Table of Contents
- En banc Federal Circuit avoids Supreme Court precedent, holding laches still a defense to equitable and legal liability in patent cases (posted 09/18/15)
- En banc Fed. Cir. extends § 112(f) (formerly ¶6); reverses panel decision of validity (posted 06/17/15)
- S.Ct. reverses Fed. Cir.; holds liability for inducement not dependent on belief as to validity (updated 01/05/16)
Gilstrap mandates attorneys's fees (posted 12/26/15)
In eDekka v. 3Balls.com et al. and E Revolution Ventures, Inc., (consolidated) plaintiff eDekka sued 130 retail and other defendants over infringement of U.S. Patent 6,266,674, directed to a method and device for storing information using user-defined labels. eDekka asserted that these claims were infringed by defendants’ e-shopping cart features on their websites. The stored information can be retrieved by searching for the associated label. The case was dismissed on an Alice grounds.
On filing of a motion for fees, Judge Gilstrap in the Eastern District of Texas, noted “[c]laim 1 essentially describes the common process of receiving, labeling, and storing information. . . . [. . .] The Court did not need the benefit of claim construction to find that the claims were directed to an abstract idea. [. . .] The Court finds that it is reasonable to conclude that eDekka acted with the goal of ‘exploiting the high cost to defend complex litigation’ to extract ‘nuisance value settlement[s]’ from defendants” (citations removed). Gilstrap concluded, “Considering the totality of circumstances, particularly eDekka’s unreasonable § 101 positions and vexations litigation strategy, the Court holds that the above-captioned cases are ‘exceptional’ . . . and GRANTS Defendant’s Consolidated Motion for Attorneys’ Fees.
Federal Circuit mulls "abstract" in Amdocs oral hearing (posted 10/09/15)
'797 patent, Claim 1: A method for generating a single record reflecting multiple services for accounting purposes, comprising:
(a) identifying a plurality of services carried out over a network;
(b) collecting data describing the plurality of services; and
(c) generating a single record including the collected data, wherein the single record represents each of the plurality of services.
In 2014, the Federal Circuit issued a previous opinion in Amdocs (Israel) Limited v. Openet Telecom, Inc. which resulted in remand to the the district court. Now it is back at the Federal Circuit to resolve Alice issues. In oral arguments a three-judge panel including judges Newman, Rayna, and Plager heard arguments that a software invention relating to collecting and organizing information from a computer network is an abstract idea or not. One of the judges (either Plager or Rayna) appeared to focus on what an abstract idea is–whether everything is “abstract” under Alice, while Judge Newman appeared to focus on preemption. The patent holder argued that the invention is tied to physical, concrete objects, and therefore is not abstract, stating, “we have left our minds. We have left the realm of just general concepts or ideas and now we are talking about something that really exists in the real world in a geographically distributed architecture.”
- Oral arguments:
En banc Federal Circuit avoids Supreme Court precedent, holding laches still a defense to equitable and legal liability in patent cases (posted 09/18/15)
In an en banc majority opinion authored by Chief Judge Prost, the Federal Circuit, in SCA Hygine Products v. First Quality Baby Products et al., found that § 282 defenses provision of Title 35 includes laches (even though it is not mentioned) and that case law (pre-dating the Supreme Court's decision last year in Patrella) shows that laches is a defense to legal liability and hence a defense to patent infringement for prior damages, in contravention of the plain meaning of Patrella in view of § 286. Confused? Read on . . .
In this case has an interesting background:
- On October 31, 2003, patent holder SCA notifies defendant First Quality of infringement of Patent 6,375,646.
- On November 21, 2003, First Quality informs SCA that it thinks SCA's patent is invalid because it is anticipated by prior patent 5,415,649, and therefore it is not infringing
- On July 7, 2004, SCA requests reexamination of the '646 patent in light of the '649 patent. SCA does not notify or communicate with First Quality regarding the reexamination or otherwise, after the initial exchange.
- On March 27, 2007, the PTO confirmed patentability of all 28 original claims and issued several other claims SCA added during reexamination.
- On August 2, 2010 – over three years after reexamination concluded and nearly seven years since the original communication – SCA filed a complaint alleging First Quality of infringing the '646 patent.
- The district court granted First Quality's summary judgment motion on latches and equitable estoppel.
- SCA appealed and in an earlier panel decision, the summary judgment was affirmed the district court's analysis.
- SCA filed a petition for rehearing en banc, posing the following questions:
- In light of the Supreme Court's decision in Petrella v. Metro-Goldwyn-Mayer 1), should A.C. Aukerman Co. v. R.L. Chaides Constr. Co. 2), be overruled so that the defense to latches is not applicable to bar a claim for damages based on patent infringement occurring within the six-year damages limitation period established by 35 U.S.C. § 286?
- In light of the fact that there is no statute of limitations for claims of patent infringement and in view of Supreme Court precedent, should the defense of latches be available under some circumstances to bar an entire infringement suit for either damages or injunctive relief?
35 U.S.C. 286 Time limitation on damages:
Except as otherwise provided by law, no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint or counterclaim for infringement in the action.
In the case of claims against the United States Government. . . .
The majority opinion discussed judicial history of laches and equitable estoppel vis-à-vis the precedent set by Aukerman. Stated the court: “Aukerman was motivated by preserving the distinction between laches – which bars only pre-suit damages – and equitable estoppel – which bars the entire suit. Estoppel, which does not necessarily involve delay in bringing the suit, requires 'statements or conduct of the patentee which must communicate in a misleading way that the accused infringer will not be disturbed by the plaintiff patentee in the activities in which the former is currently engaged” (internal quotes and citations removed).
The court explained that although Auckerman controlled the operation of laches in patent cases for over two decades, the recent Petrella decision in the Supreme Court upset the status quo by holding that laches was not a defense to legal relief in copyright law. Petrella calls portions of Aukerman's reasoning into question, necessitating this en banc reconsideration. Specifically, In Petrella, the Supreme Court reasoned that the copyright statute of limitations itself takes account of delay, crowding out the judiciary's power to decide whether a suit is timely. Therefore, the Supreme Court found, “laches is a defense developed by courts of equity; its principal application was, and remains, to claims of an equitable cast for which the Legislature has provided no fixed time limitations.”
The en banc opinion held that, under Petrella, Section 286 acts as a prescription by Congress of a time period for recovery of damages. Characterizing Section 286 as a statute of limitations or a limitation on damages is not dispositive or a relevant consideration. Because patent infringement is a continuous tort, there is no relevant functional difference between a damages limitation and a statute of limitations. However, the majority opinion held that, based on a “sufficiently reliable source on the meaning of § 282,” the defenses provision, that that section uses inclusive language, and hence includes within it codification of laches as a statutory defense to patent infringement. This is consistent with prior interpretations of § 282.
The question remained:
If laches as codified in § 282 is a defense only against only equitable relief, Petrella prohibits judicial application of laches to bar legal damages. If, however, laches as codified operates as a defense to both legal and equitable relief, patent law's statutory scheme–like the Lanham Act . . . – does not implicate Patrella. In that case § 286 obligates us to apply laches as a defense to a legal relief, notwithstanding § 286's time limitation on the recovery of damages.
Based on tenuous at best logic, the court further held, “[i]n sum, the case law strongly supports the availability of laches to bar legal relief. In applying laches to ongoing relief, the court held awarding ongoing relief requires that the court act within its equitable discretion, which, according to eBay must be exercised consistent with traditional principles of equity. This means following the four-fact test laid out in eBay.
In a dissent-in-part authored by Judge Hughs, joined by Moore, Wallace, Taranto, and Chen, Judge Hughes writes:
In Petrella v. Metro-Goldwyn-Mayer, Inc., the Supreme Court emphasized that it had never approved the use of laches to bar a claim for legal damages brought within a statutory limitations period. The majority reasons that Petrealla is not controlling here because Congress specifically incorporated laches as a defense to legal damages into the Patent Act of 1952. But the majority has no sound basis for finding that Congress intended to displace the uniform limitations period in § 286 with the case-specific doctrine of laches. The majority's key logic – that Congress adopted the view of some lower courts that laches could bar legal relief in patent cases – requires us to presume that Congress ignored the Supreme Court. For in 1952, the Supreme Court had already recognized the common-law principle that laches cannot bar a claim for legal damages. I know of no precedent for inferring a congressional departure from a common-law principle recognized by the highest court based solely on aberrational lower-court decisions.
Federal Circuit asserts Williamson on all claim types (posted 09/08/15)
Claim 1. A method of preventing unauthorized recording of electronic media comprising:
activating a compliance mechanism in response to receiving media content by a client system, said compliance mechanism coupled to said client system, said client system having a media content presentation application operable thereon and coupled to said compliance mechanism;
controlling a data output path of said client system with said compliance mechanism by diverting a commonly used data pathway of said media player application to a controlled data pathway monitored by said compliance mechanism; and
directing said media content to a custom media device coupled to said compliance mechanism via said data output path, for selectively restricting output of said media content.
In Media Rights Technologies, Inc., v. Capital One Financial Corporation, et al., Judge O'Malley, writing for the Federal Circuit, affirmed the lower court's decision on Summary Judgment invalidating all claims of U.S. Patent 7,316,033, claim 1 of which is shown to the right. The subject patent includes claims of every category, including method, apparatus, and computer-readable-media.
Citing Williamson and Apex, the court stated that the “presumption against the application of § 112, ¶ 6 to a claim term lacking the word, 'means' can be overcome if a party can demonstrate that the claim term fails to recite sufficiently definite structure or else recites function without reciting sufficient structure for performing that function” (internal quotations removed). Media Rights, as the patent holder, argued that the specification included adequate structure to support the definiteness of “compliance mechanism.” However, the court held that not all four of the identified functions of “compliance mechanism” are supported by the specification. Specifically, the court held “the specification fails to disclose an operative algorithm for both the 'controlling data output' and 'managing output path' functions.” The court further held that the specification failed to disclose sufficient structure for the “monitoring” function.
Preponderance good enough for rexaminations (posted 09/04/15)
§ 1.303 (2012) - Civil action under 35 U.S.C. 145, 146, 306.
(a) Any applicant, or any owner of a patent involved in an ex parte reexamination proceeding filed before November 29, 1999, dissatisfied with the decision of the Board of Patent Appeals and Interferences, and any party to an interference dissatisfied with the decision of the Board of Patent Appeals and Interferences may, instead of appealing to the U.S. Court of Appeals for the Federal Circuit (§ 1.301), have remedy by civil action under 35 U.S.C. 145 or 146, as appropriate. Such civil action must be commenced within the time specified in § 1.304.
(b) If an applicant in an ex parte case, or an owner of a patent involved in an ex parte reexamination proceeding filed before November 29, 1999, has taken an appeal to the U.S. Court of Appeals for the Federal Circuit, he or she thereby waives his or her right to proceed under 35 U.S.C. 145.
(c) A notice of election under 35 U.S.C. 141 to have all further proceedings on review conducted as provided in 35 U.S.C. 146 must be filed with the Office of the Solicitor and served as provided in § 41.106(e) of this title.
(d) For an ex parte reexamination proceeding filed on or after November 29, 1999, and for any inter partes reexamination proceeding, no remedy by civil action under 35 U.S.C. 145 is available.
The Federal Circuit, in Dome Patent L.P. v. Michelle K. Lee, upheld a district court decision that upheld the Patent Office's decision in an ex parte reexamination proceeding to invalidate Dome's patent under 35 U.S.C. § 103. At issue is U.S. Patent 4,306,042 directed to making polymers for gas permeable contact lenses. The ex parte reeexamination was ordered by the Patent Office at the request of a defendant in an infringement suit
On appeal, Dome argued that the district court erred by only requiring the Patent Office to show obviousness by a preponderance of the evidence, rather than by clear and convincing evidence. If the Patent Office decides after an ex parte reexamination that a preponderance of the evidence establishes the claimed subject matter is not patentable, 35 U.S.C. § 145 authorizes the district court, for reexaminations filed before November 29, 1999, to review whether that final decision is correct. The § 145 action does not concern the different question of whether, as a part of a defense to an infringement action, clear and convincing evidence establishes that an issued and asserted patent should be held invalid. Dome argued rather that the presumption of validity in § 282 applies to its claimed invention because the district court action concerns a claim that the Patent Office previously allowed to be patented. The court ruled, though, that § 282 does not apply in this instance because the action did not involve a defense to a charge of infringement of an issued patent. The court stated that when the Patent Office institutes ex parte reexamination, it reopens prosecution to determine whether the claimed subject matter should have been allowed in the first place. At that point, there is no need to presume that the Patent Office had “done its job” in the previous examination, and so the presumption is not applicable.
Akamai-Limelight Inducement: Fed. Cir. en banc. takes a second look (posted 08/28/15)
On August 13, 2015, the Federal Circuit published a unanimous en banc opinion addressing the long and hard fought battle over Inducement. Limelight was accused by Akamai and co-plaintiff MIT of infringing U.S. Patent 6,108,703. In this decision, the jury verdict finding liability for infringement was upheld.
- Consistent with BMC Res., Inc. v. Paymantech, L.P. 3), direct infringement under 35 U.S.C. §271(a) occurs where all the steps of a claimed method are performed by or attributable to a single entity.
- An entity is responsible for others' performance of method steps when (1) the entity directs or controls others' performance, or (2) where the actors form a joint enterprise (overruling Golden Hour Data Systems, Inc. v. emsCharts, Inc. 4) ).
- To determine if the entity directs or controls the acts of another, general principles of vicarious liability are considered.
- Previously, the court has held that liability can be found by traditional agency principles, contracts with another to perform one or more steps of the method.
- With this decision, the court holds that liability under §271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit on performance of a step or steps of a patented method and establishes the manner or timing of that performance. In those instances, the third party's actions are attributed to the alleged infringer such that the alleged infringer becomes the single actor chargeable with direct infringement.
- Where two or more actors form a joint enterprise, all can be charged with the acts of the other, rendering each liable for the steps performed by the other as if each is a single actor.
- A joint enterprise requires proof of
- an agreement, express or implied, among the members of the group
- a common purpose to be carried out by the group
- a community of pecuniary interest in that purpose, among the members
- an equal right to a voice in the direction of the enterprise, which gives an equal right of control
- 08/2012: En banc Federal Circuit upholds jury verdict of liability, holding that a party that induces another party to perform method steps is liable even though not a direct infringer (and there is no single direct infringer).
- 06/2014: The Supreme Court reversed the Federal Circuit, holding that by plain meaning of the statute, if there was no direct infringement by a single entity, there was no liability for infringement. The Supreme Court held open the door for the Federal Circuit to say that a party could be liable for direct infringement even though they don’t personally perform all the steps. If so, this ruling by the Supreme Court would be moot.
- 05/2015: On remand, a panel Federal Circuit opinion upheld the lower court ruling vacating the jury award because there was no direct infringement.
- 08/2015: En banc Federal Circuit reverses panel decision, upholding jury verdict of liability for reasons stated above.
Fed. Cir.: ITC can hear inducement claims (posted 08/11/15)
19 U.S. § 1337 (Section 337 of the Tariff Act of 1930) - Unfair practices in import trade
(a) Unlawful activities; covered industries; definitions
(1) Subject to paragraph (2) [requiring that an industry related to the patented articles exists or is in the process of being established], the following are unlawful, and when found by the Commission to exist shall be dealt with, in addition to any other provision of law, as provided in this section:
(B) The importation into the United States, the sale for importation, or the sale within the United States after importation by the owner, importer or consignee, of articles that –
(i) infringe a valid and enforceable United States patent . . .
In Suprema v. ITC, an en banc review of a panel decision reversed precedent, holding that ITC can block importation of goods that do not directly infringe, but have the potential to infringe U.S. Patents once combined with other items. The en banc court found that the phrase in Section 337 of the Tarrif Act of 1930, “articles that infringe” is “short hand” and refers to 35 U.S.C. § 271, the statutory provision defining infringement. In that statutory provision, the word, “infringement” encompasses both direct and indirect infringement, including infringement by importation that induces direct infringement of a method claim. The court noted that disparity in language between 337 and 271 is attributed to the in rem language of Section 337 and the in personam language of § 271. The court looked to the history of § 271 to find that Congress “has not directly answered whether goods qualify as 'articles that infringe' when the Commission has found that an importer used such goods, after importation, to directly infringe at the inducement of the goods' seller.” In accordance with Chevron, the court then found that the Commission's interpretation is not unreasonable and is consistent with the statutory language, even though it is not the only possible interpretation, and that the Commission reasonably determined that its interpretation would further the purpose of the statute.
Broadest reasonable interpretation standard stands (posted 07/09/15)
In a 6-5 decision, In re Cuozzo Speed Technologies, LLC., the full Federal Circuit denied en banc review of its prior panel decision to let stand BRI claim construction by the BPAI during inter partes review. Judge Dyk, joined by Lourie, Chen, and Hughes, authored a concurring opinion finding (1) the PTO has applied BRI standard in proceedings for more than a century, and (2) the AIA does not indicate congressional intent to change the prevailing BRI standard.
Judge Prost, joined by Newman, Moore, O'Malley, and Reyna, dissented, arguing that IPR is a new, court-like proceeding designed to adjudicate validity of issued patent claims and in such proceeidngs claims are given their actual meaning, not BRI. According to Prost, the AIA “is a new statutory regime” and Congress' silence as to the proper claim construction standard does not suggest congressional intent one way or the other on this new proceeding.
Newman wrote a separate dissent, highlighting the outlier nature of the majority opinion, noting that ”[a]ll of the amici curiae criticize the panel majority position and urge en banc attention to this “matter of exceptional importance.” Separately she argues that “the legislative purpose [of the AIA] fails if the PTO applies different law than is applied in the courts” and again lists from her panel dissent the reasons BRI is improper in AIA proceedings.
Federal Circuit refines Teva; intrinsic evidence subject to de novo legal analysis (posted 06/19/15)
The Federal Circuit, taking this case on remand from the Supreme Court (see below), in an opinion authored by J. Moore and joined by J. Wallach, again found Teva's patent claims to “molecular weight” invalid as indefinite. Specifically, the court held:
“A party cannot transform into a factual matter the internal coherence and context assessment of the patent simply by having an expert offer an opinion on it. The internal coherence and context assessement of the patent, and whether it conveys claim meaning with reasonable certainty, are questions of law. The meaning one of skill in the art would attribute to the term molecular weight in light of its use in the claims, the disclosure in the specification, and the discussion of this term in the prosecution history is a question of law. The district should not defer to Dr. Grant's ultimate conclusion about claim meaning in the context of this patent nor do we defer to the district court on this legal question. [. . .] Determining the meaning or significance to ascribe to the legal writings which constitute the intrinsic record is legal analysis. The Supreme Court made clear that the factual components include 'the background science or the meaning of a term in the relevant art during the relevant time period.' Teva cannot transform legal analysis about the meaning or significance of the intrinsic evidence into a factual question simply by having an expert testify on it. Determining the significance of disclosures in the specification or prosecution history is also part of the legal analysis. Understandings that lie outside the patent documents about the meaning of terms to one of skill in the art or the science or the state of the knowledge of one of skill in the art are factual issues. Even accepting as correct the district court's factual determinations about SEC and the transfer of chromatogram data to create Figure 1, these facts do not resolve the ambiguity in the Group 1 claim about the intended molecular weight measure.”
Judge Meyer dissented, arguing that key factual findings made by the district court were not clearly erroneous and therefore should be given deference. These findings were “(1) a person of ordinary skill in the art of polypeptide synthesis would infer from the use of the SEC method disclosed in the specification of the '808 patent that the term 'molecular weight' referred to peak average molecular weight; (2) a skilled artisan would not rely upon a statement Teva made when prosecuting the '847 patent that the expression of molecular weight in kilodalton units 'implie[d] a weight average molecular weight,' because that statement rested on obvious scientific error; and (3) that artisan would instead rely on Teva's affirmative statement, made qhile prosecuting the '539 patent, that 'molecular weight' meant peak average molecular weight.
Fed. Cir. toes line with Alice, invalidates groundbreaking non-invasive fetal diagnostics patent (posted 06/18/15)
Subject matter eligibility test under Mayo 5) :
- Determine whether the claims at issue are directed to a patent-ineligible concept.
- If yes, consider the elements of each claim both individually and “as an ordered combination” to determine whether additional elements “transform the nature of the claim” into a patent-eligible application.
In Ariosa Diagnostics, Inc. v. Sequenom, Inc., the Fed. Cir. held that the application of a discovery that maternal blood plasma contains free copies of fetal DNA is not patentable since the the claims are first held to be drawn to a naturally occurring phenomena, that free fetal DNA is present in maternal plasma or serum, and hence satisfies the first Mayo test that the claim is patent ineligible. Turning then to the second step of the Mayo test, the court determined, “the preparation and amplification of DNA sequences in plasma or serum were well-understood, routine, conventional activities performed by doctors” and hence steps for amplifying and analyzing the fetal DNA “does not result in an inventive concept that transforms the natural phenomenon of cffDNA into a patentable invention.”
En banc Fed. Cir. extends § 112(f) (formerly ¶6); reverses panel decision of validity (posted 06/17/15)
In Williamson v. Citrix, aka Williamson II, the en banc Federal Circuit holds that a claim limitation reading, “distributed control module” invokes 35 U.S.C. § 112(f) (formerly ¶6) means+function analysis.
This ruling reverses the prior panel decision that found the opposite. More specifically, the court reversed previous precedent that held that absence of the word “means” created a strong presumption not to interpret the claim as a means+function claim under 35 U.S.C. § 112(f)/¶6.
The Williamson en banc court held:
- . . . such a “heightened burden” is unjustified . . . [;] we should abandon characterizing as “strong” the presumption that a limitation lacking the word “means” is not subject to § 112, para. 6. That characterization . . . has the inappropriate practical effect of placing a thumb on what should otherwise be a balanced analytical scale. It has . . . resulted in a proliferation of functional claiming untethered to § 112, para. 6 and free of the strictures set forth in the statute. Henceforth we will apply the presumption as we have done prior to Lighting World, without requiring any heightened evidentiary showing and expressly overrule the characterization of that presumption as “strong.”
- We also overrule the strict requirement of “a showing that the limitation essentially is devoid of anything that can be construed as structure.”
- The standard is whether the words of the claim are understood by persons of ordinary skill in the art to have a sufficiently definite meaning as the name for structure.
Analysis of facts
The court construed the claim limitation, distributed learning control module for receiving communications transmitted between the presenter and the audience member computer systems and for relaying the communications to an intended receiving computer system and for coordinating the operation of the streaming data module and held:
- the limitation “is in a format consistent with traditional means-plus-function claim limitations. It replaces the term 'means' with the term 'module' and recites three functions formed by the 'distributed learning control module.'”
- ”'Module' is a well-known nonce word that can operate as a substitute for 'means' in context of § 112, para. 6. [. . .] Generic terms such as 'mechanism,' 'element,' 'device,' and other nonce words that reflect nothing more than verbal constructs may be used in a claim in a manner that is tantamount to using the word 'means' because they typically do not connote sufficiently definite structure and therefore may invoke § 112, para. 6“ (internal citations and quotes removed).
- The word “module” is a nonce word that “sets for the same black box recitation of structure for providing the same specified function as if the term 'means' had been used.”
- “The prefix 'distributed learning control' does not impart structure into the term 'module.' These words do not describe a sufficiently definite structure. . . . the written description fails to impart any structure significance to the term.”
Letting Newman's words speak for themselves:
I respectfully dissent from the en banc ruling that is inserted into this panel opinion at Section II.C.1. The court en banc changes the law and practice of 35 U.S.C. § 112 paragraph 6, by eliminating the statutory signal of the word “means.” The purpose of this change, the benefit, is obscure. The result, however, is clear: additional uncertainty of the patent grant, confusion in its interpretation, invitation to litigation, and disincentive to patent-based innovation.
Curiously, the court acknowledges that it “has long recognized the importance of the presence or absence of the word 'means.'” Maj. Op. at 13. Nonetheless, the court rejects the meaning and usage of “means” to signal means-plus-function claim construction. The court now overrules dozens of cases referring to a “strong presumption” of means-plus-function usage, and goes to the opposite extreme, holding that this court will create such usage from ”[g]eneric terms such as 'mechanism,' 'element,' 'device,' and other nonce words.“ Maj. Op. at 17. In the case before us, the so-called “nonce” word is “module.” Thus the court erases the statutory text, and holds that no one will know whether a patentee intended means-plus-function claiming until this court tells us.
I dissent from the majority's reasoning and the majority's holding that “distributed learning control module” falls under paragraph 6. I express no opinion on the ultimate validity of the claim; the claim must stand or fall on its merit, but does not fall under paragraph 6.
Akamai requests new en banc review 06/16/15
See details in Joint Infringement.
S.Ct. reverses Fed. Cir.; holds liability for inducement not dependent on belief as to validity (updated 01/05/16)
35 U.S.C. § 271:
(b) Whoever actively induces infringement of a patent shall be liable as an infringer
(c) Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial non-infringing use, shall be liable as a contributory infringer.
Posted May 26, 2015: In a 6-2 decision written by Justice Kennedy, the Supreme Court reversed the Federal Circuit in Commil v. Cisco. Specifically, the court held that a good-faith belief of invalidity of a patent is not relevant to an inquiry as to whether that party is guilty of inducement to infringe, notwithstanding the legal requirement that the accused have knowledge of the patent and knowledge of infringement to be found guilty of inducement.
- Parties' Briefs
- Oral Arguments at Supreme Court: Transcript
Stated the Court
- ”Global-Tech requires . . . proof [for both contributory infringement and inducement] that the defendant knew the acts were infringing. And the Court's opinion was clear in rejecting any lesser mental state as the standard.“
- The scienter element for induced infringement concerns infringement; that is a different issue from validity. [. . .] . . .because infringement and validity are separate issues under the Act, belief regarding validity cannot negate the scienter required under §271(b).
- To say that an invalid patent cannot be infringed, or that someone cannot be induced to infringe an invalid patent, is in once sense a simple truth, both as a matter of logic and semantics. [. . .] But the questions courts must address when interpreting and implementing the statutory framework requires a determination of the procedures and sequences that the parties must follow to prove the act of wrongful inducement and any related issues of patent validity.”
- “. . . invalidity is not a defense to infringement, it is a defense to liability. And because of that fact, a belief as to invalidity cannot negate the scienter required for induced infringement.”
Dissent (Scalia, Roberts):
- Saying that infringement cannot exist without a valid patent does not 'conflate the issues of infringement and validity' . . . any more than saying that water cannot exist without oxygen 'conflates' water and oxygen.“
01/05/16: On remand from the Supreme Court, the Federal Circuit, again favoring Cisco, again reversed the jury verdict, finding the jury lacked substantial evidence in support of its conclusion that Comcast infringed the “running” element of the claim.
Prior to the the Supreme Court issuing cert., there were two trials between Cisco and Commil. In the first trial, the jury found the Commil patent to be valid and directly infringed; validity has been upheld by the Federal Circuit. However, after Cisco's representatives in the first trial repeatedly used prejudicial and anti-Semitic language (Commil is based in Israel and the inventors of the subject patent are Israeli) the trial judge ordered a new trial on just the issues of induced infringement and damages. In the second trial, the jury returned a $63.7 million verdict against Cisco, which, in 2013, a divided Federal Circuit panel, in Commil USA LLC v. Cisco Systems, Inc., reversed, because “the district court erred in preventing Cisco from presenting evidence during the second trial of its good-faith belief of invalidity to rebut Commil's allegations of induced infringement.” The Federal Circuit panel held:
“It is axiomatic that one cannot infringe an invalid patent. [. . .] Accordingly, one could be aware of a patent and induce another to perform the steps of the patent claim, but have a good-faith belief that the patent is not valid. Under those circumstances, it can hardly be said that the alleged inducer intended to induce infringement. Thus, a good-faith belief of invalidity is evidence that may negate the specific intent to encourage another’s infringement, which is required for induced infringement.”
J. Newman dissented from the panel decision. Newman's dissent was cited in Judges Rayna's dissent to the denial of a request for an en banc. rehearing (which was joined by Rader, Newman, Laurie, and Wallach). Newman argued:
“A defendant's ultimate liability for induced infringement, as for direct infringement, is subject to various defenses including patent invalidity and uneforceability. However, whether there is infringement in fact does not depend on the belief of the accused infringer that it might succeed in invalidating the patent. Such a belief, even if held in good faith, does not negate infringement of a valid and enforceable patent. This rule applies, whether the infringement is direct or indirect. My colleagues err in holding that ‘evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement.’
[. . .]
“Validity of the Commil patent was sustained by the jury, sustained by the district court, and sustained by this court. Whatever Cisco's ‘belief’ as to invalidity of the patent, this belief is irrelevant to the fact and law of infringement. A belief of invalidity cannot avoid liability for infringement of a patent whose validity is sustained. The panel majority's contrary holding is devoid of support in law and precedent.”
At the Supreme Court:
The Supreme Court granted Commil's petition for cert. but limited to question 1: ”[w]hether the Federal Circuit erred in holding that a defendant's belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. § 271(b).“
The Supreme Court previously denied Cisco's cross-petition seeking review of Circuit's decision to remand for a retrial only on the issue of induced patent infringement and not also on the “related” question of patent invalidity. Cisco argued that the Seventh Amendment requires that all issues be retried “unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone mayh be had without injustice.”
N.D. Illinois upholds GUI claims under Alice (posted 05/07/15)
1. A method of placing a trade order for a commodity on an electronic exchange having an inside market with a highest bid price and a lowest ask price, using a graphical user interface and a user input device, said method comprising:
setting a preset parameter for the trade order displaying market depth of the commodity, through a dynamic display of a plurality of bids and a plurality of asks in the market for the commodity, including at least a portion of the bid and ask quantities of the commodity, the dynamic display being aligned with a static display of prices corresponding thereto, wherein the static display of prices does not move in response to a change in the inside market;
displaying an order entry region aligned with the static display prices comprising a plurality of areas for receiving commands from the user input devices to send trade orders, each area corresponding to a price of the static display of prices; and
selecting a particular area in the order entry region through single action of the user input device with a pointer of the user input device positioned over the particular area to set a plurality of additional parameters for the trade order and send the trade order to the electronic exchange.
In Trading Technologies International, Inc. v. CQG, Inc. and CQGT, LLC, the Northern District of Illinois found that claims drawn to a method of providing a graphical user interface (GUI) were patentable under 35 U.S.C. § 101.
The court rejected CQG's argument that the claims recite an abstract idea for placing orders for a commodity on an electronic exchange based on observed market information. Specifically, CQG argued that the elements recited in the claims, “merely perform basic functions relating to electronic commodity trading and updating market information using unidentified and generic computer components.”
Stated the court:
Neither the claims of the '304 patent nor the claims of the '132 patent are directed to solely “setting, displaying, and selecting” data or information that is visible on the GUI device. Rather, the claims are directed to solving a problem that existed with prior art GUIs, namely, that the best bid and best ask prices would change based on updates received from the market. There was a risk with the prior art GUIs that a trader would miss her intended price as a result of prices changing from under her pointer at the time she clicked on the price cell on the GUI. The patents-in-suit provide a system and method whereby traders mae playce orders at a particular, identified price level, not necessarily the highest bid or the lowest ask price because the invention keeps the prices static in position, and allows the quantities at each price to change.
Fed. Cir.: Claim terms to be consistently construed (posted 04/14/15)
In In re: 55 Brake LLC, the Federal Circuit held that the term, “plurality of sensors,” includes a vehicle motion sensor because claim 7 specifies, “wherein one of said plurality of sensors is a vehicle motion sensor.” The Federal Circuit reasons that:
a broader [than an embodiment described in the specification] reading of “plurality of sensors” to include a vehicle motion sensor, is reasonable in light of the plain language of the claims, the specification, and the overall object of the invention to “enable sensors to detect . . . potentially unsafe conditions in or around the vehicle . . . [and] to automatically control the brakes and/or other equipment” as appropriate.
The court further explained its reasoning in a footnote citing Phillips v. AWH Corp.: “In contrast to claims 7 and 9, claim 13 does not explicitly define a vehicle motion sensor as one of the plurality of sensors. But because claim terms are to be construed consistently throughout a patent, our reasoning above applies equally to claim 13.”
Supreme Court leaves in place CAFC's ruling on inability to compel co-owner to join suit (posted 03/31/15)
The Supreme Court denied certiorari in STC.UNM v. Intel Corp., in which the Federal Circuit upheld the lower court lack of standing dismissal for failure to join a necessary party. The factual background is interesting:
- An initial patent 5,705,321 ('321 patent) resulted from contributions of four people: Brueck, Saidi, and Chu, employed by the University of New Mexico (UNM), and Draper, employed by Sandia. The '321 patent claims technology similar to that of the asserted patent 6,042,998 ('998 patent).
- In mid-1996, the four inventors executed a joint assignment to UNM of the invention that issued as the '321 patent, but in October of 1996, UNM executed an assignment to Sandia to correct Draper's prior assignment to UNM which “was made in error.” This assignment explicitly transferred to Sandia “those rights and interests previously assigned to [UNM] by Bruce Draper . . . and to any and all Patents which may be issued thereon . . . and to any and all divisions, reissues, continuations, and extensions.”
- While '321 was pending Brueck and Saidi continued their research and filed an application leading to the instant '998 patent, which incorporated the '321 patent by reference but did not claim priority to any earlier-filed application.
- During prosecution of the '998 patent the PTO rejected the claims for double patenting over the '321 patent, and the rejection was overcome by UNM filing a terminal disclaimer, which stated that it was “the owner of record of a 100 percent interest in the instant application.”
- In 2002, UNM assigned its own interest in the '321 and '998 patents to STC, a wholly-owned licensing arm of UNM.
- In 2008, STC successfully petitioned the PTO to correct the inventorship of the '998 patent to include two more named inventors, Hersee and Malloy, who were employees of UNM at the time of the invention, and assigned their interests in the '998 patent to UNM. In addition, STC successfully sought a certificate of correction to indicate that the '998 patent is a continuation-in-part of the '321 patent.
- Although Sandia has an ownership interest in the '321 patent since October 1996, Sandia had never claimed any interest in the '998 patent. (In 2009, STC and Sandia entered into a royalty sharing agreement for the '321 patent that does not mention the '998 patent.)
At the district court, Intel argued in a motion for summary judgment that the '998 patent was unenforceable for failing to comply with the common-ownership requirement of the terminal disclaimer. In response, STC contends that Sandia did in fact co-own the '998 patent since it issued by operation of the assignment, or alternatively, that Sandia obtained ownership of the '998 patent when it formally became a continuation-in-part of the '321 patent. Nevertheless, STC confirmed the prior assignment and assigned an undivided interest in each of the '321 and '998 patents to Sandia in 2011. The district court rejected STC's theories and granted partial summary judgment for Intel, reasoning that ownership rights must derive from inventorship and because Draper did not co-invent any claims of the '998 patent, he had no interest in the '998 patent to assign. Thus the court held that Sandia did not co-own the '998 patent with UNM or STC at any point prior to the 2011 assignment. The parties then cross moved on the issue of standing, given Sandia's co-ownership, which was granted by the district court.
STC argued before the Federal Circuit that Rule 19(that requires the court to compel joinder of co-inventor or co-owner of a patent “to bring before the court all persons deemed necessary to the suit.” However, the Federal Circuit held that the holding in Ethicon v. United States Surgical Corp 6) requires co-owners (ordinarily) to consent to the suit, and that this requirement was not dictum, but essential to the disposition of the case. In this case, Sandia did not affirmatively give up its right to refuse to join the suit (e.g., by signing an exclusive license arrangement or otherwise agreeing to join). Unless STC can secure Sandia's voluntary joinder, obtain the '998 and '321 patents outright, or become the exclusive licensee of Sandia's interest, STC cannot enforce the '998 patent in court.
Judge Newman's Dissent:
Judge Newman holds that the present ruling is contrary to Rule 19 as well as precedent. Stating in part:
By statute, “A patentee shall have remedy by civil action for infringement of his patent.” 35 U.S.C. §281. . . . Precedent establishes that all entities with the right to enforce the patent are necessary parties to an action for enforcement; the purpose is to shield the accused infringer from mulitple suits, as well as to resolve all potential claims efficiently and fairly. Entities with enforcement rights who do not voluntarily join in such suit “must” be joined involuntarily, as provided by FRCP 19(a) (“Required Joinder of Parties”).
Departing from this clear and compulsory procedure, the panel majority holds that co-owner Sandia cannot be involuntarily joined with the University in this infringement suit, thus preventing the University from enforcing the patent, for Sandia is a necessary party. That holding is not correct. When a party declines . . . to join . . . involuntary joinder is provided by Federal Rule 19. The panel majority's ruling . . . is contrary to law.
On March 30, 2015, the Supreme Court denied certiorari, leaving the Federal Circuit's panel decision in tact.
Fed. Cir. reverses BPAI's anticipation invalidation (posted 03/16/15)
In Vicor Corp. v. Synqor, Inc., the Federal Circuit reversed the BPAI's reversal of an Examiner's 102 rejection in an Ex parte reexamination. The prior art consisted of U.S. Patent 5,377,090 which incorporates by reference U.S. patent 5,274,539. The two patents issued from separate applications. The earlier '539 patent teaches that an isolation stage can use diodes as rectifiers, but in alternative embodiments, can use controlled rectifiers in place of the diodes. The later patent '090 teaches a single isolation stage having a plurality of regulation stages to produce a plurality of output D.C. voltages. The BPAI reversed the Examiner's rejection, finding that the combined reference did not teach a single embodiment that has an isolation stage that uses controlled rectifiers, followed by multiple regulation stages. The Federal Circuit reversed the BPAI, stating, “The incorporated teachings include Steigerwald '539's alternative embodiment, which teaches a substitution that takes place within the isolation stage.”
Fed. Cir. construes Octane (posted 02/25/15)
In Biax v. Invidia et al., the Federal Circuit, in a nonprecedential opinion, reversed a lower court's award of attorney's fees under the pre-Octane Fitness, Brooks “objectively baseless” standard. The Fed. Cir. cited Octane stating:
The Supreme Court rejected the Brooks Furniture standard, explaining that “there is no precise rule or formula for making” a determination as to whether a case is exceptional. It is a case-by-case determination based on considering the totality of teh circumstances. Such an exceptional case is “rare.” But, if the case “stands out from others with respect to the substantive strength of a party's litigating position . . . or the unreasonable manner in which the case was litigated,” it is “exceptional” under the meaning of the statute. Thus, objective reasonableness remains a relevant factor. [Emphasis added.]
In applying this construction of the Supreme Court opinion, the Federal Circuit found that the lower court misread expert testimony that was relied upon to conclude that Biax had no reasonable basis to assert infringement.
S.Ct. denies cert. on AIA Consitutionality (posted 02/25/15)
On February 23, 2015, the S.Ct. denied a petition for certiorari alleging that the America Invents Act is unconstitutional because of its first-to-file provisions.
Federal Circuit redefines "exhaustion" (posted 02/18/15)
In Helferich Patent Licensing v. NYTimes and JCPenney (Fed. Cir. 2015), the Federal Circuit found that content providers such as the New York Times must pay a patent royalty to Helfereich, who owns a patent for sending and receiving alerts to mobile phones, despite the fact that the manufacturer of the mobile phones at issue had already licensed the patents.
Supreme Court reverses Circuit's rule for de novo claim construction (posted 01/20/15)
In Teva Pharmaceuticals USA Inc. v. Sandoz, Inc., the Supreme Court held that, when reviewing a district court's resolution of subsidiary factual matters made in the course of its construction of a patent claim, the Federal Circuit must apply a “clear error,” not a de novo, standard of review. Justice Breyer delivered the opinion of the Court.
The case comes to the Supreme Court on appeal by patent holder Teva from a Federal Circuit decision to invalidate a claim due to indefiniteness. Specifically, the Federal Circuit reversed a lower court ruling that the claim term, “molecular weight” referred to “peak average molecular weight” because that is what a skilled artisan would have understood at the time of the patent application. The Federal Circuit reached its invalidity determination based on de novo review of all aspects of the district court's claim construction, including subsidiary facts, in contravention of Federal Rule of Civil Procedure 52(a)(6) which states that a court of appeals “must not . . . set aside” a district court's ”[f]indings of fact“ unless they are “clearly erroneous.”
The Supreme Court held that:
“In some cases . . . the district court will need to look beyond the patent's intrinsic evidence and to consult extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the relevant art during the relevant time period. In cases where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about that extrinsic evidence. These are the “evidentiary underpinnings” of claim construction that we discussed in Markman, and this subsidiary factfinding must be reviewed for clear error on appeal”
Justice Thomas, joined by Alito, dissented, arguing:
“Patents are written instruments, so other written instruments supply the logical analogy. [. . .] The classic case of a written instrument whose construction does not involve subsidiary findings of fact is a statute. [. . .] The construction of deeds, by contrast, sometimes involves subsidiary findings of fact. [. . .] The question we must ask, then, is whether the subsidiary findings underlying claim construction more closely resemble the subsidiary findings underlying the construction of statutes or those underlying the construction of contracts and deeds that are treated as findings of fact. [. . .] This, in turn, depends on whether patent claims are more like statutes or more like contracts and deeds. [. . .] For purposes of construction, contracts and deeds are less natural analogies for patents. [. . .] In granting a patent, the Government is acting not as a party to a bilateral contract binding upon itself alone, but instead as a sovereign bestowing upon the inventor a right to exclude the public at large from the invention marked out by his claims. [. . .]
“Because the skilled artisan inquiry in claim construction more closely resembles determinations categorized as 'conclusions of law' than determinations categorized as 'findings of fact,' I would hold that it falls outside the scope of Rule 52(a)(6) and is subject to de novo review.”