Contributors: Knobbe Martens
Beware of What You Say: Prosecution History Estoppel
In Samsung Electronics Co., Ltd. v. Elm 3DS Innovations, LLC, Appeal Nos. 2017-2474, -2475, -2476, -2478, -2479, 2480, -2482, -2483, -2018-1050, -1079, -1080, 1081, 1082, the Federal Circuit found that if the technology is complex, a party may be required to provide more evidence of a reasonable expectation of success for obviousness.
Samsung, Micron, and SK Hynix (collectively “Petitioners”) filed thirteen IPRs challenging the validity of eleven of Elm’s patents based on obviousness. The patents at issue related to stacked integrated circuit memory. During claim construction before the PTAB, the parties disputed the meaning of the term “substantially flexible.” Elm contended that the claim term should be given its ordinary meaning, while the Petitioners argued that the record supported a construction defined by an embodiment found in the specification. The PTAB agreed with Elm on the claim construction and relied on a general purpose dictionary to construe “substantially flexible” to mean “largely able to bend without breaking.” The PTAB went on to determine that the prior art did not disclose the “substantially flexible” limitation. Further, the PTAB found that a person of ordinary skill in the art would not have reasonably expected success in combining the fabrication process disclosed in two of the pieces of prior art with the dielectric material in another piece of prior art. The PTAB found that Petitioners’ expert’s testimony that the dielectric material disclosed in the prior art had certain benefits and the prior art disclosing fabrication processes was in the same technological field as the prior art disclosing the dielectric material was insufficient to show a reasonable expectation of success, particularly given the complexity of semiconductor fabrication. The PTAB held that the claims were patentable and not obvious.
The Federal Circuit affirmed the PTAB’s decisions, but noted that the PTAB’s claim construction incorrectly used a general-purpose dictionary definition of the claim term. The Federal Circuit found that Elm had clearly and unambiguously disclaimed claim scope to overcome various examiner objections or rejections during prosecution of at least some of the patents at issue. Nonetheless, the Federal Circuit affirmed the PTAB’s decisions that the claims were patentable and not obvious.
One-year Clock for Filing IPR Petition Applies to Litigants and Parties that Become Privies of the Litigant Prior to Institution.
In Power Integrations, Inc v. Semiconductor Components, Appeal No. 2018-1607, the Federal Circuit decided that an IPR is time-barred under 35 U.S.C. § 315(b) if, at the time of institution, the petitioner is in privity with a party who was served with a complaint for patent infringement over a year before the petition was filed.
In 2009, Power Integrations sued Fairchild for patent infringement. After expiration of Fairchild’s one-year IPR window under § 315(b), Semiconductor Components—who was not a party to the litigation—petitioned for IPR. At the time Semiconductor Components petitioned, they had entered into a merger agreement with Fairchild. The merger closed after the IPR petition was filed, but before the PTAB issued its institution decision. In instituting the IPR, the PTAB focused its § 315(b) analysis on when the petition was filed, and asked whether Semiconductor Components and Fairchild were in privity on that date. Because the merger had not closed at the time of filing, the PTAB determined that the petition was not time-barred.
The Federal Circuit reversed. Section 315(b) states that an IPR “may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” The Federal Circuit noted that the “is filed” language does not dictate when to determine if the privity relationship exists. Instead, the words “is filed” merely mark the end of the one-year window for filing an IPR petition. Section 315(b) provides a condition, which if true, dictates that an IPR “may not be instituted.” Accordingly, the PTAB may not institute if, at the time of institution, the petitioner is subject to the time-bar.
State Sovereign Immunity Does Not Bar an IPR
In Regents of the University Of Minnesota v. LSI Corporation, Appeal No. 2018-1559, state sovereign immunity does not apply to IPR proceedings asserted against patents owned by or assigned to states, regardless of whether the state has asserted the patent claims in a district court litigation.
The Regents of the University of Minnesota (“UMN”), an arm of the state of Minnesota, sued LSI Corp. and customers of Ericsson Inc. in district court for infringement of a number of patents. In turn, LSI and Ericsson separately petitioned for IPR against UMN’s patents. UMN filed a motion to dismiss the petitions based on state sovereign immunity. An expanded panel at the PTAB concluded that although state sovereign immunity applies to IPR proceedings, UMN waived its immunity by filing the district court suit. A concurring opinion concluded that state sovereign immunity was not implicated because IPR proceedings are in rem proceedings.
The Federal Circuit agreed that the IPR against UMN’s patents could continue, but held that state sovereign immunity does not apply to IPR proceedings. The Federal Circuit noted that because IPR proceedings are more similar to agency enforcement actions than civil litigation, they are an adjudication of a public right and are not barred by tribal sovereign immunity. The court reasoned that, because state and tribal sovereign immunity do not materially differ with regard to IPR proceedings, state sovereign immunity also does not apply to IPR proceedings. The Federal Circuit did not address the issue of whether, if state sovereign immunity were to apply to IPR proceedings, UMN waived its immunity by asserting patent claims in district court.
Separate from the opinion, Judges Dyk, Wallach, and Hughes also provided additional views on the matter, arguing that “state sovereign immunity also does not apply to IPR proceedings because they are in substance the type of in rem proceedings to which state sovereign immunity does not apply.”
Years-Old R&D Investments Satisfy the Domestic Industry Requirement
In Hyosung TNS Inc. v. ITC, Appeal No. 2017-2563, past investments can satisfy the ITC’s domestic industry requirement if (1) the investments pertain to products covered by an asserted patent and (2) the complainant continues to make other investments relating to such products at the time the complaint is filed.
Diebold filed a complaint with the ITC arguing that Hyosung violated 19 U.S.C. § 1337(a)(1)(B) by importing products that infringed Diebold’s patents. The ITC agreed with Diebold and entered a limited exclusion order and a cease-and-desist order. Hyosung appealed the ITC’s decision.
On appeal, Hyosung argued that Diebold failed to satisfy the domestic industry requirement under § 1337(a)(1)(B) for the products covered by one of the asserted patents. In particular, Hyosung asserted that Diebold’s main investments for these products, which occurred between 2005 and 2010, failed to meet the economic prong of the domestic industry requirement, as those investments occurred at least 5 years before Diebold brought the ITC action in 2015.
The Federal Circuit disagreed with Hyosung and held that past investments may be considered to support a domestic industry claim if (1) the investments pertain to products covered by the asserted patent and (2) the complainant continues to make investments relating to such products at the time the complaint is filed. Diebold’s investments between 2005 and 2010 were directly related to products covered by the asserted patent. Additionally, Diebold continued to have service and assembly expenses for those products until the date of its ITC complaint. As a result, substantial evidence supported the ITC’s domestic industry finding.
Reissue Patent Claims Not “Clearly and Unequivocally” Supported in Original Patent Are Invalid
In Forum US, Inc. v. Flow Valve, LLC, Appeal No. 2018-1765, the Federal Circuit held that the original patent on which a broadening reissue patent is based must clearly and unequivocally disclose the invention claimed in the reissue patent.
Forum filed a declaratory judgment action to invalidate a reissue patent owned by Flow Valve. The original patent claimed a fixture with “a plurality of arbors,” and the reissue patent added new claims without the arbor limitation. Forum contended the added reissue claims violated 35 U.S.C. § 251, because the original patent did not disclose an invention without arbors. In opposition, Flow Valve argued that a person of ordinary skill in the art would understand that the original patent disclosed multiple inventions, consisting of embodiments with and without arbors. Flow Valve supported this argument with an expert declaration. The district court granted summary judgment of invalidity because the original patent did not “explicitly and unequivocally” indicate the invention claimed in the reissue claims. Flow Valve appealed.
Affirming the grant of summary judgment, the Federal Circuit stated that the original patent must “clearly and unequivocally” disclose the newly claimed invention to satisfy § 251, and found that Flow Valve’s original patent did not disclose any arbor-less embodiment. The Federal Circuit added that even if a person of ordinary skill in the art would understand that the newly claimed, arbor-less invention would be possible, that understanding would be insufficient to comply with the standard set forth in the case law.
A Single Prior Art Reference Can Render a Patent Obvious
In Game and Technology Co., Ltd. v. Activision Blizzard Inc., Appeal No. 2018-1981, the Federal Circuit determined that a single prior art reference can render a patent obvious if it would have been obvious to modify that reference to arrive at the claimed invention.
Game and Technology Co., Ltd. (“GAT”) owned a patent directed to a method of customizing internet game characters in online games. Activision sought inter partes review of the patent and argued that it was obvious in view of two prior art references: a video game manual and a patent publication. The PTAB determined that the challenged claims were obvious over the video game manual alone or combined with the patent publication. GAT appealed, challenging the determination of obviousness and the claim construction of the terms “gamvatar” and “layers.”
GAT argued on appeal that a single reference cannot support a finding of obviousness. The Federal Circuit rejected this as a matter of law because a patent can be obvious in light of a single prior art reference if it would have been obvious to modify that reference. The Federal Circuit also affirmed the PTAB’s construction of the terms “gamvatar” and “layers.” The Federal Circuit noted that the specification is always highly relevant to the claim construction analysis, and that the specification supported the PTAB’s construction.
Registering Immoral or Scandalous Trademarks
In IANCU v. Brunetti, Appeal No. 18-302, the Lanham Act’s prohibition on registering immoral or scandalous trademarks violated the First Amendment because it discriminated on the basis of viewpoint.
Designer Erik Brunetti sought to register the trademark “FUCT.” The USPTO denied the application because 15 U.S.C. § 1052(a) prohibits registering trademarks that include immoral or scandalous matter. Brunetti challenged the “immoral or scandalous” bar in Section 1052(a). The Federal Circuit held that the provision violated the First Amendment.
The Supreme Court affirmed. In an earlier Supreme Court case, Matal v. Tam, the Supreme Court held that a ban on registering trademarks that disparage persons was unconstitutional because it was based on viewpoint. The Supreme Court applied Matal and held that the “immoral or scandalous” bar was similarly unconstitutional because it discriminated on the basis of viewpoint. The statute, on its face, distinguished between ideas aligning with conventional societal norms, and those that defy society’s sense of decency, which resulted in a viewpoint-discriminatory application of the law. Thus, the provision violated the First Amendment.
Justice Alito concurred but argued the decision does not prevent Congress from adopting a more carefully crafted statute to preclude the registration of marks containing vulgar terms. Chief Justice Roberts dissented in part, agreeing that the term “immoral” cannot be given a narrow construction to eliminate viewpoint bias, but arguing that the term “scandalous” could be construed narrowly to eliminate viewpoint bias.
Supreme Court Clarifies When Commercial or Financial Information Is ‘Confidential’ Under the Freedom of Information Act
In Food Marketing Institute v. Argus Leader Media, Appeal No. 18-481, the Federal Circuit determined that commercial or financial information is confidential under the Freedom of Information Act (FOIA) when it is (1) both customarily and actually treated as private by its owner and (2) provided to the government under an assurance of privacy.
Argus Leader Media filed a FOIA request with the Department of Agriculture (USDA) seeking information submitted to the USDA from stores in the national food-stamp program. The USDA declined the request under FOIA’s Exemption 4, which shields “trade secrets and commercial or financial information obtained from a person and privileged or confidential” from disclosure. Argus Leader sued to compel disclosure of the USDA information. The district court, employing Eighth Circuit precedent, found that the stores’ data was not confidential because disclosure would not cause substantial competitive harm. When the USDA declined to appeal, the Food Marketing Institute intervened and appealed to the Eighth Circuit, which affirmed the district court’s decision. The Supreme Court granted the Institute a stay of the Eighth Circuit’s mandate and later granted certiorari.
In a 6-3 decision, the Court rejected the Eighth Circuit’s “competitive harm” test for confidential commercial or financial information. The Court observed that this test originated from a highly criticized 1974 D.C. Circuit decision that relied on witness statements from a congressional hearing on a different, unpassed bill. The Court held that, “where commercial or financial information is both customarily and actually treated as private by its owner and provided to the government under an assurance of privacy, the information is ‘confidential’ within Exemption 4’s meaning.”
The Doctrine of Equivalents May Apply Despite Restriction Requirements and Narrow Claiming
In UCB, Inc. v. Watson Laboratories Inc., Appeal No. 2018-1397, 2018-1453, the Federal Circuit found that application of the doctrine of equivalents may not be barred by: (1) prosecution history estoppel where an election in response to a restriction requirement does not constitute a surrender of an asserted equivalent, or (2) intentional narrow claiming where there is insufficient evidence that the asserted equivalent was foreseeable.
UCB filed suit against Defendants Watson and Actavis asserting a patent relating to a transdermal form of a drug for treating Parkinson’s disease. The district court found that Defendants infringed all of the asserted claims of the patent under the doctrine of equivalents. While Defendants’ products used a different adhesive than the claimed adhesives, the district court determined that, under the doctrine of equivalents, the differences between Defendants’ adhesives and the claimed adhesives were insubstantial. The district court also rejected Defendants’ arguments that UCB was barred from asserting the doctrine of equivalents. Defendants appealed.
On appeal, the Federal Circuit first agreed with the district court that UCB was not barred from asserting the doctrine of equivalents. Regarding prosecution history estoppel, the Federal Circuit disagreed with Defendants’ reading of the prosecution history, noting that the restriction requirement did not relate to Defendants’ adhesive and that UCB never added a limitation excluding Defendants’ adhesive by amendment. Accordingly, the Federal Circuit concluded that UCB’s election in response to the Examiner’s restriction was not a narrowing amendment, and did not indicate a surrender of Defendants’ adhesive as an equivalent. Next, the Federal Circuit rejected Defendants’ argument that UCB chose to draft narrow claims and therefore should not be permitted to expand the scope of those claims through the doctrine of equivalents. While recognizing that foreseeability of an asserted equivalent at the time of claim drafting is a factor to consider in determining whether the doctrine of equivalents should apply, the Federal Circuit determined that there was not enough indication from the patent specification, claims, or the record evidence of the inventor’s knowledge to conclude that UCB surrendered Defendants’ adhesive as an equivalent for infringement purposes. The Federal Circuit also rejected Defendants’ claim vitiation and ensnarement arguments. Finding no clear error in the district court’s application of the doctrine of equivalents, the Federal Circuit affirmed.
Federal Circuit Clarifies Appellate Jurisdiction to Review Attorney’s Fees Awards
In Elbit Systems Land And C4i Ltd. v. Hughes Network Systems, LLC, Appeal No. 2018-1910, neither 28 U.S.C. § 1295 nor 28 U.S.C. § 1292(c)(2) provided appellate jurisdiction to review an attorney’s fees award where the amount of attorney fees had not yet been quantified.
Elbit Systems Land and C4I Ltd. and Elbit Systems of America, LLC (collectively “Elbit”) sued Hughes Network Systems, LLC for patent infringement. The jury found certain asserted claims were infringed and not invalid, and it awarded damages. The district court found that the case was exceptional due to Hughes’s litigation conduct and that Elbit was entitled to attorney’s fees. The district court did not quantify the amount of the attorney’s fees to be awarded to Elbit.
Hughes appealed the infringement finding, damages award, and exceptionality determination. The Federal Circuit affirmed the district court’s decision regarding infringement and damages and dismissed Hughes’ appeal with respect to the district court’s exceptionality finding.
The Federal Circuit held that there was substantial evidence to support the jury’s infringement finding and damages award. Specifically, the Federal Circuit noted that the jury could permissibly find that Hughes’s products infringed certain asserted claims given the parties’ expert testimony. Elbit also provided expert testimony on an appropriate damages award based on a previous, similar settlement, while Hughes did not introduce any expert testimony on that subject.
With respect to the district court’s unquantified attorney’s fees award, the Federal Circuit held that it lacked jurisdiction to review the finding. Citing the Supreme Court’s decision in Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988), the Federal Circuit held that 28 U.S.C. § 1295 could not provide the basis for jurisdiction because a determination of entitlement to fees is not a reviewable final decision until quantification of the fee award. The Federal Circuit also noted that 28 U.S.C. § 1292(c)(2), which authorizes review of a judgment that is final except for an accounting, could not provide jurisdiction because, under Budinich, the statute does not authorize review of fees rulings and fees are not part of an “accounting” under the statute.
Plausible and Specific Factual Allegations that Aspects of a Claim Are Inventive Are Sufficient to Defeat a Motion to Dismiss for Patent Ineligibility
In Cellspin Soft, Inc. v. Fitbit, Inc. et al., Appeal Nos. 2018-1817, -1819, -1820, -1821, -1822, -1823, -1824, -1825, -1826, the Federal Circuit held that, while factual allegations wholly divorced from the patent claims or specification would not defeat a motion to dismiss under Section 101, plausible and specific allegations that certain aspects of the claims are inventive can be sufficient. Additionally, a patent’s presumption of validity is also a presumption of eligibility under § 101.
Cellspin filed complaints against numerous defendants alleging infringement of one or more of its four patents relating to uploading media from a data capture device to the Internet using a cellphone as an intermediary. Defendants filed an omnibus motion to dismiss on the basis that all four patents were drawn to the patent-ineligible abstract idea of acquiring, transferring, and publishing data. Just a few days before the hearing on the motion to dismiss and after briefing was completed, Cellspin amended its complaints to allege that the patents’ claim limitations were unconventional. The parties then submitted supplemental briefing addressing the Federal Circuit’s then-recent decisions in Berkheimer and Aatrix. The district court granted Defendants’ omnibus motion to dismiss, finding that all asserted claims were ineligible under § 101. Several Defendants also moved for attorneys’ fees under § 285, which the district court granted.
On appeal, the Federal Circuit first explained that the patents were drawn to the abstract idea of capturing and transmitting data from one device to another. Despite Cellspin’s arguments that the claims were directed to improving Internet-incapable data-capture devices and mobile networks, the Court stated that it had consistently held that similar claims reciting the collection, transfer, and publishing of data were directed to an abstract idea. However, on step two of Alice, the Federal Circuit explained that the district court erred in discounting the factual allegations regarding unconventionality in Cellspin’s amended complaints. The Federal Circuit noted that, while not just any allegation of inventiveness, “wholly divorced from the claims or the specification,” would defeat a motion to dismiss, a district court must accept plausible and specific factual allegations as true. Because the district court did not credit Cellspin’s allegations in its amended complaints, the Federal Circuit vacated the dismissal and remanded to the district court.
The Federal Circuit also vacated the attorneys’ fees award, as Defendants were no longer the prevailing parties. The Court also noted that the district court had erred in the underlying exceptional-case analysis. First, the Federal Circuit explained that the presumption of validity applies to eligibility under § 101, because the USPTO examines whether patents comply with § 101. The Federal Circuit also ruled that the district court had erred in faulting Cellspin for filing the amended complaints just days before the hearing on the motion to dismiss, since the amended complaints were filed within the permissible time outlined in the scheduling order and because Berkheimer and Aatrix had been decided only a few weeks earlier.