Antares Pharma, Inc. – The panel affirms the denial of Antares' motion for preliminary injunction based on the finding that the patent in suit, a reissue patent, is invalid due to the failure of Antares to comply with the "original patent" requirement of 35 U.S.C. § 251.
e.Digital – The Circuit affirms a judgment of non-infringement based on a determination that e.Digital was collaterally estopped from seeking construction of a limitation presented in a claim added during reexamination of a first patent but improperly applied the doctrine to a second, unrelated patent.
Versata Software – The panel instructs the district court to grant a motion to stay action pending post-grant review under the CBM review program, noting that a stay may be warranted even when the CBM proceeding does not address all asserted patents in the litigation.
Antares Pharma, Inc. v. Medac Pharma Inc. and Medac GmbH
Fed. Cir. Case 2014-1648 (November 17, 2014)
Antares is a developer of automatic injection devices used to self-administer pharmaceuticals. The patent in suit, entitled "Needle Assisted Jet Injector," discloses a system for injecting medicant in which a needle punctures the skin before forcefully expelling the medicant, thereby minimizing some of the downsides of typical jet injectors in which the medicant ruptures the outer layers of skin, while maintaining advantages of typical jet injectors. During prosecution applicants repeatedly distinguished their invention from the prior art by focusing on the "jet injector" limitation in the claims but not in the prior art. The originally-issued claims all included the "jet injection" limitation.
Antares filed a broadened reissue application within the two year statutory limit set forth in 35 U.S.C. § 251. The originally-allowed claims of the patent recite various embodiments of a jet injection device and specify, for example, the exact depth the needle assist plunges to, the force at which the medicant is expelled, and the gauge of the needle. The reissue claims cover embodiments of injection devices (not restricted to jet-injection devices) with particular combinations of safety features, such as a latch, pushbutton, and needle guard.
Antares filed a motion for preliminary injunction shortly after filing suit. The motion was denied because claims 31, 34, 35, and 37, added during reissue, were determined likely to be invalid for violating the recapture rule. During the original prosecution, the applicants distinguished the prior art by stressing that the claims were limited to jet injectors. During reissue, when the applicants sought to claim safety features not limited to jet injectors, they were broadening their claims to cover non-jet injectors. Because the court held that the recapture rule was violated, it did not consider the question of whether the "original patent" requirement was satisfied.
The panel notes that it reviews the denial of the preliminary injunction for abuse of discretion, but reviews errors of law relating to that denial de novo. The applicability of the recapture rule and the original patent requirement of 35 U.S.C. § 251 are reviewed de novo. Because the panel holds that the asserted claims fail the original patent requirement of § 251, it does not reach the question of whether the recapture rule applies and, if it does, whether it was violated here.
The original patent requirement is well-established, being recognized in the reissue statute and longstanding Supreme Court jurisprudence. The current statute (§ 251(a)) governing reissues provides in relevant part:
Whenever any patent is, through error. . deemed wholly or partly inoperative or invalid . . . by reason of the patentee claiming more or less than he had a right to claim in the patent, the Director shall . . reissue the patent for the invention disclosed in the original patent . . .(emphasis added)
The Supreme Court's definitive explanation of the original patent requirement appears in U.S. Industrial Chemicals, Inc. v. Carbide & Carbon Chemicals Corp., 315 U.S. 668 (1942). There, the Court analyzed a reissue patent relating to a process for the production of a chemical compound. The original claims required the presence of water as a catalyst. After the patent was issued, it became clear that water was not required as a catalyst. The patentee asserted that the original claim was in error because it required the presence of water, and the patentee sought and obtained a reissue that omitted that "erroneous" requirement. The patentee subsequently brought suit for infringement of the newly added claims, which omitted the water limitation. The Court held the reissue claims invalid for failing to satisfy the "same invention" requirement. It explained that a reissue claim is for the "same invention" if the original patent specification fully describes the claimed inventions, but not if the broader claims are merely suggested or indicated in the original specification. It is not enough that an invention might have been claimed in the original patent because it was suggested or indicated in the specification. The reissue claims were invalid because, although the original specification hinted at the fact that water might be optional, it was nonetheless clear that the invention disclosed in the original patent required the presence of water. That hint, suggestion, or indication that water was optional was not enough to save the reissue claims.
The Supreme Court's articulation of the "same invention" test in Industrial Chemicals was in the context of 35 U.S.C. § 64, which had slightly different language from the current reissue statute. However, despite the change in language, it appears that no change in substance was intended.
Since the creation of this court in 1982, the Circuit has addressed Industrial Chemicals and the original patent requirement on four occasions: In re Hounsfield, 699 F.2d 1320 (Fed. Cir. 1983); In re Weiler, 790 F.2d 1576 (Fed. Cir. 1986); In re Amos, 953 F.2d 613 (Fed. Cir. 1991); and Hester Industries., Inc. v. Stein, Inc., 142 F.3d 1472 (Fed. Cir. 1998). These cases shed light on Industrial Chemicals in two respects. First, they rejected a gloss put on Industrial Chemicals by the Board in later cases, which had interpreted Industrial Chemicals and subsequent Circuit cases as creating an "intent to claim" test for the original patent requirement. The court explained that "intent to claim" was "only one factor that sheds light upon whether the claims of the reissue application are directed to the same invention." Second, Circuit cases explained that the Industrial Chemicals standard is analogous to the written description requirement, which, as the en banc decision in Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co., 598 F.3d 1336 (Fed. Cir. 2010) made clear, requires that the patent description "clearly allow persons of ordinary skill in the art to recognize that the inventor invented what is claimed. Whether or not the written description requirement of § 112 was satisfied here, Industrial Chemicals made clear that, for § 251, "it is not enough that an invention might have been claimed in the original patent because it was suggested or indicated in the specification." 315 U.S. at 676. Rather, the specification must clearly and unequivocally disclose the newly claimed invention as a separate invention.
Applying the Industrial Chemicals standard, asserted reissue claims in the present case are invalid. The original claims focused on jet injectors while the asserted claims are focused on particular safety features and do not contain the jet injection limitation. To be sure, the original patent requirement focuses on the original specification rather than the original claims. The original specification here does not adequately disclose the later-claimed safety features. The specification discussed only one invention: a particular class of jet injectors. This is clear from the title of the patent ("Needle Assisted Jet Injector"), the abstract ("A jet injection device. . ."), the summary of the invention ("The present invention relates to a needle assisted jet injector."), the repetitive descriptions of the "present invention" as being for a jet injector, and the entirety of the specification ("jet" is mentioned 48 times in the 7-page specification). Although safety features were mentioned in the specification, they were never described separately from the jet injector, nor were the particular combinations of safety features claimed on reissue ever disclosed in the specification. Rather, the safety features were serially mentioned as part of the broader conversation: how to build the patented jet injection device. These "suggestions" or "indications" of alternative inventions are not sufficient to satisfy the original patent requirement of § 251. Nowhere does the specification disclose, in an explicit and unequivocal manner, the particular combinations of safety features claimed on reissue, separate from the jet injection invention. This does not meet the original patent requirement under § 251.
e.Digital Corporation v. Futurewei Technologies, Inc., dba Huawei Technologies (USA),
and Pantech Wireless, Inc. ,
Fed. Cir. Case Nos. 2014-2019, 1242, and 1243 (November 19, 2014)
Before the cases at issue in this appeal, e.Digital asserted claims 1 and 19 of the '774 patent in a prior action in Colorado. The '774 patent discloses a device with a microphone and a removable, interchangeable flash memory recording medium that allows for audio recording and playback. Asserted claims 1 and 19 recited "a flash memory module which operates as sole memory of the received processed sound electrical signals" (sole memory limitation). The court construed the sole memory limitation to require "that the device use only flash memory, not RAM or any other memory system" to store the "received processed sound electrical signals." Based on the claim construction, the parties to the prior action stipulated to dismiss the case with prejudice.
After dismissal of the Colorado case the PTO cancelled claims 1 and 19 in an ex parte reexamination. It issued reexamined claim 33, which recites the limitations of cancelled claims 1 and 19, including the identical sole memory limitation, and added additional limitations, such as a microprocessor.
e.Digital then filed the present action in the Southern District of California, asserting reexamined claim 33 and claims 2 and 5 of a '108 patent. Based on the Colorado court's construction, the defendants moved to apply collateral estoppel to the construction of the sole memory limitation in the '774 and '108 patents.
The court granted the motions and adopted the Colorado court's construction, reasoning that the '774 patent reexamination never addressed the sole memory limitation, and that the '108 and '774 patents are "closely related." e.Digital and Huawei stipulated to final judgment of non-infringement so e.Digital could appeal the Huawei decision. Apple then moved to convert its judgment to a final judgment, and GoPro, but not Pantech, joined the motion. The court converted all of the partial judgments to final judgments under Fed. R. Civ. P. 54(b). e.Digital appealed these judgments.
The district court's application of collateral estoppel is reviewed de novo, applying the law of the regional circuit. Collateral estoppel applies if: (1) the issue necessarily decided in the previous proceeding is identical to the one which is sought to be relitigated; (2) the first proceeding ended with a final judgment on the merits; and (3) the party against which collateral estoppel is asserted was a party or in privity with a party at the first proceeding. On appeal, the parties only dispute whether construction of the sole memory limitation presents an identical issue.
The panel holds that the district court correctly applied collateral estoppel to the '774 patent because reexamined claim 33 recites the sole memory limitation identical to claims 1 and 19, and because the '774 patent reexamination never addressed that limitation or the presence of RAM. The panel noted that it was not saying that reexamination history cannot ever create a new issue that would preclude collateral estoppel, such a scenario does not exist here because the reexamination history in no way modifies, clarifies, or even informs the construction of the sole memory limitation. Because reexamined claim 33 presents the identical claim construction inquiry as decided in the Colorado action, the district court properly applied collateral estoppel to the '774 patent.
The '108 patent, on the other hand, presents a separate claim construction issue. The '108 patent is not related to the '774 patent, but does disclose a purported improvement to the '774 patent. While the '108 patent may incorporate by reference the '774 patent as prior art, it does not change the fact that the patents are not related. The '108 patent discloses a separate invention, includes a distinct prosecution history, and is supported by a different written description—including Figures 3 and 4, which clearly depict RAM. These distinctions reinforce the well understood notion that claims of unrelated patents must be construed separately so the panel holds that the district court erred in applying collateral estoppel to the '108 patent.
The panel notes that its decision that collateral estoppel cannot apply to the construction of a claim in one patent based on a previous claim construction of an unrelated patent is not an invitation to assume the opposite is always justified. That is, a court cannot impose collateral estoppel to bar a claim construction dispute solely because the patents are related. Each case requires a determination that each of the requirements for collateral estoppel are met, including that the issue previously decided is identical to the one sought to be litigated. A continuation-in-part, for instance, may disclose new matter that could materially impact the interpretation of a claim, and therefore require a new claim construction inquiry.
Conversion of Partial Judgment to Final Judgment Under Fed. R. Civ. P. 54(b)
Finally, the panel holds that the district court did not abuse its discretion in converting Pantech's partial judgment of noninfringement to a final judgment under Fed. R. Civ. P. 54(b). Rule 54(b) provides that a district court "may direct entry of a final judgment as to one or more, but fewer than all, claims . . . only if the court expressly determines that there is no just reason for delay." The panel sees no error in the district court's determination that there was no just reason for delay because as the Huawei case was already on appeal, certifying the balance of cases ensured that the collateral estoppel order would be appealed only once. The court therefore did not abuse its discretion when it converted Pantech's judgment to a final one for purposes of appeal.
Versata Software, Inc., Versata Development Group, Inc., and Versata, Inc. v. Callidus Software, Inc., Fed. Cir. Case No. 2014-1468 (November 20, 2014)
Versata sued Callidus on July 19, 2012 for infringement of its '326, '304, and '024 patents. In September of 2012 Callidus filed a motion to transfer the case, which was eventually denied by the district court in May of 2013. In early August, Callidus then answered, counterclaimed as to three of its own patents, and informed the court that it would file a CBM petition and seek a stay of the litigation. Later that month, Callidus filed its first set of CBM petitions based on § 101, challenging all of the claims of the '326 patent, the independent claims of the '304 and '024 patents, and some dependent claims of those two patents. Callidus simultaneously filed its motion to stay.
While declining to consider a stay until the PTAB instituted a CBM review, the district court set dates for a Markman hearing and trial for 2015. On March 4, 2014, the PTAB initiated a CBM review for each patent, and Callidus renewed its motion to stay in the district court. Shortly thereafter, Callidus petitioned for a second CBM review, this time for the remaining claims of the '304 and '024 patents, also under § 101.
After the PTAB instituted CBM review on the first set of petitions, the district granted a stay as to the '326 patent but denied it as to the '304 and '024 patents. Thereafter, Callidus filed an interlocutory appeal under § 18(b) of the AIA. During this appeal, the PTAB instituted a CBM review on Callidus' second set of petitions, finding every remaining claim of the '304 and '024 patents more likely than not unpatentable under § 101.
Section 18(b)(1) of the AIA instructs the district court to consider four factors when deciding whether to grant a motion to stay:
- whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
- whether discovery is complete and whether a trial date has been set:
- whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party;
- whether a stay, or the denial thereof, will reduce the burden of litigation of the parties and the court.
Factor (A): Simplification of Issues
The panel rules that the court clearly erred by essentially creating a categorical rule that if any asserted claims are not also challenged in the CBM proceeding, this factor disfavors a stay. Though the panel factor weighs more heavily in favor of a stay "when all of the litigated claims are undergoing CBM review" "stays can be warranted even when a CBM proceeding does not address all asserted patents, claims, or invalidity defenses." VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1312-14 (Fed. Cir. 2014).
A proper simplification analysis would look to what would be resolved by CBM versus what would remain. The district court erred in not finding relevant the fact that all of the independent claims, as well as some dependent claims, of the '304 and '024 patents are undergoing CBM review. The panel also takes judicial notice of the fact that the PTAB had instituted a second CBM review, this time on all remaining claims.
Finally, the panel explains that it is not necessary for the CBM proceedings to simplify all invalidity issues to warrant stay. The statute explicitly allows petitioners to raise one invalidity defense without invoking estoppel as to other defenses that could have been raised. Compare AIA § 18(a)(1)(D) with 35 U.S.C. § 315(e)(2). Balancing all of these interests, the panel finds that the first factor strongly favors stay.
Factor (B): Whether Discovery Is Complete and Whether A Trial Date Has Been Set
The district court weighed this factor against a stay or was at best neutral, finding that though discovery wasn't complete, the trial date that is scheduled is within months of when the PTAB is expected to issue its decision. The panel found two errors with this reasoning: first, the court did not explain how the PTAB's decision before the trial date counsels against stay; second, the court failed to analyze how much more remains to be done in litigation before reaching the trial date.
Callidus filed its first CBM petitions and motion to stay when the litigation was still in its infancy. The district court clearly erred when it evaluated the stage of litigation at the time of its decision because "as we explained in VirtualAgility, generally the time of filing the motion will be the relevant stage at which to measure this factor." Further, while the panel noted that it is correct for the district court to wait for the PTAB's institution of a CBM review before granting a stay, whether "we look at the date the motion to stay was filed or the date when the PTAB granted review, the factor strongly favors a stay."
With the close of expert discovery still seven months away, no exchange of claim construction terms or constructions, and Markman and trial over a year away, the panel finds that much of the litigation was still in front of the parties and the district court. The panel noted that courts must be mindful of the burden on the parties and the court in completing both discovery, resolving summary judgment motions, completing the Markman process, and preparing for trial. This timing factor thus strongly favors stay.
(C) Undue Prejudice or Tactical Advantage
The district court made no factual findings that Versata would suffer undue prejudice as a result of a stay, yet found that Callidus would gain a tactical advantage because it would still seek its own infringement counterclaims during the stay on Versata's patents. The panel finds these findings clearly erroneous considering Callidus' admission that it was seeking a stay as to all proceedings and Versata's silence as to a stay of the entire litigation. Because the record does not suggest any undue prejudice to Versata or tactical advantage to Callidus, the court clearly erred, and this factor strongly favors a stay.
(D) Reduced Burden of Litigation
The district court found that "Callidus' tactics in filing motions to transfer and dismiss under 12(b)(6) have actually increased the burdens of litigation, rather than reduced them." In so finding, the court determined that this factor weighed against a stay. The panel finds that the district court clearly erred because the correct test is one that focuses prospectively on the impact of the stay on the litigation, not on the past actions of the parties."
As previously noted in VirtualAgility, the "simplification factor analysis under the first factor points in the same direction as reducing the burden of litigation under the fourth factor." For these reasons and the reasons given in the first factor, the panel found that this factor strongly favors a stay.
This case, and its recent VirtualAgility decision, show how strongly the Circuit feels about cases being stayed pending CBM review. Though the CBM petition on appeal in Versata was not on all claims in the case and only on § 101 grounds (without mention of § 102, 103, or 112), the panel finds it enough of a simplification of issues to warrant a stay. The Circuit also does not give much weight to what has already occurred in the litigation as long there is much left to do before trial.