PTO matters Inter Partes Review St. Jude Medical Cardiology Division, Inc., v Volcano Corporation, 749 F.3d 1373 (Fed. Cir. 2014); In re Dominion Dealer Solutions, LLC, 749 F.3d 13793 (Fed. Cir. 2014); In re the Proctor & Gamble Company, 749 F.3d 1376 (Fed. Cir. 2014) Denials of petitions for inter partes review are deemed not to be appealable to the Circuit. Vaillancourt v. Becton Dickinson & Co., 749 F.3d 1368 (Fed. Cir. 2014) In another dismissal of an inter partes appeal, the Circuit ruled that one who assigned his patent during an inter partes reexamination had no right to appeal the inter partes decision. Interferences Tobinick v. Olmarker and Rydevik, 753 F.3d 1220 (Fed. Cir. 2014) The Circuit reverses an interference determination that there was inadequate disclosure in the specification to support copied claims directed to the treatment of herniated discs. Troy v. Samson Manufacturing Corp., 758 F.3d 1322 (Fed. Cir. 2014) The Circuit vacates and remands a district court decision in an interference action because the district court erred in refusing to consider evidence that was not presented in the PTO but was pertinent to the determination of priority. While the AIA eliminated interferences for patent applications filed after March 16, 2013, it is still possible to have interferences declared as to applications and patents filed prior to that date as long as the interference claim is submitted within one year of issuance of a patent or within one year of the publication of an application. Interferences in which priority of invention is determined will therefore be with us for at least the next several years, so these interference decisions remain pertinent. Terminal Disclaimer Japanese Foundation for Cancer Research v. Michelle K. Lee, 2014 U.S. App. LEXIS 23109 (Fed. Cir. Dec. 9, 2014) The panel reverses the district court, finding that the PTO did not act arbitrarily or capriciously, or abuse its discretion in declining to use its inherent authority to withdraw a terminal disclaimer that the Foundation's attorney filed in accordance with the PTO's regulations. Use of a Certificate of Correction to Withdraw the Terminal Disclaimer On appeal, the Foundation argues that the PTO has the authority to issue a certificate of correction for the '187 patent to withdraw the terminal disclaimer. But this reading of the statute is, according to the panel, strained and lacks support in case law. Therefore, the panel concludes that there is no basis for withdrawing the terminal disclaimer by means of a certificate of correction.5 Exercising the PTO’s Inherent Authority to Withdraw the Terminal Disclaimer The PTO has clearly articulated in its regulations that, other than the patentee, only the attorney of record is authorized to file a terminal disclaimer on the patentee's behalf. And here, the patentee provided specific authority to its attorney to file a disclaimer by filing a power of attorney to prosecute the underlying application. Even if we disagreed with the PTO's position, we must not substitute our own judgment for that of the agency because "unless these vital differentiations between the functions of judicial and administrative tribunals are observed, courts will stray outside their province and read the laws of Congress through the distorting lenses of inapplicable legal doctrine. Here, the PTO determined that miscommunications between the Foundation and its attorney did not excuse the actions of the attorney, and we will not substitute our judgment for that of the agency. Validity Section 101 (Patentable Subject Matter) Smartgene, Inc. v. Advanced Biological Laboratories, SA, 555 Fed. Appx. 950 (D.C. Cir. 2014) In a decision rendered months prior to Alice, a panel of Judges Lourie, Dyk and Taranto affirmed the district court's summary judgment of invalidity of computer-related medical diagnosis claims under 35 USC 101 as being directed to unpatentable subject matter. The panel found that the district court's ruling properly followed CyberSource, where the court held that section 101 did not embrace a process defined simply as using a computer to perform a series of mental steps. CyberSource and earlier precedents rest on the Supreme Court's decisions indicating that section 101 covers neither "mental processes" associated with or as part of a category of "abstract ideas," nor processes that merely invoke a computer and its basic functionality for implementing such mental processes without specifying new physical components or specifying processes defined other that by the mentally performable steps. The opinion neatly anticipated what the Supreme Court was going to be saying in Alice, instead of following Judge Rader and others on the Circuit who feel section 101 should be a coarse strainer on patentability. In re Roslin Institute, 750 F.3d 1333 (Fed. Cir. 2014) In another pre-Alice decision, the Circuit determined that a cloned animal is not patentable because it is a natural phenomenon that does not possess different characteristics than an animal found in nature. The Court cited Chakabarty and Funk Bros. for the teaching that when the qualities of the invention sought to be patented "are the work of nature” and are unaltered by the hand of man, there is no patentable subject matter. Here, the methods of creating the clone were not at issue as they were separately patented in another application. Roslin argued that clones like Dolly are patentable because they are not created via nature, but instead by human handiwork. The Circuit disagreed, noting "Dolly’s genetic identity to her donor parent renders her unpatentable” under Chakabarty because she possesses no "markedly different characteristics from any animals found in nature.” The Circuit then examined Dolly under the more recent Myriad doctrine but found Roslin had not created or altered any of the genetic information of its claimed clones, or the genetic structures of the DNA used to make them. Alice Corporation Pty. Ltd. v. CLS Bank International et al., 134 S.Ct. 2347 (2014) The Supreme Court unanimously rules that the claimed invention is no more than an abstract concept for managing risk in computerized trading, and as such does not constitute patentable subject matter. The Court raises the bar on whether computer-related business method patents can recite patentable subject matter. With three justices arguing in affirmance that business method patents can never recite patentable subject matter, a unanimous Court strikes down the claims at issue.6 The claimed invention is designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary. Specifically, the patents in suit claim (1) a method for exchanging financial obligations, (2) a computer system configured to carry out the method for exchanging obligations, and (3) a computer-readable medium containing program code for performing the method of exchanging obligations. The Supreme Court holds that because the claims are drawn to a patent-ineligible abstract idea, they are not patent eligible under §101. The opinion, written by Justice Thomas, is summarized by the Court: (a) The Court has long held that §101, which defines the subject matter eligible for patent protection, contains an implicit exception for ‘“[l]aws of nature, natural phenomena, and abstract ideas.’” Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U. S. (2013) In applying the §101 exception, this Court must distinguish patents that claim the “‘buildin[g] block[s]’ ” of human ingenuity, which are ineligible for patent protection, from those that integrate the building blocks into something more, see Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), thereby “transform[ing]” them into a patent-eligible invention. (b) Using this framework, the Court must first determine whether the claims at issue are directed to a patent-ineligible concept. If so, the Court then asks whether the claim’s elements, considered both individually and “as an ordered combination,” “transform the nature of the claim” into a patent-eligible application. (1) The claims at issue are directed to a patent-ineligible concept: the abstract idea of intermediated settlement. Under “the longstanding rule that ‘[a]n idea of itself is not patentable,’ ” Gottschalk v. Benson, 409 U. S. 63 (1972), this Court has found ineligible patent claims involving an algorithm for converting binary-coded decimal numerals into pure binary form, a mathematical formula for computing “alarm limits” in a catalytic conversion process, Parker v. Flook, 437 U. S. 584 (1978); and, most recently, a method for hedging against the financial risk of price fluctuations, Bilski. It follows from these cases, and Bilski in particular, that the claims at issue are directed to an abstract idea. On their face, they are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk. Like the risk hedging in Bilski, the concept of intermediated settlement is “ ‘a fundamental economic practice long prevalent in our system of commerce,’ ” ibid., and the use of a third-party intermediary (or “clearing house”) is a building block of the modern economy. Thus, intermediated settlement, like hedging, is an “abstract idea” beyond §101’s scope. (2) Turning to the second step of Mayo’s framework: The method claims, which merely require generic computer implementation, fail to transform that abstract idea into a patent-eligible invention. (i) “Simply appending conventional steps, specified at a high level of generality,” to a method already “well known in the art” is not “enough” to supply the “ ‘inventive concept’ ” needed to make this transformation. Mayo . The introduction of a computer into the claims does not alter the analysis. Neither stating an abstract idea “while adding the words ‘apply it,’ ” Mayo , nor limiting the use of an abstract idea “ ‘to a particular technological environment,’ ” Bilski, is enough for patent eligibility. Stating an abstract idea while adding the words “apply it with a computer” simply combines those two steps, with the same deficient result. Wholly generic computer implementation is not generally the sort of “additional featur[e]” that provides any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.” Mayo. (ii) Here, the representative method claim does no more than simply instruct the practitioner to implement the abstract idea of intermediated settlement on a 7 generic computer. Taking the claim elements separately, the function performed by the computer at each step—creating and maintaining “shadow” accounts, obtaining data, adjusting account balances, and issuing automated instructions—is “[p]urely ‘conventional.’” Mayo. Considered “as an ordered combination,” these computer components “ad[d] nothing . . .that is not already present when the steps are considered separately.” Viewed as a whole, these method claims simply recite the concept of intermediated settlement as performed by a generic computer. They do not, for example, purport to improve the functioning of the computer itself or effect an improvement in any other technology or technical field. An instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer is not “enough” to transform the abstract idea into a patent-eligible invention. (3) Because petitioner’s system and media claims add nothing of substance to the underlying abstract idea, they too are patent ineligible under §101. Petitioner conceded below that its media claims rise or fall with its method claims. And the system claims are no different in substance from the method claims. The method claims recite the abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the same idea. This Court has long “warn[ed] . . . against” interpreting §101 “in ways that make patent eligibility ‘depend simply on the draftsman’s art.’” Mayo. Holding that the system claims are patent eligible would have exactly that result. In a concurring opinion, Justice Sotomayor wrote, citing Justice Steven’s concurring opinion in Bilski: “I adhere to the view that any claim that merely describes a method of doing business does not qualify as a‘process’ under §101.” She was joined in that opinion by Justices Ginsburg and Breyer. In late July, while testifying before the House Judiciary Committee, Acting Deputy Director of the PTO Michelle Lee noted that the PTO was pulling allowances for a reassessment of claims under CLS. Applicants have been notified of the withdrawal and the applications were returned to the originally assigned examiners. The PTO is in the process of evaluating public comments in preliminary examination instructions it issued on June 30. In a paper just published today in IP 360 on how to draft claims that will be acceptable under Alice, the author said to (1) get technical (claim a particular way of doing it on a computer – not every way); (2) narrow the claims (include elements that claim significantly more than the idea itself); (3) tell a compelling story (in the spec and in at least some claims); (4) play up the distinctions between man and machine (make the computer integral to the claimed invention, so a human can’t do it with a pencil and paper); and (5) keep an eye on what the Federal Circuit says in applying Alice. Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., et al., 758 F.3d 1344 (Fed. Cir. 2014) In this first patentable subject matter case decided by the Circuit since CLS, the panel affirms a decision by the district court and rules that claims defining a device profile and a method for creating a device profile within a digital image processing system are not patent eligible under 35 U.S.C. § 101. The claim recites a process of taking two data sets and combining them into a single data set, the device profile. The two data sets are generated by taking existing information—i.e., measured chromatic stimuli, spatial stimuli, and device response characteristic functions—and organizing this information into a new form. According to the panel, claim 10 thus recites an ineligible abstract process of gathering and combining data that does not require input from a physical device. Without additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent eligible. "If a claim is directed essentially to a method of calculating, using a 8 mathematical formula, even if the solution is for a specific purpose, the claimed method is non-statutory." Parker v. Flook, 437 U.S. 584, 595 (1978). Planet Bingo LLC v. VKGS LLC, 576 Fed. Appx. 1005, 2014 U.S. App. LEXIS 16412 (Fed. Cir. 2014) In a non-precedential opinion the Circuit determines that patents directed to computer-aided methods and systems for managing a game of Bingo do not claim patentable subject matter, noting that the case is a straight-forward application of Alice Corp. v. CLS Bank. The patents claim managing a bingo game while allowing a player to repeatedly play the same sets of numbers in multiple sessions. According to the panel, reviewing the claims de novo, the district court correctly concluded that managing the game of bingo “consists solely of mental steps which can be carried out by a human using pen and paper.” Like the claims at issue in Gottschalk v Benson, 409 U.S. 63 (1972) not only can these steps be “carried out in existing computers long in use,” but they also can be “done mentally.” Thus, the panel holds that the subject matter claimed in the patents is directed to an abstract idea. Abstract ideas may still be patent-eligible if they contain an “‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application,” Alice, but, according to the panel, in this case, the claims recite a generic computer implementation of the covered abstract idea. Accordingly, the panel holds that the claims at issue do not have an ‘inventive concept’ sufficient to ‘transform’ the claimed subject matter into a patent-eligible application. buySafe, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014) Claims directed to a system for ensuring security for online sales are no different than Alice’s computerized method of managing risk in financial trading, so Buysafe’s patent is found invalid under § 101. According to the panel, the Supreme Court explained that the method claims in Alice invoke “the use of a computer to create electronic records, track multiple transactions, and issue simultaneous instructions,” “electronic recordkeeping,” and “the use of a computer to obtain data, adjust account balances, and issue automated instructions.” They do not, for example, purport to improve the functioning of the computer itself. They do not effect an improvement in any other technology or technical field, and they merely invoke some unspecified, generic computer. The system claims in Alice are no different, the Court added, explaining that they invoke a “‘data processing system’ with a ‘communications controller’ and ‘data storage unit,’” which are “purely functional and generic” components for “performing the basic calculation, storage, and transmission functions required by the method claims.” Finally, the Court viewed the claims to a computer-readable medium for the methods as indistinguishable for § 101 purposes. Comment: The panel describes the analysis for determining whether a claim is patent-eligible as: whether the claim is directed to one of the three excluded categories -laws of nature, natural phenomena, and abstract ideas; and if so, is there enough extra included in the claim that it passes muster under §101 (and it can do so even if it is a business method). In applying the first step, the breadth or narrowness of the law, phenomenon or idea is not relevant. With regard to the second step, as noted in Alice and the Circuit’s recent Planet Bingo case, simply requiring generic computer implementation does not move the claim into the realm of patentable subject matter.9 Ultramercial, Inc. v. Hulu, LLC, and WildTangent, Inc., 772 F.3d 709 (Fed. Cir. 2014) After two prior reversals of a district court’s ruling that the claims do not recite patentable subject matter, the Circuit finally agrees with the district, citing Alice and striking down the patent because the claims simply instruct the practitioner to implement the abstract idea with routine, conventional activity. While the Supreme Court has held that the machine-or-transformation test is not the sole test governing § 101 analyses, Bilski, that test can provide a useful clue in the second step of the Alice framework, see Bancorp Servs., L.L.C., v. Sun Life Assurance Co. of Can., 687 F.3d 1266 (Fed. Cir. 2012). A claimed process can be patent-eligible under § 101 if: "(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008) (en banc), affd on other grounds, Bilski, 561 U.S. 593. The claims of the '545 patent, however, are not tied to any particular novel machine or apparatus, only a general purpose computer. The Internet is not sufficient to save the patent under the machine prong of the machine-or-transformation test. CyberSource. It is a ubiquitous information-transmitting medium, not a novel machine. And adding a computer to otherwise conventional steps does not make an invention patenteligible. Alice. Any transformation from the use of computers or the transfer of content between computers is merely what computers do and does not change the analysis. The claims of the '545 patent also fail to satisfy the transformation prong of the machine-or-transformation test. The method as claimed refers to a transaction involving the grant of permission and viewing of an advertisement by the consumer, the grant of access by the content provider, and the exchange of money between the sponsor and the content provider. These manipulations of "public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances." Bilski, 545 F.3d at 963. We therefore hold that the claims of the '545 patent do not transform any article to a different state or thing. While this test is not conclusive, it is a further reason why claim 1 of the '545 patent does not contain anything more than conventional steps relating to using advertising as a currency. DDR Holdings, LLC v. Hotels.com, et al., 2014 U.S. App. LEXIS 22902 (Fed. Cir. Dec. 5, 2014) The panel affirms denial of JMOL as to noninfringement and invalidity of a ‘399 patent, but reverses the denial of JMOL as to anticipation with respect to a '572 patent. Judge Chen writes the most in depth discussion of Alice v. CLS Bank we’ve seen from the Circuit, upholding patentability and providing some guidance as to the drafting of patent-eligible claims, with Judge Mayer dissenting. The ‘572 and ‘399 patents are directed to systems and methods of generating a composite web page that combines certain visual elements of a "host" website with content of a third-party merchant. For example, the generated composite web page may combine the logo, background color, and fonts of the host website with product information from the merchant. Prior art systems allowed third-party merchants to lure the host website's visitor traffic away from the host website because visitors would be taken to the third-party merchant's website when they clicked on the merchant's advertisement on the host site. The patents-in-suit discloses a system that provides a solution to this problem (for the host) by creating a new web page that permits a website visitor, in a sense, to be in two places at the same time. Patentable subject matter under § 101 The majority begins its § 101 analysis at Mayo/Alice step one: determining whether the computer implemented claims at issue here are "directed to" a patent-ineligible abstract idea. Here, we note that the '399 patent's asserted claims do not recite a mathematical algorithm, nor do they recite a fundamental 10 economic or longstanding commercial practice. Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet. Like claims in the cases discussed above, the claims involve both a computer and the Internet. But these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks. It is also clear that the claims at issue do not attempt to preempt every application of the idea of increasing sales by making two web pages look the same, or of any other variant suggested by NLG. Rather, they recite a specific way to automate the creation of a composite web page by an "outsource provider" that incorporates elements from multiple sources in order to solve a problem faced by websites on the Internet. As a result, the '399 patent's claims include "additional features" that ensure the claims are "more than a drafting effort designed to monopolize the abstract idea." Alice. In short, the claimed solution amounts to an inventive concept for resolving this particular Internet-centric problem, rendering the claims patent-eligible. In sum, according to the majority, the '399 patent's claims are unlike the claims in Alice, Ultramercial, and buySAFE that were found to be directed to little more than an abstract concept. To be sure, the '399 patent's claims do not recite an invention as technologically complex as an improved, particularized method of digital data compression. But nor do they recite a commonplace business method aimed at processing business information, applying a known business process to the particular technological environment of the Internet, or creating or altering contractual relations using generic computer functions and conventional network operations, such as the claims in Alice, Ultramercial, or buySAFE. The claimed system, though used by businesses, is patent-eligible under § 101. The district court did not err in denying NLG's motion for JMOL of invalidity under 35 U.S.C. § 101 as to these claims. Comment: This is the first case post-Alice in which the Circuit has upheld claims that were subject to a § 101 challenge. In its opinion the majority cites to its opinions in buySAFE and Ultramercial but the same invalidity result was reached in Digitech Image Techs., LLC v. Electronics for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014) and Planet Bingo, LLC. v. VKGS LLC, 576 Fed. Appx. 1005 (Fed. Cir. 2014)(nonprecedential). In I/P Engine, Inc. v. AOL Inc., 576 Fed. Appx. 982 (Fed. Cir. 2014), the panel ruled that the patent was invalid as obvious but Judge Mayer wrote in a concurring opinion that the case should never have gone to trial since none of the asserted claims recited patentable subject matter. We’ll see in future cases whether Judge Chen’s (and Judge Wallach’s) thinking represents the majority of the Circuit or if Judge Mayer’s high bar under § 101 is accepted by the other judges. Content Extraction and Transmission LLC v. Wells Fargo Bank, Nat’l. Assoc. et al., 2014 U.S. App. LEXIS 24258 (Fed. Cir. Dec. 23, 2014); Diebold, Inc. v. Content Extraction and Transmission LLC, et al., 2014 U.S. App. LEXIS 24258 (Fed. Cir. Dec. 23, 2014) The Circuit affirms dismissal under Rule 12(b)(6) of patentee’s infringement suit due to the asserted patents being patent ineligible under 35 U.S.C. § 101, and the dismissal of counterclaims for tortious interference and RICO violations. This summary will deal only with the § 101 issue and the latter dismissal is discussed later in this paper. CET asserted four related patents directed generally to a method of 1) extracting data from hard copy documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from the extracted data, and 3) storing that information in a memory. This method can be performed by software on an ATM that recognizes information written on a scanned check. Applying Mayo/Alice step one, the panel agrees with the district court that the claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, 11 and 3) storing that recognized data in a memory. The concept of data collection, recognition, and storage is undisputedly well-known. Indeed, humans have always performed these functions. And banks have, for some time, reviewed checks, recognized relevant data such as the amount, account number, and identity of account holder, and stored that information in their records. CET attempts to distinguish its claims from those found to be abstract in Alice and other cases by showing that its claims require not only a computer but also an additional machine—a scanner. CET argues that its claims are not drawn to an abstract idea because human minds are unable to process and recognize the stream of bits output by a scanner. However, the claims in Alice also required a computer that processed streams of bits, but nonetheless were found to be abstract. Similar to how the computer-implemented claims in Alice were directed to "the concept of intermediated settlement," and the claims in Dealertrack were directed to the concept of "processing information through a clearinghouse," CET's claims are drawn to the basic concept of data recognition and storage. For the second step of the panel’s analysis, the panel looks to see whether the limitations present in the claims represent a patent-eligible application of the abstract idea. Alice. For the role of a computer in a computer implemented invention to be deemed meaningful in the context of this analysis, it must involve more than performance of "well-understood, routine, and conventional activities previously known to the industry." Further, "the mere recitation of a generic computer cannot transform a patent ineligible abstract idea into a patent-eligible invention." Applying Mayo/Alice step two, we agree with the district court that the asserted patents contain no limitations—either individually or as an ordered combination that transform the claims into a patent-eligible application. There is no "inventive concept" in CET's use of a generic scanner and computer to perform wellunderstood, routine, and conventional activities commonly used in industry. At most, CET's claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment. Such a limitation has been held insufficient to save a claim in this context. See Alice, 134 S. Ct. at 2358; Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715– 16 (Fed Cir. 2014); buySAFE, 765 F.3d at 1355. Obviousness Hoffman-La Roche Inc. and Genentech, Inc. v. Apotex Inc. et al., 748 F.3d 1326 (Fed. Cir. 2014) In a split decision, the court affirmed a summary judgment determination of invalidity of patents directed to Roche’s popular Boniva® osteoporosis drug, the panel members vehemently disagreeing on the teachings of the prior art and the proper analysis for the “obvious to try” issue. The issue in this case is whether it would have been obvious at the time of invention to select a once monthly oral dosing regimen of ibandronate to treat osteoporosis and to set that dose at 150 mg. As to the frequency of dosing, the majority found that there was at least a reasonable expectation that once monthly dosing of ibandronate could successfully treat osteoporosis and reduce fracture risk. According to the majority, conclusive proof of efficacy is not necessary to show obviousness. The prior art established at least a reasonable expectation that once monthly dosing of ibandronate could successfully treat osteoporosis and reduce fracture risk As to the amount of the monthly dose, the panel found that the combination of several prior art references suggested a dosage level of about 150 mg per month, or at least indicated that a monthly dose of 150 mg was obvious to try. A person skilled in the art looking to scale to a monthly dose of oral ibandronate from a known-effective daily dose was faced with a very limited set of possibilities, and all the law requires is a reasonable expectation of success.12 Sanofi-Aventis Deutschland GmbH et al. v. Glenmark Pharmaceuticals Inc., USA et al., 748 F.3d 1354 (Fed. Cir. 2014) In her second discussion of the “obvious-to-try” issue in the past two weeks, Judge Newman, this time writing for a unanimous panel, reminded us that the standard of “obvious-to-try” requires a limited number of specific alternatives offering a likelihood of success in light of the prior art and common sense. Intouch Technologies, Inc. v. VGO Communications, Inc., 751 F.3d 1327 (Fed. Cir. 2014) The Circuit determined that the evidence “did not even come close” to being substantial enough to support an obviousness finding and therefore reversed the denial of JMOL. But the Circuit affirmed the denial of a motion for new trial, even though defendant’s witness testified about an opinion despite the fact that privilege had not been waived prior to trial, and defendant’s expert discussed prior art that had not been disclosed prior to trial. K/S Himpp v. Hear-Wear Technologies, LLC, 751 F.3d 1362 (Fed. Cir. 2014) A split panel of the Circuit affirms an obviousness finding of the PTO Board in a ruling that in some respects seems inconsistent with the KSR’s dictate that “common sense” is to be considered in obviousness rulings. HIMPP argues that the Examiner and the Board failed to consider the knowledge of a person having ordinary skill in the art solely because HIMPP did not provide documentary evidence to prove purportedly well-known facts. HIMPP asserts that refusing to consider the knowledge of a person having ordinary skill in the art because of a lack of record evidentiary support is contrary to the Supreme Court's admonishment in KSR against the overemphasis on the importance of published articles and the content of issued patents. The majority disagreed with HIMPP, and ruled that the Board was correct to require record evidence to support an assertion that the structural features of the claims were known prior art elements. Q.I. Press Controls, B.V. v Lee, 752 F.3d 1371 (Fed. Cir. 2014) The Circuit reverses and remands a portion of the Board's inter partes reexamination decision because very similar claims were found to be valid and invalid, citing an obligation to the public not to provide inconsistent rulings of patentability. Allergan, Inc. and Duke University v. Apotex Inc., 754 F.3d 952 (Fed. Cir. 2014) A divided panel reverses a determination of invalidity as to obviousness of the two patents in suit directly to an eyelash growth stimulant after deciding that there was insufficient corroboration to prove that the claimed invention was conceived before an article that rendered the claimed invention obvious. Given the overwhelming weight of evidence, the majority felt that remand is unnecessary “as here, the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art are not in material dispute, and the obviousness of the claim is apparent in light of these factors.” Accordingly, the majority reverses the district court’s finding that the patent is not invalid for reasons of obviousness.13 Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc., 752 F.3d 967 (Fed. Cir. 2014) The Circuit affirms a determination of obviousness as to a BMS patent covering its Baraclude® drug used for the treatment of hepatitis B. According to the panel, a party seeking to invalidate a patent as obvious must demonstrate that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success from doing so. To establish obviousness in cases involving new chemical compounds, the accused infringer must identify some reason that would have led a chemist to modify a known compound. Generally, an obviousness inquiry concerning such known compounds focuses on the identity of a "lead compound." A lead compound is a compound in the prior art that would be "a natural choice for further development efforts." Leo Pharmaceutical Products, Ltd. v. Teresa Stanek Rea, 726 F.3d 1346 (Fed. Cir. 2013) Based largely on its conclusion that the claimed combination would not have been “obvious to try,” and that the objective indicia of unexpected result, commercial success, and long felt but unsolved need all support a finding of nonobviousness, the panel reverses the Board’s determination that a patent to a treatment for psoriasis was invalid under §103. Obviousness Although patents to Dikstein and Serup attempt the combination of a vitamin D analog with a corticosteroid, neither discloses or addresses the stability problems of combining vitamin D analogs and corticosteroids into one pharmaceutical formulation. Leo presented experimental evidence to the Board that each of these ingredients harmed the storage stability of the vitamin D analog and corticosteroid combination. If these discoveries and advances were routine and relatively easy, the record would undoubtedly have shown that some ordinary artisan would have achieved this invention within months of Dikstein or Serup. Instead this invention does not appear for more than a decade. Objective Evidence of Nonobviousness This record shows “extensive experimental evidence” of unexpected results that contradict the Board’s obviousness finding. The commercial success of Leo Pharmaceutical’s Taclonex® ointment is a testament to the improved properties of the ’013 patent’s claimed invention. The record also shows evidence of long felt but unsolved need, i.e., the need for a single formulation to treat psoriasis. The length of the intervening time between the publication dates of the prior art and the claimed invention can also qualify as an objective indicator of nonobviousness. Scientific Plastic Products, Inc. v. Biotage AB, 766 F.3d 1355 (Fed. Cir. 2014) A majority of the panel affirms a determination of obviousness, holding that the Board did not err in holding that it would have been obvious to modify a chromatography cartridge with the resealable threaded cap taught by art that the majority found to be analogous. SPP is the owner of the three patents that relate to a resealable cartridge for low pressure liquid chromatography (LPLC). After SPP filed suit against Biotage for patent infringement, Biotage requested inter partes reexamination of the three patents, and the district court stayed the litigation. The patent examiner rejected all claims of the three patents based on obviousness, and the Board affirmed the rejections.14 The primary issue on reexamination concerned the obviousness of combining the LPLC cartridge of the Yamada reference with the King or Strassheimer pressure-resistant caps. The examiner found that Yamada discloses all of the features of the SPP cartridge except for the complementary inclined sealing surfaces of the cap and the lip of the container.King relates to improved seals for container closure assemblies, and is “especially applicable to the sealing of containers in substantially gas-tight and liquid-tight fashion, such as the sealing of . . . beverage containers.” King shows a container closure assembly with a threaded polymer cap that ensures a fluid tight seal. The examiner found that King shows sealing surfaces that have oppositely-inclined surfaces with respect to the cap and lip of the container, as in the SPP closure. Strassheimer relates to plastic bottles and closures therefor that are especially useful for carbonated beverages. Strassheimer also shows a plastic threaded cap that ensures a fluid-tight seal even after repeated use. The examiner found that Strassheimer shows a taper on the lip of the plastic container that corresponds to a taper on the cap, as in the SPP closure. Are King and Strassheimer Analogous Prior Art? Here, the King and Strassheimer references address the problem of providing a fluid-tight seal at elevated pressures, between a container and a resealable cap. According to the majority, this is sufficiently close to the problem addressed by the claimed invention, and substantial evidence supports the Board’s finding that King and Strassheimer are available as prior art. Was the Claimed Invention Obvious? The question remains as to whether combining the cartridge of Yamada with the pressure-resistant cap of King or Strassheimer would have been obvious to a person of ordinary skill in the field of liquid chromatography devices. The issue here is not whether the Yamada cartridge leaked, but whether there was a concern with leakage in LPLC cartridges such that a person of ordinary skill would have provided a known pressure-resistant cap, as in King or Strassheimer, to the cartridge of Yamada. The majority concludes that substantial evidence supports a finding that there was such a concern, and goes on to hold that the Board did not err in holding that it would have been obvious for a person of ordinary skill in the field of the invention to modify the chromatography cartridge of Yamada with the resealable threaded cap of King or Strassheimer. Bristol-Myers Squibb Company v. Teva Pharmaceuticals USA, Inc., 769 F.3d 1339 (Fed. Cir. 2014) On a 7-4 vote the Circuit refuses to grant en banc hearing to review the invalidation of a BMS patent to a hepatitis B treatment even though the prior art drug from which it evolved was toxic to humans. Dissenting opinions note that the panel’s decision sets the bar too high to maintain the validity of drug patents. The reasoning of the panel and the majority is that the toxicity of the prior art drug was not discovered until after the filing date of the patent in suit and therefore was not relevant to what would have been obvious at the time of the invention. Judge O’Mally concurs, writing separately to assuage BMS and the amici’s fears that the panel decision has rewritten the test for obviousness for pharmaceutical patents. In her view, the concerns expressed are unjustified and mischaracterize the opinion. This case does not forge new ground or set down immutable principles. It simply decides that, on the record before it, the district court did not err in finding the asserted claim of the patent invalid as obvious. Judge Newman, with Judges Lourie and Reyna, argues that the panel’s decision creates several new standards for determination of obviousness. For example, the court deemed it irrelevant to the obviousness determination that the prior art “lead compound,” the carbocyclic analog of 2’-deoxyguanosine (2’-CDG), is highly toxic to humans, whereas the new product entecavir is non-toxic. 15 Judge Newman notes that the case has aroused extensive commentary, particularly in the chemical and pharmaceutical fields; the request for rehearing en banc is supported by much of the nation’s researchbased industry, which has filed briefs as amici curiae to point out the disincentives and uncertainties flowing from the court’s rulings. Until this case, inventors could confidently establish patentability of a new product or a new use by showing that the new property or use was unexpected in light of the prior art. Judge Taranto also dissents, expressing the concern that the ruling raises questions about core aspects of the widely used approach to obviousness analysis—particularly, the proper meaning of “reasonable expectation of success” and “unexpected results.” Those questions would benefit from plenary consideration and would allow a focus on and full analysis of the doctrinal issues, considering the language of section 103 (what it resolves and what it leaves open); the role of section 103 in the statute as a whole (which places a premium on early filing). Comment: Given the sharp split of the Circuit and the significance of this issue to the pharmaceutical industry, this is a case that would benefit from Supreme Court review. Evidently it is common that a great deal of evidence regarding new drugs is developed after patent applications are filed. While Judge O’Malley’s concurrence suggests this ruling applies only to the narrow facts of this case, the panel decision and Judge Dyk’s opinion seem to be fairly absolute: post-filing evidence is not to be considered in the obvious analysis. Par Pharmaceutical, Inc. and Alkermes Pharma Ireland Ltd. v. TWI Pharmaceuticals, Inc. 2014 U.S. App. LEXIS 22737, 112 U.S.P.Q. 2d 1945 (Fed. Cir. 2014) A bench trial determination of invalidity is reversed, with the Circuit ruling that the district court failed to apply a sufficiently high standard in order to rely on inherency. According to the panel, the limitation at issue necessarily must be present, or must be the natural result of the combination of elements explicitly disclosed by the prior art in order for a claimed invention to be rendered obvious. The inherent teaching of a prior art reference is a question of fact. In re Napier, 55 F.3d 610, 613 (Fed. Cir. 1995). The use of inherency, a doctrine originally rooted in anticipation, must be carefully circumscribed in the context of obviousness. See, e.g., In re Oelrich, 666 F.2d 578, 581 (C.C.P.A. 1981) ("[M]ere recitation of a newly discovered function or property, inherently possessed by things in the prior art, does not distinguish a claim drawn to those things from the prior art."). In Oelrich, inherency in an obviousness analysis was discussed: Inherency, however, may not be established by probabilities or possibilities. The mere fact that a certain thing may result from a given set of circumstances is not sufficient. If, however, the disclosure is sufficient to show that the natural result flowing from the operation as taught would result in the performance of the questioned function, it seems to be well settled that the disclosure should be regarded as sufficient. Thus, early precedent established that the concept of inherency must be limited when applied to obviousness, and is present only when the limitation at issue is the "natural result" of the combination of prior art elements. More recent Circuit analysis does not diminish this conclusion. A party must meet a high standard in order to rely on inherency to establish the existence of a claim limitation in the prior art in an obviousness analysis— the limitation at issue necessarily must be present, or the natural result of the combination of elements explicitly disclosed by the prior art. The district court, however, did not require that TWi present evidence sufficient to prove inherency under this standard. The district court's broad dictates regarding the effect of particle size on bioavailability and food effect are not commensurate with the actual limitations at issue. While it may be true that a reduction in particle size naturally results in some improvement in the food effect, 16 the district court failed to conclude that the reduction in particle size naturally results in "no substantial difference" in the food effect. Tyco Healthcare Group LP and United States Surgical Corp. v. Ethicon Endo-Surgery, Inc., 2014 U.S. App. LEXIS 22777, 112 U.S.P.Q. 2d 1979 (Fed. Cir. 2014) The panel throws out a $176 million verdict based on the district court’s improper decision to exclude § 102(g) prior art in its obviousness determinations, even though that art was found by the district court to apply in its anticipation analysis. The asserted patents disclose a surgical device that employs ultrasonic energy to cut and coagulate tissue in surgery. The device includes a stationary and movable handle at one end and a shaft with a tube within a tube construction at the other. A clamp and a curved blade sit at the distal end of the shaft. The clamp opens and shuts like a jaw against the blade via a dual cam mechanism. The Davison Patent and the Ethicon Prototype In 1993, Ultracision, Inc. commercialized an ultrasonic surgical device similar to the claimed invention. The device includes a shaft capable of fitting through a trocar with a ten millimeter diameter. In 1994, Ultracision obtained the Davison patent covering that invention. The Davison patent describes and depicts both straight and curved blade clamp configurations, and discloses that a benefit of using a curved blade is that it facilitates treatment of tissue at awkward angles of approach. Ultracision then worked to modify the patented device so that it could fit through a trocar with a five millimeter diameter. By November 1995, Ultracision had a prototype using this design that could cut and coagulate tissue. After Ethicon acquired Ultracision at the end of 1995, Ethicon worked to perfect the modified design for commercialization. Ethicon completed this design by November 1996. This so-called Ethicon Prototype employed a single pin and slot design and could successfully cut and coagulate tissue by December 1996. Ethicon nevertheless sought to increase the size of the blade so that the device could cut and seal larger blood vessels, and modified the clamp to use two pins and slots to accommodate the larger blade. From August to December 1997, the Ethicon Prototype was used to cut and seal large vessels, and Ethicon launched products based on the prototype in August 1998. Ethicon also filed patent applications covering the Ethicon Prototype in October 1997. These applications resulted in the Ethicon patents. The '662 Patent The '662 patent, filed in 1992, discloses an “approximating apparatus for jaw structure in surgical instrumentation." The device employs a pair of camming members and slots to open and close the jaw. The '662 patent further discloses that the jaw structure can be used for many surgical purposes including "grippers, graspers, dissectors, cutters, measurers, staplers, etc." Anticipation The district court properly held that the Ethicon Prototype anticipates twenty-six of the asserted claims because Ethicon conceived of the prototype before Tyco's January 1997 conception date and diligently reduced it to practice without abandoning, suppressing, or concealing it thereafter. Under § 102(g), Ethicon can establish that its Prototype was prior art by proving "either that it reduced its invention to practice first or that it conceived of the invention first and was diligent in reducing it to practice." Section 102(g) Prior Art as Section 103 Prior Art The district court erred when it inconsistently applied § 102(g) to the Ethicon Prototype by not requiring prior reduction to practice for anticipation purposes but requiring it for the obviousness analysis. The clear language of § 102(g) does not require prior reduction to practice so long as the inventor can prove that he or she conceived of the invention first and was diligent in later reducing it to practice. 17 Curved Blade Claims Claims would have been obvious if they are nothing more than a combination of familiar elements that yield predictable results. KSR, Intl. Co. v. Teleflex Inc., 550 U.S. 398, 417 (2007). The district court should have concluded that the Curved Blade Claims would have been obvious in view of the Ethicon Prototype and the Davison patent. Dual Cam Claims The district court also ruled that switching from a single cam to a dual cam mechanism in an ultrasonic device would not have been an obvious design decision. But Tyco's own expert agreed that the single and dual cam mechanism operate in the same way, which suggests that the switch from a single cam to a dual cam was more trivial than Tyco alleges. Prior Art Solvay S.A. v. Honeywell International, Inc., 742 F.3d 998 (Fed. Cir. 2014) In a split decision the Circuit holds that an invention conceived by a foreign inventor and reduced to practice in the U.S. by others can qualify as prior art under 35 U.S.C. §102(g)(2). That section provides, "[a] person shall be entitled to a patent unless . . . before such person's invention thereof, the invention was made in this country by another inventor who had not abandoned, suppressed, or concealed it." While §102(g) was eliminated in the AIA, that amendment only affects patents having a filing date of March 16, 2013 or later, so §102(g) cases are still very relevant. – Suffolk Technologies, LLC v. AOL Inc. and Google Inc., 752 F.3d 1358 (Fed. Cir. 2014) The Circuit affirms summary judgment of anticipation based on a post by a college student despite the patentee’s argument that the post would not have been accessible to those with ordinary skill in the art. The patentee Suffolk contends that the Usenet newsgroup was populated mostly by “beginners,” not those of ordinary skill in the art. Suffolk bases this claim on the college student’s comment that he was a “newbie” and that “this question might seem ridiculous.” The panel noted the evidence that there were no courses or books concerning CGI at the time of the post in 1995, and the inventor learned about CGI through selfstudy, presumably using the Internet. Second, the record indicates that those of ordinary skill in the art actually were using such newsgroups at the time. Specifically, both Suffolk’s validity expert and the inventor both used the newsgroups. In Re Rambus, 753 F.3d 1253 (Fed. Cir. 2014) The Circuit reverses a determination of anticipation by the Patent Trial and Appeal Board in an inter partes reexamination where there is no substantial evidence to support the Board’s decision. This case, like the Tobinick case decided two weeks earlier and discussed above, shows that the Circuit is not reluctant to reverse determinations by the PTAB, even when the standard of review is so low that it is simply looking for "substantial evidence" to support the Board's decision.18 Prior Invention by Another Fleming v. Escort Inc. and Beltronics USA, Inc., 2014 U.S. App. LEXIS 24419 (Fed. Cir. Dec. 24, 2014) The panel affirms a finding of infringement and validity as to most of the asserted claims. The panel also affirms the court’s finding of invalidity based on prior invention, rejecting patentee’s argument that there was insufficient corroboration. Also affirmed is a ruling that the reissuance of the patent in suit was appropriate, rejecting the argument that the reason for seeking reissue did not meet the “error” precondition for reissuance. Hoyt Fleming owns two reissue patents related to radar detectors for detecting police signals, which incorporate a GPS unit. The incorporated GPS can reduce false alarms (i.e., the signaling of a police presence when none exists) by allowing the detector to disregard signals from an identified location known to produce such false alarms (e.g., a storefront door opener transmitting a radar signal that can be mistaken for a police presence). Escort contends that Steven Orr, who works for Escort as a consultant, had invented a GPS-incorporating radar detector before Fleming did—a prior invention under 35 U.S.C. §§ 102(g) and 103 (2006). Fleming's claimed priority date is April 14, 1999—the filing date of his patent application. Orr alleged that he conceived his invention in 1988 and made a working embodiment that reduced it to practice in April 1996. From 1988 to 1996, Orr was working at Cincinnati Microwave (“Cincinnati”), and when Cincinnati entered bankruptcy, Escort acquired rights to the Orr invention. During the summer of 1997 Escort sought Orr's assistance in the new enterprise, and Orr filed a patent application to claim his alleged invention, with Escort as assignee, on June 14, 1999, two months after Fleming filed his application. The jury in this case found most of Fleming's asserted claims to be infringed by Escort and not to be invalid. It found invalid several other claims based upon Orr’s prior invention either independently or in combination with other prior art. The district court denied motions for JMOL. Sufficiency of Orr’s prior invention evidence The invalidity verdict rested first on Orr's prior invention, which the jury found to anticipate some of the claims, and second, on the combination of Orr's prior invention and prior art patents to invalidate other claims. The content of those teachings and the motivation to combine are fact questions, which the panel assumes the jury answered in Escort's favor. The evidence makes credible Orr's general account: in 1988, when he had his specific conception, various industry participants were thinking generally about equipping radar detectors with GPS to reduce false alarms; Cincinnati, in particular, was interested in the idea; by 1992, Orr was collecting data and working toward reducing the conception to practice; and in 1996, spurred by great interest in his project, Orr reduced his invention to practice. The evidence, in referring to frequencies and to using a GPS-given location to mute a detector alarm, also provides substantial corroboration of the more specific claim limitations concerning lockout frequencies and distances that Fleming highlighted in his argument. Fleming is correct that none of the corroborating evidence constitutes definitive proof of Orr's account or discloses each claim limitation as written. But the corroboration requirement has never been so demanding. It is a flexible, rule-of reason demand for independent evidence that, as a whole, makes credible the testimony of the purported prior inventor. 19 Abandoned, suppressed or concealed Fleming's final challenge is that, even if Orr had priority of invention by virtue of his activities through 1996, he lost priority under 35 U.S.C. § 102(g)(2)'s disqualification of prior inventions that have been abandoned, suppressed, or concealed. Although the Circuit accepts the facts as found by the jury where (as here) they are supported by substantial evidence, suppression or concealment is a question of law to be reviewed de novo. In this case, there is no evidence of any active efforts to suppress or conceal. And the panel finds the timing of Orr's activities leading to his June 1999 patent application not to warrant an inference of abandonment, suppression, or concealment. In these circumstances, the panel does not infer suppression, concealment, or abandonment for two reasons. First: In making his argument, Fleming's position has been that his priority date is April 14, 1999, when he filed his patent application. That date is later than the dates of Orr's conception (1988) and reduction to practice (1996). It also is later than the latest possible date—summer 1998—that the evidence establishes Orr resumed work on his prior invention when joining Escort. Even if the focus were solely on Orr (thus disregarding Escort, the patent-rights owner), and even if Orr had abandoned his invention before summer 1998, the defense of abandonment is properly rejected on the ground that Orr resumed his active work before Fleming's April 1999 priority date. “Error” under section 251 Escort, in its cross-appeal, argues that Fleming's patents are invalid because there was no "error" to qualify for reissuance under section 251. The asserted error here is that, when drafting his original patent, Fleming failed to appreciate the full scope of his invention and the inadequacy of the original claims for properly capturing the full scope. This is a classic reason that qualifies as error. It identifies a deficient understanding of some combination of fact and law bearing on the meaning of claim language, the inventions disclosed in the written description, and how particular language does or does not map onto products or processes that could be claimed under section 251 consistent with the written description. Claim Indefiniteness Under Section 112 Alcon Research Ltd. v. Barr Laboratories, Inc., 745 F.3d 1180 (Fed. Cir. 2014) A ruling of noninfringement was affirmed where the patentee never read its claims on the accused drugs but instead analyzed infringement based on tests performed during development of its own product. However, the panel reversed rulings that the patents in suit violated enablement and written description requirements of § 112. Chicago Board Options Exchange, Inc. v. Intl. Securities Exchange, LLC, 748 F.3d 1134 (Fed. Cir. 2014) The Circuit reverses a determination of indefiniteness because one of ordinary skill would be able to determine the meaning and scope of the claim. GE Lighting Solutions, LLC v. Agilight, Inc., 750 F.3d 1304 (Fed. Cir. 2014) A Federal Circuit panel agrees as to 3 of the 4 patents in suit but is divided as to the fourth where the written description apparently did not conform to the figures.20 In re Thomas Packard, 751 F.3d 1307 (Fed. Cir. 2014) In this case, decided prior to Nautilus v. Biosig, the Circuit upholds the validity of different standards for claim indefiniteness during prosecution proceedings at the PTO and during post-issuance proceedings before a court. The MPEP provides at §2173.05(e) that "a claim is indefinite when it contains words or phrases whose meaning is unclear." The applicant argued to the Circuit that the proper standard for determining indefiniteness in the PTO should be the same as the standard applied by the Circuit; that is, whether the term is "insolubly ambiguous." He argued that this would be an easier standard for him to meet since a claim is not "insolubly ambiguous" if "a court can give any meaning to the disputed term in the context of the claim." The more lenient “insolubly ambiguous” test was, as noted above, thrown out by the Supreme Court in Nautilus. Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120 (2014) The Supreme Court reverses the Federal Circuit’s holding that a claim meets the dictates of 35 USC 112 as long as it is not “insolubly ambiguous,” unanimously rejecting the Circuit’s standard, which “tolerates some ambiguous claims but not others.” According to the Supreme Court, section 112’s definiteness requirement must take into account the inherent limitations of language. On the one hand, some modicum of uncertainty is the “price of ensuring the appropriate incentives for innovation,” and patents are “not addressed to lawyers, or even to the public generally,” but to those skilled in the relevant art. At the same time, a patent must be precise enough to afford clear notice of what is claimed, thereby “‘apprising the public of what is still open to them,’ ” To tolerate imprecision just short of that rendering a claim “insolubly ambiguous” would diminish the definiteness requirement’s public-notice function and foster the innovation-discouraging “zone of uncertainty,” against which this Court has warned. The expressions “insolubly ambiguous” and “amenable to construction,” which permeate the Federal Circuit’s recent decisions concerning §112, ¶2, fall short in this regard and can leave courts and the patent bar at sea without a reliable compass. Triton Tech of Texas, LLC v. Nintendo of America, Inc., 753 F.3d 1375 (Fed. Cir. 2014) In an infringement case directed against Nintendo’s Wii product, the Circuit affirms that the asserted claims are indefinite because structure for the claimed “integrator means” is not adequately disclosed in the specification. The patent in suit is directed to an input device in which a user can communicate with a computer by moving the input device — much like using a mouse, but in three dimensions. The input device sends commands to the computer based on the input device's three-dimensional position, orientation, and motion. In the preferred embodiment, these components include three accelerometers and three rotational rate sensors. The patent does not further explain how the numerical integration is performed, only that it is performed in a "conventional manner." The panel cited to the pertinent language of § 112 ¶ 6 and noted that, in exchange for using means plus function claiming, the patent must disclose the corresponding structure for performing the claimed function and clearly link that structure to the function. The panel held that if the function is performed by a general purpose computer, the specification must also disclose the algorithm that the computer performs to accomplish that function.21 H-W Technology, L.C. v. Overstock.com, Inc., 758 F.3d 1329 (Fed. Cir. 2014) The Circuit affirms a ruling that (1) a claim corrected by a certificate of correction cannot be asserted where the infringement began prior to issuance of the certificate, and (2) an apparatus claim that includes method limitations is invalid as indefinite. The patentee argued that the district court itself had authority to correct a claim error but the panel holds that a district court can correct a patent only if the error is evident from the face of the patent. Here, the error is not evident from the face of the patent since the claim reads coherently without the missing limitation. The Circuit also held that the apparatus claim at issue combines two statutory classes of invention and therefore the claim is indefinite. Here, because of the disputed language (“wherein said user completes” and “wherein said user selects”), it is unclear here when infringement would occur. ScriptPro, LLC, et al. v. Innovation Associates, Inc., 762 F.3d 1355 (Fed. Cir. 2014) The Circuit reverses summary judgment of invalidity under § 112, ¶ 1, holding that issues of fact remain as to whether the claims of the patent that do not recite “sensors” are broad enough to include sensor-less systems even though the patent specification states that “the collating unit of the present invention broadly includes several components, including “a plurality of sensors.” Interval Licensing, LLC v. AOL, Inc., et al., 766 F.3d 1364 (Fed. Cir. 2014) In its first application of the Supreme Court’s Nautilus v. Biosig decision, the Circuit rules that the phrase “unobtrusive manner that does not distract a user,” in reference to the manner in which an attention manager displays images, fails to inform those skilled in the art about the scope of the invention with reasonable certainty, and the Circuit therefore affirms the district court’s judgment of invalidity under § 112, ¶ 2. The key claim language at issue in this appeal includes a term of degree, “unobtrusive manner.” The panel does not understand the Supreme Court to have implied in Nautilus, and it does not hold today, that terms of degree are inherently indefinite. Claim language employing terms of degree has long been found definite where it provided enough certainty to one of skill in the art when read in the context of the invention. As the Supreme Court recognized in Nautilus, absolute precision in claim language is unattainable. Although absolute or mathematical precision is not required, it is not enough, as some of the language in prior cases may have suggested, to identify some standard for measuring the scope of the phrase. The Supreme Court explained that a patent does not satisfy the definiteness requirement of §112 merely because a court can ascribe some meaning to a patent’s claims. The claims, when read in light of the specification and the prosecution history, must provide objective boundaries for those of skill in the art. The patents’ “unobtrusive manner” phrase is highly subjective and, on its face, provides little guidance to one of skill in the art. The lack of objective boundaries in the claim language is particularly troubling in light of the patents’ command to read the term “image” broadly to mean any sensory stimulus that is produced from the set of content data, including sounds and video. The patents contemplate a variety of stimuli that could impact different users in different ways. A term of degree fails to provide sufficient notice of its scope if it depends on the unpredictable vagaries of any one person’s opinion. Where, as here, there is a purely subjective claim phrase, the panel says to turn to the written description for guidance.22 After reviewing the specification and prosecution history, the panel concludes that the “unobtrusive manner” phrase has too uncertain a relationship to the patents’ embodiments. Contrary to Interval’s suggestion, the wallpaper embodiment does not provide a reasonably clear and exclusive definition, leaving the facially subjective claim language without an objective boundary. In sum, the panel holds that the “unobtrusive manner that does not distract a user” phrase, when viewed in light of the specification and prosecution history, fails to inform those skilled in the art about the scope of the invention with reasonable certainty. The claims that depend on that phrase are thus invalid for indefiniteness. Naming Proper Inventor(s) General Electric Company and GE Wind Energy, LLC v. Thomas Wilkins, Mitsubishi Heavy Industries, Ltd., et al.,750 F.3d 1324 (Fed. Cir. 2014) When determining whether a putative inventor has met his burden of providing "clear and convincing evidence" of inventorship, the Circuit determines that a court should assess whether credible testimony has been given, and if so, whether corroborative evidence has also been provided. Here the putative inventor "refused four times to take an unqualified oath to tell the truth at his deposition" and "filed a declaration calling the district court 'obtuse,' 'overly assumptive,' and 'ignorant'," and failed to produce any realiable documents supporting his allegations. Not surprisingly, the district court concluded that Wilkins and Mitsubishi failed to establish Wilkins' inventorship, and that ruling is affirmed by the Circuit. Claim of Priority Medtronic CoreValve, LLC v. Edwards Lifesciences Corp., 741 F.3d 1359 (Fed. Cir. 2014) The Circuit affirmed a district court's summary judgment ruling of invalidity based on the failure to comply with the priority claiming requirements of 35 USC 119 and 120. Here the Circuit determined that the patent was not entitled to the priority date it claimed, and therefore the patent was invalid. The Federal Circuit first looked to the language of Section 120, which allows a later-filed application to claim the benefit of an earlier filing date if "it contains … a specific reference to the earlier filed application…." The Circuit had previously held that the "specific reference" requirement mandates that each intermediate application in the chain of priority must refer to the prior applications. Here, intermediate applications, but not the actual patent in suit, failed to specifically reference each of the earlier-filed applications in the priority chain. Therefore, the patent in suit was not entitled to claim priority back to the priority date of the first international application, which thus became invalidating prior art. Inequitable Conduct Apotex, Inc. v. UCB, Inc., 763 F.3d 1354 (Fed. Cir. 2014) The Circuit affirms unenforceability based upon the intentional withholding of material prior art, keeping true facts from an expert, and making affirmative misrepresentations of material facts. The panel also notes that the actions come close to the misconduct that Therasense held could justify a finding of inequitable conduct without showing but-for materiality. The case shows that the Circuit will uphold findings of inequitable conduct after Therasense but in almost every case where it has done so there has been misconduct at issue in addition to the withholding of prior art.23 American Calcar, Inc. v. American Honda Motor Co., Inc., 768 F.3d 1185 (Fed. Cir. 2014) A divided panel affirms a determination that the district court followed the tests set forth in Therasense and did not abuse its discretion in determining that the patents in suit are unenforceable due to inequitable conduct. This appeal arises from Calcar’s suit against Honda asserting the infringement of several related patents directed to navigation and other systems for use in a car. Before trial, Honda moved for a finding of inequitable conduct based on the actions of Calcar’s founder, Mr. Obradovich. Among the three coinventors, Mr. Obradovich was the one primarily responsible for preparing the patent application. Honda alleged that while Mr. Obradovich disclosed the existence of the 1996 Acura RL (“96RL”) navigation system, he intentionally did not disclose additional information that would have led the PTO to deny the patent as anticipated or rendered obvious by the system. In 1996, Honda added the navigation system as an option for the Acura RL. At the time, Calcar was publishing “Quick Tips” guides: booklets with condensed information from a car’s owner’s manual. During the course of developing a QuickTips guide for the 96RL, Mr. Obradovich drove the car and operated the navigation system, and Calcar personnel took photographs of the navigation system and owner’s manual. Subsequently, Mr. Obradovich began working on the parent application that ultimately issued as one of the patents in suit. The application explicitly referred to the 96RL system as prior art, and Mr. Obradovich acknowledged that the system was used as the basis of Calcar’s inventions. Honda alleged that Mr. Obradovich knew that the owner’s manual and photographs were in Calcar’s possession and deliberately withheld them during prosecution. Honda argued that the operational details that he did not disclose were precisely those that were claimed in the other patents at issue—the use of the system to display the status of vehicle functions. Therasense requires ”but for” materiality and specific intent Inequitable conduct is an equitable defense to patent infringement. The defendant proves inequitable conduct “by clear and convincing evidence that the patent applicant (1) misrepresented or omitted information material to patentability, and (2) did so with specific intent to mislead or deceive the PTO.” Intent and materiality must be separately established. Therasense, 649 F.3d at 1290. On appeal, the district court’s findings of materiality and intent are reviewed for clear error and the ultimate finding of inequitable conduct based on those underlying facts is reviewed for abuse of discretion. Materiality Calcar’s principal argument is that the district court improperly failed to account for the inventive differences between the prior art 96RL navigation system and the claims of the ’465 and ’795 patents. Calcar points to examples listed in the patent’s specification, such as the ability to retrieve such features as climate control functions, “the radio, the engine, and other aspects of the vehicle.” The district court did address the differences between the 96RL system and what Calcar actually claimed. It found that the only difference was “the nature of the information contained in the systems”: navigational details (destinations, addresses, directions) in the 96RL system and information about the vehicle itself in the ’465 and ’795 patents. The district court found that the PTO would have not allowed the patents as “it would have been obvious to a person of ordinary skill in the art to include different information in the 96RL navigation system.” Id. Because the district court did not commit clear error in its finding of materiality, the panel affirms the district court’s determination that the undisclosed operational details of the 96RL navigation system are material to the patentability of the patents.24 Intent Calcar provided a limited disclosure of the 96RL navigation system in the patents’ specification, and it also submitted a New York Times article describing the system during prosecution. As the district found, however, these disclosures exclude material information about the 96RL system, such as the manner in which the prior art system provided notifications to the user and displayed search results. Partial disclosure of material information about the prior art to the PTO cannot absolve a patentee of intent if the disclosure is intentionally selective. For the aforementioned reasons, the majority affirms the district court’s judgment that the ’497, ’465, and ’795 patents were obtained through inequitable conduct and are thus unenforceable. Double Patenting AbbVie, Inc., et al. v. The Mathilda, et al., 764 F.3d 1366 (Fed. Cir. 2014) After having paid $100 million to license a first patent from plaintiffs to market its Humira anti- inflammatory, AbbVie was sued for infringement of a second patent. That second patent was found invalid for double patenting since the narrow species of the newer patent were not patentably distinct from the genus claimed in the first patent. Public Use Delano Farms Company, et al. v. The California Table Grape Commission, et al., 2015 U.S. App. LEXIS 346 (Fed. Cir. Jan. 9, 2015) The Circuit affirms a judgment that two plant patents are not invalid based on the plants being in “public use” more than one year prior to the filing date. Two individuals obtained samples of patented plant varieties in an unauthorized manner and planted them in their fields. The district court found, and the panel agreed, that there were sufficient confidentiality assurances that the uses could not be considered a “public use” under 35 USC §102(b). The Legal Tests to be Applied The proper test for the public use prong of the §102(b) statutory bar is whether the purported use was accessible to the public or was commercially exploited. The question in a case such as this one is thus whether the actions taken by the inventor (or, as in this case, a third party) create a reasonable belief as to the invention's public availability. Factors that we have previously identified as being helpful in analyzing that question include the nature of the activity that occurred in public; the public access to and knowledge of the public use; and whether there was any confidentiality obligation imposed on persons who observed the use. The last factor captures the common sense notion that whether an invention is “accessible to the public” depends, at least in part, on the degree of confidentiality surrounding its use. An agreement of confidentiality, or circumstances creating a similar expectation of secrecy, may negate a public use where there is not commercial exploitation. The analysis is similar when the allegedly public use is performed by an unaffiliated third party rather than the inventor. In order to be invalidating, such use must still be publicly accessible; secret or confidential third-party uses do not invalidate later-filed patents. The adequacy of any confidentiality guarantees are measured in relation to the party in control of the allegedly invalidating prior use. 25 The Use Was Not a “Public Use” The appellants argue that the cultivation of the unreleased varieties by Jim Ludy and Larry Ludy constituted public use because they made no attempt to maintain confidentiality and made no discernible effort to maintain the invention as confidential. The problem with the appellants' argument is that it is squarely contrary to the district court's findings of fact. Larry Ludy was present during Jim Ludy's conversation with Klassen, and knew Klassen did not have the authority to provide the Ludys with unreleased varieties. When Jim Ludy gave Larry Ludy the plants, Jim Ludy told his cousin to "keep knowledge of the plants to ourselves" and expected the fact of their possession of the plants to remain private. After the critical date, Larry Ludy allowed Sandrini to sell the fruit of the unreleased vines under a different name to avoid detection. Moreover, during a deposition, Larry Ludy refused to identify Klassen as the source of the Ludys' unreleased plants. The findings of the district court clearly establish, therefore, that both Ludys knew that they were not authorized to have the plants and that they needed to conceal their possession of the plants. The facts of this case show that Jim Ludy sought to maintain control of the plants he obtained from Klassen. Although Jim Ludy shared the plants with his cousin, the evidence showed that Larry Ludy was aware of the need to keep the plants secret, and at Jim Ludy's urging, Larry Ludy continued to treat his possession of the plants as confidential and non-public. Finally, the appellants argue that the lack of secrecy with which the Ludys cultivated the unreleased varieties mandates a finding of public use. The Ludys grew the plants in locations that were visible from public roads but grape varieties cannot be reliably identified simply by viewing the growing vines alone. The unreleased varieties were not labeled in any way, and the appellants introduced no evidence that any person other than the Ludys and Sandrini had ever recognized the unreleased varieties. A reasonable jury could conclude that if members of the public are not informed of, and cannot readily discern, the claimed features of the invention in the allegedly invalidating prior art, the public has not been put in possession of those features. In this case, the district court, sitting as the trier of fact, came to exactly that conclusion, and the evidence supports the court's conclusion. Defenses Laches and Estoppel SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 767 F.3d 1339 (Fed. Cir. 2014) The panel affirms a grant of summary judgment of laches based on more than a six-year delay in filing suit, but finds that issues of fact preclude summary judgment as to equitable estoppel. However, the case has now been accepted for en banc review. On October 31, 2003, SCA sent a letter to First Quality, contending that some of First Qualities’ adult incontinence products infringed SCA’s ‘646 patent. If First Quality disagreed, SCA asked it to provide an explanation. First Quality responded that a ‘649 patent invalidated the ‘646 patent. SCA and First Quality exchanged four more letters over the next eight months, but those letters concerned a different patent and different products. On July 7, 2004, SCA filed an ex parte reexamination request based in part on the prior art ’649 patent. About three years later, on March 27, 2007, the PTO confirmed the patentability of all of the claims of the ‘646 patent. SCA never notified First Quality about the reexamination.26 Starting in 2006, First Quality began expanding its line of adult incontinence products. In 2008 First Quality acquired Covidian’s Tyco Healthcare Retail Group and, along with it, some of the products at issuehere. It continued its expansion in 2009 at a cost of more than $10 million. SCA claims that it began preparing to file suit against First Quality immediately after the reexamination was concluded. But SCA did not file suit or otherwise contact First Quality until August 2, 2010, when it filed its complaint in this case—six years and nine months after SCA first contacted First Quality regarding the ’646 patent. According to SCA, it spent the ensuing three years implementing new business management structures, evaluating outside counsel, and examining other potentially infringing products. The court granted First Quality’s summary judgment as to laches and equitable estoppel, and SCA appeals. Laches exists in this case. SCA argues that the reexamination proceedings preclude application of the laches presumptions in this case because the reexamination period should be excluded from the total delay. Reasonable explanations for delay include attempts to enforce the patent, such as filing suit against another infringer or participating in post-grant PTO proceedings. The district court concluded that SCA’s stated reasons for delay, principally the reexamination, were insufficient to overcome the presumption of unreasonable delay. Although the panel disagrees that SCA was required to provide notice of the reexamination proceedings to First Quality, it agrees that SCA failed to rebut the presumption of unreasonable delay. Issues of fact remain as to equitable estoppel. The first element of equitable estoppel requires SCA to have made a misleading communication, either affirmatively or by omission. The panel notes that silence alone will not create an estoppel unless there was a clear duty to speak or somehow the patentee’s continued silence reenforces the defendant’s inference that the defendant will be unmolested. Although the most common example of equitable estoppel is a patentee who objects to allegedly infringing activities and then remains silent, that silence must be coupled with other factors, such that the patentee’s misleading conduct is essentially misleading inaction. Compared to prior case law finding equitable estoppel, the interaction between SCA and First Quality was meager. SCA and First Quality exchanged only six terse letters over a course of eight months. Only two of those letters referenced the ’646 patent or the accused products. First Quality never solicited further comment from SCA. A reasonable juror could conclude that First Quality raised an issue SCA had overlooked and that SCA, rather than acquiescing, took immediate action. Infringement Gemalto S.A. v. HTC Corporation, 754 F.3d 1364 (Fed. Cir. 2014) The Circuit affirms claim construction and defendants’ motion for summary judgment of noninfringement that the Android operating system does not infringe three Gemalto patents. Included as defendants are HTC, Google, Samsung, Motorola Mobility and Exedea. The summary judgment means that Java cards that are installed in smartphones using Google’s Android operating system dd not infringe the Gemalto patents. A plaintiff must provide “particularized testimony and linking argument to show the equivalents” are insubstantially different, and Gemalto provided no testimony asserting that the difference in functionality between cache memory and permanent memory is in fact insubstantial. Therefore, no reasonable fact finder could find that the two types of memory function in substantially the same way to achieve substantially similar results. Moreover, if cache memory were equivalent to the recited memory that stores 27 an application and interpreter, Gemalto’s claims would read on microprocessor systems that were widely used prior to its invention. According to the panel, the doctrine of equivalents cannot be applied to encompass the prior art. Therefore, the panel agreed with the district court that the accused devices do not infringe under the doctrine of equivalents due to their use of cache memory. Ferring B.V. v. Watson Laboratories, Inc. and Apotex, Inc., 764 F.3d 1401 (Fed. Cir. 2014) In two separate rulings the Circuit finds that generic versions of Lysteda®, a popular treatment for heavy menstrual bleeding, to be non-infringing, either because the active ingredient released more slowly or too quickly to infringe the patents in suit. Based on the Actions Outside of the US Halo Electronics, Inc. v. Pulse Electronics, Inc., 769 F.3d 1371 (Fed. Cir. 2014) Actions taking place entirely outside of the U.S. do not, in this case, subject the defendant to liability for infringement of two Halo patents. Infringement of those same patents based upon actions in the U.S. is not willful where the defendant had an engineer perform a “cursory examination” of the patents and concluded that the patents were invalid. Sale and Offer for Sale Halo argues that the district court erred in granting summary judgment of no direct infringement as to the sale and offer for sale of products that Pulse delivered abroad. a. Sale of such products The patent statute does not define the meaning of a “sale” within the U.S. for purposes of § 271(a). The ordinary meaning of a sale includes the concept of a transfer of title or property. Indeed, Article 2 of the UCC provides that “a sale consists in the passing of title from the seller to the buyer for a price.” U.C.C. § 2-106; separately defines a “contract for sale” as including “both a present sale of goods and a contract to sell goods at a future time.” The products were manufactured, shipped, and delivered to buyers abroad. Pulse received the actual purchase orders for those products abroad. While Pulse and Cisco engaged in quarterly pricing negotiations for specific products, the negotiated price and projected demand did not constitute a firm agreement to buy and sell, binding on both Cisco and Pulse. Instead, Pulse received purchase orders from Cisco's foreign contract manufacturers, which then firmly established the essential terms including price and quantity of binding contracts to buy and sell. Pulse was paid abroad by those contract manufacturers, not by Cisco, upon fulfillment of the purchase orders. Thus, substantial activities of the sales transactions at issue, in addition to manufacturing and delivery, occurred outside the U.S. Any doubt as to whether Pulse's contracting activities in the U.S. constituted a sale within the U.S. under § 271(a) is resolved by the presumption against extraterritorial application of our laws. b. Offer for Sale The panel then turns to consider whether Pulse offered to sell within the U.S. those products that Pulse manufactured, shipped, and delivered abroad. The location of the contemplated sale controls whether there is an offer to sell within the United States. In order for an offer to sell to constitute infringement, the offer must be to sell a patented invention within the U.S. The panel adopts the reasoning of Transocean Offshore Deepwater Drilling, Inc. v. Maersk Contractors USA, Inc., 617 F.3d 1296 (Fed. Cir. 28 2010) and concludes that Pulse did not directly infringe the Halo patents by offering to sell the products in the U.S. because Cisco outsourced all of its manufacturing activities to foreign countries, and the contemplated sales were outside the U.S. Likewise with respect to other Pulse customers, there is no evidence that the products at issue were contemplated to be sold within the U.S. The panel therefore concludes that Pulse did not offer to sell the products “within the U.S.” Concurring opinion Judges O’Malley and Hughes concur but think the full Circuit should reevaluate the standard for the imposition of enhanced damages in light of Highmark Inc. v. Allcare Health Management Systems, Inc., 134 S. Ct. 1744 (2014) and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). Judge Hughes reiterated this feeling in his recent concurrence in Bard Peripheral Vascular, Inc. et al. v. W.L. Gore and Associates, Fed. Cir. Case 2014-1114 (January 13, 2015). Claim Construction Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc., 134 S.Ct. 1761 (2014) 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 is to apply a "clear error," not a de novo, standard of review. However, in its ruling the Court establishes a gaping exception that provides for de novo review to claim constructions that are largely based on intrinsic evidence, which should continue to cover most such constructions. Federal Rule of Civil Procedure 52(a)(6) states that a court of appeals must not set aside a district court's findings of fact unless clearly erroneous. It sets out a clear command, Anderson v. Bessemer City, 470 U. S. 564, 574, and does not make exceptions or exclude certain categories of factual findings from the court of appeals' obligation. The Rule thus applies to both subsidiary and ultimate facts. Even if exceptions to the Rule were permissible, there is no convincing ground for creating an exception here. Markman v. Westview Instruments, Inc., 517 U. S. 370, neither created, nor argued for, such an exception. There, the Court held that the ultimate question of claim construction is for the judge, not the jury, but it did not thereby create an exception from the ordinary rule governing appellate review of factual matters. Instead, the Court pointed out that a judge, in construing a patent claim, is engaged in much the same task as the judge would be in construing other written instruments, such as deeds, contracts, or tariffs. Construction of written instruments often presents a "question solely of law," at least when the words in those instruments are "used in their ordinary meaning." Great Northern R. Co. v. Merchants Elevator Co., 259 U. S. 285, 291. Clear error review is "particularly" important in patent cases because a district court judge who has presided over, and listened to, the entire proceeding has a comparatively greater opportunity to gain the necessary "familiarity with specific scientific problems and principles," Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U. S. 605, 610, than an appeals court judge who must read a written transcript or perhaps just those portions referenced by the parties. But if a written instrument uses "technical words or phrases not commonly understood," which may give rise for the need to consider extrinsic evidence, those words may give rise to a factual dispute. In that circumstance, the determination of the matter of fact will precede the function of construction. Sandoz claims that separating "factual" from "legal" questions may be difficult and, like the Federal Circuit, posits that it is simpler for the appellate court to review the entirety of the district court's claim construction de novo than to apply two separate standards. But courts of appeals have long been able to separate factual from legal matters, and the Federal Circuit's efforts to treat factual findings and legal 29 conclusions similarly have brought with them their own complexities. As for Sandoz's argument that "clear error" review will bring about less uniformity, neither the Circuit nor Sandoz has shown that divergent claim construction stemming from divergent findings of fact on subsidiary matters should occur more than occasionally. When the district court reviews only evidence intrinsic to the patent, the judge's determination is solely a determination of law, and the court of appeals will review that construction de novo. However, where the district court needs 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, and where those subsidiary facts are in dispute, courts will need to make subsidiary factual findings about the extrinsic evidence. The district judge, after deciding the factual dispute, will then interpret the patent claim in light of the facts as he has found them. The ultimate construction of the claim is a legal conclusion that the appellate court can review de novo. But to overturn the judge's resolution of an underlying factual dispute, the appellate court must find that the judge, in respect to those factual findings, has made a clear error. Justice Thomas dissents, joined by Justice Alito, arguing that the standard of review for claim construction should continue to be solely on a de novo basis. Comment: As we know, many claim constructions are resolvable by reference solely to the intrinsic evidence. Often, when one party attempts to reference extrinsic evidence, it results in the court noting that extrinsic evidence will not be considered when it is inconsistent with the intrinsic evidence. Given the hybrid approach pronounced by the Court, counsel having little faith in the construction they think will be adopted by the district court will undoubtedly be relying exclusively on the intrinsic record and those believing that a judge is leaning their way will want to present and argue the extrinsic evidence. In re Gianelli, 739 F.3d 1375 (Fed. Cir. 2014) In this appeal from the PTAB, the Federal Circuit reverses a determination of obviousness based on the panel’s holding that “adapted to” is not synonymous with “capable of” when considering whether one of ordinary skill would have thought to modify a prior art exercise machine to arrive at the claimed invention. Because these terms are commonly used claim terms, the court’s holding is one to closely consider. EnOcean GmbH v. Face Int’l. Corp., 742 F.3d 955 (Fed. Cir. 2014) Claims that recite “means” are presumptively to be construed under § 112, ¶ 6, while those that don’t are presumptively not to be construed as means plus function claims. The Circuit reiterates the test to be applied in determining whether claims that don’t use “means for” language should nonetheless be construed under § 112, ¶ 6. Here the panel unanimously determined that § 112, ¶ 6 did not apply because there was an adequate description of the structure through the use of the claim term “receiver.” The panel compared it to "height adjustment mechanism," "computing unit ... for . . . evaluating," or "detent mechanism" in other cases. We see other cases where means plus function claims are not construed under § 112, ¶ 6 where there is sufficient structure recited in the claim to overcome the presumption of construction under § 112, ¶ 6. We just have to remember it is just a rebuttable construction so we should keep this in mind both when drafting a claim and arguing claim construction. Tempo Lighting, Inc. v. Tivoli, LLC, 742 F.3d 973 (Fed. Cir. 2014)30 The Circuit affirms the PTAB’s reversal of an examiner's claim construction that had improperly relied on extrinsic evidence, but vacated the Board's determination that an inter partes reexamination requester had waived its right to present an invalidity argument by not cross appealing a PTO Office action. The panel notes that extrinsic evidence is of relatively little probative value, especially where, as here, it is inconsistent with the intrinsic evidence. The panel also supported the Board's rejection of the argument that the examiner was construing the claims with an eye to preserving their validity under § 112, noting that this was a doctrine of limited utility. Elcommerce.com, Inc. v. SAP AG and SAP America, Inc., 745 F.3d 490 (Fed. Cir. 2014) In a split decision, the Circuit affirmed a venue transfer, but vacated the district court’s rulings on meansplus-function claims, holding that it was necessary to have expert testimony as to whether one with ordinary skill in the art would have understood the functions described, and whether there was adequate disclosure in the specification to support the claims. While the majority of the panel determined that expert witness testimony may not be necessary in every case, it was necessary here for the court to decide whether SAP had met its burden of proving invalidity. The panel explained that a patent must describe sufficient structure or acts whereby a person of ordinary skill in the field could perform the specified function without undue experimentation. The panel held that it cannot be assumed that, without evidence, a general purpose judge can ascertain the position of persons of skill in the art and conclude that there is insufficient support for the eleven interrelated means-plusfunction claim limitations. Instead of evidence, SAP submitted only attorney argument. The majority thus vacated the rulings as to the system claims. Butamax Advanced Biofuels LLC v. Gevo, Inc., 746 F.3d 1302 (Fed. Cir. 2014); Frans Nooren Afdichtingssystemen B.V. v. Stopaq Amcorr Inc., 744 F.3d 715 (Fed. Cir. 2014); Starhome GmbH v. AT&T Mobility LLC , 743 F.3d 849 (Fed. Cir. 2014); Ancora Technologies, Inc. v. Apple, Inc., 744 F.3d 732 (Fed. Cir. 2014) Shire Development, LLC v. Watson Pharmaceuticals, Inc., 746 F.3d 1326 (Fed. Cir. 2014); and Braintree Laboratories, Inc. v. Novel Laboratories, Inc., 749 F.3d 1349 (Fed. Cir. 2014) The Circuit flexes its muscle reversing claim construction rulings by the district court in de novo claim rulings consistent with Ballast Lighting. Lighting Ballast Control LLC v. Philips Electronics North America Corporation, 744 F.3d 1272 (Fed. Cir. 2014) In a 6-4 en banc decision, the Federal Circuit held that arguments and evidence presented by the appellants, the dissent, and many of the amici did not justify reversing the holding of Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc) that claim construction required a de novo standard of review. The majority opinion by Judge Newman noted that the question before it was not simply whether to defer to district courts or instead to examine claim construction de novo. The q ues t ion was whether there is “compelling justification” to depart from the doctrine of stare decisis, particularly when that precedent is an en banc Federal Circuit decision. Starhome GmbH v. AT&T Mobility LLC, 743 F.3d 849 (Fed. Cir. 2014) In what seems to be a rare affirmance of claim construction, a unanimous panel affirmed the district court's use of extrinsic evidence to support claim construction. The Circuit determined that the term 31 "gateway" had a well-understood meaning in the art at the time of filing, and plaintiff Starhome's definition was just too different from the way the industry had been using the term. The panel rejected Starhome's attempt to use the doctrine of claim differentiation since the pertinent claims differed in scope in several respects. The panel also refused to accept Starhome's attempt to use the prosecution history of a related European application. While noting that statements made to foreign patent offices are sometimes relevant, the panel felt that the European history actually supported defendant's position that the patentee did not intend to depart from the ordinary definition of the terms at issue. E2Interactive, Inc. v. Blackhawk Network, Inc., 561 Fed. Appx. 895 (Fed. Cir. 2014) In a nonprecedential but interesting decision rendered two days prior to Vederi, the Circuit reached a conclusion that was different from that in Vederi, reversing a claim construction ruling based upon what the panel determined to be a clear prosecution disclaimer. This decision is interesting because the panel did not even address arguments by the patentee (1) that the plain language in claim supported the district court’s construction and (2) that the narrower construction would exclude coverage of one of the disclosed embodiments, both of which were considered critical in Vederi. This case again demonstrates the importance of closely studying the prosecution history when rendering an infringement opinion or when presenting claim construction arguments to the district court, even when the claim language appears to be clear and broad. Vederi, LLC v. Google, Inc., 744 F.3d 1376 (Fed. Cir. 2014) The Circuit reverses a district court’s ruling that Google’s popular Street View product does not infringe, noting that the district court’s claim construction relied too heavily on extrinsic evidence and an alleged disclaimer, and that did not give sufficient weight to the plain language of the claim or the specification. The district court based its construction largely on extrinsic evidence regarding the technical meaning of “elevation” as an architectural term of art. The panel disagreed with this approach because the court did not adequately consider the intrinsic evidence that supported a broader construction. For example, the claim language itself supports a broader interpretation since the operational language in this case is “substantially elevations” and not simply “elevations.” The panel found that the district court’s construction effectively read “substantially” out of the claim, and “a claim construction that gives meaning to all the terms of the claim is preferred over one that does not do so.” The panel also noted that the specification supports a broader construction. For example, the specification discloses the option of using a fish-eye lens and such an image “provides a curved, as opposed to vertical, projection, and almost certainly reflects curvature and perspective.” Google’s “flat” construction would not allow the claims to cover the fish-eye lens embodiment. The examples in the specification that provide flat images do not require the narrower construction since those examples are merely described as preferable. Google also cites to a statement in the specification that distinguishes prior art imaging providing samplings on the surface of an imaginary sphere, which is "computationally intensive and hence cumbersome and inefficient in terms of time and cost." However, the panel did not think this statement amounted to a clear and unmistakable disavowal of claim coverage, noting that this reference is fundamentally different from the use of a cluster of cameras to take images looking out in all directions. Google also suggested that an argument made during prosecution to distinguish prior art disclaimed the construction sought by Vederi, but the panel similarly did not think that argument constituted a clear and unambiguous disavowal of spherical or curved images. Comment: We can take a lot from this case – make sure to describe the preferred embodiments as merely “preferred,” exercise care in distinguishing the prior art in the specification and the prosecution - but perhaps32 the clearest teaching is that, wherever possible, do not use the same verbiage to distinguish the prior art in all of the independent claims. While Vederi appears to be on the road to winning this case, its road might have been easier had it not included the phrase “substantially elevations” in all of the asserted claims in the four patents in suit. GE Lighting Solutions, LLC v. Agilight, Inc., 750 F.3d 1304 (Fed. Cir. 2014) Noting that the standards for finding lexicography and disavowal are exacting, the panel stated: “To act as his own lexicographer, a patentee must clearly set forth a definition of the disputed claim term, and clearly express an intent to define the term. Similarly, disavowal requires that the specification make clear that the invention does not include a particular feature.” The panel found neither here. Similarly, while the specification only discloses a single embodiment of an IDC connector, it does not disavow or disclaim the plan meaning of IDC connector or otherwise limit it to that embodiment. In each of these cases the Circuit reminds us there must be a clear and unambiguous disavowel of a broad definition. In Golden Bridge and Hill-Rom the alleged disavowal was in the prosecution history while in X2Y and GE Lighting it was alleged to have been in the specification. . In Vederi the disavowal was alleged to have been in both. However, despite this high bar, these cases show that the Circuit will, if the evidencen is clear and unambiguous, find such disavowals. - The X2Y case is a good example of how the careless drafting of a specification can doom a patentee’s claim construction because, other than the limiting language in the specification, X2Y had strong arguments for a broad claim construction. Golden Bridge shows how careful we have to be in prosecution to avoid a disavowal. Hill-Rom Services, Inc. et al. v. Stryker Corporation et al., 755 F.3d 1367 (Fed. Cir. 2014) A divided panel reverses the district court's claim construction on several grounds, including improperly reading limitations from the specification into the claims and improperly invoking judicial estoppel to limit the claims. X2Y Attenuators, Inc. v. ITC and Intel Corporation, et al., 757 F.3d 1358 (Fed. Cir. 2014) The Circuit affirms the ITC’s claim construction and a determination that Intel and its customers did not infringe X2Y’s patents. The technology at issue relates to structures for reducing electromagnetic interference in electrical circuits, and is used in many Apple and Hewlett-Packard computers. The patented inventions use shielding electrodes to reduce the undesirable buildup of charge, known as “parasitic capacitance,” between electrodes used for conduction. Golden Bridge Technology, Inc. v. Apple, Inc., et al., 758 F.3d 1362 (Fed. Cir. 2014) The Circuit determines that the patentee disclaimed a broader scope of the claim term “preamble” in an IDS submission that included a previously-agreed-upon construction. An additional infringement theory argued by the patentee in a motion for reconsideration was waived because the argument was made for the first time in a motion for reconsideration. The panel notes that the Circuit generally construes terms according to their plain and ordinary meanings to one of ordinary skill in the art, but departs from that meaning where there is disclaimer. Here, GBT clearly33 and unmistakably limited the term “preamble” to "a signal used for communicating with the base station that is spread before transmission." During reexamination of the '267 patent and prosecution of the '427 patent, GBT submitted and requested that the PTO "expressly consider" its stipulated construction of preamble from the Texas litigation. The stipulation required the preamble to be spread before transmission. According to the panel, it would have been natural for both the PTO and the public to rely upon the stipulation in determining the scope of the claimed invention. Amdocs (Israel) Limited v. Openet Telecom, Inc., et al., 761 F.3d 1329 (Fed. Cir. 2014) In a split decision the Circuit reverses the granting of a motion for summary judgment of noninfringement as to four patents in suit. The panel finds issues of fact as to the first three patents based on its conclusion that certain evidence should not have been excluded, and that the district court improperly resolved factual issues against the non-moving party. The majority disagrees with the court as to claim construction on the fourth patent. CardSoft, LLC, v. Verifone, Inc., et al., 769 F.3d 1114 (Fed. Cir. 2014) Because the district court erred by failing to give “virtual machine” its ordinary and customary meaning, the Circuit reverses the court’s construction of this term, throwing out a $15 million verdict against payment terminal manufacturer VeriFone. Because CardSoft waived any argument that Verifone infringes under the correct construction, the Circuit grants Appellants’ judgment of no infringement as a matter of law. CardSoft alleges that Appellants infringe two patents directed to software for small, specialized computers, like payment terminals. In construing the patent claims, the district court adopted CardSoft’s proposed construction for the claim term “virtual machine.” Applying the court’s construction, a jury returned a verdict for CardSoft. Construction of “Virtual Machine” The evidence establishes that, at the time the asserted patents were filed, the defining feature of a “virtual machine” was its ability to run applications that did not depend on any specific underlying operating system or hardware. That the specification would emphasize this aspect of a virtual machine is not surprising in light of the extrinsic evidence, which also supports VeriFone’s proposed construction. The prosecution history expressly ties this extrinsic evidence—the “write once, run anywhere” Java virtual machine—to the patent’s use of “virtual machine.” During prosecution of the ’945 patent, the applicant stated that the Java virtual machine was a “conventional” virtual machine that allowed “different incompatible computers (incompatible hardware and operating systems)” to “be programmed to emulate the same hypothetical computer” so that “applications” written for that hypothetical computer “are therefore portable to the previously incompatible computers.” The applicant explained that the claims describe “an addition to a conventional virtual machine,” not a wholly new structure. In short, the asserted patents use “virtual machine” in exactly the same way Sun used the term—the patents simply optimize the virtual machine for use on a payment terminal. CardSoft waived its argument so Verifone is entitled to judgment of no infringement. VeriFone contends that, applying the correct construction, it is entitled to judgment of no infringement as a matter of law because the accused payment terminals run applications that depend on a specific underlying operating system or hardware. CardSoft did not respond to this argument in its responsive brief on appeal. It instead argued that “because Appellants’ construction of ‘virtual machine’ is wrong” the jury’s verdict should be affirmed. By failing to respond to VeriFone’s argument, CardSoft effectively conceded that the accused devices run applications that depend on a specific underlying operating system or hardware. 34 Consequently, the panel concludes that CardSoft waived this argument, and grants Appellants judgment of no infringement as a matter of law. World Class Technology Corporation, v. Ormco Corporation, 769 F.3d 1120 (Fed. Cir. 2014) The patent in suit claims a bracket for orthodontic braces that avoids or reduces interference with the gums even when being mounted on a molar tooth. While the panel notes that the meaning of “support surface” is not unambiguous from the claim language, the specification makes it clear that the construction determined by the district court was the proper one. The claim language does not by itself convey a clear, unambiguous meaning in the respect at issue. Where, as here, the claim language itself leaves interpretive questions unanswered, a construction that stays true to the claim language and most naturally aligns with the patent’s description of the invention will be, in the end, the correct construction. Critically, the specification in this case identifies gum avoidance as the sole purpose of the acute angle the support surface must make with the slot base. Under Ormco’s construction, however, the acute angle would not serve the sole stated purpose in the arrangement that Ormco’s construction is aimed at covering—in which the slide is inserted from the top, first moves along the ledge, and arrives at the support surface for closing after crossing the slot. In that embodiment, there is no problem of gum contact and no need for the acute angle. Such a construction is unmoored from, rather than aligned with, the description of the invention. The specification also sharpens the distinction between the support surface and the ledge surface that is suggested by the use of two different terms for the two surfaces. Whereas the support surface is linked with slide movement, the ledge is not. It is mentioned in a single paragraph. That paragraph explains that when the slide is closed, one end of the slide “abuts the labial surface of [the] ledge.” The rest of the paragraph then describes a portion of the bracket connected to the ledge that covers the end of the slide, protecting the slide against food and acting as a stop for the slide’s movement. Such statements are inconsistent with Ormco’s constructions of “ledge” and “support surface,” which would allow the slide to move along either surface interchangeably. For those reasons, the panel concludes that the specification makes clear that the district court correctly resolved the uncertainties in the claim language, adopting a construction that aligns with the description of the invention. Means-Plus-Function Claims Robert Bosch, LLC v. Snap-On Inc., 769 F.3d 1094 (Fed. Cir. 2014) The Circuit disagrees with the district court’s handling of the presumption of “means plus function” claiming but affirms that the terms “program recognition device” and “program loading device” invoke 35 U.S.C. § 112, ¶ 6. The panel determines that the specification does not disclose corresponding structure for these terms, so the claims are found to be indefinite and therefore invalid. Bosch owns the rights to the ’313 patent, which claims a diagnostic tester that determines whether the computerized control unit in a motor vehicle needs to be reprogrammed. The external diagnostic tester is made up of a “program recognition device” and a “program loading device,” defined in claim 1 as follows: 1. An external diagnostic tester for motor vehicles . . . comprising,35 a program recognition and program loading device, wherein a program version contained in a connected control unit is queried and recognized by means of the program recognition device, and, if the program available in the motor vehicle and recognized via the diagnostic/test plug is not stored there in a latest and most current version, a respective most current version is loaded by the program loading device into a program storage device of the pertinent control unit of the motor vehicle, wherein the external diagnostic tester automatically establishes communication with a central data base in order to check the program version and, if necessary, to obtain the current program version that applies for the control unit connected to the diagnostic tester and to store it there. (emphasis added) Section 112, ¶ 6 (now § 112(f)) allows a patentee to express a claim limitation as “a means or step for performing a specified function without the recital of structure, material, or acts in support thereof,” and claim limitations expressed in this manner “shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.” According to the panel, the framework under which the courts are to determine if a claim limitation invokes § 112, ¶ 6 is a two-step process. First, we must determine if the claim limitation is drafted in the means-plus-function format. The use of the term “means” triggers a rebuttable presumption that § 112, ¶ 6 governs the construction of the claim term. EnOcean GmbH v. Face Int’l Corp., 742 F.3d 955, 958 (Fed. Cir. 2014). Alternatively, where the claim language does not recite the term “means,” we presume that the limitation does not invoke § 112, ¶ 6. When a claim term lacks the word “means,” the presumption can be overcome if the challenger demonstrates that “the claim term fails to ‘recite sufficiently definite structure’ or else recites ‘function without reciting sufficient structure for performing that function.’” If a claim term invokes § 112, ¶ 6, then we proceed to the second step and attempt to construe the disputed claim term by identifying the “corresponding structure, material, or acts described in the specification” to which the claim term will be limited. Welker Bearing Co. v. PHD, Inc., 550 F.3d 1090, 1097 (Fed. Cir. 2008). If we are unable to identify any “corresponding structure, material, or acts described in the specification,” the claim term is indefinite. Determining whether certain claim language invokes § 112, ¶ 6 is an exercise in claim construction and is therefore a question of law, subject to de novo review. There is No Presumption that “Program Recognition Device” Is a Means-Plus-Function Term Bosch claims that the use of the term “by means of” in the claim does not trigger the presumption in favor of § 112, ¶ 6. The panel agrees with Bosch, noting that we are unaware of any precedent stating that the presumption is triggered by a claim’s use of the expression “by means of.” The Presumption Against Invoking § 112, ¶ 6 Is Overcome for Both Terms Although both “program recognition device” and “program loading device” are presumed not to invoke § 112, ¶ 6, the panel then turns to the issue of whether this “strong” presumption against means-plus-function claiming is overcome. In undertaking this analysis, we ask if the claim language, read in light of the specification, recites sufficiently definite structure to avoid § 112, ¶ 6. The question is whether the claim language names particular structures or, instead, refers only to a general category of whatever may perform specified functions. In the latter case, § 112, ¶ 6 then commands a construction of the limitation as referring to specification-identified corresponding structures and their equivalents. The ’313 patent’s specification does not contain a single reference to the structure of the “program recognition device” itself; all of the proffered citations from the specification merely explain its function. Although Bosch was entitled to a presumption against means-plus-function claiming, for the foregoing reasons the panel agrees with the district court and Snap-On that this presumption was overcome. The claim terms, construed in light of the specification, fail to provide sufficiently definite structure to one of skill in the art. The claim terms “program recognition device” and “program loading device” invoke § 112, ¶ 6.36 The Two Claim Terms Are Indefinite Since the panel concludes that both claim terms invoke § 112, ¶ 6, it attempts to construe the terms by identifying the corresponding structure described in the specification to which the claim term will be limited. If there is no structure in the specification corresponding to the means-plus-function limitation in the claims, the claim will be found invalid as indefinite. On this point, however, little needs to be said, as the panel finds no such disclosure. Therefore, the panel concludes that “program recognition device” and “program loading device” are indefinite. Since these terms are found in the only independent claim of the patent, all claims in the ’313 patent are invalid. Williamson v. Citrix Online, LLC, Microsoft Corp., et al., 770 F.3d 1371 (Fed. Cir. 2014) A split panel reverses a ruling on claim construction and a determination of invalidity for indefiniteness, and remands for a decision as to whether products such as Microsoft’s Office Live Meeting and Citrix’s GoToMeeting infringe. The majority determines that the district court’s narrow construction was inconsistent with the intrinsic evidence and rules that “distributed learning control module” should not be construed as a means plus function clause. Construction of the “graphical display” limitations The majority rules that the district court erred in construing this phrase as requiring a “pictorial map.” First, the claim language itself contains no such “pictorial map” limitation. While the specification discloses examples and embodiments where the virtual classroom is depicted as a “map” or “seating chart,” nowhere does the specification limit the graphical display to those examples and embodiments. In fact, they are repeatedly described in terms of preference. The Circuit has repeatedly cautioned against limiting the claimed invention to preferred embodiments or specific examples in the specification. Construction of the phrase “distributed learning control module” The majority rules that the district court erred in concluding that “distributed learning control module” is a means plus function claim term. Section 112, para. 6, provides that "an element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof." As stated in many Circuit opinions, the failure to use the word “means” in a claim limitation creates a rebuttable presumption that § 112, para. 6 does not apply. This presumption is a strong one that is not readily overcome. To rebut this strong presumption, it must be demonstrated that skilled artisans, after reading the patent, would conclude that the claim limitation is so devoid of structure that the drafter constructively engaged in means plus function claiming. A claimed expression cannot be said to be devoid of structure if it is used in common parlance or by persons of skill in the pertinent art to designate structure, even if the term covers a broad class of structures and even if the term identifies the structures by their function. Technical dictionaries, which are evidence of the understandings of persons of skill in the technical arts, may inform whether claim terms connote structure. Moreover, in circumstances in which a structure-connoting term is coupled with a description of its operation, sufficient structural meaning generally will be conveyed to persons of ordinary skill in the art. In making this assessment, it is important to consider the claimed expression as a whole, and not merely any single word, as well as its surrounding textual context. The court here failed to give weight to the strong presumption that § 112, para. 6, did not apply based on the absence of the word “means.” The Circuit has seldom held that a limitation not using “means” must be considered to be in means plus function form, and the circumstances must be unusual to overcome the presumption. Moreover, in determining that the strong presumption was overcome, the district court erred: (1) in failing to appreciate that the word “module” has a number of dictionary meanings with structural 37 connotations; (2) in placing undue emphasis on the word "module" apart from the claimed expression "distributed learning control module"; and (3) in failing to give proper weight to the surrounding context of the rest of the claim and the supporting text of the specification in reaching the conclusion that the drafter employed means plus function claiming. The court, in characterizing the word “module” as a mere nonce word, failed to appreciate that the word “module” has understood dictionary meanings as connoting either hardware or software structure to those skilled in the computer arts. The court also failed to consider the claimed expression “distributed learning control module” as a whole. The adjectival modifiers “distributed learning control” cannot be ignored and serve to further narrow the scope of the expression as a whole. These claimed interconnections and intercommunications support the conclusion that one of ordinary skill in the art would understand the expression "distributed learning control module" to connote structure. The specification further explains that the distributed learning control module operates as a functional unit of the distributed learning server and coordinates the operation of the streaming data module through input from the presenter computer system. While the specification describes the claimed phrase in a high degree of generality, in some respects using functional expressions, it is difficult to conclude that it is devoid of structure. Comment: The issue of whether a claim phrase should be interpreted as means plus function language continues to be the basis of precedential opinions of the Circuit. Less than a month ago in Bosch, LLC v. Snap-On, Inc., 2014 U.S. App. LEXIS 19671 (Fed. Cir. Oct. 14, 2014), the presumption against interpreting a phrase as means plus function was overcome as to “program recognition device” and “program loading device.” The cases of Elcommerce.com., Inc. v. SAP, 564 Fed. Appx. 599 (Fed. Cir. 2014) and Chicago Board Options Exchange, Inc. v. Intl. Securities Exchange, LLC, 748 F.3d (Fed.Cir. 2014) both dealt with whether there was adequate disclosure in the specification to support means plus function language in the claims. “For the US” IRIS Corporation v. Japan Airlines Corporation, 769 F.3d 1359 (Fed. Cir. 2014) IRIS Corporation brought suit in district court, alleging that JAL committed patent infringement by examining the electronic passports of its passengers within the U.S. Because the allegedly infringing acts were carried out "for the United States" under 28 U.S.C. § 1498(a), the panel affirms the district court's decision to dismiss IRIS's complaint. IRIS alleges that JAL infringed its patent under 35 U.S.C. § 271(g) by "using electronic passports in the processing and/or boarding of passengers at JAL services passenger check-in facilities throughout the United States." JAL moved to dismiss IRIS's suit for failure to state a claim upon which relief can be granted, among other things, arguing that federal laws requiring the examination of passports conflict with the patent laws and therefore exempt JAL from infringement liability. It also argued that IRIS's exclusive remedy is an action against the United States under 28 U.S.C. § 1498(a). The district court granted JAL's motion to dismiss, adopting only JAL's conflict-of-laws rationale. IRIS appeals. The parties ask us to decide, among other things, whether the United States has assumed liability under 28 U.S.C. § 1498(a) for JAL's allegedly infringing activities. The statute states: Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States . . . the owner's remedy shall be by action against the United States in the United States Court of Federal Claims . (emphasis added). 38 The statute further clarifies that an accused activity is "for the United States" if two requirements are met: (1) it is conducted "for the Government," and (2) it is conducted "with the authorization or consent of the Government." The government's authorization or consent may be either express or implied. In this case, the government has clearly provided its authorization or consent because—as the parties and the United States agree—JAL cannot comply with its legal obligations without engaging in the allegedly infringing activities. Under such circumstances, the government has expressly authorized or consented to those activities. But, standing alone, a governmental grant of authorization or consent does not mean that the alleged use or manufacture is done "for the United States" under § 1498(a). To qualify, the alleged use or manufacture must also be done "for the benefit of the government." "[I]ncidental benefit to the government is insufficient," but "[i]t is not necessary [for the Government] to be the sole beneficiary. . . . ." The government benefits here because JAL's examination of passports improves the detection of fraudulent passports and reduces demands on government resources. This, in turn, directly enhances border security and improves the government's ability to monitor the flow of people into and out of the country. When the government requires private parties to perform quasi-governmental functions, such as this one, there can be no question that those actions are undertaken "for the benefit of the government." Accordingly, because JAL's allegedly infringing acts are carried out "for the United States" under 28 U.S.C. § 1498(a), we affirm the district court's decision to dismiss IRIS's suit. Indirect Infringement Limelight Networks, Inc. v. Akamai Technologies, Inc., 134 S.Ct. 2111 (2014) The Supreme Court reverses the Circuit’s en banc ruling that a defendant who performed some steps of a method patent and encouraged others to perform the rest could be liable for inducement of infringement even if no one was liable for direct infringement. Justice Alito says once and for all, citing Aro Convertible, that liability for inducement must be predicated on direct infringement. Here the method has not been infringed because the performance of all of its steps is not attributable to any one person. Since direct infringement has not occurred, there can be no inducement of infringement under §271(b). The Federal Circuit’s contrary view would deprive §271(b) of ascertainable standards and require the courts to develop two parallel bodies of infringement law. The Court’s reading of §271(b) is reinforced by §271(f)(1), which illustrates that Congress knows how to impose inducement liability predicated on non- infringing conduct when it wishes to do so. In Deepsouth v Laitram the Supreme Court looked to see whether §271(a), prevents someone from making parts of a shrimp deveining machine to sell to foreign buyers to assemble outside of the US. The Deepsouth decision said that §271(a) did not prevent that. As a result of Deepsouth, Congress established §271(f)(1) providing that whoever supplies from the US a substantial portion of the components of a patented invention as to actively induce the combination outside of the US, they are liable just as though those parts were combined in the US. There is no reason to apply a different rule for inducement. Akamai subsequently asked the Circuit to revisit en banc the issue of whether joint performance of a patented method can create liability for direct infringement. On July 24, 2014 the Circuit rejected Akamai’s request, instead referring the case on remand to its two remaining panel members and a newly-selected judge.39 Doctrine of Equivalents Ring & Pinion Service Inc. v ARB Corporation, 743 F.3d 831 (Fed. Cir. 2014) The Circuit rejected the argument of an appellant that foreseeability of an equivalent at the time of filing is a bar to a finding of infringement based upon the doctrine of equivalents. In doing so the panel provided a good review of the effect of foreseeability, the difference between equivalence analysis under 112(f) and the doctrine of equivalents, the doctrine of vitiation, and the effect of factual stipulations at trial. The district court held that foreseeability at the time of filing is not a formally recognized limitation on the doctrine of equivalents. R&P argued, as many accused infringers do, that the doctrine of equivalents does not apply to equivalents that were foreseeable at the time of filing. The panel ruled that it is clear that known interchangeability weighs in favor of a finding of equivalence. There are only two differences between the equivalence determination for literal infringement purposes under 112(f) and the doctrine of equivalents: timing and function. Equivalence under 112(f) is evaluated at the time of issuance, while equivalence under the doctrine of equivalents is evaluated at the time of infringement. Hence, a technology that did not exist at the time of patenting can be found to be an equivalent under the doctrine of equivalents even though it cannot be an equivalent under the literal infringement analysis of 112(f). The second difference between literal infringement under 112(f) and doctrine of equivalents infringement relates to the function of the element. For literal infringement, the accused structures must perform the identical function, while the doctrine of equivalents covers accused structures that perform substantially the same function in substantially the same way with substantially the same results. This is true whether the accused equivalent was known at the time of patenting or later arising. Where a finding of non-infringement under 112(f) is based solely on the lack of identical function, it does not preclude a finding of equivalence under the doctrine of equivalents. Epos Technologies Ltd., et al. v. Pegasus Technologies Ltd., et al., 766 F.3d 1338 (Fed. Cir. 2014) The district court’s claim construction regarding four different claim terms is erroneous so the Circuit vacates and remands summary judgments of literal noninfringement and under the doctrine of equivalents where the district court “shortcut” consideration of the equivalence evidence. The patents in suit relate to pens that digitize writing and devices for retrofitting writing surfaces so that writing can be digitally captured. The panel finds that the district court improperly construed the terms “drawing implement,” “given time interval,” “marking implement,” and “temporary attachment.” The panel also determines that issues of equivalence remain that preclude summary judgment of noninfringement under the doctrine of equivalents. This analysis under the doctrine of equivalents is the most interesting part of the decision. Summary judgment of noninfringement under the doctrine of equivalents All of the claims at issue in the ’371 patent claim a handheld device for use with a board comprising several components, including an ultrasonic receiver or transmitter device for receiving or transmitting an “intermittent” ultrasound signal. The district court adopted Pegasus’ proposed construction of “intermittent” as “something that occurs occasionally, in a non-continuous manner, in a random or unpredictable manner, or at selected times.” The court stated that “intermittent” could “refer only to those times when the user is actively using the device.” Applying its construction, the district court determined that EPOS is entitled to summary judgment on Pegasus’s claim of literal infringement because the EPOS Products generate a continuous ultrasound signal. Pegasus does not appeal these determinations.40 The district court devoted only two sentences to its decision on infringement of the ’371 patent under the doctrine of equivalents. It reasoned that allowing continuous ultrasound signals to be equivalents “would eliminate the intermittent limitation entirely,” and that “the doctrine of equivalents cannot extend that far.” The panel states that when addressing the doctrine of equivalents, a court must ask whether an asserted equivalent is an “insubstantial difference” from the claimed element, or whether it matches the “function, way, and result of the claimed element. Courts should be cautious not to shortcut this inquiry by identifying a ‘binary’ choice in which an element is either present or ‘not present.’” Here, the district court shortcut the inquiry by identifying a binary choice (continuous or intermittent) that is not compelled by the ’371 patent or the evidence. The court’s decision does not consider the functioning of the EPOS Products as part of its determination, and did not consider Pegasus’ expert declaration explaining why the EPOS Products’ signals are equivalent to the claimed intermittent ultrasound signal. The panel therefore vacates the district court’s constructions of “drawing implement,” “given time interval,” “marking implement,” and “temporary attachment,” and reverses the summary judgments of noninfringement based upon those faulty constructions. The panel also vacates the district court’s grant of summary judgment of noninfringement of the ’371 patent under the doctrine of equivalents and remands for proceedings consistent with this opinion. Prosecution History Estoppel EMD Millipore Corporation et al. v. Allpure Technologies, LLC, 768 F.3d 1196 (Fed. Cir. 2014) The Circuit affirms summary judgment of no literal infringement, and holds that the district court should not even have reached the doctrine of equivalents because of prosecution history estoppel. There is a presumption that prosecution history estoppel applies when a patentee has filed an amendment seeking to narrow the scope of a claim, and “the reason for that amendment was a substantial one relating to patentability.” The patentee bears the burden of rebutting the application of prosecution history estoppel by establishing one of three exceptions: (1) the equivalent was unforeseeable at the time of the application; (2) the rationale underlying the amendment bears no more than a tangential relation to the equivalent in question; or (3) there is some other reason suggesting that the patentee could not reasonably be expected to have described the equivalent. See Warner-Jenkinson Co. v Hilton Davis Chem. Co., 520 U.S. 17, 30-31 (1997) and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 734 (2002). During prosecution of the ’543 patent, the applicant amended claim 1’s language, adding the requirement that the transfer member’s seal have “a first end comprised of a bellows-shaped part sealingly attached to said holder, and a second end comprising a self-sealing membrane portion interiorly formed at an end of said bellows part.” The applicant stated that the purpose of the amendment was to make claim 1 “allowable and distinguishable over the cited references.” The panel concludes that it was unnecessary for the district court to perform a doctrine of equivalents analysis because prosecution history estoppel bars Millipore’s arguments. Although the applicant eliminated the “after use” language, the applicant nonetheless added the requirement that the seal have a first and second end with distinct elements. This narrows the seal limitation, which in turn narrows the transfer member limitation. And the applicant even stated in its reasons for amendment that “none of the references show or disclose a seal formed like the present one.” Thus, these amendments were added to overcome a previous rejection. And to the extent this statement is ambiguous, the panel notes that the Supreme Court has stated “[w]here no explanation is established . . . the court should presume that the patent 41 applicant had a substantial reason related to patentability for including the limiting element added by amendment.” Warner-Jenkinson, 520 U.S. at 33. Willful Infringement SSL Services, LLC v. Citrix Systems, Inc. and Citrix Online, LLC, 769 F.3d 1073 (Fed. Cir. 2014) This case has already been discussed in the damages section but has an interesting willful infringement discussion as well. In the case, the Circuit affirms motions denying a new trial as to whether Citrix’s “GoTo” products dealing with encrypted data communication infringe, and denying JMOL as to willful infringement and invalidity of the patents. The panel also vacates and remands the denial of prevailing party status to SSL. The ruling thus preserves the district court’s adding $5 million to a $10 million judgment against Citrix as a result of the willful infringement. Willful Infringement To establish willful infringement, the patent holder must show clear and convincing evidence that: (1) “the infringer acted despite an objectively high likelihood that its actions constituted infringement” and (2) “that this objectively-defined risk . . . was either known or so obvious that it should have been known to the accused infringer.” In re Seagate Tech., LLC, 497 F.3d 1360, 1371 (Fed. Cir. 2007) (en banc). We review the first objective prong de novo and the second subjective prong for substantial evidence. (1) Objective Prong Citrix argues that, because its non-infringement and invalidity defenses were reasonable, the district court erred in denying JMOL of no willful infringement. In support, Citrix relies on the fact that the court did not grant summary judgment and that the USPTO rejected the relevant claims of the ’011 Patent multiple times over the same prior art references presented at trial during the initial phases of an ex parte reexamination. However, the panel rules that the court’s finding that SSL met the threshold objective prong is supported by the record. The jury soundly rejected Citrix’s invalidity argument and non-infringement arguments. As noted above, the Takahashi reference does not disclose an applications level encryption program. Although not dispositive, the USPTO similarly found Citrix’s invalidity arguments unfruitful, despite the lower preponderance of the evidence standard. (2) Subjective Prong The panel agrees that SSL presented substantial evidence that Citrix knew of the objectively high risk that its products infringed the asserted claims of the ’011 Patent. SSL presented evidence that Citrix first became aware of the ’011 Patent in 2000 based on the V-One Agreements. Citrix negotiated and executed the agreements with V-One, which identified and incorporated the ’011 Patent. Furthermore, a former Citrix executive, Bill Mangum, testified that he knew of the ’011 Patent as a result of Citrix’s relationship with VOne. A V-One executive also testified that Citrix knew of the ’011 Patent and that V-One had provided Citrix with access to its technology relating to the ’011 Patent. Based on this evidence, the panel finds that the district court did not err in denying Citrix’s motion for JMOL on the subjective prong of SSL’s claim of willful infringement. Citrix argues that it should receive a new trial on willfulness because the court prevented the jury from hearing testimony from its Chief Engineer regarding Citrix’s good faith belief that its products were noninfringing and that reexamination had been initiated at the PTO. We find that the district court did not abuse its discretion in precluding that testimony since its probative value was outweighed by its potential prejudice. 42 Aqua Shield v. Inter Pool Cover Team, et. al., 2014 U.S. App. LEXIS 24132 (Fed. Cir. Dec. 22, 2014) The panel vacates (1) a decision granting patentee damages of only $10,800 since the award was inappropriately limited to the profits defendants made, and (2) a ruling that there was no willful infringement since that determination was improperly based on the denial of a motion for preliminary injunction and the court failed to consider all of the factors relevant to recklessness under Seagate. The following discussion will deal with the willful infringement holdings of the case. To prove that its patent was willfully infringed, a patentee must make two related showings. First, it must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent. In re Seagate Tech., LLC, 497 F.3d 1360 (Fed. Cir. 2007). Second, the patentee must also demonstrate that this objectively-defined risk (determined by the record developed in the infringement proceeding) was either known or so obvious that it should have been known to the accused infringer. Id. Here the district court gave only one reason for concluding that IPC reasonably believed that its products did not infringe—namely, the denial of the preliminary injunction. Our opinion in Seagate expressly connects findings of willfulness to preliminary-injunction rulings. ("A substantial question about invalidity or infringement is likely sufficient not only to avoid a preliminary injunction, but also a charge of willfulness based on post-filing conduct."). But it states no rigid rule, and it notes that preliminary injunctions can be denied even when a defendant has not raised substantial questions about invalidity or infringement. In a later willfulness determination, the significance of a preliminary-injunction denial depends on why the preliminary injunction was denied. Here the New York court denied Aqua Shield's motion because of personal-jurisdiction questions and because Aqua Shield lacked sufficient knowledge of IPC's product to make the required showing of a likelihood of success on the merits. The denial of the motion here is thus a legally insufficient reason for determining that IPC did not willfully infringe. The panel therefore vacates the court's decision that IPC did not willfully infringe. If the district court determines on remand that IPC willfully infringed Aqua Shield's patent, it should reconsider its decision to deny enhanced damages and attorney's fees. Comment: This is one of only a few decisions since Seagate reversing denial of willful infringement. More common are decisions like the one last week in Stryker Corporation v. Zimmer, Inc., Fed. Cir. Case 2013- 1668 (Dec. 19, 2014) reversing a willfulness determination based upon the defendant’s arguments of noninfringement and invalidity arguments being reasonable. Design Patents Pacific Coast Marine Windshields Limited v. Malibu Boats, 739 F.3d 694 (Fed. Cir. 2014) Presented with the issue of whether prosecution history estoppel should apply to design patents, the panel states that the same principles of public notice that underlie prosecution history estoppel apply to design patents as well as utility patents. With each type of patent, prosecution history estoppel promotes the “clarity that is essential to promote progress.” Refusing to apply the principles of prosecution history estoppel to design patents would undermine the “definitional and public-notice functions of the statutory claiming requirement.”43 MRC Innovations, Inc. v. Hunter Mfg., LLP, 747 F.3d 1326 (Fed. Cir. 2014) In a design patent case, the Circuit affirmed a finding of invalidity where the lower court properly followed the test for obviousness. The Circuit restated the two-step test as follows: First, the court must identify “a single reference, ‘a something in existence, the design characteristics of which are basically the same as the claimed design.’” The “basically the same” test requires consideration of the “visual impression created by the patented design as a whole.” The trial court judge may determine almost instinctively whether the two designs create basically the same visual impression,” but “must communicate the reasoning behind that decision. Once the primary reference is found, other “secondary” references “may be used to modify it to create a design that has the same overall visual appearance as the claimed design.” These secondary references must be “‘so related [to the primary reference] that the appearance of certain ornamental features in one would suggest the application of those features to the other.’” Remedies Damages VirnetX v. Cisco Systems, 767 F.3d 1308 (Fed. Cir. 2014) Apple successfully appeals a $368 million judgment that its Face Time feature infringes a patent of VirnetX. The panel vacates and remands, based on faulty claim construction, the improper denial of a motion for JMOL based on non-infringement under the doctrine of equivalents, and the admission of improper expert witness testimony as to damages. The panel’s comments on the expert testimony could make it significantly more difficult for patentees to argue for big damage awards. VirnetX accuses Apple of infringement based on its “FaceTime” system. The patents at issue claim technology that resolves domain names and facilitates establishing “secure communication links.” After discussing claim construction and infringement, the panel turned to the most important issueof this opinion, and that is damages. Damages Even though the case had to be remanded due to faulty claim construction, the panel takes the opportunity to address the expert witness testimony VirnetX presented, which the jury apparently accepted, to get to the $368 million award. Weinstein’s First Approach: Royalty Base Apple argues that the testimony of VirnetX’s expert Roy Weinstein on the proper royalty base should have been excluded because it relied on the entire market value of Apple’s products without demonstrating that the patented features drove the demand for those products. However, the panel concludes that his testimony confirms that he did not even attempt to subtract any other unpatented elements from the base, which therefore included various features indisputably not claimed by VirnetX, e.g., touchscreen, camera, processor, speaker, and microphone, to name but a few. Weinstein's Testimony as to Comparable Licenses One of Weinstein’s theories relied on a 1 to 2 percent royalty on the price of the device based on comparable licenses. Apple contended those licenses were not comparable but the panel disagreed, noting 44 that some of those licenses were related to the patents in suit, and the differences between those licenses and the present dispute had been explained to the jury. Given the issues the panel had with the rest of the damages testimony, the evidence of comparable licenses is likely to play an important part in the remand if VirnetX prevails on infringement. Weinstein’s Second and Third Approaches: Nash Bargaining Solution In addition to arguing reasonable royalty, Weinstein offered two other estimates of damages attributable to the FaceTime feature. Both of these estimates relied on the Nash Bargaining Solution. According to the panel, the Nash theorem arrives at a result that follows from a certain set of premises. It asserts nothing about what situations in the real world fit those premises. Anyone seeking to invoke the theorem must establish that fit, because the 50/50 profit-split result is proven by the theorem only on those premises. Weinstein did not do so. Conclusory assertions cannot form the basis of a jury’s verdict Ericsson, Inc. v. D-Link Systems, Inc., et al., 2014 U.S. App. LEXIS 22778, 113 U.S.P.Q. 2d 1001 (Fed. Cir. 2014) The Circuit reverses denial of JMOL following a $10 million verdict, and remands based on improper jury instructions relating to application of the entire market value rule to standard essential patents covering a Wi-Fi standard. The most interesting discussion in this opinion is the panel’s decision to vacate the damage award and remand the case due to faulty jury instructions as to what were reasonable and nondiscriminatory or RAND terms. This summary will focus on the panel’s analysis of that issue. Admissibility of Evidence of Prior Licenses As we explained recently in VirnetX, Inc. v. Cisco Systems, Inc., 767 F.3d 1308 (Fed. Cir. 2014), where multicomponent products are involved, the governing rule is that the ultimate combination of royalty base and royalty rate must reflect the value attributable to the infringing features of the product, and no more. What is taken from the owner of a utility patent for purposes of assessing damages under § 284 is only the patented technology, and so the value to be measured is only the value of the infringing features of an accused product. The Circuit has recognized that licenses may be presented to the jury to help the jury decide an appropriate royalty award. Prior licenses, however, are almost never perfectly analogous to the infringement action. Recognizing that constraint, however, the fact that a license is not perfectly analogous generally goes to the weight of the evidence, not its admissibility. In short, where expert testimony explains to the jury the need to discount reliance on a given license to account only for the value attributed to the licensed technology, as it did here, the mere fact that licenses predicated on the value of a multi-component product are referenced in that analysis—and the district court exercises its discretion not to exclude such evidence—is not reversible error. The District Court's RAND Jury Instruction The panel notes that this is an issue of first impression for the Circuit, and to its knowledge, only three other courts have considered the issue of appropriate RAND royalty rates—all district courts. a. The district court's use of the Georgia-Pacific factors The panel notes that it is unwise to create a new set of GeorgiaPacific-like factors for all cases involving RAND-encumbered patents, but cautions that courts must consider the facts of record when instructing the jury and should avoid rote reference to any particular damages formula.45 b. Apportionment analysis for Standard Essential Patents (SEPs) As with all patents, the royalty rate for SEPs must be apportioned to the value of the patented invention. When dealing with SEPs, there are two special apportionment issues that arise. First, the patented feature must be apportioned from all of the unpatented features reflected in the standard. Second, the patentee's royalty must be premised on the value of the patented feature, not any value added by the standard's adoption of the patented technology. Just like modern electronic devices, technological standards include multiple technologies. We know that patents often claim only small portions of multicomponent products and we have precedent which covers apportionment of damages in those situations. Similarly, SEPs can, and, often do, claim only limited aspects of the overall standard. Just as we apportion damages for a patent that covers a small part of a device, we must also apportion damages for SEPs that cover only a small part of a standard. In other words, a royalty award for a SEP must be apportioned to the value of the patented invention (or at least to the approximate value thereof), not the value of the standard as a whole. A jury must be instructed accordingly. Our decision does not suggest that all SEPs make up only a small part of the technology in the standard. Indeed, if a patentee can show that his invention makes up “the entire value of the" standard, an apportionment instruction probably would not be appropriate. This is particularly true for SEPs. When a technology is incorporated into a standard, it is typically chosen from among different options. Once incorporated and widely adopted, that technology is not always used because it is the best or the only option; it is used because its use is necessary to comply with the standard. In other words, widespread adoption of standard essential technology is not entirely indicative of the added usefulness of an innovation over the prior art. This is not meant to imply that SEPs never claim valuable technological contributions. We merely hold that the royalty for SEPs should reflect the approximate value of that technological contribution, not the value of its widespread adoption due to standardization. Because SEP holders should only be compensated for the added benefit of their inventions, the jury must be told to differentiate the added benefit from any value the innovation gains because it has become standard essential. The panel concluded that that was not done here. Aqua Shield v. Inter Pool Cover Team, et. al., 2014 U.S. App. LEXIS 24132 (Fed. Cir. Dec. 22, 2014) The panel vacates (1) a decision granting patentee damages of only $10,800 since the award was inappropriately limited to the profits defendants made, and (2) a ruling that there was no willful infringement since that determination was improperly based on the denial of a motion for preliminary injunction and the court failed to consider all of the factors relevant to recklessness under Seagate. The following discussion will deal only with the decision as to reasonable royalty. Reasonable Royalty The panel agrees that the infringer's actual profits earned during the period of infringement can be relevant, but finds that the court erred in the use it made of IPC's profit figures. What an infringer's profits actually turned out to have been may be relevant, but only in an indirect and limited way—as some evidence bearing on a directly relevant inquiry into anticipated profits. Thus, when the infringer is a profit-making enterprise, a reasonable royalty is the amount that a person, desiring to manufacture, use, or sell a patented article, as a business proposition, would be willing to pay as a royalty and yet be able to make, use, or sell the patented article, in the market, at a reasonable profit. In hypothetical-negotiation terms, the core economic question is what the infringer, in a hypothetical pre-infringement negotiation under hypothetical conditions, would have anticipated the profit-making potential of use of the patented technology to be, compared to using noninfringing alternatives. If a potential user of the patented technology would expect to earn X profits in the future without using the patented technology, and X + Y profits by using the patented technology, it would 46 seem, as a prima facie matter, economically irrational to pay more than Y as a royalty—paying more would produce a loss compared to forgoing use of the patented technology. The district court did not err in considering IPC's profits, but it did err in treating the profits actually earned during the period of infringement as a royalty cap. That treatment incorrectly replaces the hypothetical inquiry into what the parties would have anticipated, looking forward when negotiating, with a backwardlooking inquiry into what turned out to have happened. Enhanced Damages Therasense, Inc. v. Becton, Dickinson & Co., 745 F.3d 513 (Fed. Cir. 2014) A divided panel affirms the denial of a motion for attorney fees incurred on appeal, on remand and in pursuing additional fees. In the district court Becton and Nova (“Becton”) won judgments of non-infringement, invalidity, and inequitable conduct, supporting a finding that the case was exceptional and awarding almost $6 million in attorney fees. On appeal, in an important en banc ruling, Therasense v. Becton Dickinson & Co., 649 F.3d 1276, 1297 (Fed. Cir. 2011), the Federal Circuit elevated the standard of proof for inequitable conduct to require that the accused infringer must prove both elements – intent and materiality - by clear and convincing evidence. The Circuit thus vacated the district court’s judgment of inequitable conduct but, applying the higher standard on remand, the district court again concluded that the patent was procured through inequitable conduct. On appeal, Becton argued it was entitled to appellate and remand fees because of the district court’s exceptional case finding. The majority noted that Becton presented no evidence of bad faith, and the mere act of pursuing appellate review cannot by itself suggest an abuse of the legal system. Here the fact the en banc ruling required a remand shows that the appeal was not without merit. Therefore, the district court did not abuse its discretion in declining to award fees for the appeal, the rehearing en banc, or the remand. Becton also argued that Abbott forced it to incur additional fees in pursuing additional attorney fees. These “fees for fees” were denied by the district court and the panel affirmed that ruling, citing Supreme Court precedent for the proposition that such fees for fees litigation should be excluded as such “can spawn a Kafkaesque judicial nightmare of infinite litigation to recover fees for the last round of litigation over fees.” Octane Fitness, LLC v. Icon Health & Fitness, Inc.,134 S.Ct. 1749 (2014) The Supreme Court holds that district courts should determine whether a case is “exceptional” in a caseby-case exercise of their discretion, considering the totality of the circumstances. The district court and the Circuit had applied the test set forth in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378 (2005). In that case the Circuit held that a case is exceptional under §285 only “when there has been some material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed. R. Civ. P. 11, or like infractions.” Absent misconduct in conduct of the litigation or in securing the patent, fees may be imposed against the patentee only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless. In reversing the Circuit, Justice Sotomayor stated the proper test to be as follows:47 We hold, then, that an “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the caseby-case exercise of their discretion, considering the totality of the circumstances. On remand from the Supreme Court the Federal Circuit ruled on August 26 that the district court must now decide whether the case is exceptional to warrant the award of attorney fees to the accused infringer. But if the case comes back to the Circuit, the Circuit will be applying the abuse- of-discretion standard as it was instructed to in the Highmark case. Highmark, Inc. v. AllCare Health Management System, Inc., 134 S.Ct. 1744 (2014 The Supreme Court rules that the district court’s decision on whether a case is exceptional should be reviewed on appeal for abuse of discretion and not de novo. Highmark vacated another decision of the Circuit, based upon its ruling in Octane. Octane held that a determination of “exceptional” is to be decided by the district court on a case-by-case exercise of their discretion considering a totality of the circumstances, so the district court’s decision should be reviewed on appeal for abuse of discretion and not de novo. Lessons to be considered in view of Octane and Highmark: 1. The Circuit will have to accord more respect to district court decisions, suggesting that the Court may similarly jettison de novo review of claim construction in the pending Teva Pharmaceuticals case; 2. Like KSR, this is an example of the Federal Circuit being told it is applying too high a burden of proof, particularly on patent infringement defendants; 3. Like eBay, this is an example of the Court telling the Federal Circuit it should not be applying special rules to patent cases; 4. In combination with post-issuance validity proceedings, this shows a power shift from NPE’s to those defending unreasonable patent infringement filings; 5. Although the Senate is prepared to consider fee-shifting legislation, it would seem that Octane would cause both the Senate and the House to reconsider the need for such legislation, much like damages cases decided by the Circuit in 2010 and 2011 rendered less necessary legislation reducing the likelihood of excessive damage awards that otherwise might have been included in AIA; and 6. The cases will likely increase the tendency of plaintiffs to file in jurisdictions perceived as being friendly to patentees, such as the Eastern District of Texas, to reduce the risk of an adverse fee award. Kilopass Technology, Inc. v. Sidense, 2014 U.S. Dist. LEXIS 112321, 112 U.S.P.Q. 2d 1376 (N.D. Cal. 2014) In view of the Supreme Court’s Octane Fitness decision, the Northern District of California reverses its prior denial of an attorney fee award, finding the case to be “exceptional” because bad faith is no longer required.48 AntiCancer, Inc. v. Pfizer, Inc., et al., 769 F.3d 1323 (Fed. Cir. 2014) The district court ordered that AntiCancer would be permitted to supplement Preliminary Infringement Contentions that the court found defective under the local patent rules, provided that it concurrently pay the attorney fees and costs incurred by the defendants in connection with their motion for summary judgment related to the Contentions. AntiCancer objected to this condition, and the district court entered summary judgment of noninfringement, dismissing the complaint with prejudice. The Circuit determines that the fee-shifting condition was improperly imposed because the court did not find that AntiCancer’s filing constituted or was tantamount to bad faith, so the judgment based thereon is vacated. Patent Local Rule 3.1 The purpose of preliminary infringement contentions is to assist the court and guide the parties in focusing on potentially dispositive issues, providing a framework for discovery and generally facilitating the proceedings. Rule 3.1 provides that the patentee must serve preliminary infringement contentions that include an identification of each claim allegedly infringed and the product(s) infringed, an element-byelement claim chart, and a statement as to whether each element is found literally or as an equivalent. The Preliminary Infringement Contentions AntiCancer states that its Contentions showed its theories of infringement, provided notice of the information to be obtained by discovery, and complied with the letter and purpose of Patent Local Rule 3.1. AntiCancer states that its “infringement theories were as crystallized as they could be” before AntiCancer could “possibly have taken any discovery to support its infringement claims and to learn the actual details of the defendants’ internal research activities.” For each patent claim identified as infringed in AntiCancer’ s Preliminary Infringement Contentions, and each element of each claim, AntiCancer identified a specific portion of the Pfizer publication. The district court held that AntiCancer’s claim charts did not provide all of the information the Patent Local Rules require. The panel reviews the three claim elements for which the district court found AntiCancer’s Preliminary Infringement Contentions deficient, and concludes that there is no reasonable basis for making the finding of bad faith that would be required to sustain the fees sanction, without which summary judgment here is improper. In Network Caching, the Northern District court explained that the Preliminary Infringement Contentions “are not meant to provide a forum for litigation of the substantive issues; they are merely designed to streamline the discovery process.” 2003 WL 21699799, at *5. Conclusion When a complaint meets the standards of the Federal Rules, and there has been no reasonable opportunity for discovery and evidentiary development of the issues, it is rarely appropriate to summarily decide the merits against the complainant. The Circuit need not intrude upon the district court’s authority to require supplementation of the Preliminary Infringement Contentions when such supplementation may assist the procedures of trial. However, exercise of a court’s inherent authority to levy a sanction as a condition of supplementing the Contentions requires conduct that constituted or was tantamount to bad faith. The panel determines that there is no finding, and there is no basis for a finding, of such impropriety here.49 Injunctive Relief and Damages Trebro Manufacturing, Inc. v. FireFly Equipment, LLC, 748 F.3d 1159 (Fed. Cir. 2014) The Circuit reverses the denial of a motion for preliminary injunction, holding that an infringement finding was “more likely than not,” that defendant had “not raised a substantial question as to validity,” and that the patentee had demonstrated irreparable harm even though it did not practice the patented invention. Chief Judge Rader, writing for a unanimous panel, found that the district court abused its discretion in denying Trebro’s motion for preliminary injunction. The panel's analysis regarding irreparable injury is interesting. The defendant had done well in competing for sales and therefore would have been able to satisfy any monetary judgment. However, the Circuit found to be critical the fact that very few machines were sold each year, and that once a machine was sold, that customer was likely to be lost to FireFly forever. This may be true to a certain extent in every case. It shows the importance of statistics in briefing irreparable injury, on the rate at which customers buying from the accused infringer return to purchase again from the patentee. Apple lnc. and Next Software, lnc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014) This decision deals with claim construction, summary judgments of noninfringement, injunctive relief, and damages relating to each party's patents. Given the length of the opinion, the many issues discussed in it, and the fact that there are two partial dissents, it is impossible to cover it all in the relatively short discussions we provide. Prevailing Party/Costs SSL Services, LLC v. Citrix Systems, Inc. and Citrix Online, LLC, 769 F.3d 1073 (Fed. Cir. 2014) The Circuit affirms motions denying a new trial as to whether Citrix’s “GoTo” products dealing with encrypted data communication infringe, and denying JMOL as to willful infringement and invalidity of the patents. The panel also vacates and remands the denial of prevailing party status to SSL. The ruling thus preserves the district court’s adding $5 million to a $10 million judgment against Citrix as a result of the willful infringement. The case has already been addressed in the damages and willful infringement sections but its discussion of what constitutes a “prevailing party” is interesting in that this issue is not normally treated by the Circuit. The district court’s determination of whether a party is the “prevailing party” under Federal Rule of Civil Procedure 54(d) and 35 U.S.C. § 285 de novo. To be the “prevailing party,” the Circuit requires: (1) that the party “received at least some relief on the merits,” and (2) “[t]hat relief must materially alter the legal relationship between the parties by modifying one party’s behavior in a way that ‘directly benefits’ the opposing party.” A party does not need to prevail on all claims to qualify as the prevailing party. The district court found that Citrix prevailed on non-infringement of the ’796 Patent and SSL prevailed on willful infringement of the ’011 Patent. Accordingly, the district court concluded that neither party is the prevailing party because “both parties achieved some success and sustained some failure.” Despite some success by Citrix in defending against some of SSL’s claims, the panel agrees with SSL that it is the prevailing party. Finding SSL to be the prevailing party, however, does not automatically entitle it to any particular level of fees. Accordingly, the panel vacates the district court’s finding of no prevailing party 50 and remands so that the district court may assess the amount of fees or costs to award to SSL in connection with the claims on which it prevailed. Patent Reissue Gilead Sciences, Inc et al. v. Natco Pharma Limited et al., 753 F.3d 1208 (Fed. Cir. 2014) A divided panel expands the double patenting doctrine by concluding that a patent that issues after but expires before another patent can qualify as a double patenting reference for the other patent. In re Dinsmore and Caruso, 757 F.3d 1343 (Fed. Cir. 2014) The Circuit affirms a Board decision that applicants’ filing of a terminal disclaimer is not an error that can be remedied by a reissue application even though applicants mistakenly thought their application and a cited patent were commonly owned at the time of the disclaimer. “Original Patent” Requirement Antares Pharma, Inc. v. Medac Pharma Inc. and Medac GmbH, 771 F.3d 1354 (Fed. Cir. 2014) 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. 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 jetinjection devices) with particular combinations of safety features, such as a latch, pushbutton, and needle guard. 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). Applying the Industrial Chemicals standard, asserted reissue claims in the present case are invalid. The original claims focused on 51 jet injectors while the asserted claims are focused on particular safety features and do not contain the jet injection limitation. 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). 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. Licensing Endo Pharmaceuticals Inc. v Actavis, Inc. and Roxane Laboratories, Inc., 746 F.3d 1371 (Fed. Cir. 2014) A majority of the panel reverses and remands the district court’s determination that defendants had implied licenses under the terms of a settlement agreement involving related patents. While the asserted patents claim priority to the same provisional applications as the patents that were the subject of the settlement agreement, the specifications of the asserted patents are different, and that the claims cover different subject matter. ITC Align Technology, Inc. v. International Trade Commission, et al., 771 F.3d 1317 (Fed. Cir. 2014) The Circuit reverses and remands the ITC’s review of an ALJ’s “order,” since that order was not either a “decision” or an “initial determination,” both of which are reviewable by the ITC. uPI Semiconductor Corporation v. International Trade Commission and Richtek Technology Corp., 767 F.3d 1372 (Fed. Cir. 2014) The panel affirms an ITC ruling that uPI violated a consent order by aiding and abetting the import of infringing computer parts, and reverses a ruling that uPI’s post-Consent Order controllers were not produced using Richtek trade secrets. The ALJ found that the formerly accused products contained or were produced using Richtek’s trade secrets and that the formerly accused products infringed the patents. The ALJ also found that the postConsent Order products infringed the patents. However, the ALJ found that the post-Consent Order products were not produced using Richtek’s trade secrets, due to clean room procedures uPI had implemented. The full Commission affirmed the ALJ’s findings that the formerly accused products were produced using Richtek’s trade secrets and that the post-Consent Order products were produced without Richtek’s trade secrets. The Commission also affirmed the ALJ’s finding that uPI’s formerly accused products violated the Consent Order with respect to the ’190 patent because uPI knowingly aided or abetted the sale or importation of formerly accused products that directly infringe the ’190 patent. uPI’s Appeal as to Third Party Imports52 uPI objects to any bar under the Consent Order against importation by uPI’s customers of products containing infringing DC- DC controllers. uPI cites the Kyocera case for the proposition that, despite its agreement by Consent Order not to knowingly aid, abet or induce importation of products produced using or containing Richtek trade secrets or infringing Richtek patents, because this case was terminated by Consent Order with no general exclusion order, no penalty can be based on importations by non-respondents. Kyocera Wireless Corp. v. International Trade Commission, 545 F.3d 1340 (Fed. Cir. 2008). The panel finds that substantial evidence supports the Commission’s findings that uPI post-Consent Order upstream sales were linked to subsequent downstream U.S. imports or sales of the formerly accused products and that uPI knowingly aided or abetted U.S. imports or sales of the formerly accused products. The Commission relied on spreadsheets produced by uPI showing uPI’s purchase order data and sales of formerly accused products to downstream customers after the Consent Order issued. The Commission also relied on testimony by uPI executives that uPI knew the contract manufacturers to whom uPI’s distributors sold the formerly accused products, and knew that these contract manufacturers imported downstream products into the U.S. Richtek’s Appeal as to the use of Trade Secrets in Post-Consent Order Products Richtek challenges the Commission’s finding that uPI’s post-Consent Order controllers are not produced using Richtek trade secrets. uPI argued to the Commission that its post-Consent Order products were independently developed through “clean room” procedures, and did not use the Richtek trade secrets. The record as a whole does not support with substantial evidence the Commission’s finding that uPI’s postConsent Order products were not produced using Richtek trade secrets. uPI stated that it engaged outside design firms to create new layouts and schematics to produce a new line of DC-DC controller chips, and that it did not provide the outside design firms with Richtek trade secrets or uPI’s former schematics or layouts. However, the evidence was grossly inadequate. Richtek’s experts testified to the high degree of similarity and identity between uPI’s post-Consent Order products and formerly accused products, compared with Richtek’s trade secrets. Richtek witnesses pointed to the many unchanged features of the layouts and the circuitry, including errors therein. The reproduction of design errors, notations and extraneous markings is not consistent with independent development. Civil Procedure Consumer Watchdog v. Wisconsin Alumni Research Foundation, 753 F.3d 1258 (Fed. Cir. 2014) A consumer advocacy group does not have standing to appeal the loss of a patent reexamination even though under the patent statute it was able to file a reexamination request. Federal courts do not have authority to entertain every dispute. To meet the constitutional minimum for standing, the party seeking to invoke federal jurisdiction must satisfy three requirements. First, the party must show that it has suffered an "injury in fact" that is both concrete and particularized, and actual or imminent (as opposed to conjectural or hypothetical). Second, it must show that the injury is fairly traceable to the challenged action. Third, the party must show that it is likely, rather than merely speculative, that a favorable judicial decision will redress the injury. Although Article III standing is not necessarily a requirement to appear before an administrative agency such as the PTO, once a party seeks review in a federal court, "the constitutional requirement that it have standing kicks in." Krauser v. Biohorizons , Inc. and BioLok, 753 F.3d 1263 (Fed. Cir. 2014)53 The Circuit transfers back to the Eleventh Circuit the appeal of a declaratory judgment action seeking to establish patent ownership rights, holding that it has no jurisdiction to hear the appeal. Videx, Inc. v. Triteq Lock and Security, LLC, 2014 U.S. Dist. LEXIS 63653 (D. Or. May 8, 2014) In a ruling dealing with patent pleading requirements under Iqbal and Twombly, the Oregon District grants defendants’ motion to dismiss where the plaintiff failed to set forth sufficient details regarding infringement following inter partes reexamination of the patent in suit. AbbVie Deutschland GmbH et al. v. Janssen Biotech, Inc. and Centocor Biologics, LLC, 759 F.3d 1285 (Fed. Cir. 2014) The Circuit affirms a ruling that AbbVie’s patents are invalid for lack of adequate written description, permitting defendants to continue to market their Stelara® psoriasis treatment. In doing so the panel rejects AbbVie’s argument that defendants were precluded by collateral estoppel from challenging validity based upon a ruling by the PTO in a related interference proceeding. According to the panel, because a district court can make a de novo determination of facts upon the submission of new evidence, a Board decision that is reviewed under § 146 is not a "binding final judgment" to preclude a losing party from litigating the same or related issues in a parallel proceeding. Consequently, the Board's priority and nonobviousness decisions lacked the requisite finality for purposes of collateral estoppel. Stauffer v. Brooks Brothers Group, Inc., 758 F.3d 1314 (Fed. Cir. 2014) The panel affirms dismissal of a pre-AIA qui tam action based on improper patent marking despite plaintiff’s arguments that the AIA amendments were unconstitutional because they amounted to a pardon by Congress rather than the President, thus violating the separation of powers doctrine. In Re Nokia, 760 F.3d 1348 (Fed. Cir. 2014) In a prior appeal the Circuit said Nokia could not address an issue raised on appeal, but instructed that the issue be presented to the Commission on remand. The Commission ruled the issue had been waived so refused to permit consideration. In a split decision the majority denies mandamus to Nokia, but the dissent couches this in terms of the Commission “defying this court’s order.” Arlington Industries, Inc. v. Bridgeport Fittings, Inc., 759 F.3d 1333 (Fed. Cir. 2014) The Circuit dismisses for lack of jurisdiction an appeal of a contempt order because the order is not a final judgment or otherwise appealable until the sanctions are decided by the district court. The fact that sanctions were ordered by the district court after the notice of appeal was filed does not help the appellant since the Circuit cannot normally consider documents outside of the record on appeal. ePlus, Inc. v. Lawson Software, Inc., 760 F.3d 1350 (Fed. Cir. 2014) The Circuit vacates an injunction, a contempt order and an $18 million penalty because all of the claims of the two patents in suit have been determined by the Circuit to be not infringed or invalid. The most interesting part of the case is that while the patent was in litigation and the patentee was prevailing as to injunctive relief and contempt, the PTO invalidated the claims at issue in a reexamination proceeding. In Fresenius the Circuit held that a non-final money judgment of damages for infringement must be set aside54 where the judgment rested on a patent claim that the PTO had found invalid. Thus, the invalidation of the patent claim precluded the patentee from recovering damages in Fresenius. Similarly here, the civil contempt sanctions must be set aside. mFormation Technologies, et al. v. Research in Motion Limited, et al., 764 F.3d 1392 (Fed. Cir. 2014) A JMOL of noninfringement is affirmed because there was no legally sufficient evidentiary basis on which a reasonable jury could have found that BlackBerry infringes the asserted claims. In so holding, the Circuit rejects the arguments of mFormation that the district court altered claim construction after the verdict was rendered, that claim construction was incorrect in that it limited the steps to the order in which they were claimed, and that there was substantial evidence to support the verdict. Collateral Estoppel e.Digital Corporation v. Futurewei Technologies, Inc., et al., 772 F.3d 723 (Fed. Cir. 2014) 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. 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." Collateral Estoppel 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 55 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. 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. Necessary Parties STC.UNM v. Intel Corporation, 754 F.3d 940 (Fed. Cir. 2014) Rejecting the argument that the involuntary joinder provisions of Rule 19(a) should be applied, a divided panel of the Circuit affirms the dismissal for lack of standing because a co-owner of the patent elected not to join the suit. Rule 19(a) states: (1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if: (A) in that person’s absence, the court cannot ac- cord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may: (i) as a practical matter impair or impede the per- son’s ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise in- consistent obligations because of the interest. (2) Joinder by Court Order. If a person has not been joined as required, the court must order that the person be made a party. A person who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plaintiff. The panel feels that Rule 19(a) does not change the fact that rules of procedure, such as that in Rule 19(a), must give way to substantive patent rights. There are two exceptions that the co-owner of a patent may use to overcome the rule against involuntary joinder: (1) when a patent owner has granted an exclusive license, and (2) when, by agreement, a co-owner has agreed to be joined in an enforcement action. Neither situation is present here. This shows the importance of making sure there is a provision in your ownership agreement that the coowner agrees to be joined as a party in any infringement effort, even if it is at the cost of the other owner. STC.UNM v. Intel Corporation, 767 F.3d 1351 (Fed. Cir. 2014) A 6-4 majority denies a petition for rehearing en banc based upon the absence of a necessary party. The majority disagrees with the argument that the provision of Rule 19(a) requiring joinder of a party without 56 whom an action cannot be heard should control over the substantive provision of patent law that prevents fewer than all owners of a patent from suing for patent infringement. Two dissenting opinions were filed, one of which is by Judge Newman, who dissented as part of the threejudge panel originally hearing the case. Judge Newman reiterated that Rule 19(a) should be used to add the reluctant co-owner in order to permit the original plaintiff to assert its patent. Her reasons are threefold. First, by this action the Circuit is applying a special exclusion from Rule 19(a); second, 35 USC 281 gives a patent owner the right to sue for infringement and by this action the Circuit is depriving the patentee of that right; and third, Rule 19 is mandatory, stating that where, in that person’s absence, the court cannot accord complete relief among existing parties; the missing party “must” be joined. According to Judge Newman, the majority holds that a party who is necessary to the action cannot be joined, and therefore that the action cannot proceed. Yet our constitutional framework provides for resolution of property disputes through judicial attention. An arbitrary rule that excludes enforcement of a property right that is owned in common, cannot be reconciled with the principles of the rule of law. At a minimum, she expresses, this ruling should be reviewed by the en banc court, not tacitly confirmed. Judge O’Malley adds in a separate dissent that it is Rule 19—not substantive judge-made laws governing joinder—that establishes the criteria for assessing joinder. See Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 118 n.13 (1968). She concludes: Rather than once again simply exempt patent law from the rules that govern all federal litigation, we should either: (1) clarify the basis for this socalled substantive right against involuntary joinder in patent infringement cases and explain why it can overcome the dictates of Rule 19; or (2) hold that Rule 19 applies, including the provisions for involuntary joinder set forth therein, and direct the lower court to consider the propriety of joinder or dismissal under that rule alone. Comments: Judge Newman’s dissent is consistent with recent Supreme Court patent rulings instructing the Circuit that there should be no special rules for patent cases. Earlier this year in Medtronic v. Mirowski the Court ruled that the party with the substantive cause of action, that is, the patentee, should have the burden of proof even in a DJ case. In eBay Inc. v. MercExchange, the Court ruled that the same test for injunctions should apply in patent cases that applies in other cases. And, just a couple of months ago, the Court ruled in Octane Fitness, LLC v. Icon Health & Fitness, Inc., that in deciding whether a case is “exceptional,” justifying an award of attorney fees, courts should simply look to see whether they case is unusual, and that it is too high of a burden to require the moving party to have to prove bad faith. When we look at the rights of the parties that are affected by this decision, the majority expresses the need to protect the reluctant co-owner from participating in an action in which it does not wish to appear. Compared to the rights of the party attempting to enforce its patent in accordance with its statutory right, the importance of protecting the recalcitrant co-owner would appear to pale. Of course, this entire issue can be avoided by contractually providing, when the original co-ownership arrangement is established, that each co-owner agrees it will be joined to litigation at the request of the other party. This decision will hopefully encourage parties to agree to such provisions. Noerr Pennington Immunity Content Extraction and Transmission LLC v. Wells Fargo Bank, Nat’l. Assoc. et al., 2014 U.S. App. LEXIS 24258 (Fed. Cir. Dec. 23, 2014); Diebold, Inc. v. Content Extraction and Transmission LLC, et al., 2014 U.S. App. LEXIS 24258 (Fed. Cir. Dec. 23, 2014) The Circuit affirms dismissal under Rule 12(b)(6) of patentee’s infringement suit due to the asserted patents being patent ineligible under 35 U.S.C. § 101, and the dismissal of counterclaims for tortious interference 57 and RICO violations. We previously discussed the patentable subject matter issue so the following will deal only with the dismissal of the tortious interference and RICO violations. CET asserted four related patents directed generally to a method of 1) extracting data from hard copy documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from the extracted data, and 3) storing that information in a memory. This method can be performed by software on an ATM that recognizes information written on a scanned check. Diebold's claims arise from the filing of allegedly frivolous infringement suits by CET against Diebold customers. Under Noerr-Pennington, a person's act of petitioning the government is presumptively shielded from liability by the First Amendment against certain types of claims. To overcome this presumptive immunity, a plaintiff must establish that the defendant's instigation of litigation was merely a "sham." Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (1993) (PRE). This two-part test requires the plaintiff to show (1) that the litigation was objectively baseless, and (2) that the defendant subjectively intended to harm the plaintiff through the abuse of a governmental process itself, as opposed to harms flowing from the outcome of that process. Under the first prong, a "sham" lawsuit must be objectively baseless "in the sense that no reasonable litigant could realistically expect success on the merits." Given the focus on the act of filing the complaint as the actionable event, CET's infringement suits, though unsuccessful, were not objectively baseless even though we dismiss the patent under section 101. This is because the state of the law of § 101 was deeply uncertain at the time CET filed its complaints against Wells Fargo and PNC in 2012. Under these circumstances, we cannot conclude that as a matter of law, no reasonable litigant in 2012 could have expected success on at least one of CET's claims. Therefore, since the act of filing its suits was shielded from liability by the NoerrPennington doctrine, the district court correctly dismissed Diebold's tortious interference and RICO violation claims against CET. Comment: In a footnote, the panel references decisions from other circuits noting that the filing of a lawsuit, even one that is frivolous, cannot by itself constitute an act of “extortion” under RICO. According to the panel: “Treating meritless litigation as a form of extortion punishable under RICO would substantially chill even valid court petitioning, as it could subject almost any unsuccessful lawsuit or set of lawsuits to a colorable claim of a RICO violation.” This shows how high the bar would be for a RICO action to survive a Federal Circuit appeal. However, contrast the often-criticized case of Tyco Healthcare Group, L.P. v. Mutual Pharmaceutical Company, Inc., 762 F.3d 1338 (Fed. Cir. 2014), remanding a case to the district court to determine whether an infringement action was in fact baseless and thus potentially qualifying as “sham litigation.” Tyco Healthcare Group LP, et al. v. Mutual Pharmaceutical Company, Inc., et al., 762 F.3d 1338 (Fed. Cir. 2014) In a split decision the Circuit vacates summary judgment that Tyco’s infringement claims were not a sham, therefore remanding for a determination of whether the sham exception to Noerr-Pennington immunity is applicable. The panel also vacates the summary judgment that Tyco’s citizen petition to the FDA was not a sham. The majority of the panel ruled that the patentee’s infringement action following an ANDA filing could give rise to antitrust violations as “sham litigation.” The majority further held that the Citizen’s Petition–alleged to contain baseless allegations of non-equivalence, filed by patentee following a finding of non- infringement, could also give rise to antitrust liability. Judge Newman wrote in dissent that the patentee has a statutory right to file an infringement suit after it receives notice of an ANDA certification. She also wrote that the patentee has a constitutional right to file a Citizen’s Petition that should trump any speculative antitrustbased claims for damages.58 The decision recognizes that the presumption of validity for a patent holder creates a high bar for a party claiming sham litigation based on invalidity. The dissent’s argument that a patentee may, as a matter of law, rely on the presumption of validity to defeat a sham litigation claim was not accepted by the majority, so the opinion makes it clear that the presumption can be overcome. Transfer of Cases In re Apple Inc., 743 F.3d 1377 (Fed. Cir. 2014) Applying the “clear abuse of discretion” standard of review, a split panel denies a writ of mandamus that would have ordered the E.D. of Texas to transfer case to the N.D. of California. In re Toyota Motor Corporation and Gulf States Toyota, Inc., 747 F.3d 1338 (Fed. Cir. 2014) The Circuit rules that the E.D. of Texas abused its discretion in denying a motion to transfer an action to the E.D. of Michigan. Apple and Toyota show that regardless of how confident we are in our position on a motion to transfer, we nonetheless have to disclose our case strategies early on and review, in exhaustive detail, the particular witnesses and documents that will be used to defend a case brought in a remote forum. It also shows the value in bringing a case in a forum of your client's choosing, whether for patent infringement or declaratory judgment, as to achieve a transfer the defendant will have to lay out its evidence far earlier than it otherwise would have to do so. In Toyota AVS simply alleged it was based in Texas without identifying any witnesses that had pertinent evidence. Yet such evidence probably existed. In re Nintendo of America, Inc., 756 F.3d 1363 (Fed. Cir. 2014) The Circuit determines that the Eastern District of Texas abused its discretion in denying a motion to sever and transfer a patent infringement case against Nintendo and its customers to the Western District of Washington when all of the identified witnesses reside in the transferee forum. Sanctions under Rule 11 Source Vagabond Systems Ltd. and Pearl Cohen Zedek Latzer LLP v. Hydrapak, Inc., 753 F.3d 1291 (Fed. Cir. 2014) The district court did not abuse its discretion in sanctioning a law firm $200,000 under Rule 11 where its arguments in support of claim construction violated all of the applicable canons of construction and its arguments of infringement had no reasonable basis. Ceats, Inc. v. Continental Airlines et al., 755 F.3d 1356 (Fed. Cir. 2014) The Circuit refuses to throw out a judgment despite finding the court-appointed mediator acted improperly by failing to disclose “an endearing social relationship” with a law firm and attorney who represented the defendants in the mediation and in the subsequent trial. Standing MadStad Engineering , Inc. and Mark Stadnyk v. USPTO and Michelle K. Lee, 756 F.3d 1366 (Fed. Cir. 2014)59 An inventor and his company lack standing to challenge the constitutionality of the first-to-file provision of the AIA because plaintiffs fail to show actual or imminent injury, fairly traceable to the challenged action. The panel rejects plaintiffs’ argument that they were subjected to increased risk of hacking because they had to spend less money on computer security due to the increased costs associated with additional patent filings required under the first-to-file system. Other arguments relating to costs associated with increased filings were also rejected as not being fairly traceable to the first-to-file provisions of the AIA. Azure Networks, LLC and Tri-County Excelsior Foundation v. CSR PLC, et al., 771 F.3d 1336 (Fed. Cir. 2014) In a split decision, the majority vacates the judgment of noninfringement because the court improperly construed the term “MAC address.” However, the most interesting part of the opinion deals with the panel’s affirmance of the district court ruling that Tri-County is dismissed for lack of standing. The '129 patent passed through many hands of ownership, and was eventually acquired by Azure, which sought local charities to join in patent enforcement activities. Ultimately Azure partnered with Court Appointed Special Advocates, which formed Tri-County, a Texas nonprofit corporation. In 2010, Azure donated to Tri-County multiple patents and patent applications, including the application that would issue as the '129 patent. A few weeks after the donation, Tri-County and Azure entered into an “Exclusive Patent License Agreement,” which transferred back to Azure certain rights in the '129 patent. Tri-County retained other rights, including the right to practice the patent and to receive a percentage of litigation and licensing proceeds. Tri-County and Azure filed suit together against the Appellees, who sought to dismiss Tri-County, arguing that the transfer to Azure constituted an assignment for purposes of standing, leaving TriCounty with no rights to sue as co-plaintiff. The district court agreed, and this appeal followed. The Patent Act governs standing to sue for infringement, and provides that only the patentee and its successors are entitled to bring an action for infringement. A party is a patentee if it holds legal title to the patent, either by issuance or assignment. When a patentee transfers rights, the party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights. In that event, the transferee is treated as the patentee and has standing to sue in its own name. And whichever party has all, or substantially all, rights in the patent alone has standing to sue for infringement. To determine whether an exclusive license is tantamount to an assignment, the panel states that it must ascertain the intention of the parties to the license agreement and examine the substance of what was granted. The parties’ intent alone is not dispositive. We must also consider a non-exhaustive list of rights for determining whether a licensor has transferred “all substantial rights” to the licensee, including: (1) the nature and scope of the right to bring suit; (2) the exclusive right to make, use, and sell products or services under the patent; (3) the scope of the licensee’s right to sublicense; (4) the reversionary rights to the licensor following termination or expiration of the license; (5) the right of the licensor to receive a portion of the proceeds from litigating or licensing the patent; (6) the duration of the license rights; (7) the ability of the licensor to supervise and control the licensee’s activities; (8) the obligation of the licensor to continue paying maintenance fees; and (9) any limits on the licensee’s right to assign its interests in the patent. The parties do not dispute that the Agreement transferred to Azure an exclusive license to practice the '129 patent. Also critical to the panel’s inquiry is that the Agreement granted Azure the exclusive right to enforce and defend the '129 patent. In determining the nature of a transfer of rights, the Circuit has repeatedly recognized that a key factor has often been where the right to sue for infringement lies. It is not uncommon for a licensor to transfer to its licensee the exclusive right to enforce the patent. But significant to this case, Tri-County reserved no right to have control over, to veto, or to be notified of any of Azure's 60 licensing or litigation activities. Retaining control of these activities is also critical to demonstrating that a patent has not been effectively assigned to the licensee. Rather than retaining any control over litigation activities, Tri-County has a strict duty under the Agreement to “join Azure as a party and cooperate with Azure in any patent infringement suit, if desirable to address a legal issue,” such as standing. Tri-County must join “at Azure's request,” and after joinder, “Azure would maintain full and absolute control over any such patent infringement suit, including settlement of any related claims or causes of action.” Tri-County’s joinder “would be limited solely to cooperation and that which is necessary to address the legal issue.” As the district court recognized, nothing about this structure indicates that Tri-County has control over any aspect of litigation. Azure’s exclusive right to sue, exclusive license, and freedom to sublicense are factors that strongly suggest that the Agreement constitutes an effective assignment. After weighing all the factors, the panel agrees with the district court that Azure acquired significant rights under the '129 patent, including the right to enforce, to license, to control the licensing and litigation, to sublicense, to practice exclusively, and to maintain the patent. Tri-County’s economic interests, limited termination rights, and unfixed reversionary interest with only a very limited amount of time remaining on the patent do not demonstrate that it retained ownership. The balance of factors establishes that Tri-County transferred all substantial rights in the '129 patent to Azure, making Azure the effective owner for purposes of standing. Comment: Usually in licensor-licensee standing cases, the licensor or the exclusive licensee brings suit alone, and the court needs to decide whether the licensor has transferred away enough rights to divest it of the right to sue. This case was different in that the licensor and licensee brought the action together. Therefore, the inquiry was whether Tri-County transferred all substantial rights to Azure and, if so, whether Tri-County may nonetheless join in the infringement action. Normally the defendant is not going to care if an additional plaintiff is named but Tri-County was what tied the action to the Eastern District of Texas, where Azure would like to have the case heard. Now it will be interesting to see if defendants/appellants are able to get the case transferred to another venue. Subject Matter Jurisdiction in DJ Actions Danisco US Inc. v. Novozymes A/S, 744 F.3d 1325 (Fed. Cir. 2014) The Circuit reverses the dismissal of a declaratory judgment action filed the day a patent issued based upon pre-patent-issuance conduct by the patentee. A unanimous panel refused to accept the “bright line” rule that activity prior to issuance of a patent cannot give rise to a justiciable controversy. Citing MedImmune the panel noted that the Supreme Court has repeatedly found the existence of an actual case or controversy even in situations in which there was no indication that the declaratory judgment defendant was preparing to enforce its legal rights. The Court has instead only “required that the dispute be definite and concrete….” Here Novozymes’s claim covering genetically modified enzymes was the sole claim of its patent and is the same claim that Novozymes described during prosecution as interfering with the claim in a Danisco patent. Novozymes twice asserted that Danisco’s patent covering similar subject matter was invalid and that Novozymes, not Danisco, was entitled to a patent on the claimed invention. Novozymes has twice sued Danisco or its predecessors for patent infringement regarding related products, once on the day its patent issued. Novozymes has never withdrawn its allegation that Danisco’s variant is encompassed by the claim that issued in Novozymes’s patent.61 According to the panel, Danisco was in the position of either abandoning its product or running the risk of being sued for infringement, which is precisely the situation that the Declaratory Judgment Act was intended to remedy. StoneEagle Services, Inc. v. David Gillman et al., 746 F.3d 1059 (Fed. Cir. 2014) A declaratory judgment action is dismissed for lack of subject matter jurisdiction where the sole basis for the action was that the defendant claimed he had written the patent application for the patent at issue, but never claimed he was an inventor. Microsoft Corporation and SAP America, Inc. v. Datatern, Inc., 755 F.3d 899 (Fed. Cir. 2014) A divided panel rules on the lack of sufficient controversy to support subject matter jurisdiction where declaratory judgment actions were based on infringement actions against a customer. Judge Rader dissents from the majority’s ruling as to Microsoft’s action on the ‘402 patent based on his feeling that the majority viewed each fact in isolation instead of considering a totality of the circumstance. “The unfortunate consequence of this decision creates a roadmap to avoid declaratory judgment when it may be most valuable to resolve disputes early and efficiently.” Sandoz Inc. v. Amgen Inc. and Hoffmann-La Roche Inc., 2014 U.S. App. LEXIS 22903, 112 U.S.P.Q. 2d 2004 (Fed. Cir. 2014) The Circuit affirms dismissal of a declaratory judgment action because the complaint did not allege an injury of sufficient immediacy and reality to create subject matter jurisdiction. The complaint was filed before plaintiff Sandoz filed an application for approval with the FDA. In fact, Sandoz had just begun testing its product that is similar to a drug patented by Hoffman-La Roche and licensed to Amgen. Amgen moved to dismiss the complaint, arguing that the court lacked jurisdiction because no immediate, real controversy between the parties yet existed. The motion was granted. The district court also relied on a separate ground for dismissal—that the BPCIA prohibited Sandoz's suit. Among its provisions, the BPCIA establishes procedures for the narrowing and resolution of patent disputes between biosimilarity applicants and reference-product sponsors. The court concluded that Sandoz could not obtain a DJ before filing an FDA biosimilarity application. The court reasoned that, because Sandoz planned to enter the market by the biosimilarity route, it had to follow the BPCIA's patent-related procedures applicable to biosimilarity applicants—which it had not done. To answer the underlying case-or-controversy question, the Circuit asks "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." The inquiry, focused on the combination of immediacy and reality, involves no bright line test. The required distinction is between a suit involving a real and substantial dispute that admits of specific relief through a decree of a conclusive character and a suit that calls for an opinion advising what the law would be upon a hypothetical state of facts. The Circuit has frequently applied Medlmmune's "all the circumstances" standard to determine, in the patent context, whether a declaratory-judgment plaintiff has presented a case of sufficient "immediacy and reality." Medlmmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).We have assessed "immediacy" by considering how far in the future the potential infringement is, whether the passage of time might eliminate or change any dispute, and how much if any harm the potential infringer is experiencing, at the time of suit, that an adjudication might redress. We have assessed "reality" by examining any uncertainties about whether the 62 plaintiff will take an action that will expose it to potential infringement liability and, if so, exactly what action. In short, we have focused on related questions of timing and contingency regarding the existence and content of any needed patent adjudication, as well as current concrete harms to the declaratory-judgment plaintiff from delaying an adjudication. Without adopting a categorical rule, the panel concludes that the present case does not meet the requirements of immediacy and reality. We begin with the immediacy requirement, noting again that contingency plays a role in applying this requirement as it does in applying the reality requirement. When Sandoz filed its suit, it was conducting a Phase III trial of a drug it hopes to make the subject of an FDA application. It told the NIH that its trial would last until April 2015. Even that date, let alone any FDA approval, was several years away when Sandoz brought this suit. And if the Phase III trial uncovers material problems, Sandoz may, at a minimum, need to delay any FDA application considerably longer. The Supreme Court and this court have indicated that Congress may act to "articulate chains of causation that will give rise to a case or controversy where none existed before"—thus, in some circumstances, effectively creating justiciability that attenuation concerns would otherwise preclude. See Consumer Watchdog v. Wis. Alumni Research Found., 753 F.3d 1258, 1261 (Fed. Cir. 2014). But Sandoz, in its current posture, cannot invoke any statutory relaxation of otherwise-applicable immediacy and reality requirements. Congress has not specifically provided for suits where the potential infringer has not filed an FDA application for the approval required before it can undertake the activity that might expose it to liability. Subject Matter Jurisdiction on Removal and Remand State of Vermont v. MPHJ Technology Investments, LLC, 763 F.3d 1350 (Fed. Cir. 2014) An NPE’s writ of mandamus relating to the remand of a case that was removed to federal court is denied because the Circuit lacks jurisdiction. Therefore, Vermont’s action contending that patent infringement demand letters violated consumer protection laws will be litigated in state court. The State of Oregon has addressed this issue a little differently. Oregon’s law, signed into law on March 3 of this year, prohibits a person or its affiliate from communicating a patent-infringement demand if it alleges, asserts or claims in bad faith that the recipient has infringed or contributed to infringing a patent or rights that the patentee, assignee or licensee has under patent. The statute permits prosecuting attorneys to make findings regarding whether the accusing entity has acted in bad faith. The prosecuting attorneys may also serve investigative demands or take enforcement actions under the Unlawful Trade Practices Act related to bad-faith demands. The law also prescribes criteria for findings of bad-faith and good-faith claims, requiring prosecuting attorneys to tell the accused if a claim was made in bad faith within 10 days and only permits recipients to sue for damages once a finding has been made that a claim was made in bad faith. For a good discussion of the statute see Patent Troll Legislation by Julianne R. Davis. AIPLA Newsstand, Aug. 14, 2014. Stay Pending PTO Proceedings VirtualAgility, Inc. v. Salesforce.com, 759 F.3d 1307 (Fed. Cir. 2014) A majority of the panel reverses as an abuse of discretion the district court’s refusal to stay an infringement case pending post-grant review under the AIA’s business method patent review program. The statute instructs the district court to consider the following four factors when deciding whether to grant a stay:63 (A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B) whether discovery is complete and whether a trial date has been set; (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. The statute further provides that the Circuit shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo. §18(b)(2). Benefit Funding Systems LLC v. US Bancorp, 767 F.3d 1383 (Fed. Cir. 2014) In the context of a stay determination, a district court need not and should not analyze whether the PTAB might, at some later date, be determined to have acted outside its authority in instituting and conducting CBM review based on § 101. Appellant Benefit Funding sued on a patent directed to a system for enabling beneficiaries of retirement benefits to convert future benefits into current resources to meet financial needs. Ten months into the litigation, appellees filed a petition for post-grant review under the Transitional Program for Covered Business Method Patents. The PTAB instituted the CBM review on the basis of 35 U.S.C. § 101, holding that it is more likely than not that the challenged claims were unpatentable. The court granted appellees’ motion to stay the litigation, and Benefit Funding filed an interlocutory appeal. Section 18(b) of the AIA identifies four factors to be considered when deciding whether to grant a stay: (A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B) whether discovery is complete and whether a trial date has been set; (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (D) whether a stay, or the denial thereof, will re- duce the burden of litigation on the parties and on the court. The district court concluded that all of the factors strongly favored a stay. Standard of Review Traditionally, the Circuit reviews decisions on motions to stay pending PTO proceedings under the abuse of discretion standard. The AIA, however, provides the authority to conduct more searching review, stating that the Circuit “shall review the district court’s decision to ensure consistent application of established precedent, and such review may be de novo.” AIA § 18(b)(2). Argument Appellants’ argument rests on the premise that the PTAB is not authorized to conduct CBM review based on § 101 grounds. That argument is a collateral attack similar to ones the Circuit recently held impermissible in VirtualAgility, Inc. v. Salesforce.com, 2014 WL 3360806. Allowing such a collateral attack would create 64 serious practical problems, including mini-trials that would overwhelm and dramatically expand the nature of the stay determination. A district court, in the context of a stay determination, need not and should not analyze whether the PTAB might, at some later date, be determined to have acted outside its authority in instituting and conducting the CBM review. This is not to say that a patent owner could never attack the PTAB’s authority to conduct CBM review. Indeed, Appellants might potentially challenge that authority in the context of a direct appeal of the PTAB’s final decision. They simply cannot mount such a challenge in opposition to a stay. Having rejected Appellants’ sole argument on appeal, the panel concludes that the district court did not abuse its discretion in granting the stay. Further, consistency with established precedent was not at issue in this case and no other compelling reason for a more searching review was presented. Finally, the panel notes that it will not address the underlying merits of that attack, namely whether § 101 is a valid ground for CBM review. Versata Software, Inc., et al. v. Callidus Software, Inc., 771 F.3d 1368 (Fed. Cir. 2014) The panel instructs the district court to grant a motion to stay action pending post-grant review under the Covered Business Method (CBM) review program, noting that a stay may be warranted even when the CBM proceeding does not address all asserted patents in the litigation. The four factors to be considered under section 18(b)(1) of the AIA are set forth in the Benefit Funding case discussed above. (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. (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 65 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. Comment: 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. Waiver of Arguments Retractable Technologies, Inc. v. Becton Dickinson, 757 F.3d 1366 (Fed. Cir. 2014) Becton Dickinson must pay a $5 million award, despite the fact that the infringement verdict was partially reversed in a prior appeal, since Becton never argued for lower damages in the earlier appeal. "While this court regularly issues remands when requested and appropriate, or on our own initiative if some but not all products are found on appeal not to infringe, there is no 'normal rule' giving district courts the authority to … recalculate damages that fall within our mandate." Becton argued that fairness requires relief but in response, the Circuit reiterates that the company had fair opportunity to raise the damages issue in the prior appeal. "To permit this issue to be revisited anew would be to endorse an end-run around the mandate rule, which we are not about to do.”66 Claim and Issue Preclusion, and Collateral Estoppel Brain Life, LLC v Elekta Inc., 746 F.3d 1045 (Fed. Cir. 2014) In an opinion that discusses claim preclusion, issue preclusion and the Kessler Doctrine, the Circuit affirms the district court’s dismissal of a subsequent case brought against the same defendant for the same imaging system found not to infringe in a prior action. In doing so the panel relied not on claim preclusion as the district court had, but instead on the so-called Kessler Doctrine. The panel also ruled that none of the foregoing doctrines precludes an action alleging infringement by equipment that was different from that found to infringe in the prior action, and was introduced after the judgment in the earlier case. Based on this case, the Kessler Doctrine will undoubtedly be a part of every future claim and issue preclusion discussion. Senju Pharmaceutical Co., Ltd. et al. v. Apotex Inc., 746 F.3d 1344 (Fed. Cir. 2014) In the second claim preclusion case in the past week, a divided panel affirms the dismissal of Senju’s patent infringement case based on claim preclusion. Apotex filed an ANDA with the FDA, asking for permission to sell a generic version of Gatifloxacin eye solution. In response, Senju filed suit for patent infringement. The district court found the asserted claims to be invalid as obvious. Senju filed for and received a reexamination certificate amending claims that had been invalidated, and then filed a second action based upon the reexamined claims. The district court granted Apotex’s motion to dismiss the second case based on claim preclusion. Senju appealed, contending this was not the same cause of action litigated in the first case since the claims were substantially different. The majority of the panel disagreed with Senju that differences in the claims were critical to claim preclusion. According to the opinion, the claims that emerge from reexamination do not in and of themselves create a new cause of action. Burden of Proof Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S.Ct. 843 (2014) Even though the patentee was barred from filing an infringement suit due to the license agreement, the Supreme Court felt that the public interest in maintaining a well-functioning patent system should not favor changing the ordinary burden of proof rule in patent cases. This case deals with a dispute over whether certain implantable heart simulators sold by Medtronic are within the scope of a patent that had been licensed from Mirowski to Medtronic. The ultimate issue for the Court was which party had the burden of proving infringement - the licensee/declaratory judgment plaintiff or the patentee/declaratory judgment defendant. The Federal Circuit acknowledged that the patentee normally bears the burden of proof, but held that where the patentee is the declaratory judgment defendant and is foreclosed from asserting infringement by the continued existence of a licensing agreement, the declaratory judgment plaintiff bears the burden of persuasion. The Supreme Court felt this was an arbitrary distinction, and one that did not justify making such a definitive change in the way declaratory judgment cases are tried. Citing Medimmune v. Genentech, Inc., 549 U.S. 118, 128 (2007), the Court found that there was no convincing reason why burden of proof case law should favor the patentee. Here, Medtronic followed the procedure set forth in Medimmune, which 67 held that a patentee does not need to stop paying royalties, and thereby subject itself to the risk of a patent infringement suit, in order to file a declaratory judgment action. Even though Mirowski was barred from filing an infringement suit due to the license agreement and Medtronic's continued payment of royalties into an escrow account, the Court felt that the patentee should still bear the burden of proof cases. JMOL Motions Medisim Ltd. V. Bestmed, LLC, 758 F.3d 1352 (Fed. Cir. 2014) The Circuit vacates denial of JMOL as to anticipation because defendant failed to move after presentation of the evidence, but affirms the grant of JMOL on an unjust enrichment claim and the grant of a new trial on anticipation. Ownership of Patent and Assignment Memorylink Corp. v. Motorola Solutions, Inc. and Motorola Mobility, Inc., 2014 U.S. App. LEXIS 22901, 113 U.S.P.Q. 2d 1088 (Fed. Cir. Dec. 5, 2014) The Circuit affirms the granting of summary judgment on contract and patent infringement claims and in the dismissal of tort claims based on the running of the statute of limitations. The Illinois statute of limitations for fraud is five years. The discovery rule delays the start of the clock until the plaintiff knew or should have known of the injury. Memorylink argues that mere knowledge of the facts underlying a claim is insufficient to start the statute of limitations clock; rather, the claim should not accrue until those facts lead to the conclusion that a legal claim exists. Because of the fiduciary duty owed to it by Motorola's attorney, Memorylink maintains that it had no reason to question the improper inventorship determination and thus could not have concluded that any of the tort claims existed before its external investigation in 2007. The panel holds that the court properly dismissed the tort claims because Memorylink knew all the facts necessary to assert its claims, and therefore its causes of action accrued, more than five years before it filed suit. Memorylink alleged that as of April 1998, although neither Schulz nor Wyckoff had contributed or done anything towards the conception of the Invention, Motorola had asserted that all four people were coinventors. The Dunlop letter provided a prime opportunity for Strandwitz and Kniskern to question that inventorship determination, yet they failed to do so. Memorylink had additional occasions in 1998 at which to inquire about or challenge the issue of inventorship, including the signing of the invention disclosure, the assignment, and the inventor declaration for the patent application. Even accepting the Complaint's allegations as true, the panel agrees with the court that Memorylink should have concluded that a legal claim existed based on Schulz and Wyckoff having contributed nothing to the conception of the invention yet being included as co-inventors on documents relating to the invention. Memorylink did not later learn of any new and significant facts underlying the tort claims to warrant tolling the statute of limitations. Memorylink's arguments about the timing of and the fiduciary duties owed from the attorney—client relationship are also unpersuasive. Even if Motorola's attorney had not explained inventorship, assignment, or joint ownership, Strandwitz and Kniskern were aware of that when they signed the assignment. Moreover, Memorylink obtained independent counsel soon thereafter, and thus reasonably should have discovered any legal claims it had well before the statute had run. Instead, it failed to challenge the inventorship determination until June 2008. The court therefore did not err in dismissing the various tort claims as untimely.68 Proper Appeal Jang v. Boston Scientific Corporation, 767 F.3d 1334 (Fed. Cir. 2014) After ruling that a patent license dispute is properly before the Federal Circuit and not the regional circuit because plaintiff’s right to relief depends on an issue of patent law, the panel exercises its discretion not to accept this interlocutory appeal under 28 USC. §1292(b). Dr. G. David Jang and BSC entered into an agreement whereby Jang assigned his patent rights in exchange for a promise to pay compensation if BSC sold stents covered by Jang’s patents. In 2005, Jang brought suit for breach of contract, basing jurisdiction on diversity of citizenship, alleging that BSC had failed to compensate Jang for the sale of certain covered stent products. BSC subsequently filed requests for ex parte reexamination in the PTO. The PTO rejected the claims and the claims at issue were canceled. In light of the PTO proceedings, BSC moved for summary judgment, arguing that under Lear, Inc. v. Adkins, 395 U.S. 653 (1969), the parties’ agreement cannot require payment for practice of claims subsequently held to be invalid. The court denied the motion, ruling that, pursuant to Studiengesellschaft Kohle, MB.H. v. Shell Oil Co., 112 F.3d 1561 (Fed. Cir. 1997) (“Kohle”), a patentee is not precluded under Lear from recovering royalties until the date the licensee or assignee first challenges the validity of the patent. On petitioners’ motion, the district court certified an interlocutory appeal of the order denying summary judgment pursuant to 28 U.S.C. § 1292(b), but the Circuit directed the parties to address the jurisdictional question prior to consideration of the merits of the petition. This Appeal is properly before the Federal Circuit and not a regional circuit This court has exclusive jurisdiction to decide an appeal from a final decision of a district court in any civil action “arising under” any Act of Congress relating to patents. 28 U.S.C. §§ 1338(a), 1295(a)(1). Even though BSC does not contend that federal patent law creates the asserted causes of action, the panel notes that this case nonetheless presents a patent issue that is “(1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Gunn et al. v. Minton, 133 S. Ct. 1059 (2013). In ruling that the Circuit has jurisdiction over Jang’s prior appeal, the panel notes that although this case arises from a contract claim, Jang’s right to relief on that claim depends on an issue of federal patent law— whether the stents sold by BSC would have infringed Jang’s patents. Nothing in Gunn alters that conclusion. Jurisdiction depends upon facts as they were at the time of filing the complaint. Jang argues that the Federal Circuit no longer has appellate jurisdiction because the PTO’s cancellation of the claims in issue means the question of patent validity as it relates to the public at large can no longer be said to be “substantial.” The panel disagrees. Just as subject matter jurisdiction in diversity cases such as this one is determined on the facts as they existed at the time the claim was filed, the Federal Circuit’s exclusive appellate jurisdiction is predicated on the cause of action and the basis of the facts as they existed at the time the complaint was filed. 28 U.S.C. §§ 1338(a), 1295(a)(1). Here, the actions of the PTO in cancelling the claims at issue did not take place until long after the complaint had been filed. Because the patent law issues raised in the complaint were at that time substantial for the reasons noted above, jurisdiction of the petition is and properly remains before this court. The Circuit exercises its discretion and decides not to take the interlocutory appeal. BSC seeks this court’s review of whether the district court correctly applied Lear and Kohle. Title 28 U.S.C. § 1292(b) authorizes a district court to certify for appeal an otherwise-unappealable order under 69 circumstances in which it is “of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” The panel notes that the Circuit grants interlocutory review only rarely and declines to grant such review here. It is not clear that the issues identified in the questions will be controlling, and each question depends on the resolution of factual issues not yet addressed by the district court. Summary Judgments Amdocs (Israel) Limited v. Openet Telecom, Inc., 761 F.3d 1329 (Fed. Cir. 2014) In a split decision the Circuit reverses the granting of a motion for summary judgment of noninfringement as to four patents in suit. The panel finds issues of fact as to the first three patents based on its conclusion that certain evidence should not have been excluded, and that the district court improperly resolved factual issues against the non-moving party. The dissent disagrees with the court as to claim construction on the fourth patent. This opinion provides a helpful analysis of the use of “plain meaning” in claim construction. In the construction of “enhance,” the panel finds no support in the specification for what might otherwise be considered the plain meaning of the term. With respect to the construction of “single record” the panel determines that the specification needs to be clear in order to override the plain meaning of a claim term. Discovery Sanctions Monsanto Company v. E.I. DuPont Nemours, 748 F.3d 1189 (Fed. Cir. 2014) The Circuit upheld the district court’s finding of fraud upon the court and award of sanctions against a party whose discovery documents were found by the district court to contradict statements made in the party’s pleadings. The panel found that the sanctions award was narrowly tailored to respond to the factual allegations the court found were made, pointing to the fact that the district court had performed its own interpretation of the license upon hearing Monsanto’s first motion to dismiss, had sided with Monsanto on the interpretation issue, and that DuPont’s problematic allegations were an attempted endrun around that dismissal. The opinion reviewed the path of discovery, found the documents fairly discovered in relation to the factual issues being determined, and gave deference to the court’s factual findings in relation to DuPont’s material misrepresentations. Contempt Proveris Scientific Corporation v Innovasystems, Inc., 739 F.3d 1367 (Fed. Cir. 2014) The Circuit vacates a contempt order because the district court had not construed the claim language at issue. In so ruling, the panel discusses: the tests to be applied in deciding whether a contempt order is appropriate; when claim construction requires language in the preamble to be considered limiting; whether a defendant that did not previously challenge validity is permitted to do so at the contempt stage; and whether overseas sales of component parts of a device found to directly infringe and is the subject of an injunction should be the basis of a finding of contempt. The panel also instructed the district court that regardless of what claim construction the court adopts on remand, Innova is not entitled to present new invalidity arguments at the contempt stage. In contrast to claim70 construction, validity was disputed in the underlying infringement lawsuit, so Innova has already had a full and fair opportunity to present its arguments relating to invalidity. The panel noted that it saw no error in the court's denial of sanctions for Innova's overseas sales of component parts, since liability for those sales is premised on 35 U.S.C. § 271(f), while the underlying infringement action alleged direct infringement by sales of whole products. Energy Recovery, Inc., v. Hauge, 745 F.3d 1353 (Fed. Cir. 2014) The Circuit reverses a district court's contempt ruling because the defendant did not violate the "intellectual property rights" or any other clear restriction of a Consent Order. The parties were previously in litigation over intellectual property rights related to pressure exchangers used in reversed osmosis. Hauge had been president of ERI, and to settle litigation resulting from his separation from the company, the parties entered into an agreement that was adopted by the district court in a Consent Order. After the expiration of the non-compete provisions of the Order, Hauge filed for and was issued a patent directed to a pressure exchanger, and subsequently began selling equipment based on his patent. He also entered into a consulting agreement with two then-current ERI employees to assist him in his new venture. The panel noted that while Hauge's hiring two employees of ERI may constitute trade secret misappropriation, that would not justify a finding of contempt. But then the opinion just mentions what would seem to be critical - that ERI's trade secret claim in California state court based on the same conduct resulted in a unanimous jury verdict in favor of Hauge. In any event, concluding that Hauge did not violate any provision of the Order, the panel held that the district court abused its discretion in finding Hauge in contempt, and vacated the injunction.
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