USPTO Has Standing to Defend Appeal From Inter Partes Reexamination
In Knowles Electronics LLC V. IANCU, Appeal No. 1954, the Federal Circuit determined that the USPTO has standing to intervene to defend its decision, even when the requestor has withdrawn.
Knowles appealed an inter partes reexamination decision of the PTAB, which affirmed an examiner’s findings that the patent claims directed to a silicon condenser microphone apparatus with a housing for shielding a transducer were anticipated or obvious. On appeal, Knowles argued that (i) the PTAB improperly construed “package” and (ii) the PTAB improperly relied on a new ground of rejection to sustain the examiner’s obviousness finding. Third-party requester Analog Devices, Inc. declined to defend the judgment in its favor, and the USPTO intervened.
The Federal Circuit first determined that the USPTO had standing to intervene. The Federal Circuit cited 35 U.S.C. § 143, which gives the Director of the USPTO “an unconditional statutory ‘right to intervene in an appeal from a [PTAB] decision.’” The Federal Circuit then stated that its precedent also allows the USPTO to intervene when the petitioner has withdrawn on appeal, concluding that it necessarily implied jurisdiction.
With respect to the claim construction of “package,” Knowles argued that the Federal Circuit should direct the PTAB to adopt the definition from another case, which construed the term more narrowly. Reviewing the PTAB’s claim construction de novo, the Federal Circuit found that the claim language and specification did not support the narrow construction proffered by Knowles. Furthermore, the Federal Circuit concluded that the extrinsic evidence relied upon by Knowles could not overcome the intrinsic evidence.
Regarding Knowles’s second argument, the Federal Circuit found that the PTAB did not rely upon a new ground of rejection in its analysis because the PTAB’s rejection relied on the same reasons provided by the Examiner. Moreover, because Knowles had a fair opportunity to respond, the PTAB’s rejection did not count as a new ground of rejection.
Judge Newman dissented, concluding that, although the USPTO may have had statutory authorization to intervene, it could not satisfy the constitutional requirements of Article III standing without a showing of an independent USPTO interest or injury.
Jurisdiction Exists When Patent Issues After ANDA Is Filed; Personalized Medicine Claims Held Patent Eligible
In Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Limited, Appeal Nos. 2016-2707 and 2016-2708, the Federal Circuit held that when a patent for a drug issues after an ANDA is filed, there can still be jurisdiction for an infringement lawsuit even when the ANDA is not amended until after the lawsuit is filed. The Federal Circuit further held that method of treatment claims directed toward administering specific dosages of a drug in the presence or absence of a particular genotype are patent eligible.
West-Ward filed an ANDA seeking approval to manufacture and sell a generic version of Vanda’s drug for treating schizophrenia patients. After the ANDA was filed, Vanda filed suit alleging infringement of its patent. While the first suit was pending, Vanda obtained a second patent for its drug and filed a second infringement lawsuit. After the second lawsuit was filed, West-Ward amended its ANDA to assert that the second issued patent was invalid and/or not infringed. The two lawsuits were consolidated, and the district court determined that the asserted patent claims were infringed through inducement and not invalid. West-Ward appealed.
The Federal Circuit first addressed whether the district court had jurisdiction over the second-filed lawsuit when the second patent issued after West-Ward filed its ANDA and where Vanda sued West-Ward for infringement before West-Ward amended its ANDA to submit a Paragraph IV certification for the second patent. The Federal Circuit found that there was jurisdiction, in part, because Vanda’s complaint alleged West-Ward infringed the second patent under 35 U.S.C. § 271(e)(2)(A) by filing the ANDA. The mere fact that West-Ward had not submitted a Paragraph IV certification for the second patent until after Vanda filed suit did not establish that there was no justiciable controversy.
Next, West-Ward argued there was no infringement of the second patent because the patent issued after the ANDA was filed and Vanda sued for infringement before West-Ward submitted a Paragraph IV certification. The Federal Circuit held that amendments to an ANDA can constitute an act of infringement. The Federal Circuit also addressed the issue of induced infringement and held that Vanda did not need to prove an actual past instance of direct infringement by a physician to establish infringement under 35 U.S.C. § 271(e)(2)(A). This section makes it possible for a patent owner to have a court determine whether, if a drug were put on the market, it would infringe the patent.
The Federal Circuit then evaluated whether the asserted claims were patent eligible. West-Ward argued that the asserted claims were ineligible under § 101 because they were directed to a natural relationship between the drug, CYP2D6 metabolism, and QT prolongation. In its analysis, the Federal Circuit distinguished the claims at issue from those in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012). In Mayo, the claims were directed to a diagnostic method based on the relationships between concentrations of metabolites in the blood and the likelihood that a drug dosage would prove ineffective or cause harm. In this case, the Federal Circuit held that the claims were patent eligible because they “are directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome.” Accordingly, the Federal Circuit affirmed the district court’s decision and grant of injunctive relief.
Judge Prost dissented, arguing that the asserted patent claims are directed to a law of nature and therefore constitute ineligible patent subject matter.
A Clear Disclaimer of Claim Scope Requires More Than Potential Inferences Drawn From an Embodiment in the Specification
In Sumitomo Dainippon Pharma Co. v. Emcure Pharmaceuticals, Appeal Nos. 2017-1798, 2017-1799, 2017-1800, the Federal Circuit held that a claim depicting a molecule encompassed the three-dimensional orientation of the molecule specifically depicted in the claim because the patentees had not disclaimed the relevant three-dimensional orientation.
Defendants filed ANDAs to obtain approval to market generic versions of the schizophrenia and bipolar drug LATUDA, the active ingredient for which is lurasidone. Plaintiffs thereafter sued Defendants for allegedly infringing a patent covering the lurasidone compound. While lurasidone can exist in two distinct three-dimensional structures that are mirror images of one another (“enantiomers”), only the (-) enantiomer was depicted in the claim at issue. Defendants argued for a construction that limited the claimed compound to a “racemic” (50/50) mixture of the two enantiomers. The Defendants supported their construction by citing similarities between the claimed compound and one disclosed in the specification. The Defendants also relied on citations to chemistry textbooks which suggested the claimed structure depicted is a shorthand representation for a racemic mixture. The district court disagreed and held that the claimed compound’s resemblance to a mixture disclosed in the specification did not justify importing limitations from the specification into the claim. The district court agreed with Plaintiffs’ proposal to interpret the claim to cover both enantiomers and mixtures thereof. Defendants stipulated to infringement under this construction, then appealed the district court’s decision.
The Federal Circuit affirmed the district court’s construction, holding that the plain language of the claim negated a limiting interpretation because the claim itself showed the (-) enantiomer and failed to include any language limiting claim scope to a racemic mixture. The Federal Circuit also found no evidence in the specification that the claim was intentionally linked or described as coextensive with a racemic mixture, or that the specification included a clear disclaimer of claim scope. Although the Federal Circuit acknowledged Defendants’ arguments based on extrinsic evidence, the Federal Circuit found no clear error in the district court’s rejection of the chemistry textbooks as irrelevant or contradictory.
Corroborating Evidence Independent of Inventor’s Testimony Needed to Prove Date of Conception
In Apator Miitors ApS v. Kamstrup A/S, Appeal No. 2017-1681, the Federal Circuit held that a party seeking to prove an earlier date of conception using an inventor’s testimony to swear behind prior art must proffer corroborating evidence that does not depend solely on the inventor’s testimony itself.
Apator appealed the Board’s rejection of its attempt to swear behind a prior art reference with an effective filing date eighteen days before Apator’s own (pre-AIA) effective filing date. The Board cited Apator’s failure to sufficiently corroborate the inventor’s testimony of prior conception. The inventor testified regarding emails he wrote referencing a number of attachments that allegedly contained proof of conception. However, the headers and bodies of the emails themselves did not indicate that files were attached, what files were attached, or the contents of the attachments. Apator relied exclusively on the testimony of the inventor to prove that the e-mails had attachments and to identify which files were attached.
The Federal Circuit affirmed the Board’s rejection. The Federal Circuit first noted that when a party seeks to prove conception through an inventor’s testimony, the party must proffer at least some corroborating evidence that is “independent of information received from the inventor.” The Federal Circuit found it had to rely exclusively on the inventor’s testimony to learn that the e-mails had attachments, to learn which files were attached, and to determine the creation date of one of the attachments. The Federal Circuit concluded that the inventor’s unwitnessed emails and drawing, alone, could not corroborate his testimony of conception.
Dismissal With Prejudice for Lack of Standing May Lead to Attorneys’ Fees for Defendant
In Raniere v. Microsoft Corporation, Appeal Nos. 2017-1400, 2017-1401, the Federal Circuit held that when a case is dismissed with prejudice for lack of standing, the defendant is the prevailing party for purposes of fee-shifting under 35 U.S.C. § 285.
Mr. Raniere sued Microsoft and AT&T for patent infringement. Raniere asserted he was the sole owner of the patents-in-suit. Years earlier, Raniere and his co-inventors had assigned all rights in the patents to an entity that was dissolved before Raniere sued. Defendants moved to dismiss for lack of standing. Despite the district court providing Raniere multiple opportunities to establish his ownership interest, he failed. The district court found Rainere was “wholly incredible and untruthful,” that he demonstrated “a clear history of delay and contumacious conduct,” and was unlikely to be able to cure the standing defect. The district court dismissed the suit with prejudice and awarded Microsoft and AT&T over $440,000 in fees under 35 U.S.C. § 285.
On appeal, Raniere argued that Microsoft and AT&T were not prevailing parties and the district court abused its discretion in finding the case exceptional. The Federal Circuit held that that Microsoft and AT&T were prevailing parties. Microsoft and AT&T “won” because the dismissal “prevented Raniere from achieving a material alteration in the relationship between them,” and the dismissal “was tantamount to a decision on the merits.” The Federal Circuit also determined the district court did not abuse its discretion in finding the case exceptional and awarding defendants the majority of the requested fees.
Priority Claims Cannot Be Incorporated by Reference
In Droplets, Inc. V. E*TRADE Bank, Appeal Nos. 2016-2504, 2016-2602, the Federal Circuit held that a priority claim must be explicitly stated in the patent and cannot be incorporated by reference from an earlier patent.
E*TRADE petitioned for inter partes review of Droplets’ ’115 patent. The ’115 patent specifically claimed priority only to the ’838 patent. Droplets argued the ’115 patent was entitled to the benefit of an earlier provisional application because the ’115 patent incorporated by reference the ’838 patent, which claimed priority to the provisional application. The Board held that incorporation by reference did not satisfy 35 U.S.C. § 120’s “specific reference” requirement to claim priority and invalidated all claims as obvious over the cited art. Droplets appealed.
Patent Office regulations require a priority claim under § 120 recite the application number and familial relationship either in an application data sheet or in the first sentence of the specification. The Federal Circuit held that incorporating a different patent’s priority claim by reference did not meet those requirements. The Federal Circuit noted that § 120 should be applied strictly to prevent placing the burden of deciphering priority on the public when the patentee was in the best position to do so. Thus, the Federal Circuit affirmed.
Equitable Estoppel Cannot Be Based on Conduct Before Issuance of Claims That Have Been Substantively Amended Through Reexamination
In John Bean Technologies Corporation v. Morris & Associates, Inc., Appeal No. 2017-1502, the Federal Circuit held that pre-reexamination conduct cannot be a basis for equitable estoppel when the asserted claims have been substantively amended and narrowed during reexamination.
John Bean and Morris are competitors in the poultry chiller market. John Bean told Morris’s customers that Morris’s product infringed John Bean’s patent. Morris sent a letter to John Bean challenging the validity of the patent. John Bean received the letter, but never responded. More than ten years later, John Bean filed an ex parte reexamination request and amended the claims. After the reexamination certificate issued, John Bean sued Morris. The District Court granted summary judgement in favor of Morris, finding that John Bean’s suit was barred by equitable estoppel. The District Court relied primarily on Morris’s letter to John Bean as showing that John Bean believed Morris was selling an infringing product and waited years to sue.
The Federal Circuit reversed. The Federal Circuit noted that any invalidity analysis of the original claims did not apply because the reexamined claims had been substantively amended and narrowed. Further, at the time of Morris’s letter, John Bean could not have engaged in misleading conduct or silence with respect to the reexamined claims because they did not issue until years later. Thus, the district court abused its discretion in granting summary judgment based on equitable estoppel.
IPR Petition Not Time Barred Because Petitioner Did Not Control Prior Litigation and Litigation Parties Were Not Real Parties in Interest in the IPR
In Wi-Fi One, LLC v. Broadcom Corp., Appeal No. 2015-1944, the Federal Circuit held that the IPR petition was not time barred because the IPR petitioner was not in privity with a district court defendant. The evidence failed to show that (1) the petitioner had the right to control the district court litigation or (2) the district court defendants were real parties in interest in the IPR proceeding.
Ericsson, Inc. sued various defendants in district court for patent infringement. Although not a defendant, Broadcom was the manufacturer of some of the chips that formed the basis for some of the infringement allegations. More than a year after Ericsson filed its complaint, Broadcom requested inter partes review of the patent at issue, then owned by Wi-Fi. Wi-Fi argued Broadcom’s petition was time-barred under 35 U.S.C. § 315(b) because Broadcom was in privity with the district court defendants. The Board found Wi-Fi failed to prove privity and found the patent invalid.
Wi-Fi appealed, arguing the decision to institute was incorrect because Broadcom’s petition was time-barred. The Federal Circuit panel initially refused to review the Board’s institution decision, citing the Federal Circuit’s prior decision in Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015). However, the en banc Federal Circuit later remanded this appeal to the panel because it had determined that the Board’s time-bar decisions at the time of initiation could be appealed.
On remand, Wi-Fi argued that the Board’s privity test, whether the party in question had sufficient control over the prior proceeding, was erroneous because the Supreme Court had adopted a more flexible standard outside the patent context. Wi-Fi also argued the Board abused its discretion when it refused Wi-Fi additional discovery on Broadcom’s role in the district court litigation. The Federal Circuit affirmed the Board, concluding that, although Broadcom’s interests were generally aligned with the defendants, the evidence did not show that Broadcom had the right to control the previous litigation. Nor did the evidence suggest that the defendants were real parties in interest in Broadcom’s IPR. The Federal Circuit also determined the Board had not abused its discretion by denying Wi-Fi additional discovery because the Board reasonably found that the discovery Wi-Fi requested, including indemnity agreements, would likely not have established control.
Judge Reyna dissented, writing that the Board applied an erroneous standard for establishing privity because it limited its analysis to the “control” ground and ignored the other grounds for establishing privity set forth by the Supreme Court. Judge Reyna also wrote that indemnity agreements evidenced privity and that the panel should have reversed the Board’s ruling denying Wi-Fi additional discovery.
An Individual Who Was Not Hired to Invent, and Has Not Assigned or Promised to Assign Patent Rights, Has Standing to Establish Ownership of a Patent
In James v. J2 Cloud Services, LLC, Appeal No. 2017-1506, the Federal Circuit held that an individual claiming sole inventorship of a patent has standing under 35 U.S.C. § 256 to establish ownership of the patent, unless he has entered into a contract in which he assigns, or promises to assign, the rights to the patent, or he was “hired-to-invent” such that his employer is entitled to claim his inventive work.
JFAX Communications contracted GSP Software to “develop software solutions for the exclusive use of JFAX.” The contract provided that “JFAX shall become the sole owner of all code and compiled software solutions as described in this Agreement as soon as it is developed, and GSP shall assign to JFAX all copyright interests in such code and compiled software.” James, a GSP partner, developed the software. JFAX later obtained a patent directed at components of that software and named JFAX’s owners as inventors. James sued the current assignee, J2, for correction of inventorship under 35 U.S.C. § 256. J2 filed a motion to dismiss under F.R.C.P. 12(b)(1), alleging that James lacked Article III standing to bring the action. The district court granted the motion, finding that James had assigned, or was obligated to assign, his patent rights under the contract and the “hired-to-invent” doctrine.
The Federal Circuit reversed. With regard to the contract, the court found the contract language could be construed such that it does not assign, or promise to assign, patent rights that would otherwise accrue to James. In particular, the “exclusive use” provision does not convey patent rights, and can be read to encompass only the specific code provided to JFAX, not the underlying patentable methods. Furthermore, the court found that the provision granting JFAX sole ownership of “all code and compiled software” and assigning the copyright interests—but no patent interests—in such code supported the interpretation that no patent rights were assigned.
Additionally, the Federal Circuit found that the “hired-to-invent” doctrine did not apply in this case—its applicability depends on whether, based on the employer-employee relationship, the court can determine that the parties entered into an implied-in-fact contract to assign patent rights. Here, the underlying agreement was between GSP, a partnership, and JFAX, not between James and JFAX. Thus, James was not himself an employee of JFAX and no employment relationship was created within the contract that would support a “hired-to-invent” inference in this case.
An Issue Is Not Actually Litigated for the Purposes of Issue Preclusion Where a Party Fails to Present Any Argument or Evidence
In Voter Verified, Inc. v. Election Systems & Software LLC, Appeal No. 2017-1930, the Federal Circuit held that validity under § 101 was not actually litigated for the purposes of issue preclusion where a party failed to present any argument or evidence concerning validity under § 101.
In 2009, Voter Verified sued Election Systems for patent infringement, and Election Systems counterclaimed alleging that the asserted claims were invalid under § 101. The district court found that the asserted claims were not invalid under § 101 after Election Systems failed to present any arguments or evidence concerning invalidity. The district court further found that the asserted claims were not infringed.
In 2016, Voter Verified again sued Election Systems, asserting infringement of the same patent. Election Systems moved to dismiss, once again alleging that the asserted claims were invalid under § 101. Voter Verified argued that issue preclusion (also known as collateral estoppel) barred Election Systems from relitigating validity under § 101. The District Court concluded that the two-step validity analysis recited in Alice, 134 S. Ct. 2347 (2014), constituted a substantial change in the law, such that issue preclusion could not apply. The district court subsequently granted Election Systems’ motion to dismiss, holding that all asserted claims were invalid under § 101. Voter Verified appealed to the Federal Circuit.
The Federal Circuit affirmed the § 101 invalidity holding. As a threshold matter, the court disagreed that issue preclusion could not apply. Rather, the Federal Circuit held that Alice did not alter the law under § 101 because the court applied the same two-step framework it created in Mayo, and Mayo was not intervening—that case was decided when the earlier litigation between Voter Verified and Election Systems was still pending. Nevertheless, the court concluded that issue preclusion did not apply because (1) the § 101 issue was not previously litigated, and (2) the § 101 issue was not critical and necessary to the prior judgment. In the prior litigation, the district court granted summary judgment of no invalidity with no analysis of § 101, because Election Systems failed to present any arguments or evidence on the issue. Moreover, the prior finding of no invalidity was not necessary to the prior judgment because the district court also previously held that Election Systems did not infringe. The Federal Circuit then found the asserted claims invalid under § 101 on the merits.