Examiner Amendments Can Trigger Prosecution History Estoppel
In Amgen, Inc. v. Amneal Pharms. LLC, Appeal No. 18-2414, the Federal Circuit held that an examiner amendment may give rise to prosecution history estoppel, even when the examiner suggests the amendment in the absence of a pending office action.
Amgen sued multiple parties for infringement of a patent directed to pharmaceutical compositions useful for treating secondary hyperparathyroidism in adult patients with chronic kidney disease. After a bench trial, the district court held that some parties infringed, but others did not because the claims contained Markush groups of binders and disintegrants. The district court concluded that the Markush group made the entire claim closed ended with regard to the binders and disintegrants such that the presence of a binder or disintegrant in an alleged infringing product, if not recited in the Markush group, supported a finding of non-infringement. The district court also determined that prosecution history estoppel created by an examiner’s amendment, precluded the use of the doctrine of equivalents (“DOE”) with regard to the Markush groups.
The claim at issue used an open ended “comprising” preamble but contained two Markush groups. Each Markush group recited “at least one [binder/disintegrant] selected from the group consisting of …” The Federal Circuit reversed, determining that though one of the compounds in the Markush group must be present for infringement, other binder/disintegrate compounds were still permissible in an infringing product because of the plain language of the claim and the open ended preamble. Accordingly, the Federal Circuit remanded infringement to the district court.
The Federal Circuit upheld the district court’s ruling that prosecution history estoppel barred the use of DOE as it related to the Markush groups. The claims as originally filed did not contain the Markush groups. In response to an obviousness rejection, Amgen made certain amendments to the claims. In a subsequent interview, prior to issuing any further office action, the examiner proposed the Markush groups as an examiner’s amendment. Amgen agreed, and the claims were then allowed. Eight months later, in continued examination, Amgen filed a statement that the examiner’s amendment was not made to overcome a prior art rejection. Amgen argued that the presumption of prosecution history estoppel was overcome because the addition of the Markush groups was not necessary to secure allowance. The Federal Circuit rejected this argument because its implication was that the examiner’s amendment served no purpose, which was “at best unpersuasive.” The Federal Circuit also rejected the argument that Amgen’s comments on the examiner’s amendment during prosecution overcame the presumption because those comments were made well after the claims were allowed and were simply “conventional boilerplate” that provided no insight into the reasons for the examiner’s amendment.
Non-Prior Art Evidence May Be Used To Prove Inherency
In Hospira, Inc. v. Fresenius Kabi USA, LLC., Appeal No. 19-1329, the Federal Circuit held that evidence of the properties of claimed embodiments may be proper evidence of inherency, even when the evidence itself is not prior art.
Hospira sued Fresenius for infringement of a patent for its ready-to-use dexmedetomidine product (Precedex Premix). Following a bench trial limited to the validity of two claims, the district court concluded that one embodiment of claim 6 (the only claim at issue on appeal) was expressly taught in the prior art. The sole issue was a limitation requiring that the concentration of the active agent decrease by no more than 2%. Relying on fact and expert testimony related to the stability of both Hospira’s Precedex Premix and Fresenius’s generic product, the district court concluded the stability limitation was inherent, and found claim 6 invalid as obvious. Hospira appealed.
On appeal, Hospira argued that the district court erred in its application of the inherency doctrine by considering the inherent properties of non-prior art embodiments. Every tested sample in the record was either from Hospira’s Precedex Premix New Drug Application or Fresenius’s Abbreviated New Drug Application, neither of which was in the prior art. The Federal Circuit rejected Hospira’s argument, explaining that extrinsic evidence can be used to demonstrate what is “necessarily present” in a prior art embodiment even if the extrinsic evidence is not itself prior art.” The Federal Circuit also rejected Hospira’s argument that the district court erred by considering only samples made using a manufacturing process first described in the patent. The Federal Circuit explained that claim 6, which is not a method claim or product-by-process claim, included no limitations regarding the manufacturing process. Because importing such limitations into the claim would be improper, the district court did not err by considering samples without regard to the process by which they were prepared.
Hospira next argued that the district court erroneously applied to the inherency issue a lower “reasonable expectation of success” standard rather than the higher “necessarily present” standard. The panel rejected this argument as well. The Federal Circuit acknowledged that the district court unnecessarily analyzed whether a person of ordinary skill in the art would have had a reasonable expectation of success in achieving the “about 2%” limitation. However, that error “did not infect its inherency analysis and findings.” Unpersuaded by Hospira’s arguments, the Federal Circuit affirmed the district court’s conclusion that claim 6 was invalid as obvious.
No Appeal of PTAB’s Final Decision by Appealing a District Court’s Adoption of that Decision
In Personal Audio, LLC v. CBS Corporation, Appeal No. 18-2256,the Federal Circuit held that it has exclusive jurisdiction to hear a direct appeal of a PTAB’s final written decision of unpatentability. The Federal Circuit does not have jurisdiction to consider a challenge to the PTAB’s decision through an indirect appeal from the district court’s adoption of the PTAB’s decision.
Personal Audio sued CBS for patent infringement. After the case was filed, a third party petitioned for IPR. The district court case proceeded and a jury determined the asserted claims were valid and awarded damages. Subsequently, the PTAB issued a final written decision that the asserted claims were unpatentable. Personal Audio and CBS agreed to stay the district court proceedings pending review of the PTAB’s decision. Personal Audio appealed the PTAB’s final written opinion, the Federal Circuit affirmed, and the Supreme Court denied certiorari. After all of that, because of the PTAB’s final written decision, Personal Audio and CBS agreed that the district court should enter judgment in favor of CBS. Personal Audio then appealed the district court’s judgement to the Federal Circuit.
The Federal Circuit affirmed. In an appeal from a district court judgment, the Federal Circuit does not have jurisdiction to consider challenges to the validity of the PTAB’s decision. The court also determined that Personal Audio’s earlier direct appeal from the PTAB’s final written decision was adequate to adjudicate Personal Audio’s challenges. Further, Personal Audio forfeited any argument that the district court should not have entered judgment based on the PTAB’s final written decision. Personal Audio made no argument distinguishing cases holding that a district court action must terminate when a PTAB unpatentability ruling is affirmed on appeal.
Prior Art Disclosing Partially Overlapping Temperature Range Is Enough to Establish Prima Facie Case of Anticipation and Obviousness
In Genentech, Inc. v. Hospira, Inc., Appeal No.18-1933, prior art disclosing a temperature range that partially overlapped with the claimed temperature range established a prima facie case of anticipation and obviousness, even though the overlap was slight. The Federal Circuit also held that IPR proceedings apply to pre-AIA patents.
Hospira petitioned for IPR against a Genentech patent. The claims at issue related to reducing impurities that result from protein A affinity chromatography by using a specific temperature range “from about 10° to about 18°C.” Prior art disclosed a temperature range of “18-25°C.” The Board determined that all the challenged claims were anticipated by this reference or rendered obvious by the reference alone or in combination with other references. Genentech appealed and challenged the Board’s findings as well as the constitutionality of the IPR process itself, because Genentech’s patent issued before the AIA was enacted.
The Federal Circuit affirmed. The court noted that a slightly overlapping range can be anticipatory, even if the overlap is slight. Also, Genentech did not establish that the claimed range was critical to the operability of the invention. The court added that an overlapping range created a presumption of obviousness and that the patentee must provide evidence that the overlapping range would not have been obvious. The Board considered Genentech’s evidence on the importance of the range unpersuasive, and the Federal Circuit ruled that substantial evidence supported the Board’s decision. Lastly, in view of its previous holding in Celgene Corp. v. Peter, 931 F.3d 1342 (Fed. Cir. 2019), the Federal Circuit held that it is not unconstitutional to apply IPR proceedings on pre-AIA patents.
Integration Clause Does Not Necessarily Invalidate Prior Agreement on Same Patent
In Molon Motor and Coil Corp. v. Nidec Motor Corporation, Appeal No. 19-1071, the Federal Circuit held that, in interpreting an integration clause that nullifies all prior agreements on the same subject matter, the courts determine what is the same subject matter by looking at factors such as the type of license, scope of market, number of patents, and types of products involved.
In 2006, Molon granted Merkle-Korff a covenant not to sue on two patents. In 2007, Merkle-Korff entered an exclusive license agreement with Molon covering the same two patents, but within a narrowly defined market scope. The 2007 agreement contained an integration clause that said all prior agreements “concerning the subject matter hereof, are merged herein and shall be of no further force or effect.” Molon later filed a patent infringement suit against Nidec, Merkle-Korff’s successor in interest to the patents, for practicing the patent outside the licensed market.
The district court found the two agreements did not concern the same subject matter and thus the integration clause of the 2007 settlement did not extinguish the 2006 covenant. The Federal Circuit affirmed. Although both agreements included the relevant patents, the agreements concerned different subject matter because of differences in the types of rights granted, scope of market, number of patents, and types of products included in each agreement.
Judge Reyna dissented, finding that the agreements related to sufficiently related subject matter, i.e., the right to practice the relevant patent.
A Litigation Position May Be Objectively Unreasonable Even If The Court Denies Summary Judgment
In Eko Brands, LLC v. Adrian Rivera Maynez Enterprises, Inc., Appeal No. 18-2215, the Federal Circuit held that a litigation position that survives summary judgment is not necessarily objectively reasonable for purposes of deciding whether the case was “exceptional.”
Eko and Adrian Rivera Maynez Enterprises (“ARM”) sued each other for patent infringement. After a jury found ARM’s patent was invalid, the district court found ARM’s litigation position concerning validity was unreasonable and awarded attorney’s fees even though the court had previously denied summary judgment of invalidity. ARM appealed.
The Federal Circuit affirmed. The court distinguished a prior decision that stated “absent misrepresentation to the court, a party is entitled to rely on a court’s denial of summary judgment . . . as an indication that the party’s claims were objectively reasonable and suitable for resolution at trial.” See Checkpoint v. All-Tag, 58 F.3d 1371, 1376 (Fed. Cir. 2017). The court explained: “Our cases require only that the district court considers the denial of summary judgment, not that the district court always give that denial decisive weight.” Thus, the Federal Circuit affirmed after concluding the district court properly considered the totality of circumstances, including ARM’s failure to meaningfully contest obviousness at trial.
PTAB Cannot Institute IPR on PTAB-Created Grounds
In Koninklijke Philips N.V. v. Google LLC, Appeal No. 19-1177, the Federal Circuit held that the Board can institute IPR only on grounds raised in a petition, and that the Board can rely on the general knowledge of a skilled artisan as of the priority date in evaluating obviousness
Google petitioned for IPR of a patent owned by Philips directed to forming a distributed multimedia presentation for a client device’s media player. In its petition, Google raised one obviousness ground based on a single prior art reference and the general knowledge of a skilled artisan. Google cited a second prior art reference and expert testimony as evidence of this general knowledge. The Board instituted IPR on both the ground raised in Google’s petition and a second ground of obviousness over the first prior art reference in view of the second prior art reference. The Board concluded that the claims were obvious based on both grounds, citing the same reasons, arguments, and evidence for both.
The Federal Circuit held that the Board erred in instituting on the second ground because it was not raised in Google’s petition. The court explained that the petition, and not the Board’s discretion, defines the metes and bounds of an IPR. With respect to the ground raised in Google’s petition, the Federal Circuit affirmed the Board’s finding of obviousness. The Federal Circuit acknowledged that prior art in an IPR is limited to patents and printed publications. It explained, however, that the obviousness inquiry under § 103 requires evaluation from the perspective of a skilled artisan, and such evaluation necessarily depends on the knowledge of a skilled artisan. It was thus proper for the Board to rely on such knowledge in its obviousness determination.
PTAB May Not Cancel Claims on the Grounds of Indefiniteness in an IPR Proceeding
In Samsung Electronics America v. Prisua Engineering Corp., Appeal No. 19-1169, the Federal Circuit held that the Patent Trial and Appeal Board (“PTAB”) may not cancel claims on the grounds of indefiniteness in an IPR proceeding.
Samsung petitioned for inter partes review (IPR) of a patent owned by Prisua directed to generating an edited video data stream through video image substitution. The PTAB initially determined that it would only review one of the claims for obviousness. However, the PTAB concluded that the claim was indefinite. Because the PTAB was unable to construe the claim, it concluded that Samsung had not established a reasonable likelihood of prevailing in showing the claim unpatentable. As the IPR was close to concluding, the Supreme Court issued its opinion in SAS. The PTAB modified its institution decision to include all challenged claims and all grounds in the petition. The PTAB allowed the parties to file supplemental briefing. In its supplemental briefing, Samsung urged the PTAB to cancel the claims on the grounds of indefiniteness. In its final written decision, the PTAB concluded, in part, that certain claims were indefinite on the basis of the Federal Circuit’s decision in IPXL because the claims recited both an apparatus and a method of using that apparatus and additionally invoked §112(6) for the recitation of a “digital processing unit” element. Further, the PTAB found that it could not apply the prior art to the claims. Thus, the PTAB found that Samsung failed to show that certain claims were unpatentable under any of the asserted grounds. Samsung appealed and challenged the PTAB’s decision not to cancel the claims it found indefinite. Samsung argued in the alternative that the PTAB should have applied the cited prior art to the claims.
The Federal Circuit held that the PTAB may not cancel claims for indefiniteness in an IPR proceeding. To support its finding, the Federal Circuit pointed to the Supreme Court’s statement in Cuozzo that the Patent Office would be acting “outside its statutory limits” by “canceling a patent claim for ‘indefiniteness under § 112’ in inter partes review.” Further, the statutory provisions governing the IPR process do not allow the PTAB to institute review for indefiniteness. The Federal Circuit also rejected Samsung’s contention that the PTAB’s inherent authority to perform claim construction during IPR proceedings means that the PTAB may cancel claims for indefiniteness. Samsung, as the petitioner, was thus not permitted to request that the PTAB cancel the claims for indefiniteness and the PTAB was not permitted to cancel the claims on the grounds of indefiniteness. However, the Federal Circuit found that the PTAB erred in applying §112(6) to the term “digital processing unit.” The Federal Circuit also found that the claims could be reviewed in relation to the prior art despite a finding of indefiniteness under IPXL and thus remanded for further consideration on that issue.
Non-Expert Testimony on Obviousness Is Inadmissible
In Hvlpo2, Llc v. Oxygen Frog, LLC, Appeal No. 19-1649, the Federal Circuit held that it is an abuse of discretion to permit a witness to testify as an expert on issues of noninfringement or invalidity unless that witness is qualified as an expert in the relevant art.
HVLPO2, LLC (“HVO”) sued Oxygen Frog and its CEO for infringement of patents on oxygen generation circuits. At trial, Oxygen Frog introduced testimony of a lay witness on obviousness who was not qualified as an expert. Specifically, the witness was asked, “Did you think that modifying the [prior art] system to support two circuits to be obvious?” The witness answered, “Yes.” HVO objected to the question as seeking improper expert opinion testimony. The district court overruled the objection and instead gave the jury a limiting instruction that the witness “certainly can offer his observations and explain to you how a system works and what he thinks would occur to him from his perspective would or would not be obvious.” The district court also instructed the jury that it was ultimately up to them to decide the issue of obviousness. The jury found that the tried claims were obvious. After the trial, HVO filed a motion for judgment as a matter of law, or in the alternative, for a new trial. The district court denied both motions. HVO appealed.
The Federal Circuit applied Federal Rule of Evidence 702 governing expert witness testimony and stated that allowing a witness to testify on issues of noninfringement or invalidity is an abuse of discretion unless such witness is qualified as an expert in the relevant art. Because Oxygen Frog’s testimony regarding obviousness came from a witness not qualified as an expert, the Federal Circuit held that the district court abused its discretion in admitting such testimony.
The Federal Circuit rejected Oxygen Frog’s argument that admitting the testimony was harmless. The court explained that such admission deprived HVO of its right to have the obviousness question decided on admissible, qualified expert testimony and prejudiced HVO by circumventing the expert discovery rules that ensure the reliability and relevance of such testimony. While recognizing that it may be possible for a district court to cure inadmissible testimony by instructing the jury to disregard it, the Federal Circuit held that the district court improperly permitted the jury to consider lay witness testimony as evidence of obviousness in this case. Thus, the Federal Circuit reversed and remanded for a new trial.
Express License of Patent Includes Implied License of Continuations
In Cheetah Omni LLC v. AT&T Services, Inc., Appeal No. 19-1264, the Federal Circuit held that the express license of a patent includes an implied license for its continuations, including continuations of continuations, because they disclose the same inventions as the licensed patent.
Cheetah Omni LLC (“Cheetah”) sued AT&T Services, Inc. (“AT&T”) for infringement of U.S. Patent No. 7,522,836 (“the ’836 patent”) directed to optical communication networks. Ciena Communications, Inc. and Ciena Corporation (collectively, “Ciena”) moved to intervene in the suit because it manufactures and supplies components for AT&T’s fiber optic systems which formed the basis of Cheetah’s infringement allegations. Ciena and AT&T moved for summary judgment claiming Cheetah’s claim was barred by a license agreement, which settled a previous litigation involving Cheetah and Ciena. In 2011, Cheetah sued Ciena for infringement of U.S. Patent 7,339,714 (“the ’714 patent”), which resulted in a license agreement between Cheetah and Ciena (the “Ciena License”). Ciena and AT&T argued that the Ciena License included an implicit license to the ’836 patent. The district court agreed, granting summary judgment and dismissing the suit with prejudice. Cheetah appealed.
The Federal Circuit affirmed the district court. The Federal Circuit looked to the language of the Ciena License to determine whether it included an implicit license to the ’836 patent. In the Ciena License, “Licensed Patents” were defined broadly to include the Patents-in-Suit and “all parents, provisionals, substitutes, renewals, continuations, continuations-in-part, divisionals, foreign counterparts, reissues, oppositions, continued examinations, reexaminations, and extensions of the Patents-in-Suit.” The Federal Circuit explained that it is key to the dispute to understand the relationship between the ’836 patent and the ’714 patent. The ’714 patent is a continuation-in-part of its parent, U.S. Patent No. 6,943,925 (“the ’925 patent”). Accordingly, the Federal Circuit held that the ’925 patent is expressly licensed in the Ciena License. In a separate chain from the ’714 patent, the ’836 patent is a continuation of a continuation of the ’925 patent, as shown in the figure below. The Federal Circuit explained that because the ‘925 patent is an expressly licensed patent in the Ciena License, the agreement also includes an implied license to a continuation of its continuation (or “grandchild”), the ’836 patent. The Federal Circuit further stated that Cheetah had an obligation to clearly state if it did not intend its license to extend to claims presented in continuation patents, which it failed to do.
IPR Petitioner Does not Impermissibly Raise New Arguments when Disclosing on Reply a Different Example of an Algorithm Discussed in its Petition
In Apple Inc. v. Andrea Electronics Corporation, Appeal No. 18-2382, an IPR petitioner relying on a prior-art algorithm was not required to discuss all potential permutations in its petition, and did not raise “new arguments” on reply by disclosing a different example of the same algorithm.
Andrea sued Apple for infringement a patent relating to reduction of background noise in audio signals. Apple thereafter filed two IPR petitions. The PTAB instituted both petitions and consolidated proceedings. In one of the IPR’s, Apple argued that an algorithm in one of its prior art references disclosed the required limitations of the claims. In support, Apple’s expert provided an example using the prior-art algorithm which assumed there were no “sub-windows” (units relating to the amount of signal being analyzed). Andrea responded that Apple’s argument was flawed because that prior-art algorithm requires at least multiple sub-windows, and even in view of multiple sub-windows, the algorithm failed to disclose the claimed limitations. On reply, Apple submitted an expert declaration discussing an example of the prior-art algorithm with multiple sub-windows, which showed that even in the multiple “sub-windows” context, the algorithm still disclosed the claimed limitations. The Board declined to consider Apple’s responsive arguments regarding multiple sub-windows, finding that the arguments raised a new theory of unpatentability for the first time in reply, and held the relevant claims were not invalid.
On appeal, the Federal Circuit vacated the Board’s decision and remanded for consideration of the arguments raised by Apple in its reply. The Federal Circuit noted that Apple’s reply asserted the same legal position (that Andrea’s claims were obvious over the prior art), relying upon the same prior art algorithm, to arrive at the same result (that Apple’s prior art reference disclosed the required limitations). The court distinguished this from situations where an IPR petitioner relies on “previously unidentified portions of a prior-art reference to make a meaningfully distinct contention” or cites “new non-patent literature references.” The panel held that IPR petitioners relying on an algorithm cannot be required to discuss all potential permutations in their petition or risk waiving the opportunity to discuss other examples in reply.
A Time-Bar Challenge to an IPR Under Section 315(b) Can Be Waived
In Acoustic Technology Inc. v. Itron Networked Solutions Inc. (Nos. 2019-1059 & 2019-1060) Acoustic Technology Inc. V. Itron Networked Solutions Inc. (No. 2019-1061), Appeal Nos. 19-1059- 1061, the Federal Circuit held that time-bar challenges to inter partes review (“IPR”) under 35 U.S.C. § 315(b) may be waived if not raised before the Patent Trial and Appeal Board (“Board”).
In 2010, Acoustic Technology Inc. (“Acoustic”) sued Itron Inc. (“Itron”) alleging infringement of U.S. Patent Nos. 5,986,574 (“the ’574 patent”) and 6,509,841 (“the ’841 patent”). In 2017, Silver Spring Networks, Inc. (“Silver Spring”) timely petitioned for IPR of the ’574 and ’841 patents, and the Board instituted IPR. After institution and while the IPR proceedings were pending, Silver Spring merged with Itron and filed updated mandatory notices that listed Itron as a real-party-in-interest. Seven months after those mandatory notices were filed, the Board issued final written decisions that found the challenged claims unpatentable. Acoustic timely appealed, asserting that the petitions were time-barred under section 315(b).
The Federal Circuit affirmed. The court found that Acoustic had waived its time-bar argument when it failed to present the argument to the Board in the seven months between Acoustic’s awareness of Itron as a real-party-in-interest and the Board’s issuance of its final written decisions. Acoustic attempted to excuse its delay by asserting that the time-bar is a “jurisdictional” issue that may be raised at any time, even on appeal. The Federal Circuit disagreed, noting that under Federal Circuit precedent there is a distinction between challenges to an agency’s “jurisdiction” and challenges to a federal court’s jurisdiction. The Federal Circuit held that time-bar challenges to the Board’s jurisdiction are not immune to waiver, and were waived by Acoustic.
A Settlement Generally Moots an Action Even if It Requires Future Performance
In Serta Simmons Bedding, LLC v. Casper Sleep Inc., Appeal No. 19-1098, the Federal Circuit held that a binding settlement agreement generally moots an action, even if the agreement requires future performance by the parties.
Serta Simmons Bedding LLC (“Serta”) sued Casper Sleep Inc. (“Casper”) for patent infringement. In response, Casper filed motions for summary judgment of noninfringement. While those motions were pending, the parties executed a settlement agreement, advised the district court of the settlement, and asked the district court to stay all deadlines. The settlement agreement provided that Casper would make a payment to Serta and the parties would dismiss the case within 5 days of that payment. Two days after the parties notified the district court of the settlement, but before Casper made its payment to Serta, the district court granted Casper’s pending motions for summary judgment of noninfringement.
Serta filed motions to enforce the settlement agreement and to vacate the district court’s summary judgment order, arguing that the judgment was void because the case became moot by virtue of the settlement agreement. The district court denied Serta’s motions, stating the case was not moot because the parties did not intend to immediately dismiss the case, instead keeping the action alive until the parties fulfilled their obligations under the agreement. The district court entered judgment and Serta appealed.
The Federal Circuit reversed. It held that a binding settlement moots an action even when the settlement agreement requires future performance. The Federal Circuit concluded that the settlement agreement between Serta and Casper mooted the district-court action. Accordingly, the Federal Circuit vacated the district court’s entry of judgment and summary judgement order and remanded the case to the district court with instructions to enforce the settlement agreement.
A “Regular and Established Place of Business” Under the Patent Venue Statute Requires the Presence of an Employee or Agent Conducting Defendant’s Business
In In re: Google LLC, Appeal No.19-126, the Federal Circuit held that a defendant does not have a “regular and established place of business” for the purpose of establishing venue under 28 U.S.C. § 1400(b) if it has no employee or agent regularly conducting its business in the district.
Super Interconnect Technologies sued Google in the Eastern District of Texas for patent infringement. Google moved to dismiss or transfer the suit, arguing that venue was improper. The district court denied the motion, opining that the presence of several Google servers in the district constituted a “regular and established place of business” under the patent venue statute, 28 U.S.C. § 1400(b). Google petitioned the Federal Circuit for a writ of mandamus.
The Federal Circuit granted Google’s petition. The court noted that it previously had denied mandamus in a similar case involving Google but concluded that mandamus was appropriate at that point to resolve inconsistencies that arose after the district courts’ application of In re Cray Inc., 871 F.3d 1355 (Fed. Cir. 2017). In re Cray identified three factors that a plaintiff must show to establish that a defendant has a “regular and established place of business” under the patent venue statute.
The Federal Circuit found that Google’s servers constituted a “place” under the first Cray factor, but not a “place of business” under the second Cray factor. The court agreed with Google that the second Cray factor requires an employee or agent to be present in the district. Relying on the historical relationship between the statutory provisions governing venue and service, the court concluded that, for a defendant to have a “regular and established place of business” for venue purposes, there must also be an “agent . . . engaged in conducting such business” who can accept service. The court rejected the argument that Internet service providers (“ISPs”) that hosted Google’s servers could be considered agents conducting Google’s business. The court reasoned that, while the ISPs have an obligation to perform on-site maintenance of servers that suggests an agency relationship, such maintenance activities are “meaningfully different from” and “only ancillary to” Google’s business.
Judge Wallach joined the majority’s order and issued a separate, concurring opinion, in which he raised the possibility that Google’s end users located in the district could be considered Google’s agents “by virtue of voluntarily or involuntarily sharing information generated on Google’s servers.”
Pre-Complaint Damages for Willful Infringement Sunk by Failure to Comply with Marking Statute
In Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., Appeal No. 19-1080, the Federal Circuit held that, to recover pre-complaint damages for infringement after making sales of unmarked products, a patentee must begin marking its products or provide actual notice to an alleged infringer—neither a finding of willful infringement nor the termination of sales of unmarked products is sufficient.
Arctic Cat negotiated a license of patents to Honda, with the final version of the agreement expressly stating that Honda had no patent marking obligations. Honda made and sold unmarked products, but eventually ceased sales. Arctic Cat subsequently sued Bombardier for infringement of the licensed patents. A jury in that case found willful infringement and awarded damages in the form of a royalty that included six years of pre-complaint damages. Following trial, the district court denied Bombardier’s renewed motion for judgment as a matter of law on marking and willfulness. Bombardier appealed. The Federal Circuit affirmed the willful infringement finding but vacated the district court’s findings on marking and remanded for further proceedings. On remand, Artic Cat argued that § 287 only applies while actively making, using, or selling unmarked products and that it was entitled to pre-complaint damages once the sale of unmarked goods ceased. Additionally, Arctic Cat argued that Bombardier’s willful infringement entitled it to all six years of pre-complaint damages including time when Honda was selling unmarked goods. The district court disagreed, granting Bombardier summary judgment of no pre-complaint damages. Arctic Cat appealed.
The Federal Circuit affirmed the district court’s denial of pre-complaint damages. Section 287 provides that “in the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice.” The Federal Circuit noted that the policy of this statute is to encourage marking, and thereby disseminate notice of the patent, as opposed to merely discouraging the sale of unmarked products. Thus, when Honda began selling unmarked products, an obligation arose under § 287 and this obligation was not discharged by the cessation of unmarked product sales. Nor was the jury’s verdict of willful infringement sufficient to find actual notice under the marking statute. The Federal Circuit noted that this theory was foreclosed by precedent and declined to revisit the conclusion that willfulness, as an indication that an infringer knew of a patent and its infringement, does not serve as actual notice under § 287.