Summaries of recent reported decisions of the Federal Circuit prepared by Irfan Lateef.
Federal Circuit Reverses Finding of Infringement Where Patentee Fails to Overcome Strong Presumption That Markush Groups Are Closed
In Shire Development, LLC v. Watson Pharmaceuticals, Inc., Appeal No. 2016-1785, the Federal Circuit reversed and remanded a district court’s finding of infringement because the patentee did not overcome the strong presumption that the “consisting of” language closes a Markush group to unrecited elements.
Shire sued Watson for infringement of a patent directed to a controlled-release oral pharmaceutical composition of mesalamine. The asserted claims recite a multi-matrix composition for controlling the rate of drug release. In particular, the claims require an outer hydrophilic matrix, which consists of compounds selected from a group, and an inner lipophilic matrix. Watson’s accused product includes magnesium stearate in its accused “outer hydrophilic matrix,” a lipophilic substance not listed in the claimed group of compounds. Nonetheless, the district court found that Watson infringed. The Federal Circuit reversed and remanded with instructions to enter judgment of non-infringement.
The phrase “consisting of” creates a strong presumption that the claim element is closed, which can be overcome when the additional element, step, or ingredient is unrelated to the invention. Shire argued, and the district court agreed, that the magnesium stearate is unrelated to the invention because the hydrophilic components of Watson’s outer matrix overwhelmed the lipophilic properties of the magnesium stearate used in Watson’s product. Relying on fact findings by the district court, the Federal Circuit concluded that the magnesium stearate in Watson’s product maintained its lipophilic character, and thus related to the invention structurally and functionally. The Federal Circuit refused to impose a requirement that would restrict “related” components to only those that advance a Markush group’s inventive elements, noting that such a requirement would in effect equate the scope of a Markush group’s “consisting of” language with either “comprising” or “consisting essentially of.” The Federal Circuit also held that examples in the specification disclosing magnesium stearate in the outer matrix were insufficient to overcome the strong presumption that Markush groups are closed.
Deletion of Limiting Language in Provisional Application Broadens Claims in Non-Provisional Application
In MPHJ Technology Investments v. Ricoh Americas Corporation, Appeal No. 2016-1243, the Federal Circuit held that limiting language in a provisional application does not limit the scope of the claims if the non-provisional application omitted the language at issue and stated that the limitation was optional.
Ricoh, Xerox, and Lexmark requested an inter partes review of a patent owned by MPHJ. That patent described a system and method of scanning with a device at one location and copying to a device at another location. MPHJ argued that the claims should be construed narrowly to require no user intervention between the copying and destination steps. MPHJ based its argument on limiting language in the original provisional application. However, that language was omitted from the non-provisional application. The PTAB disagreed and construed the claims broadly to include scanning and emailing, with or without user intervention. Based on that interpretation, the PTAB invalided the claims over the cited prior art.
The Federal Circuit affirmed the Board’s decision. The Federal Circuit acknowledged that the provisional application contained language that may have limited the scope of the invention to a one-step process. However, the non-provisional application omitted that language and stated that a single-step operation was optional. The Federal Circuit held that one skilled in the art would find that change significant and that it would indicate that a one-step process was optional. Thus, because user intervention was permitted, all claims were anticipated or obvious over the references cited by the Board.
Judge O’Malley dissented in part, arguing that, because the issued patent incorporated the provisional application by reference, “the patentee did the opposite of deleting any references to a single-step operation.”
Federal Circuit Remands IPR Final Decision For Inadequate Obviousness Analysis, Sidesteps Issue of Proper Claim Construction Standard
In Personal Web Technologies, LLC v. Apple, Inc., Appeal No. 2016-1174, the Federal Circuit held that when making a determination of obviousness in an IPR, the PTAB must make findings, supported by evidence and explanation, that (1) the cited prior art discloses all of the elements of the challenged claims and (2) that a person of ordinary skill in the art (“POSA”) would have been motivated to combine the cited prior art with a reasonable expectation of success.
Apple petitioned for inter partes review of a Personal Web Technologies (“PWT”) patent directed towards naming files based on mathematical functions. The Board instituted review and held the claims unpatentable as obvious over Apple’s cited references.
At the Federal Circuit, PWT asserted that the Board had not adequately supported its conclusion that the claims were obvious, arguing that the Board had not supported its finding that the cited references disclosed all the elements of the claims or its finding that a POSA would have been motivated to combine the references with a reasonable expectation of success. The Federal Circuit agreed, holding that the Board’s decision had several flaws. First, the Board’s decision cited one reference as disclosing a certain element of the claims, whereas Apple’s petition relied solely on the other reference. This discrepancy was not addressed by the Board. In addition, the Board’s decision did not explain how a cited passage from a reference met a claim limitation. Finally, the Board found the combination of cited references “would have allowed for” a POSA arrive at the claimed invention. The Federal Circuit explained that the mere possibility of combining prior art references does not establish obviousness—a motivation to combine and a reasonable expectation of success are necessary. Based on these inadequacies, the Federal Circuit vacated the Board’s obviousness determination and remanded for reconsideration.
The Federal Circuit also declined to decide whether the broadest-reasonable-interpretation (“BRI”) or the district court claim-construction standard should be applied in an IPR when the patent at issue expires after the Final Written Decision but while a rehearing request is pending before the Board. Instead, the Federal Circuit held that the Board’s claim construction was correct under either standard because the meaning of the claim language was plain from the face of the claims. The Federal Circuit pointed out that the new 18-month rule allowing a party to request a district court-type construction, 37 C.F.R. § 42.100(b), did not apply because the rule was not in effect for this IPR and, in any event, the time from filing the petition to expiration of the patent exceeded 18 months.
Federal Circuit Rejects Non-Practicing Entity’s Claim That Being Forced to Litigate in California Was Unfair
In Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, Appeal No. 2015-1919, the Federal Circuit held that to exercise specific personal jurisdiction, a court must find (1) sufficient minimum contacts between the party and the forum state, and (2) it is “reasonable and fair” to do so. In particular, the Federal Circuit found it was reasonable and fair to exercise jurisdiction over a party that sent notice letters into the forum state, visited the forum state to discuss its infringement contentions, and had previously litigated in the forum state.
Papst, a German non-practicing entity, sent several notice letters to Xilinx alleging patent infringement. After Xilinx failed to respond, Papst sent representatives to Xilinx’s headquarters in California to discuss its infringement contentions. No agreement was reached, and Xilinx filed a declaratory judgment action in the Northern District of California seeking a declaration of non-infringement and invalidity. The District Court dismissed the suit for lack of personal jurisdiction. Xilinx appealed.
Papst did not dispute that its actions, including sending notice letter to Xilinx and visiting Xilinx in California satisfied the minimum contacts requirement. Instead, Papst argued that exercise of personal jurisdiction was not “reasonable and fair.” It is presumptively reasonable to exercise jurisdiction where minimum contacts have been established. To defeat jurisdiction, a party must show a “compelling case” under Burger King, that jurisdiction is unreasonable. The five Burger King factors include: (1) the burden on the defendant, (2) the forum state’s interest in adjudicating the dispute, (3) the plaintiff’s interest in obtaining convenient and effective relief, (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental substantive social policies.
Papst focused its argument on the first factor, relying on Redwing’s holding that although warning letters satisfy the requirements of minimum contacts, such letters cannot satisfy the fairness prong. Redwing explained that to require a defendant to answer in a distant foreign forum when its only contacts were efforts to give proper notice of its patent rights placed an undue burden on the defendant. The Court rejected Papst’s argument, finding that the burden on the defendant was minimal. Papst is a non-practicing entity residing outside of the United States, and has done more than merely send a notice letter into California, including traveling to California to discuss infringement contentions and a licensing offer. Papst even chose to file seven patent infringement lawsuits in California in the past.
Accordingly, the Federal Circuit held that exercising specific personal jurisdiction over Papst in California was proper.
Federal Circuit Affirms Preliminary Injunction in Lawnmower Case
In Metalcraft Of Mayville, Inc. v. The Toro Company, Appeal Nos. 2016-2433, 2016-2514, the Federal Circuit found that the district court did not abuse its discretion in granting a preliminary injunction against an accused infringer.
The district court granted Metalcraft’s motion for a preliminary injunction against Toro for its riding lawnmowers with a suspended operator platform which infringed Metalcraft’s patent. The asserted claims require “an operator platform that supports the seat and an entire body of an operator during use.” Toro argued that its mowers do not support the “entire body of an operator” because the steering controls are mounted to the chassis rather than suspended operator platform. The Federal Circuit determined that the specification and the unasserted dependent claims show that the claim element at issue does not require the steering controls to be mounted on the suspended operator platform.
The Federal Circuit also found that the district court did not abuse its discretion in rejecting Toro’s obviousness defense based on a lack of motivation to combine prior art references. Toro failed to provide an explanation as to how or why one of skill in the art would have combined the two particular prior art references at issue. Toro merely identified a problem that the prior art reference sought to solve. “However, ‘knowledge of a problem and motivation to solve it are entirely different from motivation to combine particular references.’”
Finally, the Federal Circuit held that the district court did not abuse its discretion in finding that Metalcraft would likely suffer irreparable harm absent an injunction. Metalcraft argued that irreparable harm would ensue because a lost sale may potentially be the loss of a lifelong customer. The district court did not abuse its discretion here since even one of Toro’s employees stated that some customers prefer to purchase an entire line of products from the same manufacturer. The Federal Circuit analogized this type of irreparable harm to “ecosystem effects,” where a company’s customers will continue to buy and recommend that company’s products, as described in Apple v. Samsung, 809 F.3d 633 (Fed. Cir. 2015).
Covered Business Method Patents Must Include At Least One Claim Containing a Financial Activity Element
In Secure Axcess, LLC v. PNC Bank National Association, et al., Appeal No. 2016-1353, the
Federal Circuit held that method claims do not fall under CBM review where the claims are only incidental to a financial activity. A CBM patent requires that the claim contains a financial activity element.
The Federal Circuit reversed the Board’s conclusion that the patent at issue is a CBM patent. The court held that the Board misinterpreted the statutory definition of a covered business method patent under AIA § 18(a)(1)(E) and improperly broadened the scope of the statute. The AIA defines a CBM patent as one which “claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service . . . .” AIA § 18(d)(1). The Federal Circuit clarified that for a patent to fall within CBM review, it must include a claim that contains a financial activity. Specifically, at least one claim, when properly construed in light of the written description, must contain a finance-related activity. The Federal Circuit cited to Versata, 793 F.3d 1306 (Fed. Cir. 2015), Blue Calypso, 815 F.3d 1331 (Fed. Cir. 2016), and SightSound, 809 F.3d 1307 (Fed. Cir. 2015) as exemplary cases where the patents at issue were held to be within the CBM provision.
In this case, the claims were directed to “systems and methods for authenticating a web page.” The claims’ only connection to a financial activity was that the invention could be used, for example, on a commercial or bank website. Accordingly, the Federal Circuit held that the method and apparatus claimed by the patent were not subject to CBM review.
No Infringement Under 271(f)(1) for Supply of Single Component
In Life Technologies v. Promega, the Supreme Court held that the supply of a single component of a multicomponent invention for combination abroad does not give rise to liability under 35 U.S.C. § 271(f)(1) because the phrase “substantial portion” in that provision refers to a quantitative measurement, and a single component cannot constitute a “substantial portion” under the statute.
Life Technologies licensed from Promega rights to practice patent claims directed to kits for genetic testing in certain fields of use worldwide. Life Technologies manufactured one component of the kit, the Taq polymerase enzyme, in the United States, and shipped it to the United Kingdom. The Taq polymerase was then assembled with the four other components of the kit, which had been manufactured in the UK. When Life Technologies sold kits outside the licensed fields of use, Promega sued under §271(f)(1) of the Patent Act, which prohibits the supply from the United States of “all or a substantial portion of the components of a patented invention” for combination abroad. While a jury returned a verdict of infringement, the District Court entered judgment as a matter of law in favor of Life Technologies. The Federal Circuit reversed, holding that a single important component could constitute a “substantial portion” of the components of an invention under §271(f)(1), and found the Taq polymerase to be such a component. Life Technologies appealed, and the Supreme Court granted certiorari.
The Court found that the reference to a “substantial portion” in §271(f)(1) referred to a quantitative measurement rather than a qualitative one. The context of the statute points to a quantitative meaning of the term “substantial,” in part because the neighboring words “all” and “portion” convey a quantitative meaning. Additionally, a qualitative reading would render the modifying phrase “of the components” unnecessary. The Court further found that a single component could not constitute a “substantial portion” for the purpose of triggering §271(f)(1) liability. The Court contrasted the plural use of “components” in §271(f)(1) with §271(f)(2), which permits liability for overseas supply of “any component of a patented invention that is especially made or especially adapted for use in the invention” from the United States. Reading §271(f)(1) to cover a single component would “leave little room for §271(f)(2),” which refers in the singular to “any component.” The Court thus reversed and remanded to the Federal Circuit.
Federal Circuit Vacates Reexam Decision Where Board Adopted Attorney Argument As Factual Findings
In Icon Health And Fitness, Inc., v. Strava, Inc., Appeal No. 2016-1475, the Federal Circuit held that the PTO may consider legal conclusions of obviousness by experts, but the expert papers must make adequate factual findings and provide a satisfactory explanation as to determinations of obviousness.
During an inter partes reexamination, an examiner found several claims of ICON’s patent obvious. On review, the PTAB affirmed, but issued a catch-all statement that, to the extent the PTAB did not address any specific arguments, it agreed with the examiner’s findings. The examiner’s findings, however, incorporated by reference statements by Strava’s witness and Strava’s attorney argument. ICON appealed to the Federal Circuit.
ICON argued that the PTAB’s principal error was its reliance on Strava’s expert testimony, which included opinions on the ultimate legal conclusion of obviousness. The Federal Circuit disagreed and held that the PTAB could consider such opinions, so long as other aspects of the expert’s declaration relate to underlying factual findings. The Federal Circuit also confirmed that the PTAB’s incorporation-by-reference could sufficiently support an obviousness finding in some circumstances. However, for some claims, the obviousness finding lacked factual support because the multi-layered incorporation-by-reference was ultimately based on attorney argument. The PTAB’s adoption of Strava’s argument did not “transform Strava’s attorney argument into factual findings or supply the requisite explanation that must accompany such findings.” Accordingly, the Federal Circuit vacated and remanded the PTAB’s findings for those claims.
Dosage Requirement for Rats Found in Provisional Application Does Not Support Claimed Dosage Requirement for Humans
In Los Angeles Biomedical v. Eli Lilly And Company, Appeal No. 2016-1518, the Federal Circuit held that a patent which claimed a specific drug dosage for humans could not claim priority to a provisional application which only described the dosage for rats.
Eli Lilly requested inter partes review of a patent directed towards a method of treating erectile dysfunction owned by Los Angeles Biomedical (“LAB”). LAB argued that the cited prior art references were not prior art under § 102(b) because the patent at issue was entitled to priority back to a provisional application. This provisional application did not disclose the claimed “up to 1.5 mg/kg/day” dosage limitation, but disclosed a rat study which described the dosage for rats. LAB argued that a POSITA could calculate the corresponding human dosage from the rat dosage via a conversion method described in an uncited reference, and that therefore the provisional application supported the non-provisional application. The Board rejected the priority claim because one skilled in the art would have had to investigate the prior art and make various assumptions.
The Federal Circuit found that LAB’s argument for priority would have required a POSITA to make numerous assumptions about the physical characteristics of rats and humans, and a POSITA would also have needed to know of an uncited journal article for calculating an interspecies dosage conversion. The Court affirmed the Board’s decision on priority because “proof of priority requires written description disclosure in the parent application, not simply information and inferences drawn from uncited references.”
Prior Art Reference Which Disclosed Chronic Administration of Drug Did Not Disclose Daily Administration of Drug
In Eli Lilly And Company v. Los Angeles Biomedical Research Institute at Harbor-UCLA Medical Center, Appeal No. 2016-1547, the Federal Circuit held that a reference which disclosed subjects taking a drug most days did not anticipate claims requiring daily administration for 45 days or more.
After the Board held that a prior art reference did not anticipate LAB’s claims because it did not disclose the administration of the drug “at a dosage up to 1.5 mg/kg/day for not less than 45 days,” Eli Lilly appealed to the Federal Circuit.
Eli Lilly relied on an example in the reference where some subjects took the drug “greater than 70% of the time” over the course of 8 or 12 weeks to anticipate the daily administration for 45 days or longer limitation. The Federal Circuit rejected this argument because the example included patients not taking the drug daily up to 30% of the time.
Eli Lilly also argued that the same reference anticipated the daily administration for 45 days or longer limitation because it defined the term “chronic administration” to mean “regular administration for an extended period, preferably daily for three or more days, and still more preferably as long as the patient suffers from erectile dysfunction.” Eli Lilly argued that a POSITA would understand that erectile dysfunction can last longer than 45 days. The Federal Circuit again rejected this argument because the reference did not expressly teach daily treatment for at least 45 days.