would necessarily vitiate the claim language requiring the board to be “made [entirely] from wood.” The district court agreed and barred Nystrom from pursuing an infringement theory based on equivalents. Would the result be different, however, if the accused device was comprised of fifty-five or sixty percent wood? Seventy percent? Should this question be resolved by a jury, by a judge, or by both?

The opinion was joined by Chief Judge Paul R. Michel and Judge Sharon Prost.

Joseph S. Presta of Nixon & Vanderhye, Arlington, Va., represented Nystrom.  Patrick J. Coyne of Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., represented Trex, Snavely Forest Products, and Home Depot.

Read the Nystrom v. Trex opinion.


B.P.A.I. Misreads Claim Term ‘Comprising’ and Interprets Claim In Way That Departs From Clear Language Used By Patentee

September 3, 2009

The Board of Patent Appeals and Interferences misread the open-ended transition term “comprising” in a way that broadly interpreted a patent claim as not requiring each leg of a wire chafing to have offsets even though the claim language clearly stated otherwise, the U.S. Court of Appeals for the Federal Circuit ruled Sept. 3 (In re Skvorecz, Fed. Cir., No. 2008-1221, 9/3/09).
The court said that the board went astray when it misapplied the protocol to give claim terms their broadest reasonable interpretation during examination. “This protocol is solely an examination expedient, not a rule of claim construction,” and it may not be used to give claims a legally incorrect interpretation, the court said.

Here, that was exactly the result when the board rejected the reissuance claims for anticipation even though the device in the prior art did not require an offset for each leg. Having reversed the anticipation rejection, the court also went on to reverse the board’s rulings that the claims were indefinite and failed to meet the written description requirement.

Wire Chafing Stand Reissuance Rejected.

Robert Skvorecz  filed an application (Serial No. 09/772,278) for reissuance of Claims 1-7 of his patent (5,996,948) on a wire chafing stand.
The reissue examiner rejected Claims 1, 2, and 5 for as anticipated under Section 102 of the Patent Act, 35 U.S.C. § 102, based on George Buff’s patent (5,503,062) covering a similar device.  

The Board of Patent Appeals and Interferences sustained the anticipation rejection as to Claims 1 and 2, but reversed it for Claim 5. However, it added two new grounds of rejection, rejecting Claim 5 for indefiniteness, and Claims 1-5 and 7 for failing to comply with the written description requirement.

Skvorecz appealed.

Comprising’ Is Misread as Not Requiring Every Leg to Offset.

Invalidity based on anticipation requires that all of the claim elements and their limitations are shown in a single prior art reference.

The board found that the examiner established a prima facie case of anticipation based on the structural similarity between the Skvorecz invention and the Buff drawing, and that Skvorecz “failed to demonstrate that the functional characteristics of his claimed invention are not inherent in the structure disclosed by Buff.”

On appeal, Skvorecz stressed that Claim 1 clearly states that “said wire legs” and “each wire leg” have offsets, and that his device thus differs from that of Buff. He noted that while his claims require that each wire leg has a laterally displacing offset, the Buff wire leg 48 does not have an offset that laterally displaces the leg from the rim.

The PTO argued that Claim 1 is anticipated by Buff because it can be construed to include wire legs without offsets, as the claim uses the open-ended transition term “comprising.” In its view, the term “comprising” is open-ended and means that not every wire leg is required by Claim 1 to include offsets.

The Federal Circuit rejected the PTO’s claim construction as flawed. “The Board erred in holding that some wire legs of the Skvorecz device, as claimed, need not have an offset, when the claims state that each wire leg has an offset,” Judge Pauline Newman wrote.
She found that the source of the board’s error was its misapplication of the protocol to give claim terms their broadest reasonable interpretation during examination. Newman reasoned as follows:

The protocol of giving claims their broadest reasonable interpretation during examination does not include giving claims a legally incorrect interpretation. This protocol is solely an examination expedient, not a rule of claim construction. Its purpose is to facilitate exploring the metes and bounds to which the applicant may be entitled, and thus to aid in sharpening and clarifying the claims during the application stage, when claims are readily changed. . … As explained in the Manual of Patent Examining Procedure (MPEP) at §2111, entitled “Claim Interpretation; Broadest Reasonable Interpretation,” “Applicant always has the opportunity to amend the claims during prosecution, and broad interpretation by the examiner reduces the possibility that the claim, once issued, will be interpreted more broadly than is justified.” This practice may also be useful in reissue examination.…

The signal “comprising” does not render a claim anticipated by a device that contains less (rather then more) than what is claimed. Here the examination expedient of “broadest reasonable interpretation” was incorrectly applied to interpret “comprising” to mean that not all the Skvorecz wire legs need have offsets, despite the claims that state that “each wire leg” has an offset. The Buff device does not have an offset located in each wire that serves as a leg to support the device. In the Buff structure both the transverse wire 48 and the longitudinal wire 49 provide the bottom support analogous to wire legs, and it is undisputed that wire segment 48 does not have an offset. Anticipation cannot be found, as a matter of law, if any claimed element or limitation is not present in the reference. The “anticipation” rejection is reversed.

Indefiniteness and Written Description Rejections Also Reversed.

Dependent Claim 5 of the reissue application requires “[a] wire chafing stand as defined in claim 1 wherein said plurality of offsets are welded to said wire legs at the separation of the upright sections into segments.”

The Patent at 35 U.S.C. §112, ¶2 states:
The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention.

The board found that Skvorecz’s use of the phrase “at the separation” rendered Claim 5 indefinite because it lacks an antecedent basis in Claim 1.

However, Skvorecz argued that reissue Claim 5 is identical to Claim 5 as issued in the original patent, and that the language criticized by the board was not found indefinite by any examiner. Further, he noted that this language is supported in the specification as originally filed.

The Federal Circuit agreed with Skvorecz and reversed the indefiniteness rejection. Newman stated:

MPEP §2173.05(e), entitled “Lack of Antecedent Basis,” states: “There is no requirement that the words in the claim must match those used in the specification disclosure,” and “Obviously, . . . the failure to provide explicit antecedent basis for terms does not always render a claim indefinite.” MPEP §2173.02 states: “Some latitude in the manner of expression and the aptness of terms should be permitted even though the claim language is not as precise as the examiner might desire.” We agree with Mr. Skvorecz that the clause “welded to said wire legs at the separation” does not require further antecedent basis in claim 1, for a person skilled in the field of the invention would understand the claim when viewed in the context of the specification.

As to any lack of clarity, Newman noted the board’s point on rehearing that if Claim 5 recited “a separation” instead of “the separation,” the definiteness requirement would be met. “This helpful suggestion may be implemented on remand,” she stated.

 “Subject to this potential amendment,” the court reversed the indefiniteness rejection.

Finally, the court also reversed the board’s rejection based on the written description requirement at Section 112, ¶1. It observed that the description of the invention provides the foundation for the scope and content of the claims, and serves to demonstrate that the applicant is in possession of the invention that is claimed. In fulfilling these purposes, the applicant may employ “such descriptive means as words, structures, figures, diagrams, formulas, etc., that fully set forth the claimed invention,” Newman said, quoting authority. Lockwood v. American Airlines Inc., 107 F.3d 1565 (Fed. Cir. 1997).

Agreeing with Skvorecz that Figures 12 and 13 adequately show such offsets in the rim, Newman said that “[a] person skilled in the mechanical arts would understand the specification including the drawings as showing the offsets and the lateral displacement of each wire leg.”

The board’s rejections were reversed, and the case was remanded.

Eugene Lieberstein of Baker & Hostetler, New York, represented Skvorecz.

The Patent and Trademark Office, Arlington, Va., was represented by William LaMarca, associate solicitor.

Read the In re Skvorecz opinion.


Five-Member Federal Circuit Panel Agrees That Martek’s DHA Patents Are Valid and Infringed

September 3 , 2009

A five-judge panel of the U.S. Court of Appeals for the Federal Circuit on Sept. 3 upheld the validity and infringement rulings on four patents held by Martek Biosciences Corp. relating to processing DHA omega-3 fatty acids (Martek Biosciences Corp. v. Nutrinova Inc., Fed. Cir., No. 2008-1459, 9/3/09).

The special panel, convened pursuant to 28 U.S.C. §46(b), affirmed the district court’s rulings against the infringement defendants, but faulted the lower court for overturning a jury verdict and granting a judgment as a matter of law that one of the patents was invalid for lack of enablement.

The panel, however, disagreed on a point of claim construction. The majority found the district court’s reading of the claim term “animal” erroneous and contrary to the definition provided by the patentee in the specification. However, Judge Alan D. Lourie, joined by Judge Randall R. Rader, argued that the district court correctly construed “animal” to exclude humans.

Patents on the Omega-3 Fatty Acid DHA.

Martek Biosciences Corp. owns several patents (5,340,594; 6,410,281; 6,451,567; and 5,698,244) relating to the production of docosahexaenoic acid (DHA), an essential omega-3 fatty acid. Martek sued Nutrinova Inc., Nutrinova Nutrition Specialties and Food Ingredients GmbH, and Lonza Ltd. (collectively Lonza) for infringement.

A jury found the asserted claims infringed and not invalid, and found that the infringement of the ’281 patent was willful. The district court excluded Lonza’s evidence of prior inventorship and denied Lonza’s motions for judgment as a matter of law (JMOL) as to invalidity of the ’594 patent and noninfringement of the ’281 patent. Further, it granted Martek a permanent injunction.

Lonza appealed those rulings and the district court’s construction of the claim term “non-chloride sodium salt.”

Martek cross-appealed the district court’s grant of Lonza’s JMOL as to the invalidity of the ’567 patent for lack of enablement and its construction of the claim term “animal” in the ’244 patent.

Five-Judge Panel Pursuant to Rule 46(b).

The Federal Circuit decided this case in a special five-member panel, not the usual three-judge panel. Judge Arthur J. Gajarsa, writing for the court, said in a footnote that this panel was convened “pursuant to our statutory authority under 28 U.S.C. § 46(b).” That statute blankly provides that the “Federal Circuit . . . may determine by rule the number of judges, not less than three, who constitute a panel.” No other explanation was given as to why the court expanded its number to five judges in this case.

The panel went on to affirm the district court’s rulings against Lonza.

‘594 Patent Not Invalid.

As to Lonza’s argument on the invalidity of the ‘594 patent, the appellate court found substantial evidence for the jury finding that two limitations of Claim 1 are adequately described by the 1988 patent application from which the ’594 patent claims priority. Particularly, it found that the 1988 application disclosed: (1) extracting lipids from a mixed culture of fermenting/growing Thraustochytrium and Schizochytrium cells and (2) combining the extracted lipids with a food material to make a food product. Accordingly, the court found substantial evidence for the jury’s finding that the ’594 patent claims are entitled to the priority date of the 1988 application, and that Lonza’s JMOL motion was properly denied.

Expert Testimony Used to Show Infringement of ‘281 Patent.

Next, Lonza challenged the finding that its accused process infringed the following limitation in the ‘281 patent: “the culture medium containing the non-chloride sodium salt as the primary source of sodium results in reduced fermentor corrosion compared to the culture medium containing sodium chloride as the primary source of sodium.”

While Lonza insisted that Martek offered mere conclusions—not comparative testing of the accused process—as evidence of infringement, the appellate court disagreed. A patentee may prove infringement by “any method of analysis that is probative of the fact of infringement,” Gajarsa noted, quoting Forest Labs. v. Abbott Labs., 239 F.3d 1305 (Fed. Cir. 2001). Further, he pointed out that under Liquid Dynamics Corp. v. Vaughan Co. Inc., 449 F.3d 1209 (Fed. Cir. 2006), circumstantial evidence may be sufficient to show infringement. In his analysis, Gajarsa rejected Lonza’s reliance on Kim v. ConAgra Foods Inc., 465 F.3d 1312 (Fed. Cir. 2006), where the patentee presented no testimony showing infringement.

Gajarsa explained:

Martek did not rely on conclusory expert testimony to demonstrate that Lonza’s medium reduces corrosion. As detailed above, Martek presented testimony from two experts, each of whom conceptually analyzed the accused process and testified that it must meet the functional claim limitation based on the composition of Lonza’s culture medium and the known effects of chloride concentration on stainless steel corrosion. Contrary to Lonza’s reading of Kim, we did not articulate a general rule requiring one who alleges infringement of a claim containing functional limitations to perform actual tests or experiments on the accused product or method. Instead, we stated only that “Kim did not prove infringement because she presented no testimony based on the accused products themselves that supported a finding of infringement.” … Here, Martek presented expert testimony based on the accused process that supports a finding of infringement

Further, though Lonza challenged the district court’s reading of this limitation in the ‘281 patent, the Federal Circuit found that the intrinsic and extrinsic evidence supported the ruling that “non-chloride sodium salt” includes sodium hydroxide (NaOH).

Nothing to Corroborate Testimony of Alleged Prior Inventor.

Lonza, who asserted that Martek’s patents were invalidated by a prior invention under 35 U.S.C. § 102(g), then challenged the district court’s exclusion of its evidence of prior invention.

However, Gajarsa found no abuse of discretion in the district court’s exclusion of Lonza’s evidence, which essentially was the testimony of the asserted inventor himself (Long). An alleged prior inventor “must provide independent corroborating evidence in addition to his own statements and documents,” such as “testimony of a witness, other than [the] inventor, to the actual reduction to practice or … evidence of surrounding facts and circumstances independent of information received from the inventor,” he said, quoting Hahn v. Wong, 892 F.2d 1028 (Fed. Cir. 1989). Here, the only corroborating evidence that Lonza offered was Long’s own abandoned patent application, and the Federal Circuit agreed with the lower court’s conclusion that this evidence was insufficient. “[W]hile an abandoned patent application is evidence of conception, it is insufficient to corroborate testimony that an alleged prior inventor reduced the invention to practice,” the Federal Circuit said, citing Texas Digital Sys. v. Telegenix Inc., 308 F.3d 1193 (Fed. Cir. 2002).

Continuing, the Federal Circuit reversed the district court’s JMOL that Claims  4 and 5 of the ’567 patent were invalid for lack of enablement. Gajarsa said that “the evidence supports the jury’s implicit finding that one need not perform undue experimentation to practice claims 4 and 5, as well as the jury’s ultimate conclusion that Lonza failed to prove invalidity of those claims by clear and convincing evidence.”

Disagreement Over Meaning of ‘Animal.’

Finally, the Federal Circuit agreed with Martek that the district court erred in construing the term “animal” in the ‘244 patent as meaning “any member of the kingdom Animalia, except humans.”

Quoting the ‘244 patent, Gajarsa noted that the patentee specifically defined “animal” as “any organism belonging to the kingdom Animalia.”  “That definition controls. Thus, because it is undisputed that humans are members of the kingdom Animalia, it was error for the district court to limit the claim term ‘animal’ to exclude humans,” Gajarsa stated.

Accordingly, the district court’s construction of the term “animal” was reversed.

However, Judge Alan D. Lourie, joined by Judge Randall R. Rader, dissented in part, arguing that the district court’s reading of “animal” was correct. Lourie acknowledged the definition given for “animal” in the patent specification, but noted that it was followed by a sentence that mentions animals used for food and milk production and lists those animals. To him, this was a strong indication that “the term ‘animal’ encompasses only those animals raised for production of food and milk products, thereby not including humans.”   

Lourie stated:

We are bound to read a claim term in a manner that is consistent with the specification as a whole. Having examined the use of the term “animal” in the claims and the specification of the ’244 patent, I believe it is clear that one of ordinary skill in the art would conclude that, despite the purported definition in the specification, the term “animal” in the claims cannot include humans.

The other members of the panel were Judges Pauline Newman and Kimberly Moore.

The district court’s ruling was affirmed in part, reversed in part, and remanded.

Martek Biosciences was represented by Gregory A. Castanias of  Jones Day, of Washington, D.C.

Nutrinova and Lonza were represented by George Pazuniak of Womble Carlyle Sandridge & Rice, Wilmington, Del.

Read the Martek Biosciences v. Nutrinova opinion.


Proof of Intent to Deceive PTO Is Needed for Trademark Fraud

August 31, 2009

A charge of fraudulent trademark procurement requires proof that the applicant or registrant knowingly made a false, material representation with the intent to deceive the Patent and Trademark Office, the U.S. Court of Appeals for the Federal Circuit ruled Aug. 31 (In re Bose Corp., No. 2008-1448, 8/31/09).

Reversing the Trademark Trial and Appeal Board’s cancellation of Bose Corp.’s entire “WAVE” mark registration, the court ruled that there was no substantial evidence that Bose knowingly intended to deceive the PTO in its renewal process. Along the way, the court rejected the board’s 2003 decision in Medinol v. Neuro Vasx Inc. that had erroneously lowered the fraud standard to that of mere negligence. It stressed that “deception must be willful to constitute fraud.”

Board Finds Fraud in Renewal Process.

Bose Corp. had initiated an opposition against the “HEXAWAVE” trademark application by Hexawave Inc., alleging a likelihood of confusion its prior registered trademarks, including “WAVE.” Hexawave counterclaimed for cancellation of Bose’s WAVE mark, arguing that Bose committed fraud in its registration renewal application when it claimed use on all goods in the registration while knowing that it had stopped manufacturing and selling tape recorders and players.

The board found that Bose had indeed stopped manufacturing and selling audio tape recorders and players sometime between 1996 and 1997, and that Bose’s general counsel knew that Bose discontinued those products when he signed Section 8 affidavit of continued use and Section 9 renewal application. It went on to find that the use statement in the Section 8/9 renewal was material, and that Bose committed fraud on the PTO in maintaining the WAVE mark registration. Thus, the board ordered the cancellation of Bose’s WAVE mark registration in its entirety. Bose Corp. v. Hexawave Inc., 88 USPQ2d 1332 (T.T.A.B. 2007).

After Bose appealed, the PTO was allowed to participate as appellee when Hexawave did not appear.

Negligence Standard of Medinol Is Rejected.

A party seeking cancellation of a trademark registration for fraudulent procurement bears a heavy burden of proof, the Federal Circuit began, citing W.D. Byron & Sons Inc. v. Stein Bros. Mfg. Co., 377 F.2d 1001 (C.C.P.A. 1967). Quoting Smith Int’l Inc. v. Olin Corp., 209 USPQ 1033 (T.T.A.B. 1981), it observed that “the very nature of the charge of fraud requires that it be proven ‘to the hilt’ with clear and convincing evidence. There is no room for speculation, inference or surmise and, obviously, any doubt must be resolved against the charging party.”

Continuing, Chief Judge Paul Michel quoted authority stating that “[a]ny ‘duty’ owed by an applicant for trademark registration must arise out of the statutory requirements of the Lanham Act,” which prohibit an applicant from making “knowingly inaccurate or knowingly misleading statements.” Bart Schwartz Int’l Textiles Ltd. v. Fed. Trade Comm’n, 289 F.2d 665 (C.C.P.A. 1961). Absent the requisite intent to mislead the PTO, even a material misrepresentation would not qualify as fraud under the Lanham Act warranting cancellation, Michel added, citing King Auto. Inc. v. Speedy Muffler King Inc., 667 F.2d 1008 (C.C.P.A. 1981). These cases by the Court of Customs and Patent Appeals “still bind us because they have never been overturned en banc,” he clarified.

Despite this long line of cases, the board followed the statement in Medinol v. Neuro Vasx Inc., 67 USPQ2d 1205 (T.T.A.B. 2003), that “[a] trademark applicant commits fraud in procuring a registration when it makes material representations of fact in its declaration which it knows or should know to be false or misleading.” Cancellations based on this reasoning of Medinol are flawed, the Federal Circuit court stated, explaining:

By equating “should have known” of the falsity with a subjective intent, the Board erroneously lowered the fraud standard to a simple negligence standard. …

We have previously stated that “[m]ere negligence is not sufficient to infer fraud or dishonesty.” … We even held that “a finding that particular conduct amounts to ‘gross negligence’ does not of itself justify an inference of intent to deceive.” … The principle that the standard for finding intent to deceive is stricter than the standard for negligence or gross negligence, even though announced in patent inequitable conduct cases, applies with equal force to trademark fraud cases. After all, an allegation of fraud in a trademark case, as in any other case, should not be taken lightly. … Thus, we hold that a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO.

Intent to Deceive Not Shown.

“Subjective intent to deceive, however difficult it may be to prove, is an indispensable element in the analysis,” Michel continued, conceding that direct evidence of deceptive intent is rarely available. While intent can be inferred from indirect and circumstantial evidence, “such evidence must still be clear and convincing, and inferences drawn from lesser evidence cannot satisfy the deceptive intent requirement,” he noted, quoting Star Scientific Inc. v. R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008). When drawing an inference of intent, “the involved conduct, viewed in light of all the evidence . . . must indicate sufficient culpability to require a finding of intent to deceive,” he added, quoting the en banc ruling in Kingsdown Med. Consultants Ltd. v. Hollister Inc., 863 F.2d 867 (Fed. Cir. 1988).

As to the conduct in this case, the court agreed that Bose made a material misrepresentation since its general counsel knew that the company had stopped manufacturing and selling audio tape recorders and players at the time the Section 8/9 renewal was filed. Bose did not contest this conclusion as to materiality on appeal. However, as to intent, Bose’s general counsel told the board that he believed the company met the “use in commerce” requirement for the renewal of the trademark by repairing damaged, previously-sold WAVE audio tape recorders and players and returning the repaired goods to the customers.

While the Federal Circuit found it unnecessary here to address the reasonableness of the general counsel’s belief, it stressed that “[t]here is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive.” Here, no showing was made of an intent to deceive the PTO. “Unless the challenger can point to evidence to support an inference of deceptive intent, it has failed to satisfy the clear and convincing evidence standard required to establish a fraud claim,” Michel wrote.

Accordingly, the court held that Bose did not commit fraud in renewing its WAVE mark and that the Board erred in canceling the mark in its entirety. Noting that the purpose of Section 8/9 renewal is to remove from the register automatically marks which are no longer in use, the court directed the board on remand to limit the cancellation to audio tape recorders and players.

The board’s decision was reversed, and the case was remanded.

Charles Hieken of Fish & Richardson, Boston, represented Bose.

The PTO, Arlington, Va., was represented by Raymond T. Chen, solicitor.

Susan J. Hightower of Pirkey Barber, Austin, Tex., argued for amicus curiae American Intellectual Property Law Association.

Read the In re Bose opinion.

Parties in Jammie Thomas Case File Motions Following $1.92 Million Jury Verdict for Recording Industry

August 28 , 2009

Following a June jury verdict awarding the recording industry $1.92 million in damages for the illegal file sharing of songs, the defendant Aug. 28 filed a motion to amend the judgment or for a new trial while the recording companies the same day moved for a permanent injunction against her (Capitol Records Inc. v. Thomas, D. Minn, No. 06-cv-1497 (MJD/RLE), 8/28/09.

The defendant’s motion argued that the award of $80,000 per infringed song is unconstitutional; the record companies argued that a permanent injunction is the only real relief they can obtain in this case because the defendant has vowed not to pay them.

A Whopping Jury Verdict.

In June, a jury in a Minnesota federal court found Mrs. Jammie Thomas found liable for willfully infringing 24 copyrighted songs and awarded Capitol Records, Sony BMG Music Entertainment, Arista Records LLC, and others $1.92 million in damages. In 2007, another jury in Minnesota had awarded $222,000 for the infringement of the same 24 songs, but the verdict was tossed by the judge due to faulty jury instructions.

After the June 2009 verdict, Cara Duckworth, spokeswoman for the Recording Industry Association of America said: “We appreciate the jury's service and that they take this as seriously as we do. We are pleased that the jury agreed with the evidence and found the defendant liable. Since day one, we have been willing to settle this case and we remain willing to do so.”

Defendant Says Verdict Is Unconstitutional.

However, Thomas’s attorneys on Aug. 28 filed a motion for new trial or to amend the judgment because the size of this verdict represents a denial of due process for their client even though the damages were awarded pursuant to the Copyright Act. They argued that the due process concerns today expressed in BMW of North America Inc. v. Gore, 517 U.S. 559 (1996), are rooted in a case involving statutory damages, St. Louis I.M. & S. Ry. Co. v. Williams, 251 U.S. 63 (1919). “The concerns that trigger the due process inquiry --- arbitrariness, variability, and unpredictability in awards --- are here in spades; of this, the nearly order-of-magnitude difference between the verdicts in the first and second trials of Mrs. Thomas is unquestionable evidence. An arbitrary award imposed pursuant to a statute is still arbitrary,” Thomas’s attorneys argued.

Her attorneys continued:

The notion that Congress decided that the award of statutory damages in this case was somehow appropriate or tailored to ensure deterrence is a fiction that the plaintiffs would have this Court adopt. The Congress that enacted the statutory-damages provision of the Copyright Act could not have had the kinds of illegal but noncommercial music downloading here at issue in mind. And because the range of conduct that triggers statutory damages under the Copyright Act is so wide, it cannot be that Congress tailored the damages available to any particular subset of that conduct. Rather, Congress left this tailoring to the ordinary process for assessment of punitive damages: a joint inquiry by jury and judge into what is just.

Here, “plaintiffs were not able to offer testimony about any actual damage done to them by Mrs. Thomas's conduct beyond perhaps $1.29 per song or $15 per album in lost sales,” and the award here of $80,000 per song is unjustifiable, Thomas’s attorneys argued. This judgment “should be altered or amended because the amount of the verdict rendered the Copyright Act's statutory-damages provision, as applied in her case, unconstitutional.”

Recording Companies Seek Permanent Injunction.

However, the recording companies insisted that a permanent injunction against Thomas is the only form of relief that they can ever really obtain in this case because Thomas “has remained unrepentant and obstinate, and has avowed that Plaintiffs will never recover any monetary relief from her.”  They argued that the illegal conduct here “will not be restrained by mere monetary damages, and that a permanent injunction in necessary to require that Defendant simply comply with the law under the Copyright Act.”

The recording companies further argued that the copyright jurisprudence before and after the Supreme Court’s decision in eBay Inc. v. MercExchange L.L.C., 547 U.S. 388 (2006), supports a presumption of irreparable harm in favor of their favor. Still they noted that, even if, as Thomas insists, irreparable harm must be shown in copyright cases after the patent ruling in eBay, irreparable harm has been proven in this case.

The recording companies went on to point out that they have met the four eBay factors required for permanent injunctions: (1) they have suffered clear irreparable injury as a result of Thomas’s illegal conduct; (2) the remedies available at law are inadequate to compensate them for their injuries; (3) the balance of hardships between the parties weighs heavily in favor of an injunction; and (4) the public interest would clearly be served by a permanent injunction.

Thomas was represented by Kiwi Camara of Camara & Sibley, Houston, Tex., and Garrett D. Blanchfield Jr. of Reinhardt, Wendorf & Blanchfield, St. Paul, Minn. The recording companies were represented by Timothy M. Reynolds and Andrew B. Mohraz of Holme Roberts & Owen, Denver, Colo., by Matthew J. Oppenheim of the Oppenheim Group, Potomac, Md., and by Felicia J. Boyd and Leita Walker of Faegre & Benson, Minneapolis, Minn.

Read Jammie Thomas’s filing for a new trial or to amend the judgment.

Read the filing by Capitol Records for a permanent injunction.

In Granting En Banc Petition in Ariad’s Suit Against Lilly, CAFC Will Define Scope of Written Description Requirement at 35 U.S.C. § 112, 1

August 14, 2009

The U.S. Court of Appeals for the Federal Circuit in a per curiam order on Aug. 21 granted Ariad Pharmaceuticals Inc.’s motion for an en banc rehearing as to whether its patent claims are invalid for failing to meet the written description requirement of Patent Act Section 112, 1 (Ariad Pharms., Inc. v. Eli Lilly & Co., Fed. Cir., No. 2008-1248, 8/21/09).

In this surprise move, the court vacates its April 3 invalidity ruling in favor of Lilly and asks the parties and amici to brief whether the written description requirement should no longer be treated as separate and distinct from the enablement requirement.

Briefs to Address if Written Description Is Separate, Distinct Requirement.

The parties in this appeal are requested to file new briefs addressing:

a. Whether 35 U.S.C. § 112, paragraph 1, contains a written description requirement separate from an enablement requirement?

b. If a separate written description requirement is set forth in the statute, what is the scope and purpose of the requirement?

Broad Clams and `Thin’ Description Help Lilly in Vacated April Ruling.

In this suit, Ariad sued Lilly for infringing a patent (6,410,516) directed to gene regulation, which Ariad licensed from Harvard University, the Massachusetts Institute of Technology, and the Whitehead Institute.

A jury found that the patent on “Nuclear factors associated with transcriptional regulation” was valid and infringed by Lilly's sales of Evista® and Xigris®, and a district court bench trial ruled that the asserted claims were directed to patentable subject matter and that the patent was not unenforceable due to inequitable conduct or prosecution laches.

Lilly appealed the court’s denial of its motion for judgment as a matter of law that the asserted claims were not infringed and were invalid, as well as the court’s ruling on inequitable conduct. Last April, the Federal Circuit reversed the invalidity ruling, finding that the claims failed to satisfy the written description requirement at 35 U.S.C. § 112, 1, but it affirmed the ruling that the patent was not unenforceable for inequitable conduct.

On the Section 112 issue, the appellate court noted the parties’ acknowledgement that the ’516 patent specification hypothesizes three classes of molecules potentially capable of reducing NF-κB activity: specific inhibitors, dominantly interfering molecules, and decoy molecules. However, Lilly argued that the asserted claims are not supported by written description because the specification fails to adequately disclose how the claimed reduction of NF-κB activity is achieved.  To Lilly, this disclosure amounts to little more than a research plan, and does not satisfy the patentee’s quid pro quo as described in Univ. of Rochester v. G.D. Searle & Co., 358 F.3d 916 (Fed. Cir. 2004).

Ariad argued that since the molecules are not actually claimed, it is entitled to claim the methods without describing the molecules.

The Federal Circuit rejected Ariad’s argument. Judge Kimberly A. Moore stated:

In Rochester, we held very similar method claims invalid for lack of written description. … Ariad attempts to categorically distinguish Rochester, Fiers,[ Fiers v. Revel, 984 F.2d 1164 (Fed. Cir. 1993)] and Eli Lilly, [Regents of the University of California v. Eli Lilly & Co., 119 F.3d 1559 (Fed. Cir. 1997)] because in those cases, the claims explicitly included the non-described compositions. … Ariad’s attempt to distinguish these cases is unavailing. Regardless of whether the asserted claims recite a compound, Ariad still must describe some way of performing the claimed methods, and Ariad admits that the specification suggests only the use of the three classes of molecules to achieve NF-κB reduction. Thus, to satisfy the written description requirement for the asserted claims, the specification must demonstrate that Ariad possessed the claimed methods by sufficiently disclosing molecules capable of reducing NF-κB activity so as to “satisfy the inventor’s obligation to disclose the technologic knowledge upon which the patent is based, and to demonstrate that the patentee was in possession of the invention that is claimed.”  …

In accordance with Rochester, the ’516 patent must adequately describe the claimed methods for reducing NF-κB activity, including adequate description of the molecules that Ariad admits are necessary to perform the methods. …

“The ’516 patent discloses no working or even prophetic examples of methods that reduce NF-κB activity, and no completed syntheses of any of the molecules prophesized to be capable of reducing NF-κB activity,” Moore continued, reviewing the disclosure. “The state of the art at the time of filing was primitive and uncertain, leaving Ariad with an insufficient supply of prior art knowledge with which to fill the gaping holes in its disclosure, she added. “Whatever thin thread of support a jury might find in the decoy-molecule hypothetical simply cannot bear the weight of the vast scope of these generic claims,” Moore stressed. “Here, the specification at best describes decoy molecule structures and hypothesizes with no accompanying description that they could be used to reduce NF-κB activity,” but “the asserted claims are far broader.”

Accordingly, the court concluded that the jury lacked substantial evidence for its verdict that the asserted claims were supported by adequate written description.

Linn Rejects Notion of Separate Written Description Requirement.

Judge Sharon Prost joined Moore’s opinion. While concurring with the invalidity result, Judge Richard Linn said that the panel opinion should have addressed an issue not handled in prior cases--whether the written description requirement is separate from that of enablement. Linn stated as follows:

I join the opinion of the court because I concur that it is supported by our precedent. I write separately to emphasize, as I have before, my belief that our engrafting of a separate written description requirement onto section 112, paragraph 1 is misguided. … As I observed in University of Rochester, section 112, paragraph 1 requires no more of the specification than a disclosure that is sufficient to enable a person having ordinary skill in the art to make and use the invention:

Section 112 of Title 35 of the United States Code requires a written description of the invention, but the measure of the sufficiency of that written description in meeting the conditions of patentability in paragraph 1 of that statute depends solely on whether it enables any person skilled in the art to which the invention pertains to make and use the claimed invention and sets forth the best mode of carrying out the invention. The question presented by 35 U.S.C. § 112, paragraph 1, is not, “Does the written description disclose what the invention is?” The question is, “Does the written description describe the invention recited in the claims—themselves part of the specification—in terms that are sufficient to enable one of skill in the art to make and use the claimed invention and practice the best mode contemplated by the inventor?” That is the mandate of the statute and is all our precedent demanded prior to Regents of the University of California v. Eli Lilly & Co., 119 F.3d 1559 (Fed. Cir. 1997).

As both this court and the Supreme Court have recognized, the claims—not the specification—define the invention. … After all, the claims, not the specification, provide the measure of the patentee’s right to exclude.”). The court’s invention of a separate written description requirement has “create[d] confusion as to where the public and the courts should look to determine the scope of the patentee’s right to exclude,” …, causing uncertainty “in how inventions are protected, in how the [Patent & Trademark Office] discharges its responsibilities, and in how business is conducted in emerging fields of law,” …

Aside from these general observations, I note that the written description requirement does separate mischief in this case. Because the court relies upon this requirement to reverse the district court, it does not reach the important enablement issue raised by Lilly. … We have long held that in order to survive the enablement requirement, the specification “must describe the manner and process of making and using the invention so as to enable a person of skill in the art to make and use the full scope of the invention without undue experimentation.” … To my knowledge, however, we have not specifically addressed this requirement in relation to the type of claims at issue here—that is, claims written broadly enough to cover any method for achieving a particular result. It may be, as Lilly argues, that such a claim can never be valid, since the specification cannot enable unknown methods. … This is an important issue that we have left unresolved. It is an issue that we would have been compelled to reach had the case been decided on enablement grounds, a basis found in section 112, instead of on written description grounds, a separate basis not justified under that section or any other provision of the Patent Act.

Apparently persuaded by the weight of Linn’s comments and the arguments raised by the parties, the Federal Circuit judges took a poll and decided that this issue “warrants en banc consideration.” The court invited the United States to file an amicus brief.

Ariad has 45 days to file its brief, to be followed by Lilly’s brief within 30 days.

Read the August 21 Ariad v. Eli Lilly en banc order.

Read the Univ. of Rochester v. G.D. Searle & Co. opinion.

Maker of Accused Titleist Pro V1 Golf Balls Gets Another Shot at Showing Callaway’s Patents Are Invalid

August 14, 2009

Infringement defendant Acushnet Co. is entitled to a new trial against Callaway Golf Co. because of the “irreconcilable inconsistency” in jury verdicts on whether the asserted patents were invalid for obviousness, the U.S. Court of Appeals for the Federal Circuit ruled Aug. 14 (Callaway Golf Co. v. Acushnet Co., Fed. Cir., No. 2009-1076, 8/14/09).

The court was puzzled how the jury found one asserted dependent claim invalid for obviousness, but found the independent claim, from which the dependent claim originated, was not invalid. Further, the court vacated a summary judgment of no invalidity for anticipation, reasoning that Acushnet had created a genuine issue of fact as to whether the patents were rendered invalid by a prior art invention.

Pro V1 Balls Enjoined After Callaway Patents Found Valid.

Callaway Golf Co. has four golf ball patents (6,210,293), (6,503,156),  (6,506,130), and (6,595,873) that are  known as the “Sullivan patents”.

Callaway sued Acushnet Co., alleging that three Titleist Pro V1 models infringed the patents.

Acushnet stipulated to infringement, but contended that the asserted claims were invalid for anticipation and obviousness. In November of 2007, the district court granted Callaway’s motion for summary judgment that the Nesbitt prior art ball (Patent. No. 4,431,193) does not anticipate as a matter of law.

After construing the claims, the district court granted summary judgment of no invalidity for anticipation under Section 102 of the Patent Act, 35 U.S.C. § 102.

In a later trial on obviousness under Section 103, the jury determined that—with the exception of dependent Claim 5 of the ’293 patent—none of the asserted claims was invalid. The district court entered final judgment that dependent Claim 5 of the ’293 patent was invalid for obviousness, but that independent Claim 4 (from which Claim 5 depends), as well as the other asserted claims, were not.

After denying Acushnet’s renewed motion for judgment as a matter of law of invalidity, the district court issued a permanent injunction against Acushnet.
Acushnet appealed.

Inconsistent Verdicts Mean Retrial on Obviousness.

Contesting the district court’s claim construction, Acushnet insisted that the determinations of no invalidity were based on a faulty reading of the phrase “cover layer having a Shore D hardness,” which appears in each of the asserted claims. In its view, the skilled artisan would read this to mean the hardness of a flat sample of the material used for the cover layer at issue, tested off the ball.

The Federal Circuit disagreed. The Sullivan patents make clear that, when read in context, this phrase means that hardness was to be measured on the ball, the court said, citing language and examples in the specifications and testimony from Acushnet’s own witnesses.

As to obviousness, Judge Timothy B. Dyk agreed that, when viewed in the light most favorable to the verdict, the jury could have reasonably concluded that Acushnet failed to prove invalidity due to obviousness. “The evidence before the jury did not compel a finding that all claim limitations were present in the prior art,” he said.

However, he went on to grant a new trial on obviousness because of the “irreconcilable inconsistency” in the jury verdicts that found dependent Claim 5 of the ’293 patent invalid for obviousness and Claim 4, from which Claim 5 originates, not invalid for obviousness.

Finally, the appellate court ruled that the district court improperly excluded certain testimony proffered by Acushnet as to anticipation and that this testimony raised a genuine question of material fact concerning anticipation by Nesbitt. Accordingly, it vacated the summary judgment of no anticipation and ordered the district to address this issue on remand.

The district court’s ruling was affirmed in part, reversed in part, vacated in part, and remanded.

The opinion was joined by Judges Richard Linn and Sharon Prost.

Callaway was represented by Frank E. Scherkenbach of Fish & Richardson, Boston. Acushnet was represented by Henry C. Bunsow of Howrey LLP, San Francisco.

Read the Callaway Golf Co. v. Acushnet Co. opinion.


District Courts Get High Deference in Denial of § 285 Attorneys’ Fees

August 12, 2009

A prevailing party denied attorneys’ fees under 35 U.S.C. 285 must prove that the district court clearly erred in failing to find the patent litigation “exceptional” or that it was harmed by the district court’s failure to entertain a motion for attorneys’ fees, the U.S. Court of Appeals for the Federal Circuit ruled Aug. 12 (Wedgetail Ltd.v. Huddleston Deluxe Inc., Fed. Cir., No. 2009-1045, 8/12/09).

Claim Construction Turns Case and the Fish’s Tail.

Wedgetail Ltd. and inventor Bobby King (Wedgetail) have a patent (6,857,220) directed to “flexible fishing lure tails and appendages”—i.e., fishing lures that simulate swimming motions when dragged through water.

After receiving an unfavorable claim construction in its patent infringement suit against Huddleston Deluxe Inc., Wedgetail Ltd. moved to dismiss all claims with prejudice and granted Huddleston a covenant not to sue.

The U.S. District Court for the Eastern District of Texas granted Wedgetail’s motion, dismissed all claims with prejudice, and ordered each party to bear its own costs and attorneys’ fees.

Huddleston appealed, arguing that it was entitled to attorneys’ fees pursuant to 35 U.S.C. § 285, which provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.”

However, the district court’s ruling was affirmed. The Federal Circuit found that that “the district court’s decision was not an abuse of discretion and, at most, amounts to harmless error.”
District Courts Given Great Deference in Fee Cases.

Judge Arthur J. Gajarsa observed that the determination of whether a case is exceptional and, thus, eligible for an award of attorney fees under § 285 requires two-steps: (1) the district court must determine whether a case is “exceptional,” a factual determination reviewed for clear error; (2) after determining that a case is exceptional, the district court must determine whether attorneys’ fees are appropriate, a determination that is reviewed for abuse of discretion.

Not only is clear and convincing evidence required to find a case “exceptional” to  warrant an award of attorneys’ fees, Gajarsa said, but, as stated in Epcon Gas Sys. Inc. v. Bauer Compressors Inc., 279 F.3d 1022 (Fed. Cir. 2002), there are only a limited universe of circumstances warrant a finding of exceptionality in a patent case: “inequitable conduct before the PTO; litigation misconduct; vexatious, unjustified, and otherwise bad faith litigation; a frivolous suit or willful infringement.”
Huddleston faulted the district court for failing to explain its decision not to award attorneys’ fees.

However, the Federal Circuit was unpersuaded. “Because of the high level of deference owed to district courts on this issue and the limited circumstances that could qualify as exceptional, this court has not imposed a blanket requirement that a district court provide its reasoning in attorney fee cases,” Gajarsa continued. Instead, he noted that the Federal Circuit only requires that a statement of the district court’s reasoning is generally necessary to enable review when an attorneys’ fees motion is granted, citing authority. Innovation Tech. Inc. v. Splash! Med. Devices LLC, 528 F.3d 1348 (Fed. Cir. 2008); Stephens v. Tech Int’l Inc., 393 F.3d 1269 (Fed. Cir. 2004).

In cases such as this, [t]he burden … rests on the appellant to prove that the district court clearly erred in failing to find a case exceptional or abused its discretion in failing to award attorney fees,” and Huddleston failed to meet this proof threshold, the Federal Circuit held. Gajarsa stated:

Here, Huddleston seeks attorney fees after Wedgetail voluntarily dismissed its claim with prejudice and granted a covenant not to sue. The record on appeal presents neither any apparent misconduct nor any judicial findings of misconduct on Wedgetail’s part. To the contrary, the record reflects that Wedgetail immediately sought dismissal of its infringement claims upon determining that it could not prevail under the district court’s claim construction. Huddleston, meanwhile, has not provided this court with any reason to believe that it might successfully obtain an attorney fee award if it were afforded the opportunity to present evidence to the district court on remand. To the district court, Huddleston merely stated: “Huddleston believes this is one of those exceptional and rare cases.” And to this court, Huddleston has offered a vague assertion that Wedgetail’s pre–claim construction infringement contentions were deficient. But it has provided no support whatsoever for its claims.

Simply put, Huddleston has failed to demonstrate either that the district court clearly erred in failing to find this case exceptional or that Huddleston was harmed by the district court’s failure to entertain a motion for attorney fees. A remand is, therefore, unwarranted.

In any case, the court noted that “Huddleston’s claim would appear to fail procedurally” because the company never filed a motion for attorneys’ fees with the district court or even stated the amount of the fee request, both of which are required under Fed. R. Civ. P. 54(d)(2)(B).

The district court’s ruling was affirmed.

The opinion was joined by Judges Alvin A. Schall and Timothy B. Dyk.

Andy Tindel of Provost Umphrey Law Firm, Tyler, Tex., argued for Wedgetail. Marc M. Gorelnik of Townsend, Townsend and Crew, San Francisco, argued for Huddleston Deluxe.

Read the entire Wedgetail v. Huddleston Deluxe opinion.


Evidence of Inventor Challenging PTO Rejections in District Court Is Excluded Since It “Should Have” Been Submitted During Prosecution

August 11, 2009

A federal district court reviewing the Board of Patent Appeals and Interferences’ rejection of an applicant’s claims for lack of written description in a suit under 35 U.S.C. § 145 properly excluded new evidence offered by the applicant because that evidence “should have” been submitted to the Patent and Trademark Office during prosecution, the U.S. Court of Appeals for the Federal Circuit ruled Aug. 11 (Hyatt v. Doll, Fed. Cir. No. 2007-1066, 8/11/09).

The majority reasoned that allowing an applicant to make unfettered submissions of new evidence in Section 145 suits would create de novo trials in district courts and undermine the deference afforded the PTO under case law and the Administrative Procedure Act. However, Judge Kimberly A. Moore strongly disagreed with the ruling, arguing that “[t]he majority takes away this patent applicant’s fundamental right to a `civil action to obtain [a] patent’ as granted by Congress in 35 U.S.C. § 145.”

Evidence Rebutting Rejections Not Submitted During Examination.

Inventor Gilbert Hyatt submitted a pro se patent application (Serial No. 08/471,702) relating to computer memory entitled “Improved Memory Architecture Having a Multiple Buffer Output Arrangement.” In October 1997, the examiner issued a final office action rejecting all 117 of Hyatt's claims for lack of adequate written, lac of enablement, and other grounds. In 1998, Hyatt—still representing himself—appealed the examiner's final rejection to the Board of Patent Appeals and Interferences.
Though reversing some of the examiner's written description and enablement rejections, the board sustained the written description and enablement rejections for 79 claims in a July 2002 decision. While Hyatt later requested a rehearing based on new arguments and citations, the board denied the motion, holding that his new evidence could and should have been presented during the original appeal briefing.

Hyatt filed this action in against the Patent and Trademark Office director under 35 U.S.C. § 145.

The U.S. District Court for the District of Columbia excluded Hyatt’s new evidence supporting the written description rehearing request, finding that Hyatt had been “negligent” in failing to submit it to the PTO during examination or in a timely manner to the board on appeal. After analyzing the case only on the board’s record, it found substantial evidence for the board’s rejections and granted summary judgment to the PTO on the ground that Hyatt's claims were invalid for inadequate written description.

Inventor “Should Have” Made Submission Earlier.

Hyatt appealed to the Federal Circuit, arguing that a plaintiff in a Section 145 action is entitled to submit additional evidence subject to no limitations other than those imposed by the Federal Rules of Evidence. However, the PTO argued that a Section 145 suit is not a trial de novo, that it is at least partly a form of appeal of PTO decisions, and that evidence not submitted to the PTO through the negligence, or at least the gross negligence, of the applicant is properly excluded in such an action.

Chief Judge Paul R. Michel began by stating that “Section 145 is silent regarding what evidence—or whether any new evidence—can be admitted in such an action.” Further, he noted that the statute does not expressly indicate what, if any, deference the district court must give to the findings of the Board, or our court to the rulings of the district court.

Where a statute provides for district court review, a de novo trial is generally not appropriate unless the statute specifically provides for it, and “Section 145 does not,” the Federal Circuit wrote. While “it was well established by the Supreme Court that review of agency decisions was generally on the agency record,” Michel continued, “the Supreme Court has never decided the issue of what kind of evidence or when evidence could be introduced in § 145 or Revised Statutes § 4915 actions, and there is no clear guidance to be gleaned from Supreme Court jurisprudence.”

Still, Michel said that “it has been the general practice of federal courts for over eighty years in certain circumstances to exclude evidence which a party could and should have introduced before the Patent Office but did not despite an obligation to do so.” Later citing a line of cases, he said that “[t]here is long history of excluding evidence not submitted to the PTO, and of a consensus that evidence may be excluded if it was not submitted to the PTO at least due to fraud, gross negligence, bad faith, or intentional suppression.” The court also noted that admitting new evidence without restriction would undermine the deference afforded the PTO consistent with the Administrative Procedure Act, 5 U.S.C. § 706, since applicants could simply “submit new evidence whenever they desired de novo review.”

It went on to hold that “under our caselaw Hyatt had an affirmative and specific duty to disclose to the PTO the evidence excluded by the district court, and was so notified by the PTO, but willfully refused to cooperate in the examination process.” Hyatt’s failure to disclose the evidence earlier in the prosecution warranted the evidentiary exclusion, it concluded.

Michel explained:

Hyatt was obligated to respond to the examiner's written description rejection by In re Alton, 76 F.3d 1168, 1175 (Fed. Cir. 1996), by explaining where in the specification support for each of these limitations could be found. We held in Alton that after studying the specification, an examiner can make out a prima facie case of lack of adequate written description, thus shifting the burden of production to the applicant, simply by identifying specific claim limitations and stating that despite reviewing the specification, he could not find support for those limitations.…

Any time from the January 7, 1997 office action rejecting Hyatt’s new claims for Hyatt’s failure to "specifically point out the support for" the claims pursuant to the examiner’s reading of MPEP § 714.02 up through when Hyatt filed his initial appeal brief before the Board on September 2, 1998, Hyatt could have declared where in his specification the written description support for each of the disputed limitations resided. After the examiner stated that he had read through the specification and could find no support for certain claim limitations, all Hyatt needed to do was show the examiner where in the specification support existed—something that should have been simple for him, the person most familiar with the specification. The Board noted, “It is far easier for appellant to describe where the limitation he wrote is disclosed than for the Office to prove that the limitation is not disclosed.” … Rejection as per Alton was in essence the examiner telling Hyatt to point to written description support in the specification for his claims. Hyatt, however, refused to cooperate, even though he necessarily possessed the information the examiner sought by the time he filed his application.

On these facts, the district court's exclusion of Hyatt's new evidence must be affirmed. The district court found that Hyatt was “negligent” in failing to submit the evidence disclosed in the Hyatt declaration to the PTO because he was obligated to do so, he had a fair opportunity to do so, and he failed to give an adequate explanation for his failure to submit it. … However, it is clear from the record that Hyatt willfully refused to provide evidence in his possession in response to a valid action by the examiner. Such a refusal to provide evidence which one possessed was grounds in Barrett [Co. v. Koppers Co., 22 F.2d 395 (3d Cir. 1927)] to exclude the withheld evidence. Similarly, we hold that in light of Hyatt's willful non-cooperation here, the district court did not abuse its discretion by excluding the Hyatt declaration.

Instead of rebutting the examiner's prima facie case that the claims were not supported by adequate written description, Hyatt argued that the burden of digging through the 238-page specification remained on the examiner, even though many limitations clearly do not appear verbatim in the specification. Before the Board, Hyatt submitted a table showing where some, but not all, of the substituent words of these limitations could be found, but this table was for many limitations of no help whatsoever in locating support for the claim limitations at issue. If the Board was wrong, it was because Hyatt purposefully kept it in the dark by not presenting evidence within his possession to overcome the examiner's rejections for lack of written description. This blatant non-cooperation was willful. Allowing Hyatt to escape the consequences of his refusal to timely submit his own information to the PTO that he was required by law and requested by the examiner to submit would hardly be consonant with the APA or the legislative purpose of § 145.

A Strong Dissent From Judge Moore.

However, Judge Kimberly A. Moore voiced a strong dissent to the majority’s ruling, stating:

The majority takes away this patent applicant’s fundamental right to a “civil action to obtain [a] patent” as granted by Congress in 35 U.S.C. § 145. Today the majority decides that a patent applicant may not introduce the inventor’s declaration in a § 145 proceeding before the district court because the inventor had an “affirmative duty” or “obligation” to disclose this evidence to the PTO. His failure to fulfill his affirmative duty, by not disclosing evidence he could have disclosed to the PTO, results in such evidence being excluded from the district court § 145 proceeding. The district court made no fact findings indicating willful withholding or intentional suppression; in fact, the district court did not even conclude that Mr. Hyatt’s conduct amounted to gross negligence, but rather excluded the evidence under a negligence “could have” standard. Nor did the PTO even argue, at any stage of these proceedings, that Mr. Hyatt’s conduct in this case was willful or intentional. Nonetheless, the majority concludes that the applicant “owed,” … , the PTO all evidence he possesses that is responsive to a rejection and that failure to fulfill this newly created “affirmative duty” amounts to willful withholding as a matter of law. There are only two possible ways to interpret the majority’s willful withholding determination. Either the majority is engaging in appellate fact finding or it is determining that breach of its newly created affirmative duty is willful withholding as a matter of law. The latter leaves no room for fact finding in individual cases and takes the discretion completely away from the trial court. Ultimately, the majority’s sweeping exclusionary rule is far broader than anything argued by the parties. …
Congress enacted a statute that permitted a “civil action” and gave patent applicants the right to present new evidence in a trial in the district court despite that this right would allow the applicant to introduce “evidence that they could have brought in before” the PTO, potentially resulting in “dragging an opponent through a second time. … Congress granted patent applicants the right to a civil action in the district court distinct from their right of appeal. It is our obligation to protect the distinction Congress codified in § 145, not to reweigh the virtues of that decision. The § 145 proceeding is a civil action and ought to be governed by the same Federal Rules of Evidence that govern other civil actions. Patent cases do not need, nor should they have, special rules of evidence.…

The statute itself distinguishes the appeal that may be brought pursuant to 35 U.S.C. § 141 because a § 145 action is not an appeal; it is a “civil action.” The statute obligates the district court to adjudicate the facts in this civil action. Because the statute affords no limitations on the type of evidence that ought to be admissible in a civil action brought under § 145, the standard Federal Rules of Evidence that govern all civil actions ought to govern. The legislative histories of § 145 and its predecessor statute, section 4915 of the Revised Statutes, repeatedly and without contradiction indicate that the intent of Congress was to permit a patent applicant to bring a new suit built upon a new record. …
The majority’s decision to start excluding evidence in § 145 actions is contrary to the statute, legislative history, Supreme Court precedent, and the long-standing practice of considering such evidence in our cases.…

The majority holds that by failing to offer his testimony to the PTO, Hyatt has failed to satisfy “an affirmative and specific duty.” … In this way, this new affirmative duty for prosecution seems to resemble inequitable conduct, though here the applicant is penalized regardless of their intent. The majority explains: “Hyatt was obligated to respond to the examiner's written description rejection by In re Alton, 76 F.3d 1168, 1175 (Fed. Cir. 1996), by explaining where in the specification support for each of these limitations could be found.” … The majority continues: “Hyatt was clearly on notice of his obligation to provide evidence or explanation to the examiner to rebut the written description rejections,” … , and “he was required by law” to provide it. … With all due respect to the majority, I do not believe a new “affirmative duty” to disclose is warranted, nor do I believe Hyatt was “required by law” or “obligated” to provide his declaration to the PTO. While Mr. Hyatt may have failed to overcome the rejections or to convince the Board based upon his submissions to the PTO, he did not fail to fulfill an “obligation” or “affirmative duty” as the majority alleges.

The district court’s grant of summary judgment was affirmed

Judge Timothy B. Dyk joined Michel’s opinion.

Hyatt was represented by Kenneth C. Bass III of Sterne Kessler Goldstein & Fox, Washington, D.C. The PTO, Arlington, Va., was represented by William Jenks, associate solicitor.

Read the Hyatt v. Doll opinion.

Read the In re Alton opinion.

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