Documents Incorporated by Reference in Their Entirety Are Not Limited by Later Potentially Limiting Statements
In Paice LLC v. Ford Motor Company, Appeal Nos. 2017-1387, -1388, -1390, -1457, -1458, the Federal Circuit held that a prior art document was incorporated by reference in its entirety into a patent specification, despite the specification later stating that where differences are not mentioned in the specification, the specific features of the prior art document are applicable to the inventions described in the specification.
This appeal arises out of several IPRs filed by Ford. During the IPRs, the PTAB found two of Paice’s patents invalid for obviousness. First, the Federal Circuit affirmed the PTAB’s finding of obviousness with respect to one patent, rejecting Paice’s arguments that the PTAB (1) erred in its determination of the scope of the prior art disclosure, (2) erred in its claim construction, and (3) failed to adequately explain its rationale for finding the claims unpatentable.
With respect to the second patent, Paice argued that the PTAB erred in finding one of the references to be prior art. Paice claimed priority to an application pre-dating one of the PTAB’s obviousness references. Paice asserted that the priority application provided written description support for its later-added patent by incorporating by reference a prior art document in its entirety. The PTAB found the language “[w]here differences are not mentioned, it is to be understood that the specifics of the vehicle design shown in the [prior art document] are applicable to the vehicles shown herein as well” in the specification limited the scope of Paice’s incorporation. Because the PTAB found that the prior art document’s relevant disclosure was different from the corresponding disclosure in the priority application, it concluded that the different prior art document disclosures were not incorporated into the priority application. The PTAB further found that the priority application alone did not provide written description support for the claimed subject matter. Accordingly, the PTAB rejected Paice’s priority claim.
The Federal Circuit held that the PTAB’s incorporation ruling was in error. In particular, the Federal Circuit found that the priority application expressly incorporated the prior art document in its entirety. The Federal Circuit determined that the language identified by the PTAB as limiting had no bearing on the extent of incorporation. Rather, it referred to the applicability of certain features of the prior art document to the improved product described in the priority application. Accordingly, the Federal Circuit remanded to the PTAB for a reconsideration as to whether the priority application, with the incorporated prior art document, provides sufficient written description support for the patent claims at issue.
No Declaratory Judgment Standing If Alleged Claims and Other Pending Litigation Would Not Resolve Entire Case or Controversy
In AbbVie Inc. v. MedImmune Limited, Appeal No. 2017-1689, the Federal Circuit held that a party may not seek a declaratory judgment to obtain piecemeal adjudication of an issue that would not resolve the entire case or controversy.
AbbVie was contractually obligated to pay royalties for sales of certain antibodies “until the last to expire of [certain] patents or the expiry of fifteen years from the date of first commercial sale of a product . . . .” Believing it would hasten the end of its royalty obligations, AbbVie brought a declaratory-judgment action to invalidate the last of those patents to expire. However, AbbVie did not seek a declaration of its rights under the royalty agreement. In particular, AbbVie did not seek a declaration that the invalidation of the last patent would constitute the “expiration” of that patent under the royalty agreement and thus terminate all royalty obligations.
The district court dismissed without prejudice on two grounds. First, it held that AbbVie lacked standing. It reasoned that because AbbVie did not practice the patent-at-issue, it could not be subject to a patent-infringement action. Alternatively, even assuming AbbVie had standing, the court decided it would not exercise jurisdiction as a matter of discretion, because the licensing agreement was governed by British law and would implicate the rights of the British government, which jointly owned the patent-at-issue.
The Federal Circuit affirmed, but on different grounds. The Federal Circuit first explained that even without the possibility of infringement, AbbVie could have standing to bring a declaratory-judgment action on the parties’ contractual obligations. But AbbVie’s claim for a declaration of patent invalidity would not resolve the parties’ underlying contract dispute. Even if AbbVie successfully proved patent invalidity, it would still be an open question whether British Courts would conclude that invalidation of the last patent would terminate AbbVie’s royalty obligation. This question would not be resolved by the litigation as framed by AbbVie. Because a litigant may not bring a piecemeal declaratory-judgment action that would not finally resolve the underlying controversy, the court affirmed the dismissal.
Distribution Agreements Can Constitute Offers for Sale Under Section 102(b)
In The Medicines Company v. Hospira, Inc., Appeal Nos. 2014-1469, 2014-1504, the Federal Circuit held that a distribution agreement qualified as an invalidating “offer for sale” under 35 U.S.C. § 102(b) when the terms of the agreement demonstrated the commercial character of an offer to sell the patented product.
The Medicines Company (“MedCo”) asserted two patents covering its Angiomax drug product against Hospira, a generic drug maker and ANDA filer. Although Angiomax had been available for decades, MedCo developed a new method of formulating Angiomax to reduce impurities. This formulation was the subject of the asserted patents, which issued on July 27, 2008. Prior to filing the patents, MedCo entered into a distribution agreement on February 27, 2007 with Integrated Commercialization Solutions, Inc. (“ICS”) to distribute the new Angiomax formulation. The agreement stated that MedCo “desire[d] to sell the Product” to ICS and ICS “desire[d] to purchase and distribute the Product.” Under the agreement, title passed to ICS upon receipt of the Product at the distribution center. The district court found that the invention was ready for patenting at the time of the agreement, but found that the patents were not invalid under § 102(b)’s on-sale bar because the distribution agreement between MedCo and ICS did not constitute an offer to sell.
The Federal Circuit reversed and remanded, finding that the terms of the distribution agreement showed that the agreement was an offer for sale. In particular, the terms included a statement that MedCo desired to sell the product and that ICS desired to purchase the product. The agreement also included the commercial price of the product and the transfer of title to ICS. MedCo argued the agreement was not an offer for sale because it was permitted to reject all purchase orders. The Federal Circuit noted, however, that the agreement required MedCo to use “commercially reasonable efforts” to fill the purchase orders, and MedCo would be unlikely to reject an order because ICS had exclusive distribution rights under the agreement and Angiomax constituted the majority of MedCo’s revenues. Therefore, the Federal Circuit held that the distribution agreement did not constitute an optional sales arrangement, and instead contained all of the necessary terms and conditions to constitute a commercial offer for sale. The Federal Circuit remanded for the district court to determine whether the offer to sell covered the patented invention.
Attorney Argument Alone Cannot Rebut Admitted Evidence at the PTAB
In Elbit Systems of America, LLC v. Thales Visionix, Inc., Appeal No. 2017-1355, the Federal Circuit held that the PTAB is entitled to weigh the credibility of expert witnesses, and that attorney argument cannot be used as evidence to rebut actual admitted evidence.
Elbit sought inter partes review of a patent owned by Thales, which related to tracking motion relative to a moving platform. Elbit challenged various claims as obvious in view of the prior art. In response, Thales argued that the limitation of calculating the “relative angular rate signal” was not explicitly disclosed in the prior art. Thales’s expert explained that this limitation is directed to a two-step method, whereas the prior art uses a three-step method. While Elbit’s expert testified that two- and three-step methods are “mathematically equivalent” and have no practical difference, the PTAB found that Elbit’s expert testimony was unsupported and entitled to little weight because he did not address the “relative angular rate signal” limitation anywhere in his opinion. As such, the PTAB credited the testimony of Thales’s expert, concluding that Elbit had failed to meet its burden of proving the asserted claims were unpatentable.
The Federal Circuit affirmed the PTAB’s decision, finding that the PTAB’s decision was supported by substantial evidence. Specifically, the Federal Circuit explained that the PTAB is entitled to weigh the credibility of witnesses, and thus declined to disturb those credibility determinations. Elbit also submitted attorney argument on appeal that the PTAB failed to credit the knowledge of a person of ordinary skill, but the Federal Circuit found that attorney argument was not evidence and was insufficient to overcome Thales’s expert testimony to the contrary.
Applicant Must Request Commencement of the U.S. National Stage of a PCT Application for Any “A”-Type PTA to Accrue
In Actelion Pharm., Ltd. v. Matal, Appeal No. 2017-1238, the Federal Circuit held that a patent applicant must expressly request commencement of the U.S. national stage of a PCT application for any “A”-type delay to begin accruing for calculating Patent Term Adjustment.
Actelion filed a U.S. Patent application as a national-stage application on January 12, 2012. The application claimed priority to a PCT application, which had a 30-month date of January 16, 2012, a federal holiday. The application was filed with a preliminary amendment that included a remark stating that “Applicant earnestly solicits early examination…,” but Actelion did not check box 3 on the PTO Form 1390 next to the statement reading: “This is an express request to begin national examination procedures.” The U.S. Patent Office issued a restriction requirement on April 26, 2013.
Under § 154(b)(1)(A), if the application is delayed more than 14 months after the date of commencement of the national stage, the term of the patent is extended for each day beyond the 14-month period. This “A”-delay calculation for Patent Term Adjustment (PTA) arises when the PTO fails to meet statutory deadlines for events that occurred during prosecution.
In the Issue Notification, the PTO granted 41 days of “A”-type PTA, encompassing the period from March 16, 2013 to April 26, 2013, and calculated based on 14 months from January 16, 2012 to March 16, 2013. Actelion requested recalculation, and the PTO reduced the grant to 40 days because January 16, 2012 was a federal holiday. Actelion filed for reconsideration once again, arguing that the 14-month period should have been calculated from the filing date of January 12, 2012 or the 30-month date of January 16, 2012. The PTO denied the petition. Actelion filed suit against the PTO, but the district court affirmed the PTO’s ruling on summary judgement. Actelion appealed to the Federal Circuit.
The Federal Circuit affirmed the district court’s ruling. Specifically, the Federal Circuit found no error in the PTO’s finding that Actelion’s failure to check box 3 of the PTO Form 1390, coupled with the boilerplate language “Applicant earnestly solicits early examination,” was at best ambivalent or inconsistent, and thus the “A”-delay calculation could not be based on the filing date of January 12, 2012. Furthermore, the Court found that the delay caused by the holiday exception, which allowed Applicants to file on the following workday, was not caused by the PTO. Accordingly, the Federal Circuit affirmed the grant of 40 days of PTA.
Licensee Did Not Materially Breach the License’s Implied Covenant of Good Faith and Fair Dealing by Exceeding the Licensed Field of Use
In MACOM Technology Solutions v. Infineon Technologies Americas, Appeal No. 2017-1448, the Federal Circuit held that a licensee did not materially breach the license’s implied covenant of good faith and fair dealing by exceeding the specified field of use.
Infineon granted MACOM an exclusive license to practice patents within a specified field of use. MACOM proceeded to make and sell products exceeding the specified field of use. In response, Infineon terminated the agreement, arguing that MACOM’s actions constituted a material breach of the license’s implied covenant of good faith and fair dealing. MACOM sued Infineon seeking a preliminary injunction that the agreement remained in effect.
The district court granted the preliminary injunction, finding that MACOM would likely establish that its activity outside the licensed field of use did not materially breach the agreement’s implied covenant of good faith and fair dealing, and thus, Infineon was not justified in terminating the agreement. The preliminary injunction stated that the license agreement would remain in full force and further enjoined Infineon from making and selling products in MACOM’s exclusive field of use. Infineon appealed to the Federal Circuit.
The Federal Circuit found no abuse of discretion in the district court’s finding that MACOM demonstrated a likelihood of success that the agreement was wrongfully terminated. The license was merely a promise by Infineon not to sue MACOM for practicing the patent within the licensed field of use. There was no additional promise that MACOM would not exceed the specified field of use. The Federal Circuit noted that instead of terminating the agreement, Infineon could enforce its patent rights against MACOM’s unlicensed activity through an infringement lawsuit.
However, the Federal Circuit found that the clause enjoining Infineon from making and selling products in MACOM’s exclusive field of use failed to meet the specificity requirements of Rule 65(d). Specifically, injunctions prohibiting future infringement without identifying a particular, adjudicated product are not sufficiently specific. Thus, the Federal Circuit vacated this clause of the preliminary injunction.
Claim Terms Equally Understood as Structure or Process Should Generally Be Interpreted in Their Structural Sense
In In Re: Nordt Development Co., LLC, Appeal No. 2017-1445, the Federal Circuit held that the Board erred in its claim construction of “injection molded” as a process limitation with no patentable weight, and vacated the Board’s finding.
The claims at issue refer to “injection molded” components of a knee brace. The examiner afforded the term “injection molded” no patentable weight after construing the claims as product-by-process claims and the term as a process limitation. As a result, the examiner rejected the claims as anticipated. The Board affirmed and Nordt appealed to the Federal Circuit.
The Federal Circuit held that the term “injection molded” is structural and should have been afforded patentable weight. Although the application describes “injection molded” as a process of manufacture, there were undisputed “clear structural differences” between a knee brace made with fabric components and injection-molded components. Moreover, terms that can equally be understood as structural or process limitations are “commonly and by default interpreted in their structural sense, unless the patentee has demonstrated otherwise.” Thus, the Federal Circuit vacated the anticipation rejection and remanded.
A Section 101 Inquiry May Involve Both Questions of Fact and Questions of Law
In Berkheimer v. HP Inc., Appeal No. 2017-1437, the Federal Circuit held (1) the term “archive exhibits minimal redundancy” was indefinite, as a skilled artisan would not have known the meaning of “minimal redundancy” with reasonable certainty, and (2) the district court erred in concluding there were no underlying factual questions to the § 101 inquiry, because while patent eligibility is ultimately a question of law, the underlying question of whether something is “well-understood, routine, and conventional” is a factual issue.
Berkheimer asserted a patent relating to digitally processing and archiving files. The district court held several claims invalid after concluding that the claim term “archive exhibits minimal redundancy” was indefinite. HP then moved for summary judgment that the remaining claims were ineligible under 35 U.S.C. § 101. The district court granted that motion and Berkheimer appealed to the Federal Circuit.
The Federal Circuit affirmed the district court’s finding of indefiniteness. The specification itself used inconsistent terminology to describe the level of redundancy the system achieved. The specification also did not contain any point of comparison to determine an objective boundary for what “minimal” meant.
With respect to the § 101 decision, the Federal Circuit affirmed in part and remanded in part. Regarding the first step of Alice, determining whether the claims at issue were directed to a patent-ineligible concept, the Federal Circuit concluded each of the claims was directed to an abstract idea. Regarding the second step of Alice, considering the elements of each claim both individually and as an ordered combination to determine whether the additional elements transformed the nature of the claim into a patent-eligible application, the specification disclosed an inventive feature of storing data in a technologically beneficial way. It also described how and why that feature was unconventional. As a result, there was a genuine issue of fact as to whether the claims recited “well-understood, routine, and conventional activities to a skilled artisan.” Thus, the Federal Circuit remanded with respect to certain claims directed towards that concept.
Federal Circuit Lacks Jurisdiction Over Antitrust Claims When Patent Law Is Not a Necessary Element of the Well-Pleaded Claims
In Xitronix Corporation v. KLA-Tencor Corporation, Appeal No. 2016-2746, the Federal Circuit held that it lacked jurisdiction over a Walker-Process antitrust claim because patent law was not a necessary element of one of the well-pleaded claims.
Xitronix sued KLA-Tencor (“KLA”), asserting a Walker Process monopolization claim, based on alleged fraudulent prosecution of a patent. The Federal Circuit asked the parties to show cause as to why the case should not be transferred to the regional Circuit for lack of jurisdiction, particularly in view of the Supreme Court’s decision in Gunn v. Minton. Under the well-pleaded complaint rule, the Federal Circuit’s jurisdiction extends to cases in which patent law is a necessary element of one of the well-pleaded claims. In Gunn, the Supreme Court held that a state law claim alleging legal malpractice in the handling of a patent case did not arise under federal patent law for purposes of exclusive federal jurisdiction. The Supreme Court found that the federal issue in that case was not substantial when analyzed with respect to the federal system as a whole.
Applying the well-pleaded complaint rule, in light of the guidance provided by Gunn, the Federal Circuit found that the monopolization claim did not necessarily depend on resolution of a substantial question of federal patent law. In reaching this conclusion, the Federal Circuit determined that the allegations of false statements were not unique to patent law and that the underlying patent issue did not present a substantial issue of patent law—there was no dispute over the validity of the patent claims, the patent claims would not be invalidated or revived based on the result of the case, the outcome of the case would not undermine the uniform body of patent law, and the result was limited to the parties and the patent in this matter. Accordingly, the Federal Circuit transferred the case to the U.S. Court of Appeals for the Fifth Circuit.
District Court’s Steps to Avoid Prejudice Following a Discovery Violation Were Adequate
In Merck Sharp & Dohme Corp. v. Amneal Pharmaceuticals LLC, Appeal No. 2017-1560, the Federal Circuit, applying Third Circuit law, found that proceeding to trial despite a party’s violation of a discovery order was not an abuse of discretion where the district court took adequate steps to ensure the opposing party would not be prejudiced.
This case arises out of a patent lawsuit between Merck and Amneal relating to Amneal’s generic version of Nasonex®. Merck alleged that Amneal’s MFA form of the active agent would convert to the patented MFM form during storage and mixing.
Following a motion to compel, the district court ordered Amneal to immediately produce samples of any “representative commercial batches” of its product that were sent to the FDA. During expert discovery, Merck learned that Amneal had not produced samples of two batches. Amneal argued that the two batches were cumulative of batches already produced. In pre-trial hearings, the district court acknowledged that Amneal should have produced the two batches but was not convinced that the additional mixing that the two batches underwent would convert the MFA to MFM. The district court refused to compel production of samples and postpone trial, instead giving Merck the opportunity to prove that the unproduced samples were substantively different from the produced samples. Following expert testimony, the district court found that, on the evidence presented, Merck failed to demonstrate that additional mixing would cause the unproduced samples to convert to MFM.
The Federal Circuit affirmed the district court’s rulings. Though describing the case as a “close” one, the Federal Circuit held that the district court took adequate steps to ensure that proceeding with the bench trial would not prejudice Merck. The Federal Circuit also found that the district court did not err in relying on the produced samples for its noninfringement finding because the Federal Circuit found the produced samples were representative of the final Amneal ANDA product.
“Subjective Preference” Is Insufficient to Establish “Teaching Away”
In Polaris Industries, Inc. v. Arctic Cat, Inc., Appeal Nos. 2016-1807, 2016-2280, the Federal Circuit reiterated that an evaluation of “teaching away” requires consideration of whether a reference “criticize[s], discredit[s], or otherwise discourage[s]” modifying the prior art in the manner claimed.
Arctic Cat filed two inter partes review petitions challenging Polaris’s patent, which is directed to all-terrain vehicles (ATVs) with two side-by-side seats. In the first IPR (“the 1427 IPR”) the Board found the claims unpatentable as obvious over one combination of references, and in the second IPR (“the 1428 IPR”) the Board found that the claims were not proven unpatentable over a second combination of references. Both parties appealed.
On appeal, Polaris challenged the Board’s finding of a motivation to combine in the 1427 IPR. The Federal Circuit affirmed the Board’s finding for two claims, but reversed with respect to a third claim. The third claim recited an ATV with side-by-side seats which, among other things, includes a fuel tank under one of the seats. The Board found that such a configuration would have been obvious to a person of ordinary skill in the art in view of a reference that taught an ATV with side-by-side seats. Polaris argued that the reference relied on by the Board taught away from including such a fuel tank because the reference taught that maintaining a low center of gravity was a goal of the disclosure. Polaris’s expert testified that modifying the ATV to include a fuel tank under the seats would substantially raise the center of gravity. The Board dismissed this argument, stating that the low center of gravity was a “subjective preference” that did not rise to the level of a teaching away. The Federal Circuit reversed, finding that the “subjective preference” test had no basis in precedent, and instructed the Board to perform the usual teaching-away analysis on remand. The Federal Circuit noted that even if the Board determined that the reference did not teach away, the statements in the reference would still be relevant in determining whether there was a motivation to combine.
The Federal Circuit also rejected challenges to the Board’s claim constructions, finding the Board properly relied on the “broadest reasonable interpretation” standard. The Federal Circuit addressed Polaris’s arguments regarding evidence of commercial success, reversing the Board and instructing the Board to consider Polaris’s undisputed evidence of commercial success.
Finally, the Federal Circuit addressed Arctic Cat’s challenges regarding the 1428 IPR. The Federal Circuit rejected Arctic Cat’s claim construction arguments, finding that Arctic Cat’s proposed construction was not reasonable in light of the specification and other evidence.
PTAB Finding That a Reference Is Similar to a Claim Limitation Is Insufficient to Show Anticipation
In In re: Hodges, Appeal No. 2017-1434, the Federal Circuit found that the PTAB’s finding that an element in a prior art reference is “similar to” a claim limitation, without further explanation, is insufficient to support a finding of anticipation.
Hodges’ patent application covered an improved drain valve. Claim 1 recites, in part, (1) a valve body that defines an inlet seat, and (2) a sensor that generates a signal. The examiner rejected this claim as anticipated by two prior art references, or obvious over the combination of the two. For Reference A, the examiner found that an unlabeled valve had similar positioning and thus inherently disclosed the valve body claimed by Hodges. The examiner also construed the claim term “signal” and determined that this term was disclosed by Reference B. The PTAB affirmed.
The Federal Circuit reversed the Board’s anticipation rulings and vacated the Board’s obviousness ruling. The Federal Circuit determined that the only correct interpretation of Reference A was that the inlet seat in the unlabeled valve is external to the outer casing of the drain valve. Accordingly, the inlet seat could not be defined by the valve body, as required by Claim 1. Also, the PTAB’s finding—that the unlabeled valve in Reference A had a similar position to Hodges’ claimed valve—was insufficient to support a finding of anticipation without further explanation as to how a skilled artisan could have practiced the invention without undue experimentation. The Federal Circuit also reversed the Board’s anticipation finding for Reference B. Applying the broadest reasonable interpretation of the term “signal,” the court held that the examiner’s construction was unreasonably broad and inconsistent with Hodges’s application. The Federal Circuit vacated the obviousness finding because the Board did not explain its factual conclusions and thus the court could not review those findings for substantial evidence.
Judge Wallach dissented in part. Judge Wallach concluded that the Federal Circuit exceeded its authority by making unsupported factual findings with regard to Reference A and should have remanded to the agency for additional investigation or explanation.
Pleadings Can Present Factual Questions Sufficient to Survive a Motion to Dismiss Under Section 101
In Aatrix Software, Inc. v. Green Shades Software, Inc., Appeal No. 2017-1452, the Federal Circuit held that allegations in the complaint describing prior art problems solved by the claimed invention presented factual disputes sufficient to survive a Rule 12(b)(6) motion under § 101.
Aatrix sued Green Shades for infringement of two patents directed to systems and methods for designing, creating, and importing data into a viewable form on a computer. Green Shades moved to dismiss under § 101. The district court granted the motion and denied leave to file a proposed amended complaint. Aatrix appealed to the Federal Circuit.
The Federal Circuit held that the allegations in the proposed amended complaint raised factual disputes sufficient to survive a motion to dismiss based on Alice/Mayo. The Alice/Mayo test involves subsidiary fact questions, including whether the claimed elements were well-understood, routine, or conventional. Here, Aatrix’s proposed amended complaint contained allegations describing the development of the patented invention, problems present in the prior art, and how the patented invention solved those problems. The Federal Circuit vacated the district court’s dismissal pursuant to Rule 12(b)(6), reversed the district court’s denial of Aatrix’s motion for leave to file an amended complaint, and remanded because the allegations in the proposed amended complaint presented a factual issue that could not be resolved on a motion to dismiss.
Judge Reyna concurred with the majority’s disposition but dissented from much of the majority’s analysis. Judge Reyna argued that the majority’s analysis put too much emphasis on subsidiary factual questions underlying the legal § 101 question. Judge Reyna also argued the Federal Circuit should have remanded without discussing, in the first instance, whether the proposed amended complaint was sufficient under Rule 12(b)(6) to survive a § 101 challenge.
Examiner Reliance on an Applicant’s Argument Results in Prosecution Disclaimer
In Arendi S.A.R.L. v. Google LLC, Appeal No. 2016-1249, the Federal Circuit held that prosecution disclaimer occurs where an applicant explains why claims were amended and the examiner confirms the reasons for allowance.
Google petitioned for inter partes review of all claims of a patent owned by Arendi. The PTAB instituted inter partes review of all claims on the ground of obviousness. In the IPR, Arendi argued that a prosecution disclaimer of certain subject matter distinguished a prior art reference. In two alternative rulings, the PTAB held all of the patent claims unpatentable. In its first ruling, the PTAB stated that prosecution disclaimer did not occur because the examiner—not Arendi—disclaimed the relevant subject matter in the Notice of Allowance; on this construction, the PTAB held the claims invalid in view of the prior art. In its second ruling, the PTAB stated that even if there had been a prosecution disclaimer, the claims still would have been obvious in light of the prior art. Arendi appealed.
On appeal, the Federal Circuit rejected the PTAB’s first ruling that prosecution disclaimer had not occurred. The court stated that the prosecution history must be consulted during claim construction so as to exclude any interpretation that was disclaimed during prosecution. During prosecution of the patent, Arendi amended the claims and explained what was changed and why. The examiner confirmed the reasons why the claims were deemed allowable in the Notice of Allowance. The examiner and Arendi understood what Arendi had changed and what the claim amendment required. Thus, the Federal Circuit held that prosecution disclaimer applied. However, Federal Circuit proceeded to affirm the PTAB’s second ruling that, even if prosecution disclaimer applied, the patent claims were nevertheless unpatentable based on obviousness.
Claim Construction Disputes Are Not Suitable for Resolution on a Motion to Dismiss
In Nalco Company v. Chem-Mod, LLC, Appeal No. 2017-1036, the Federal Circuit reiterated that a plaintiff need not prove its case of patent infringement at the pleading stage. Additionally, the Federal Circuit held that, to the extent a defendant disputes the pleaded allegations or claim scope, these inquiries are not suitable for resolution on a motion to dismiss.
Nalco’s asserted patent was directed to a method of removing elemental mercury from the flue gas created by combustion in coal-fired power plants. Nalco alleged that the defendants’ combustion process operated in the same manner as the claimed method. The district court granted the defendants’ motions to dismiss Nalco’s five successive complaints under Rule 12(b)(6) for factual deficiencies in pleading various infringement theories. Nalco appealed the district court’s dismissal of its Fourth Amended Complaint.
The Federal Circuit reversed the dismissal of Nalco’s Fourth Amended Complaint and remanded for further proceedings. In reinstating all the claims, the Federal Circuit found that Nalco had adequately pled its infringement theories under the Twombly and Iqbal pleading standard. For the direct infringement claims, the Federal Circuit found that Nalco had plausibly alleged its direct infringement theories and that the district court had inappropriately resolved disputes on a Rule 12(b)(6) motion without the benefit of claim construction. The Federal Circuit also reversed the district court’s dismissals of the indirect infringement and willful infringement claims, which were solely based on the dismissal of the underlying direct infringement claim. The Federal Circuit ruled that factual disputes related to those claims should not be resolved at the Rule 12(b)(6) stage.