Claims Without the Term “Means” Are Presumed to Not Be Means-Plus-Function Claims, However the Presumption Is Rebuttable
In Zeroclick, LLC v. Apple Inc., Appeal No. 2017-1267, the Federal Circuit held that failure to use the word “means” in the asserted claims created a rebuttable presumption that the asserted claims were not means-plus-function claims invoking § 112 ¶ 6. That presumption was not overcome here because the challenger did not prove, by a preponderance of the evidence, that the claim terms failed to recite sufficiently definite structure.
Zeroclick sued Apple for patent infringement of claims directed to a method of operating a graphical user interface. In response, Apple asserted invalidity of those claims. The district court held that the challenged claims were invalid for indefiniteness, reasoning that the claim terms “program” and “user interface code” are means-plus-function limitations for which the specifications do not disclose sufficient structure. Zeroclick appealed.
The Federal Circuit vacated the district court’s judgment and remanded for further proceedings. The Federal Circuit found that the district court erred in construing the claim terms “program” and “user interface code” as means-plus-function limitations. That neither of the limitations uses the word “means” created a presumption that § 112 ¶ 6 does not apply. The Federal Circuit noted that the presumption remained unrebutted because Apple failed to provide evidentiary support for its position that the limitations must be construed under § 112 ¶ 6. The Federal Circuit found that the district court erred by not giving effect to the unrebutted presumption, and remanded the case to the district court.
Determining Whether a Claim Element or Combination of Elements Would Have Been Well-Understood, Routine, and Conventional Is a Question of Fact
In Aatrix Software, Inc. v. Green Shades Software, Inc., Appeal No. 2017-1452, and Berkheimer v. HP Inc., Appeal No. 2017-1452, the Federal Circuit denied petitions for rehearing en banc, concluding that Berkheimer and Aatrix are correct in concluding that whether a claim element or combination would have been well-understood, routine, and conventional is a question of fact, falling under step two of the Alice framework.
In two separate orders, the Federal Circuit denied petitions for rehearing en banc, declining to revisit its decisions in Aatrix Software and Berkheimer. Judge Moore, joined by four other judges, stated that “Berkheimer and Aatrix stand for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time is a question of fact.” This factual inquiry falls under step two of the Alice framework.
Judge Lourie, in a concurrence joined by Judge Newman, stated that § 101 does not need a two-step analysis to determine whether an idea is abstract and indicated that “the law needs clarification by higher authority, perhaps by Congress.”
Judge Reyna dissented from both denials. According to Judge Reyna, under Federal Circuit precedent, the § 101 inquiry is a question of law and the Aatrix and Berkheimer decisions are contrary to that precedent.
Board Must Consider Applicants’ Response to New Arguments Raised in Examiner’s Answer, Even Though Examiner Did Not Designate Arguments As New
In In Re: Durance, Appeal No. 2017-1486, the Federal Circuit held that 37 C.F.R. § 41.41(b)(2) does not bar a reply brief from addressing arguments newly raised in the examiner’s answer, regardless of whether the examiner designated the new argument as a new ground of rejection.
Timothy D. Durance, Jun Fu, and Parastoo Yaghmaee (“Applicants”) appeal a decision from the PTAB affirming an examiner’s obviousness rejection. The examiner issued a final office action rejecting all of Applicants’ claims as obvious in view of the cited references. On appeal to the PTAB the examiner advanced new arguments to support the rejection, but did not designate these arguments as new grounds of rejection. In their reply brief Applicants rebutted these new arguments, but the PTAB disregarded them, stating the arguments were “not responsive to an argument raised in the Answer.” The PTAB denied Applicants’ requested rehearing.
The Federal Circuit vacated the PTAB’s decision and remanded for consideration of the new arguments. The Court found that if an examiner’s answer includes arguments raised for the first time, an applicant may address those arguments in the reply. Here, Applicants’ reply brief was responsive and included citations indicating the new arguments addressed. Therefore, the Federal Circuit found it was an error for the PTAB to disregard these arguments.
Federal Circuit Holds It Has Jurisdiction To Review Board’s Final Decision in an IPR That Was Instituted On Only Some of the Petitioned Claims and Grounds
In PGS Geophysical AS v. IANCU, Appeal Nos. 2016-2470, 2016-2472, 2016-2474, the Federal Circuit determined that it had jurisdiction to hear an appeal from a Board final decision in an IPR even though the Board erred by not instituting on all claims and grounds.
PGS owned a patent directed at methods and systems for marine seismic surveying. A competitor filed three petitions for IPRs against PGS’ patent. The Board instituted the three IPRs but only for some claims and not on all grounds. PGS appealed the Board’s decision on obviousness of certain claims. During the appeal, PGS and the competitor settled. However, the Director intervened to defend the Board’s decisions.
The Federal Circuit stated that in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), the Supreme Court held that the IPR statute does not permit partial institution on an IPR petition. Under a post-SAS analysis, the Board erred in limiting the scope of the IPRs it instituted and the scope of its final written decisions. However, the Federal Circuit concluded it still had jurisdiction to address the merits of the Board’s decisions and did not need to remand to the Board to address the claims and grounds the Board excluded from the IPRs. Specifically, the Federal Circuit found that the standard for final agency action under the Administrative Procedure Act (APA), 5 U.S.C. § 704 was met. Here, the Board issued institution decisions and final decisions in each IPR and even if erroneous, they terminated the IPR proceedings on all claims and grounds. The Federal Circuit drew an analogy to civil litigation and the situation where a district court incorrectly dismisses one count early in a case and proceeds to judgment on the merits on the second count only. Once the second count is resolved, both counts are subject to appeal. The Federal Circuit stated that “legal error does not mean lack of finality.” Here, the Federal Circuit also noted that neither party sought SAS-based relief and affirmed the Board’s decision on obviousness.
PTAB Must Consider Numerous Factors When Determining Whether Meeting Materials Are “Publicly-Accessible” Prior Art Publications
In Medtronic, Inc. v. Barry, Appeal Nos. 2017-1169, 2017-1170, in determining whether materials distributed at meetings or conferences are reasonably accessible to the public, the Federal Circuit held that the Board must consider numerous factors, not just the exclusive nature and expertise of a group.
This appeal arose from the Board’s final written decisions upholding the validity of all challenged claims in the two patents . The Board held that certain “Video and Slides” that were only distributed in meetings and conferences for a select group of experts in spinal deformity were not reasonably accessible to the public. The Board concluded the Video and Slides were not prior art and declined to consider grounds relating to the Video and Slides.
The Federal Circuit vacated the Board’s determination that the “Video and Slides” did not qualify as prior art. The relative expertise of the recipients and the exclusive nature of the group were not dispositive. A proper analysis required further consideration of: the size and nature of the meetings and whether they are open to people interested in the subject matter of the material disclosed; whether there is an expectation of confidentiality between the distributor and the recipients of the materials; and whether any policies or practices associated with a particular group meeting give rise to an expectation that disclosures would remain confidential despite any formal, legal obligations of confidentiality. The Federal Circuit remanded to the Board to consider whether the “Video and Slides” are publicly-accessible publications.
Failing to Provide Clear Notice of Invalidity Position May Justify Denial of Attorneys’ Fees
In Stone Basket Innovations, LLC v. Cook Medical, LLC, Appeal No. 2017-2330, the Federal Circuit held that in determining whether a case was exceptional for attorneys’ fees purposes, the District Court properly considered the totality of the evidence, including clear notice of the prevailing party’s invalidity position and litigation conduct.
Stone sued Cook in District Court alleging patent infringement. Cook petitioned for IPR of all claims. Following institution of the IPR, Stone requested an adverse judgment in the IPR, and all claims of the patent were canceled. Stone then successfully moved to dismiss the district court case with prejudice. Following the dismissal, Cook filed a motion under § 285 for attorney fees because of the alleged substantive weakness of Stone’s litigation position and Stone’s pattern of vexatious litigation. The District Court denied the motion, holding that none of the evidence put forth by Cook warranted such fees.
The Federal Circuit found that the District Court did not abuse its discretion in view of the evidence Cook relied on—Cook’s invalidity contentions and inventor testimony. The contentions failed to put Stone on “clear notice” of the asserted patent’s invalidity because they merely listed 32 references , along with a blanket statement of obviousness and “inconsistent and unilluminating” claim charts. Inventor testimony that a single claim limitation was known in the prior art did not make the case exceptional because patentability is considered by evaluating the claim as a whole. The Federal Circuit factored in Cook’s litigation conduct, emphasizing Cook’s failure to provide early notice of its frivolousness assertion. With respect to Cook’s vexatious litigation argument, the Federal Circuit held that the District Court did not abuse its discretion by finding that Cook failed to provide evidence that Stone’s litigation practices rise to the level exceptionality. In distinguishing Stone’s actions from behavior previously found to be exceptional, the Federal Circuit highlighted that Stone did not seek an immediate settlement, but instead litigated its position for nearly two years.
Judge Newman Dissents from Denial of En Banc Rehearing Regarding the Federal Circuit’s Jurisdiction Over Walker Process Claims
In Xitronix Corporation v. KLA-Tencor Corporation, Appeal No. 2016-2746, Judge Newman dissented from a per curiam denial of a petition for rehearing en banc to address the significance of the Federal Circuit’s determination that it does not have jurisdiction in an appeal over Walker Process antitrust claims.
The original Federal Circuit panel determined it did not have jurisdiction in an appeal over a Walker Process monopolization claim because the appealed issues of fraud and inequitable conduct presented no substantial issue of patent law. KLA-Tencor petitioned for panel rehearing and rehearing en banc; both petitions were denied in a per curiam order.
Judge Newman dissented. She believed the original decision was contrary to the statute governing Federal Circuit jurisdiction and contrary to precedent and experience. Judge Newman disagreed that the Supreme Court’s decision in Gunn v. Minton (removing Federal Circuit jurisdiction from a state law legal malpractice action) also removed Federal Circuit jurisdiction in Walker Process appeals. Judge Newman disputed the original panel’s conclusion that “something more” was required to raise a substantial issue of patent law, without further explanation on what would qualify as “something more.” Judge Newman cited en banc Federal Circuit precedent establishing that the Federal Circuit has exclusive jurisdiction over appeals involving antitrust aspects of Walker Process appeals. She stressed that because the panel decision is contrary to this authority and changes what had been a stable jurisdictional path in Walker Process appeals, at a minimum, en banc review should be required.
IPR Petitioner Bears the Burden of Proving that Proposed Amended Claims Are Unpatentable
In Sirona Dental Systems GmbH v. Institut Straumann AG, Appeal Nos. 2017-1341, 2017-1403, the Federal Circuit held that the Patent Trial and Appeal Board erred in an IPR by placing the burden on the patent owner to prove that proposed substitute claims were patentable.
Institut Straumann AG and Dental Wings Inc. (“Petitioners”) petitioned for inter partes review of a patent owned by Sirona Dental Systems. Petitioners asserted that Claims 1–4 and 9–10 were anticipated, and that Claims 1–10 were obvious in view of a German reference. The Board rejected Petitioner’s anticipation arguments, but found that Claims 1–8 were obvious. The Board denied Sirona’s contingent motion to amend because Sirona failed to affirmatively demonstrate that the proposed substitute claims were patentable. Sirona appealed to the Federal Circuit.
The Federal Circuit affirmed the Board’s findings about obviousness and anticipation, but vacated the Board’s denial of Sirona’s contingent motion to amend because the Board improperly placed the burden of establishing patentability on Sirona. Rather, in view of Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017)(en banc), the burden of persuasion properly rests with Petitioners to establish that the proposed substitute claims are not patentable. The Federal Circuit remanded the case for reconsideration, leaving the Board to determine whether it can consider combinations of references not argued by a Petitioner’s opposition to a motion to amend.
A Patentee May Recover Foreign Lost Profits Where the Infringer Exported a Component of a Patented Invention
In WesternGeco LLC V. ION Geophysical Corp., No. 16-1011, the Supreme Court held that a patentee may recover foreign lost profits where the infringer violated § 271(f)(2) by exporting from the United States a component of a patented invention.
A jury found ION Geophysical liable for infringement under § 271(f)(2), and awarded WesternGeco lost profits for lost foreign sales under § 284. On appeal, ION Geophysical argued this decision violated the general rule that federal statutes only apply within the territorial jurisdiction of the United States. The Supreme Court addressed the question of extraterritoriality by analyzing whether the conduct relevant to the statute’s “focus” occurred in the United States. The focus of § 284 is to award damages adequate to compensate for infringement. The infringement statute, § 271(f)(2), focuses on domestic conduct, namely supplying components in or from the United States. The Supreme court reasoned that exporting components from the United States is within the focus of § 271(f)(2), and that by allowing WesternGeco to recover for lost foreign sales, the damages were merely the means by which the statute achieves its end of remedying a domestic infringement.
In dissent, Gorsuch expressed concern that permitting damages for lost foreign sales under U.S. patent law would allow other countries to use their own patent laws to exert control over the U.S. economy. Because the act of patent infringement must be domestic, he argued a patent owner’s recovery should likewise be limited to the infringer’s domestic activities.
A Passing Reference in the Prior Art May Not Overcome Evidence of Teaching Away
In Impax Laboratories Inc. v. Lannett Holdings Inc., Appeal No. 2017-2020, the Federal Circuit held that a passing reference in the prior art to a formulation containing the claimed active ingredient and the claimed administration route may not overcome evidence of teaching away.
Astrazeneca AB, Astrazeneca UK Limited, and their exclusive licensee Impax Laboratories Inc. (together, “Astrazeneca”) sued Lannett Holdings Inc. (“Lannett”) for patent infringement based on Lannett’s ANDA seeking approval to manufacture and sell generic versions of Zomig® Nasal Spray. The asserted claims addressed a zolmitriptan formulation capable of nasal administration. Appellant argued the asserted claims were obvious over a reference disclosing a formulation that could be administered intranasally and may use zolmitriptan as the active ingredient. Despite this relevant disclosure, the district court found after a bench trial that the prior art taught away from formulating zolmitriptan for intranasal administration because the prior art taught that the active metabolite of zolmitriptan was more effective than zolmitriptan itself, and that a nasal spray would require zolmitriptan itself to be effective. Thus a person skilled in the art would not have had a reasonable expectation of success in making a nasal formulation of zolmitriptan.
The Federal Circuit found that the case was “close.” However, applying the deferential “clearly erroneous” standard, the Federal Circuit affirmed the district court’s factual findings and its judgment of non‑obviousness based on those findings. The Federal Circuit noted that it was “especially persuaded” by the expert’s testimony supporting Astrazeneca’s teaching-away argument, finding Astrazeneca’s expert more credible than Lannett’s.