A Preamble That Saves May Be a Preamble That Limits
In Data Engine Technologies LLC v. Google LLC, Appeal No. 21-1050, the Federal Circuit held that a patentee that relies on language in the preamble to successfully argue that its claims are directed to patent-eligible subject matter cannot later assert that this language in the preamble has no limiting effect for the purposes of determining infringement.
Data Engine Technologies (DET) sued Google in the District Court of Delaware for infringement of a patent owned by DET. The patent at issue described the use of tabbed navigation of pages in three-dimensional spreadsheets. Google asserted that the claims were invalid under 35 U.S.C. § 101. The district court agreed and found that the claims were directed to the abstract idea of using notebook-style tabs to label and navigate spreadsheets. DET appealed to the Federal Circuit, relying on the preamble of the claims to argue that the innovation of the patent was in providing a user-friendly navigation specifically in the context of three-dimensional spreadsheet applications. The Federal Circuit agreed with DET and remanded for further proceedings.
After remand, Google sought to reopen claim construction and asked the district court to construe the preamble of the claims as limiting. The district court agreed and found that Google did not infringe DET’s patent because Google’s allegedly infringing spreadsheet application did not provide three-dimensional spreadsheets. DET appealed to the Federal Circuit, which affirmed, stating “where … a patentee relies on language found in the preamble to successfully argue that its claims are directed to eligible subject matter, it cannot later assert that the preamble term has no patentable weight for purposes of showing infringement.”
Billion Dollar Verdict Erased by Inadequate Description of Functional Claims
In Juno Therapeutics, Inc. v. Kite Pharma, Inc., Appeal No. 20-1758, the Federal Circuit held that knowledge of a common general structure and the disclosure of two representative species is insufficient to support the written description of a functionally claimed genus when the claimed function results from specific structures and the specification does not provide distinguishing characteristics for structures that achieve the claimed function and those that do not.
Juno sued Kite for patent infringement of claims to a genus of chimeric T cell receptors having a functionally defined binding element and broadly defined binding targets. As part of its defense, Kite argued that the asserted claims were invalid for lack of written description because they covered “millions of billions” of possible candidates, only a fraction of which would satisfy the functional claim language, and the two embodiments disclosed in the specification were not representative. Juno, in turn, argued that potential candidates were well-known and possessed common structural features such that the two working examples were representative. Returning a verdict worth over $1.2 billion in damages, the jury found that Kite failed to prove that the asserted claims were invalid for lack of written description. Kite moved for judgment as a matter of law of inadequate written description, which the district court denied.
On appeal, the Federal Circuit reversed, holding that no reasonable jury could have found that the patent satisfied the written description requirement. Reiterating the standard from Ariad, the Federal Circuit emphasized that genus claims using functional language concerning binding “must demonstrate that the applicant has made a generic invention that achieves the claimed result and do so by showing that the applicant has invented species sufficient to support a claim to the functionally-defined genus.” Walking through the evidence, the Federal Circuit explained that even accepting that there were known candidates for both targets and binding elements, the specification lacked a disclosure that would distinguish the binding elements that would actually bind to a selected target from those that were incapable of binding. The Federal Circuit also noted that the common structure between the two examples and other candidates that Juno argued was insufficient here when a change to the amino acid sequence within the same general common structure would change the binding target and the specification failed to provide distinguishing characteristics for such structures. Thus, substantial evidence did not support the jury verdict, and the claims were invalid for want of written description.
Forget About Seeking A Reasonably Royalty—Federal Circuit Affirms Order Excluding Damages Theory For Flash Memory Patent
In MLC Intellectual Property, LLC v. Micron Technology, Inc., Appeal No. 20-1413, the Federal Circuit held that when relying upon lump sum payments in a prior license agreement to support a reasonable-royalty rate, explanation as to how the royalty rate is derived from the lump sum payment is needed, the theory and underlying facts/documents should be disclosed before expert discovery, and apportionment between patented and non-patented features must be considered absent reliance on a comparable license.
MLC sued Micron for infringement of a patent directed to flash memory storage. Micron moved to (1) preclude MLC’s damages expert from characterizing prior license agreements as reflecting a specific royalty rate; (2) strike the damages expert’s report for the untimely disclosure of a reasonable-royalty opinion; and (3) exclude the damages expert’s reasonable-royalty opinion for failing to apportion the value of non-patented features. The district court granted each of Micron’s requests and certified the orders for interlocutory appeal.
The Federal Circuit affirmed, holding that the district court did not abuse its discretion in limiting MLC’s evidence of damages. With respect to the expert’s opinion that prior license agreements reflected a specific royalty rate, the Federal Circuit observed that each license agreement was for a lump-sum payment, neither explicitly contained the royalty rate that the expert claimed was “understood” from the agreements, and the proposed royalty rate was not derived from the lump-sum payments. Concerning the district court’s decision to strike the expert’s opinion as to a reasonable royalty as untimely, the Federal Circuit observed that MLC failed to identify the factual basis of its reasonably-royalty theory during fact discovery and rejected MLC’s argument that it was not obligated to do so in response to contention interrogatories or questioning during deposition. Last, the Federal Circuit affirmed the district court’s exclusion of the reasonable-royalty theory for failure to apportion. The court observed that the accused technology did not make up the whole of the accused product and the expert’s royalty theory did not rely upon an exception to the need to apportion, such as when a comparable license is relied upon.