Expert Testimony That Contradicts Patent Specification Fails to Create a Genuine Issue of Fact
In Caredx, Inc. v. Natera, Inc., Appeal No. 22-1027, the Federal Circuit held that expert testimony that steps of challenged patent claims were unconventional failed to preclude summary judgment of ineligibility where specification admitted the steps were conventional.
CareDx, Inc. (“CareDx”) sued Natera, Inc. and Eurofins Viracor, Inc. (collectively, “Defendants”) alleging infringement of claims directed at methods for detecting organ transplant rejection by measuring levels of the organ donor’s cell-free DNA in the recipient’s blood. Defendants moved for summary judgment, arguing that the asserted claims were patent ineligible under 35 U.S.C. § 101 because they were directed to the detection of natural phenomena using only conventional techniques. In support of their motion, Defendants relied on portions of the specification that admitted that each step of the claimed methods were “well known” or “known in the art.” In its opposition, CareDx relied on expert testimony that the steps were not conventional. The district court granted summary judgment, finding that CareDx had failed to create a genuine issue of fact. CareDx appealed.
The Federal Circuit explained that under the Alice/Mayo test, a claim is ineligible if it is directed to a natural law together with conventional steps to detect or quantify the manifestation of that law. The Federal Circuit held that the specification’s numerous admissions that each step of the claimed methods was “well known” or “known in the art” served as intrinsic evidence of ineligibility. CareDx could not rely on extrinsic evidence that plainly contradicted the intrinsic record to create a genuine issue of fact. The Federal Circuit therefore affirmed the district court’s judgment.
MOTIVE MATTERS – FORUM SHOPPING CAN LEAD TO ATTORNEYS’ FEES
In Realtime Adaptive Streaming LLC v. Netflix Inc., Appeal No. 21-1484, the Federal Circuit held that courts may use their inherent equitable powers to award attorneys’ fees for bad faith conduct.
Realtime Adaptive Streaming (Realtime) filed suit against Netflix in the District of Delaware alleging infringement of six patents. While the action was pending, Netflix moved to dismiss the Delaware action, arguing that several of the patents were ineligible under Section 101. Netflix also filed IPRs challenging the patentability of the patents. After the Patent Office instituted the IPR proceedings and a Delaware magistrate judge recommended that several patents be found ineligible, but before the district court ruled on the recommendation, Realtime voluntarily dismissed the suit.
Realtime re-asserted the same patents in the Central District of California, despite having previously argued in Delaware that litigating in California would be an unfair burden. Netflix moved for attorneys’ fees and to transfer the actions back to Delaware. Prior to any decision, Realtime voluntarily dismissed the case. The district court awarded fees for the California actions under Section 285 and, in the alternative, under its inherent equitable powers, finding that Realtime had engaged in impermissible forum shopping.
Applying Ninth Circuit precedent, the Federal Circuit held that the California district court did not abuse its discretion in awarding fees under its inherent equitable powers. The Federal Circuit noted that while Rule 41 allows a plaintiff to voluntarily dismiss an action and refile in another forum, Realtime’s conduct was blatant gamesmanship to avoid a potentially adverse ruling in Delaware. The Federal Circuit also upheld the district court’s denial of fees for the IPR proceedings and the Delaware action, finding no abuse of discretion in the court’s determination that the Delaware action was not clearly untenable when Realtime filed that action and that the IPR institutions alone were not enough to apprise Realtime of the futility of its litigation efforts.
Famous Trademark Not Abandoned After Original Owner’s Bankruptcy
Tiger Lily Ventures Ltd. v. Barclays Capital Inc. Appeal No. 21-1107, the Federal Circuit held that a trademark associated with a bankrupt company was not abandoned when the trademark continued to be used during bankruptcy and was the subject of active licenses.
After Lehman Brothers filed for bankruptcy in 2008, Barclays Capital acquired the LEHMAN BROTHERS mark and licensed it back to Lehman Brothers. Subsequently, Barclays allowed all of its acquired LEHMAN BROTHERS trademark registrations to expire. In 2013, Tiger Lily applied to register the mark LEHMAN BROTHERS for beer and spirits. Barclays then filed an application to register the mark LEHMAN BROTHERS for various financial services, and an opposition to Tiger Lily’s applications. Tiger Lily responded by opposing Barclays’ application. The Trademark Trial and Appeal Board (“Board”) found that Barclays had not abandoned its rights to the mark, and had priority of use. Tiger Lily appealed.
On appeal, Tiger Lily challenged the Board’s findings on abandonment, among other issues. The Federal Circuit rejected this challenge, noting Tiger Lily’s admission that Lehman Brothers had continued to use the mark under license from Barclays in the course of winding up its affairs, and that such use was “similar in nature to the context in which Lehman Brothers used the mark for decades.” Regarding the similarity of goods and services, the Federal Circuit found that the use of trademarks on products that differ from the original source of the trademark is common in modern consumer markets. The court pointed to evidence showing that Lehman brothers, in marketing its own banking products and services, had used its LEHMAN BROTHERS mark for promotional products related to whisky and alcoholic beverages. The Federal Circuit rejected Tiger Lily’s admitted attempt to benefit from the fame of Barclays’ LEHMAN BROTHERS mark, and affirmed the TTAB’s judgment in favor of Barclays.