Contributed by Knobbe Martens
Grammar School: District Court Erred in Departing from Claim Language to Adopt Construction that Encompassed All Disclosed Embodiments
In Simo Holdings Inc. v. Hong Kong Ucloudlink Network, Appeal No.19-2411, the Federal Circuit held that a claim construction that excludes an embodiment disclosed in the specification is proper where the claim language and intrinsic evidence sufficiently indicate that the disclosed embodiment is not within the scope of the claim.
SIMO Holdings Inc. (SIMO) sued Hong Kong uCloudlink Network (uCloudlink) for patent infringement, asserting claims directed to apparatuses and methods for reducing roaming charges on cellular networks. The parties cross-moved for summary judgment on infringement. The district court granted summary judgment of infringement and denied uCloudlink’s cross-motion based on its conclusion that one of the device components recited in the claims (a “non-local calls database”) was not required to establish infringement. The district court reasoned that the contrary construction advanced by uCloudlink “although grammatically appealing, would contradict the specification,” which characterized the non-local calls database as an optional component of the invention. Following a jury determination that infringement had been willful, the district court entered a final judgment awarding SIMO $8.2 million in damages. uCloudlink appealed.
The Federal Circuit reversed the summary judgment rulings, concluding that the district court erred in its claim construction. The Federal Circuit explained that the district court’s construction departed from traditional principles of grammar and was based on a misunderstanding of Federal Circuit precedent. While construing claims to encompass disclosed embodiments is generally favored, the Federal Circuit emphasized that this rule is not absolute and must give way where the claim language and intrinsic evidence demonstrate that a particular embodiment is excluded from the scope of the claim. The Federal Circuit determined that, under the correct claim construction, uCloudlink was entitled to summary judgment of noninfringement. The Federal Circuit rejected SIMO’s request for remand, finding that SIMO had failed to identify a triable issue of fact with respect to infringement.
Controlling Your Own Destiny: Patent Owner Unilaterally Moots Appeal to Preserve Favorable PTAB Determination
In Abs Global, Inc. v. Cytonome/St, LLC, Appeal No. 19-205, the Federal Circuit held that in 2017, Cytonome sued ABS for infringement of U.S. Patent No. 8,529,161. In response, ABS petitioned for inter partes review of the ’161 patent. The PTAB issued a final written decision that invalidated some, but not all, of the challenged claims. After the final written decision issued, the district court granted ABS’s motion for summary judgment of non-infringement. ABS appealed the portion of the PTAB’s final written decision holding some claims not unpatentable. In response, Cytonome filed a brief that included an affidavit disclaiming any appeal of the district court’s judgment of non-infringement of the ’161 patent, and argued ABS’s appeal was moot.
The Federal Circuit applied the doctrine of voluntary cessation and agreed that Cytonome’s affidavit mooted ABS’s appeal. The court held Cytonome’s affidavit demonstrated the Cytonome could not reasonably be expected to resume its enforcement efforts. Thus, the Federal Circuit held, there was no present injury in fact to ABS because ABS’s only alleged injury was the threat of infringement in the parallel district court proceeding. Moreover, there was nothing in the record suggesting a substantial risk of future ABS infringement. The Federal Circuit ruled that it was not enough for ABS to allege that Cytonome could conceivably reassert the ’161 patent against a future product without concrete evidence the product was at least in development. Because Cytonome’s affidavit encompassed all of ABS’s allegedly unlawful conduct, and because ABS did not rebut Cytonome’s showing that the Cytonome’s conduct was not reasonably likely to recur, the doctrine of voluntary cessation eliminated any case or controversy and mooted the IPR appeal.
The Federal Circuit rejected ABS’s argument that Fort James Corp. v. Solo Cup Co., 412 F.3d 1340 (Fed. Cir. 2005), created an exception to the mootness doctrine. The court held that Fort James stood for nothing more than the principle that a district court had the power to decide both questions posed in alternative grounds for relief when its decree was subject to review by a court of appeal. Fort James was therefore inapplicable because no determination in the IPR proceeding could provide an alternative ground for judgment in the district court proceeding.
No Kitchen Confusion: When Comparing Marks, The Trademark Board Can Give Less Weight To Shared Terms If The Terms Are Suggestive Or Descriptive
In Quiktrip West, Inc. v. Weigel Stores, Inc., Appeal No. 20-1304, the Federal Circuit held that when comparing marks under the Dupont factors, the Board may give less weight to shared terms that are highly suggestive if not descriptive. Further, a party’s willingness to alter its mark multiple times to prevent customer confusion demonstrates a lack of bad faith.
In 2014, Weigel Stores, Inc. began using the stylized mark W KITCHENS in connection with food and beverages sold in its stores. The mark as originally used by Weigel appeared as follows:
QuikTrip West, Inc. sent Weigel a cease and desist letter requesting that Weigel cease using the W KITCHENS mark on the basis that it was confusingly similar to QuikTrip’s registered QT KITCHENS mark, shown below:
In response, Weigel modified its mark twice before applying to register the third and final iteration of its mark, shown below:
QuikTrip then filed an opposition to Weigel’s mark under 15 U.S.C. § 1052(d), alleging that it would create a likelihood of confusion with its QT KITCHENS mark. The Board dismissed QuikTrip’s opposition, finding that there was no likelihood of confusion under the DuPont factors. QuikTrip appealed.
On appeal, QuikTrip challenged the Board’s analysis of two DuPont factors: the similarity of the marks and Weigel’s alleged bad faith. Regarding the similarity of the marks, the Federal Circuit found that the Board properly determined that, when comparing the marks, it should give less weight to the shared term KITCHEN(S) because “kitchen” is a highly suggestive if not descriptive word. Further, the Board correctly gave more weight to the dominant, distinct portions of the marks, namely, Weigel’s encircled W and QuikTrip’s QT. Regarding Weigel’s alleged bad faith, QuikTrip argued that the Board failed to meaningfully consider evidence of Weigel’s intentional copying of elements of QuikTrip’s mark, including Weigel’s alleged photographing of QuikTrip’s stores and its review of QuikTrip’s marketing materials. In response, Weigel argued that its willingness to alter its mark multiple times to prevent customer confusion should negate any inference of bad faith. Both the Board and the Federal Circuit agreed with Weigel and the Federal Circuit affirmed the decision of the Board.
Evidence Supports Prior Art’s Public Accessibility but Not the Board’s Adoption of an Unpresented Theory of Anticipation
By Benjamin Van Adrichem
In M & K Holdings, Inc. v. Samsung Electronics Co.,Ltd., Appeal No. 20-1160, the Federal Circuit held that title-searchable publications shared on a prominent standards-setting organization’s website are printed publications. The Board committed procedural error by adopting a theory of anticipation that could not be reconciled with petitioner’s theory of obviousness.
Samsung requested inter partes review of M&K’s patent related to compressing video files. Samsung’s petition relied upon references “WD4-v3,” “Park” and “Zhou,” which were generated in connection with the work of a joint task force (“JCT-VC”) of representatives from technology companies, universities and research institutions who establish industry standards for high-efficiency video coding. Rather than challenge the substance of Samsung’s petition, M&K argued that these references were not printed publications under 35 U.S.C. § 102 for lack of public accessibility. The Board disagreed, finding that JCT-VC was a prominent organization, the references were discussed at JCT-VC meetings, and they were posted on the organization’s public website before the priority date of the challenged patent. Consequently, the Board found all challenged claims unpatentable, including a finding that claim 3 was anticipated by WD4-v3 despite Samsung only asserting that claim 3 was obvious.
The Federal Circuit affirmed the Board’s findings regarding public accessibility of the references, but vacated the determination that claim 3 was anticipated. Regarding public accessibility, M&K only disputed whether the references could have been located by exercising reasonable diligence. The Federal Circuit, however, noted a wealth of evidence in the Board’s opinion on this topic, such as the discussion of the references at conferences, the prominent status of JCT-VC, word of mouth knowledge of the JCT-VC website, and title-search functionality for locating references on this website. While M&K made much of the website’s landing page lacking search functionality or even an indication of a document repository, the Federal Circuit rejected these arguments in concluding that the dispositive question was whether a user of the website could have located the references through reasonable diligence.
The Federal Circuit held that the Board committed procedural error in finding anticipation of claim 3. Samsung only asserted that claim 3 was obvious over WD4-v3, Park and Zhou—not anticipated by WD4-v3 as the Board found—and Samsung expressly stated that WD4-v3 did not disclose one of the limitations. Because M&K was not on notice that the Board might adopt an anticipation theory of unpatentability for claim 3, the Federal Circuit vacated and remanded for further analysis.
No Patent Eligibility Reward for Customer Loyalty Program Computer System
In Cxloyalty, Inc. v. Maritz Holdings Inc., Appeal No. 20-1307, the Federal Circuit held that a claim implementing an abstract idea using conventional techniques is patent ineligible.
CxLoyalty petitioned for covered business method (“CBM”) review of claims of Maritz’s patent relating to a computerized system that permits a customer of a loyalty program to redeem loyalty points for rewards offered by vendors without the need for human interaction.
The Board concluded that the original claims were patent ineligible but that Maritz’s proposed substitute claims were patent eligible. At step one of the two-step framework for evaluating patent eligibility, the Board determined that the original and substitute claims were directed toward “facilitating, or brokering, a commercial transaction” between “a purchaser using a first form of value (i.e., a rewards program participant using points in whole or in part) and a seller transacting in a second form of value (i.e., a vendor system which transacts purchases in currency,” which the Board concluded was a “fundamental economic practice long prevailing in commerce” and, therefore, an abstract idea. At step two, the Board concluded that the original claims were patent ineligible because they merely recited “generic and conventional computer components . . . and functionality for carrying out” the abstract idea, but that the substitute claims were patent eligible because, based primarily on Maritz’s expert’s testimony, they contained an inventive concept.
On appeal, the Federal Circuit concluded that both the original and substitute claims were directed to patent ineligible subject matter. At step one, the Federal Circuit agreed with the Board, concluding that because the original and substitute claims were directed to transfers of information relating to a longstanding commercial practice, the claims were directed to an abstract idea. At step two, the Federal Circuit determined that the original and substitute claims were directed toward nothing more than applying the foregoing abstract idea using techniques, whether considered individually or as an ordered combination, that were well understood, routine, and conventional. Maritz argued that its expert’s testimony established that the invention was a technological solution to a technological problem. The Federal Circuit disagreed, reasoning that the expert testimony was conclusory and that the purportedly solved technological problem of connecting the loyalty awards system with those of third-party vendors while keeping the overall nature of the transaction hidden was not a technological problem requiring a solution that improved the performance of the computer system itself. Moreover, the claims did not recite a solution to the problem Maritz identified. Accordingly, the Federal Circuit affirmed the Board’s determination that the original claims were patent ineligible and reversed the Board’s determination that the substitute claims were patent eligible.
When Can the PTO Extend a Patent’s Term Due to Delay From an Appeal?
In Chudik v. Hirshfeld, Appeal No. 20-1833, the Federal Circuit held that an examiner’s self-reversal may not qualify as “reversing an adverse determination.”
In 2006, Chudik applied for a patent for a shoulder surgery guide. Following the examiner’s second rejection of the pending claims in 2010, Chudik requested continued examination. In 2014, following the examiner’s final rejection of the pending claims, Chudik appealed to the Board. In response, the examiner reopened prosecution and rejected the claims on new grounds. This process was repeated in 2015 and 2016. Finally, in 2017, while Chudik’s fourth appeal was pending, the examiner withdrew some objections and, following some claim amendments, allowed some of Chudik’s patent claims. Chudik’s patent issued on May 15, 2018, eleven and a half years after filing. The PTO awarded Chudik a patent term adjustment of 2,066 days, but rejected Chudik’s argument that he was entitled to an additional 655 days for the time his four notices of appeal were pending. 35 U.S.C. § 154(b)(1)(C) governs delay due to appellate review by the Board or a federal court (C-delay). C-delay requires that “the patent [be] issued under a decision in the review reversing an adverse determination of patentability.” The PTO concluded that the C-delay provision does not apply here because (1) the Board’s jurisdiction over the appeals never attached and (2) there was no Board reversal. Chudik then filed a complaint against the PTO in district court, alleging that he was entitled to the additional 655 days of C-delay. The district court rejected Chudik’s challenge, and Chudik appealed.
On appeal, Chudik argued that the examiner reversed an adverse determination of patentability by reopening examination and allowing patent claims after Chudik appealed to the Board. The Federal Circuit disagreed, reasoning that “appellate review,” ordinarily means that a separate party must determine the merits of the review. Therefore, the examiner’s self-reversal did not qualify as “reversing an adverse determination” under § 154(b)(1)(C)(iii). The Federal Circuit affirmed without resolving the PTO’s other grounds for its denial—when jurisdiction over an appeal to the Board attaches.
Contradictory Positions Render Claims Indefinite
In Infinity Computer Products v. Oki Data Americas, Inc., Appeal No. 20-1189, the Federal Circuit held that contradictory positions taken during prosecution and reexamination regarding the scope of the claims render the claims indefinite.
Infinity sued Oki Data in the District of Delaware asserting infringement of four related patents directed to using a fax machine as a printer or a scanner for a personal computer. Particularly, the claims include a connection between the computer and fax machine via a “passive link” without any intervening circuitry. The district court found that “passive link” was indefinite and entered final judgment of invalidity. Infinity appealed to the Federal Circuit.
The Federal Circuit agreed with the district court and found that Infinity’s contradictory positions during prosecution and reexamination rendered the term “passive link” indefinite. During prosecution, Infinity distinguished a prior art reference by arguing that a fax machine connected to a device housed within a computer did not constitute a “passive link” between the fax machine and computer because the computer would receive a signal processed by the intervening device, rather than an uninterrupted signal from the fax machine. Later during ex parte reexamination of a continuation-in-part of the earlier application, Infinity sought to antedate a prior art reference by claiming priority to the parent application. In contrast to its original position, Infinity argued that the parent application’s depiction of a fax machine connected to a device housed within a computer did disclose a “passive link.” The court concluded that the intrinsic evidence would leave a person of ordinary skill in the art without reasonable certainty as to the term “passive link” and thus affirmed the finding of indefiniteness.
If You Buy The Whole Company, You Can Fight Its Legal Battles
In Mojave Desert Holdings, LLC v. Crocs, Inc., Appeal No. 20-1167, the Federal Circuit held that the purchaser or assignee of all assets and interests of the requester of inter partes reexamination could substitute itself at the PTAB as the real-party-in-interest and could assume the original requester’s Article III standing to appeal.
Crocs sued U.S.A. Dawgs in district court for infringement of Crocs’s design patent. U.S.A. Dawgs filed a third-party request for inter partes reexamination of Crocs’s patent, which led to a finding that Crocs’s patent was anticipated. Crocs appealed to the Patent Trial and Appeal Board (“PTAB”). During the PTAB appeal, U.S.A. Dawgs filed for Chapter 11 bankruptcy and sold all its assets and interests to Dawgs Holdings. U.S.A. Dawgs continued to exist for the purpose of winding up. Later, Dawgs Holdings assigned all rights and interests to Mojave, including all claims in the reexamination and the district court.
Months later, Mojave filed a petition with the PTAB to substitute itself as the real party in interest in the reexamination. The PTAB expunged and dismissed Mojave’s petition, saying the sale and assignment agreements were insufficient to establish Mojave as the real-party-in-interest, Mojave lacked standing in the reexamination, and the petition was not timely filed within the 20-day period found in 37 C.F.R. § 41.8(a). The PTAB reversed the examiner’s rejection of Crocs’s patent, and U.S.A. Dawgs appealed.
The Federal Circuit reversed the PTAB decision on substitution, holding that the sale and assignment agreements properly transferred all of U.S.A. Dawgs’s assets, including the interest in the reexamination. The Federal Circuit also rejected Crocs’s argument that Mojave’s petition was untimely, noting 37 C.F.R. § 41.8(a) was designed to detect conflicts of interest and is not directly related to substitutions. Finally, the court rejected Crocs’s argument that Mojave lacked standing to appeal, holding that as U.S.A. Dawgs’ successor-in-interest, Mojave met the Article III requirements for standing. The court granted Mojave’s substitution on appeal without remanding to the PTAB.
You Missed a Spot: The PTAB Should Consider All Presented Arguments and Evidence in Obviousness Determinations
In Canfield Scientific, Inc. v. Melanoscan, LLC, Appeal No. 19-1927, the Federal Circuit held that the PTAB’s refusal to consider presented arguments and evidence can be a misapplication of the law of obviousness.
Canfield Scientific, Inc. (“Canfield”) filed an IPR petition challenging the validity of a patent owned by Melanoscan, LLC (“Melanoscan”). The patent was directed to an enclosure with cameras and lights used for body imaging to detect health and cosmetic conditions, such as skin cancer. Canfield argued that a person of skill in the art would have combined the presented references to include multiple cameras to cover more body surface area without needing to move the subject. The Board rejected Canfield’s argument, finding that the claims were patentable. The Board found that a person of ordinary skill in the art would not have been motivated to combine the references because the physical structures in the references would have blocked the cameras in the other reference. Canfield appealed.
The Federal Circuit reversed, holding that the independent claims were unpatentable as obvious. The Federal Circuit noted that the Board failed to mention arguments presented by the petitioner that the subject to be imaged can be placed at the center of the multi-camera system, which was disclosed in multiple references. The Federal Circuit held that the prior art disclosed placing the subject in the enclosure and placing multiple cameras and lights within the enclosure, as required by the independent claims. The Federal Circuit remanded to consider the dependent claims.
It’s Not All About the Benjamins: Recoupment of Monetary Investment is Not the Only Consideration for Equitable Intervening Rights
In John Bean Technologies Corp. v. Morris & Associates, Inc., Appeal No. 20-1090, the Federal Circuit held that recoupment of monetary investment is not the sole factor a court must consider, nor a factor that must be weighed more heavily, when determining entitlement to a defense of equitable intervening rights.
In 2002, Morris and Associates, Inc. (“Morris”) sent a demand letter to John Bean Technologies Corp. (“Bean”), asserting that Bean’s patent was invalid and citing prior art in support. Bean did not respond. In 2014, Bean amended claims of the same patent and received a reexamination certificate. Bean filed an infringement suit against Morris six weeks later. Morris filed a motion for summary judgment asserting that Bean’s patent infringement claims were barred by equitable intervening rights and the district court granted the motion. Bean appealed to the Federal Circuit, claiming the district court abused its discretion by improperly weighing the equitable intervening rights factors.
The Federal Circuit rejected Bean’s argument that monetary recoupment of investments made prior to the grant of reissue should be deemed sufficient to defeat the grant of the equitable remedy and affirmed the district court’s decision. The Federal Circuit noted that recoupment is not the sole objective, nor the sole factor under 35 U.S.C. §252 as it relates to protection of “investments made or business commenced,” and that the equitable intervening-rights analysis is broader. The Federal Circuit agreed with the district court’s finding that Bean engaged in bad faith by not disputing Morris’s belief that the patent was invalid in 2002, and instead allowing Morris to build up its business for over a decade based on the accused product before requesting reexamination. The Federal Circuit also agreed that Morris’s investment was more than just financial because it included research, development, promotion and good will for over a decade.
Inter Partes Reexam Can Trigger Issue Preclusion
In Synqor, Inc. v. Vicor Corporation, Appeal No. 19-1704, the Federal Circuit held that a finding during inter partes reexamination that two references would not be combined precluded a finding of obviousness based on the same two references in a later proceeding.
Vicor filed three reexamination (“reexam”) petitions against three patents owned by SynQor. In the first two reexams, the Patent Trial and Appeal Board decided that a skilled artisan would not combine two prior art references—“Steigerwald” and “Cobos”—and therefore that SynQor’s patent claims would not have been obvious. The Federal Circuit affirmed those decisions.
In the third reexam, the Board departed from its two prior decisions and combined Steigerwald with Cobos to find the challenged claims obvious. SynQor appealed to the Federal Circuit, arguing that issue preclusion barred this obviousness finding based on the previously litigated combination.
The Federal Circuit first considered whether inter partes reexam proceedings can trigger issue preclusion. Although these proceedings allow for neither compulsory process nor cross-examination, the Federal Circuit majority found that they provide adequate adversarial participation for both the requester and the patent owner. Thus, the majority held that issue preclusion may arise from such proceedings. Applying the traditional issue-preclusion factors, the majority found that the decisions in the first two reexams precluded the combination of Steigerwald and Cobos in the third reexam. Accordingly, the Federal Circuit vacated the Board’s decision in the third reexam.
In dissent, Judge Dyk argued that inter partes reexam is inquisitional rather than adversarial, so it cannot trigger issue preclusion. The dissent cited the patent examiner’s leading role in the proceedings, along with the lack of discovery and cross-examination, to distinguish inter partes reexam from traditional adversarial proceedings.
Promises Made, Promises Not Kept: Even an Implied License Requires Compliance With Its Terms
In Bitmanagement Software Gmbh v. United States, Appeal No. 20-1139, the Federal Circuit held that the U.S. Navy infringed Bitmanagement’s software copyright by copying its software outside the scope of an implied license.
In 2013, the United States Navy purchased a license for the use of Bitmanagement’s copyrighted software. Though the parties never signed an express contract, the parties’ communications made clear that the license allowed the Navy to operate approximately 120 simultaneous copies of the software. The parties also agreed that the Navy would track the number of currently operating copies of Bitmanagement’s software with third-party license-tracking software. The Navy then installed the software on approximately 430,000 computers in the Navy Marine Corps’ intranet using a mass installer provided by Bitmanagement. The Navy never tracked its usage of Bitmangement’s software. Bitmanagement sued the government for copyright infringement in the United States Court of Federal Claims. After trial, the court found that the parties’ conduct created an implied-in-fact license that authorized the copying. Bitmanagement appealed that decision.
On appeal, the Federal Circuit held that the parties had created an implied-in-fact license, but that the Navy’s copying was outside the scope of that license. Because the Navy never tracked its usage of Bitmanagement’s software, the Federal Circuit found that the Navy had not complied with the terms of the license. The Federal Circuit then considered whether the Navy’s failure was a breach of a covenant of the license, such that Bitmanagement’s remedy was to sue for breach of contract, or whether the requirement to use third-party license-tracking software was a condition precedent of using Bitmanagement’s software at all, such that Bitmanagmenet’s remedy was to sue for copyright infringement. The Federal Circuit found that use of the third-party license-tracking software was a condition precedent to the Navy’s copying of Bitmanagement’s software because Bitmanagement would never have provided a mass installer to the Navy except for the Navy’s promise to track the number of currently operating copies. Thus, the Federal Circuit remanded for consideration of copyright damages.
Federal Circuit Affirms $173 Million Award
By Brok Humbert
In Bayer Healthcare LLC v. Baxalta Inc., Appeal No. 19-2418, the Federal Circuit held that in upholding a $173 million dollar award, the Federal Circuit permitted a damages expert to present a range of reasonable potential royalty rates and found no Seventh Amendment right to jury trial existed for supplemental damages calculated using the jury’s chosen royalty rate and undisputed infringing sales data.
Bayer sued Baxalta and Nektar Therapeutics alleging willful infringement of a patent directed to human protein production. The district court held as a matter of law that any infringement was not willful. A jury later found that Baxalta infringed asserted claims, that those claims were not invalid for lack of enablement, and that Bayer was entitled to a reasonable royalty of $155 million for infringement occurring during the damages period presented. After trial, the district court awarded Bayer an additional $18 million in supplemental damages for the time between the damages period presented at trial and the date of the district court’s judgment. Baxalta and Bayer moved for judgment as a matter of law or a new trial on the issues of willfulness, infringement, enablement, and damages. The district court denied those motions and the parties appealed.
The Federal Circuit affirmed the district court’s rulings in their entirety. It upheld the district court’s claim constructions, including the district court’s decision not to further construe a term appearing in a construction, finding the district court had issued rulings that resolved the parties’ controversies as to that term. The Federal Circuit held substantial evidence supported the jury’s verdicts regarding infringement and enablement. As to damages, the Federal Circuit upheld the jury’s choice of a reasonable royalty rate, and found no error in permitting Bayer’s damages expert to provide a range of proposed rates, rather than a single proposed rate. The Federal Circuit further upheld the district court’s award of supplemental damages, finding there was no Seventh Amendment right to a jury trial on that award in this case, where the supplemental damages were calculated using the jury’s chosen royalty rate and undisputed actual infringing sales data. Finally, the Federal Circuit affirmed the district court’s ruling as a matter of law of no willful infringement, finding there was insufficient evidence to show that Baxalta’s conduct was wanton, malicious, or in bad faith.
Vexatious and Wanton Conduct Calls for Attorney Fees
By Bita Kianian
In Arunachalam v. IBM, Appeal No. 20-1493, the Federal Circuit held that filing RICO claims based on patent infringement and other vexatious conduct justifies sanctions.
In April 2016, Dr. Lakshmi Arunachalam filed suit against International Business Machines (“IBM”) alleging infringement of her ’506 patent and violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO Act”). The case was assigned to Judge Richard G. Andrews. In May 2016, Dr. Arunachalam filed an amended complaint, adding as defendants SAP America, Inc. (“SAP”), JPMorgan Chase & Co. (“JPMorgan”), and Judge Andrews (collectively, “Appellees”). The amended complaint alleged that Appellees had engaged in civil racketeering.
Appellees moved to dismiss the racketeering claims. Dr. Arunachalam opposed the motion to dismiss and filed a motion to recuse Judge Andrews from the case. The district court referred the motion to dismiss to Chief Judge Leonard P. Stark. Dr. Arunachalam then moved to recuse Chief Judge Stark. Chief Judge Stark denied the motion to recuse him and dismissed Judge Andrews as a defendant. In March 2017, the district court granted Appellees’ motion to dismiss claims of racketeering, explaining, “‘[p]atent infringement is not a crime,’ it is ‘not on the extensive list of crimes that can be a racketeering [predicate] act’.” Dr. Arunachalam filed a series of motions to vacate the dismissal, all of which were denied.
In December 2017, the PTAB issued a final written decision finding that the asserted claims of Dr. Arunachalam’s ’506 patent were unpatentable. In May 2018, upon a motion by IBM, the district court dismissed Dr. Arunachalam’s claim of patent infringement with prejudice, finding that the PTAB decision meant there were no valid claims in the ’506 patent to assert. Dr. Arunachalam filed a motion for reconsideration, which the district court denied. In July 2018, Appellees moved for sanctions in the form of attorneys’ fees. The district court awarded $57,190 to JPMorgan, $51,772 to SAP, and $40,000 to IBM. Dr. Arunachalam appealed.
The Federal Circuit held that the district court did not abuse its discretion in imposing sanctions. The Federal Circuit explained that it is in the court’s inherent power to impose sanctions and that the record clearly demonstrated Dr. Arunachalam’s “vexatious and wanton litigation conduct” and that she had forced Appellees and the district court to expend resources responding to her “repetitive and frivolous” motions. The Federal Circuit also found that the district court awarded reasonable attorneys’ fees using the “lodestar” approach. Furthermore, the Federal Circuit struck all “scandalous and irrelevant statements” from Dr. Arunachalam’s briefs.
Corresponding Structure Snafu: Lack of Algorithm Renders Claims Indefinite
By Christopher Lewis
In Rain Computing, Inc. v. Samsung Electronics Co. Ltd., Appeal No. 20-1646, the Federal Circuit held that the structure for performing a function of a means-plus-function term may not be a general purpose computer without an algorithm for performing the function.
In 2018, Rain Computing, Inc. (“Rain”) filed suit against Samsung Electronics Co. Ltd., Samsung Electronics America, Inc., and Samsung Research America, Inc. (collectively “Samsung”) for patent infringement based on Samsung’s provision of software applications through an app store. The claims of the patent are directed to delivering software application packages to a client terminal. In February of 2020, the district court issued an order construing various terms including an “executing” term and a “user identification module” term. The district court further determined that the term “user identification module” was a means-plus-function term and was not indefinite. Following that order, the district court entered judgment, based on the parties’ joint stipulation, that the asserted claims were neither infringed nor invalid for indefiniteness. Rain appealed and Samsung cross-appealed.
On appeal, Rain challenged the district court’s construction of the “executing” term and Samsung challenged the district court’s construction of the “user identification module” term. Specifically, Samsung challenged the court’s determination that the “user identification module” term does not render the claims indefinite. Samsung argued that the “user identification module” term lacked specific structure to render the term definite. The Federal Circuit agreed with Samsung’s arguments. First, the Federal Circuit concluded that, the term “user identification module” is a means-plus-function term, noting that “module” is a well-known nonce word that can substitute for “means”, that the term was not commonly understood to connote a particular structure, and that the specification does not impart any structural significance to the term. Having determined that the term was a means-plus-function term, the Federal Circuit next identified the function “to control access to one or more software application packages to which the user has a subscription.” The function was undisputed by both parties.
Finally, the Federal Circuit determined that the specification failed to disclose adequate corresponding structure for executing the function of the “user identification module.” The Federal Circuit explained, that where, as was the case here, the corresponding structure is a general computer that is not capable of performing the controlling access function without specialized software, the specification must disclose the algorithm the computer performs to accomplish that function. Because the Federal Circuit concluded that nothing in the claim language or the written description provided an algorithm to execute the function of the “user identification module”, it found the term “user identification module” lacked sufficient structure, rendering the asserted claims indefinite. Accordingly, the Federal Circuit reversed the district court’s judgment that the claims are not invalid as indefinite and dismissed Rain’s appeal as moot.
Federal Circuit Throws Out Diaper Genie Decision
By Ben Shiroma
In Edgewell Pers. Care Brands, LLC v. Munchkin, Inc., Appeal No. 20-1203, the Federal Circuit held that apparatus claims’ non-functional terms should be construed to cover all of the apparatus’ uses; vitiation cannot be used to shortcut the doctrine of equivalents analysis.
Edgewell Personal Care Brands, LLC and International Refills Company, Ltd. sued Munchkin, Inc. for infringement of U.S. Patent Nos. 8,899,420 and 6,974,029. These patents cover a specialized garbage can, which includes a pail and a cassette that dispenses a plastic wrapper for used diapers. The ’420 patent’s claims are directed to a cassette with a “clearance” in the portion of the pail that holds the cassette. The ’029 patent’s claims are directed to a cassette with an “annular cover” with a “tear-off section.” After construing the patents’ claims, the district court granted summary judgment of no literal infringement for the ’420 patent and no infringement under the doctrine of equivalents for the ’029 patent.
On appeal, the Federal Circuit vacated summary judgment for the ’420 patent, reversed summary judgment for the ’029 patent, and remanded. With respect to the ’420 patent, the Federal Circuit held the district court erred in its construction of “clearance” by adding in a requirement that a space remain between the cassette and pail after installation of the cassette. The Federal Circuit explained: “it is usually improper to construe non-functional claim terms in apparatus claims in a way that makes infringement . . . turn on the way an apparatus is later put to use.” Because of this error in claim construction, the Federal Circuit vacated summary judgment of non-infringement for the ’420 patent. With respect to the ’029 patent, the Federal Circuit affirmed the district court’s claim construction, but nevertheless reversed the summary judgment of no infringement under the doctrine of equivalents because the district court incorrectly applied a claim vitiation analysis. The Federal Circuit explained vitiation applies only if the theory of infringement renders a claim element “inconsequential or ineffective.” The Federal Circuit cautioned that courts should not “shortcut [the doctrine of equivalents] inquiry by identifying a ‘binary’ choice in which an element is either present or ‘not present.’” Instead, a court must evaluate the evidence and determine whether a reasonable juror could find that the accused products perform substantially the same function, in substantially the same way, achieving substantially the same result as the claims. In view of testimony from Edgewell’s expert, the Federal Circuit held there was a genuine issue of material fact sufficient to preclude summary judgment, and reversed.
Reviewability of PTAB Estoppel Decisions
By Radhika K. Raman
In Uniloc 2017 LLC v. Facebook Inc., Appeal No. 19-1688, the Federal Circuit held that 35 U.S.C. § 314(d) does not preclude Federal Circuit review of the Patent Trial and Appeal Board’s post-institution application of § 315(e)(1) estoppel
Uniloc’s patent, U.S. Patent No. 9,995,433 (’433 patent) was the subject of multiple petitions for inter partes review (“IPR”), including two petitions filed by Facebook, and one petition filed by Apple. While Facebook’s petitions were pending, the Board instituted Apple’s IPR. Facebook then filed a follow-on petition substantively identical to Apple’s instituted petition and moved to join Apple’s IPR. The Board instituted Facebook’s follow-on petition and granted the motion. In the meantime, yet another challenger, LG Electronics, filed two petitions substantively identical to the two original Facebook petitions. The Board eventually instituted Facebook’s original petitions, LG’s follow-on petitions, and granted LG’s motion to join the Facebook IPRs.
Two months after instituting LG’s follow-on IPRs, the Board issued a final written decision in the Apple IPR upholding patentability of all challenged claims. This triggered the estoppel provision of §315(e)(1) as to Facebook, and the Board estopped Facebook from maintaining its challenge for any claim upheld in the Apple IPR. §315(e)(1) estoppel prevents a petitioner in an IPR with a final written decision from later raising “any ground that the petitioner raised or reasonably could have raised during that inter partes review” in a subsequent USPTO action, civil action, or ITC proceeding. The Board, however, held that Facebook’s estoppel did not extend to LG. The Board eventually issued a final written decision in the Facebook/LG IPRs holding all challenged claims unpatentable.
Uniloc appealed, arguing that LG was a real party in interest or privy of Facebook, and therefore should be subject to estoppel. Before reaching Uniloc’s argument, the Federal Circuit first considered whether §314(d), which makes the Board’s institution decision nonappealable, also precludes judicial review of the Board’s post-institution application of estoppel. The Federal Circuit reasoned that because any estoppel in this case only arose post-institution, it was separate from the Board’s earlier institution decision. Thus, because estoppel could not have applied at the time of institution, the Federal Circuit held §314(d) likewise does not bar appellate review of the Board’s post-institution estoppel decision. Turning to the Uniloc’s underlying challenge, the Federal Circuit affirmed the Board’s conclusion that LG was not a real party in interest or privy of Facebook.
Innovative Data Processing is an Ineligible Algorithm
By Atiya Myers
In Re The Board Of Trustees, Appeal No. 20-1012, the Federal Circuit held that a claim directed to an innovative mathematical process to generate data was a patent ineligible algorithm that lacked any improvement of a technological process under the two-step Alice inquiry.
The Board of Trustees of the Leland Stanford Junior University (“Stanford”) filed an application having claims directed to an improved method of processing data about a person’s genetic makeup in order to predict the parent from whom a gene was inherited. The Examiner rejected the claims for being directed to patent ineligible abstract mathematical algorithms and the Board affirmed under the two-step Alice inquiry.
The Federal Circuit led with the long-established holding that “mathematical algorithms for performing calculations, without more, are patent ineligible.” The Court then characterized Stanford’s innovation as being mathematical analysis and noted that the claim recited generic computer hardware and required no concrete application for using the data. In an effort to rebut the Board’s Alice findings, Stanford argued that the claim was a novel, specific application that provided more information than previous methods and therefore was not an abstract idea. The Federal Circuit rejected this argument, holding that even if this was an improved data-generating process it was still directed to an abstract mathematical calculation that failed to improve a technological process under the Alice inquiry. Stanford then argued that the Board failed to assess the elements of the claim as an ordered combination. Again, the Federal Circuit rejected this argument reasoning that Standard failed to explain how the ordered combination of data processing elements moved the claimed subject matter from an abstract idea into a practical application. Thus, the claims were drawn to patent ineligible subject matter and the Board’s decision was affirmed.
Federal Circuit Cannot Review Denial of Institution of IPR, Unless Extraordinary Circumstances Are Shown
By Benjamin Van Adrichem
In Mylan Labs. Ltd. v. Janssen Pharmaceutica, N.V., Appeal No. 21-1071, the Federal Circuit lacks jurisdiction over appeals from decisions denying institution of an IPR. However, the Federal Circuit has jurisdiction over mandamus petitions challenging decisions denying institution, but mandamus relief is an extraordinary remedy.
Janssen sued Mylan in district court for patent infringement. Mylan subsequently petitioned for IPR of the asserted patent. The Board denied institution and concluded it would be an inefficient use of resources to institute the IPR due to the quickly approaching trial dates in co-pending litigation which had substantial overlap with the issues raised in the IPR petition. Mylan was not a party to one of the co-pending lawsuits considered by the Board. Mylan appealed to the Federal Circuit claiming that (1) the denial of institution based on timing of a separate district court litigation to which Mylan was not a party violates Mylan’s constitutional and due-process rights; and (2) “the Board’s continued adoption and application of non-statutory institution standards through ad hoc proceedings lie in contrast to congressional intent.” Mylan further requested mandamus relief on the same grounds. Janssen moved to dismiss Mylan’s appeal for lack of jurisdiction.
The Federal Circuit reasoned that no statute grants it jurisdiction over appeals from decisions denying institution and therefore Mylan’s appeal was dismissed pursuant to 28 U.S.C. § 1295(a)(4) and 35 U.S.C. § 314(d). Specifically, 35 U.S.C. § 314(d) states “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and non-appealable.” The Federal Circuit recognized the Supreme Court’s strong presumption in favor of judicial review, but maintained that § 314 bars appeal from a decision denying institution.
The Federal Circuit concluded that judicial review is available for decisions denying institution in extraordinary circumstances by petition for mandamus. The Federal Circuit reasoned that the All Writs Act is especially important when the Board denies institution because this decision defeats the Federal Circuit’s prospective jurisdiction. While the Federal Circuit determined that it had jurisdiction to consider Mylan’s request for mandamus on the merits, it ultimately denied the request for mandamus relief. Mandamus is an extraordinary remedy and the petitioner must show: (1) it has clear and indisputable legal right; (2) it does not have another adequate method for relief; and (3) the writ is appropriate under the circumstances. The Federal Circuit made clear that the Director is permitted, but never compelled to institute an IPR, and the petitioner has no right to an institution. Mylan needed to identify a colorable constitutional claim to obtain relief – and Mylan failed to do so. Therefore, Mylan failed to show a clear right to relief and was not granted mandamus relief.
What’s Enough to Show Information is “Trade Secret” for Filing Under Seal?
By Marissa M. Rosenbaum
In Depuy Synthes Products, Inc. v. Veterinary Orthopedic Implant, Inc., Appeal No. 20-1514, the Federal Circuit held that internal efforts to maintain confidentiality are not enough to establish a confidential relationship with a third party and to warrant denying the public’s right to access information on a public docket.
Depuy Synthes Products (“Depuy”) and Veterinary Orthopedic Implants (“VOI”) are competitors in the market for veterinary orthopedic implants. Depuy sued VOI for patent infringement. Depuy filed under seal an unopposed motion for leave to amend its complaint. The amended complaint joined as a defendant the manufacturer of VOI’s accused products, disclosed the identity of the manufacturer, and information about the business relationship between VOI and the manufacturer. VOI argued that the manufacturer’s identity and related information should be redacted from the amended complaint, on the basis that it constituted trade secret information. Depuy argued that the manufacturer’s identity was already publicly known and did not warrant publicly filing a redacted amended complaint.
The district court found that the identity of VOI’s manufacturer was not a trade secret because VOI failed to take reasonable measures to protect the manufacturer’s identity, the parties did not have any confidentiality agreement, and there was an email that suggested VOI’s relationship with the manufacturer was known within the relevant community. Thus, the district court ordered the amended complaint to be publicly filed without redaction. VOI appealed the district court’s order.
The Federal Circuit affirmed the district court’s order, and held that the district court did not clearly err by finding that VOI did not take reasonable measures to protect its manufacturer’s identity. The Federal Circuit also acknowledged that VOI did not have an express confidentiality agreement, nor did it produce any evidence to show it established a confidential relationship with the manufacturer by way of custom or course of dealing. Thus, the Federal Circuit confirmed that VOI’s “internal efforts” to keep the manufacturer’s identity confidential were not sufficient, in and of themselves, to constitute “reasonable efforts” to maintain secrecy under the Uniform Trade Secrets Act. The Federal Circuit also affirmed the district court’s decision to publicly release business information related to VOI and the manufacturer, given VOI produced no evidence to demonstrate how it would be harmed by the public filing of this information.
Stanford’s Computer Models – Inventive for Parents, But Not for Patents
By Ryan McBride
In Re: Board of Trustees of the Leland Stanford Junior University, Appeal No. 20-1288, the Federal Circuit held that the specific combination of purely mathematical steps in a claim are not inventive enough to transform patent ineligible mathematical algorithms and mental processes.
Stanford University filed a patent for a computerized statistical model for determining Haplotype phases, which can help predict which parent gave a child a certain gene. The examiner rejected the claims on the grounds that they involve patent ineligible subject matter. Stanford appealed to the Patent Trial and Appeal Board (“PTAB”) arguing that their use of a particular statistical tool as well as the specific ordered combination of steps in the claims, improves on existing statistical models. Stanford argued these improvements transform the claim into patent eligible material. The PTAB disagreed and found that the claims consisted entirely of patent ineligible mathematical algorithms and mental processes under an Alice analysis. The PTAB also held that the claims do not introduce additional limitations that provide an inventive concept under Alice, and affirmed the rejection of the Claim.
The Federal Circuit affirmed the Board’s decision. The Federal Circuit analyzed Stanford’s argument that the ordered combination of the steps is important to the improved efficiency and accuracy of the model, but found that the claims were merely abstract mental processes under Alice that did not require computer functionality. Thus, because the claims were found to be directed entirely to mathematical concepts, and the ordered combination did not introduce additional limitations, all claims were patent ineligible under Alice.
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