In a wide-ranging decision rendered in a case that had previously been before the U.S. Court of the Federal Circuit, the Court this time affirmed a pre-KSR jury instruction that a modification is not obvious unless the prior art suggests the desirability of the modification. The Federal Circuit also clarified the scope of its argument-based estoppel under the doctrine of equivalents and held that it was not improper for a product owner to add additional claims during re-examination for the specific purpose of covering a competitor’s device. Cordis Corp. v. Medtronic AVE, Inc. and Boston Scientific Corp., Case Nos. 06-1393, -1394, -1395, -1396, -1415, -1416 (Fed. Cir., Jan. 7, 2008) (Bryson, J.).

Jury Instruction on Obviousness

Although Medtronic AVE (AVE) agreed with the jury instruction on obviousness at trial (which took place prior to the Supreme Court decision in KSR), on appeal it challenged instruction to the jury on obviousness, arguing that it conflicted with KSR (see IP Update, Vol 9, No. 12). The jury was instructed that “a suggestion to combine references may also flow from the nature of the problem or from the ordinary knowledge of those skilled in the art that certain references are of special importance. If the prior art references as a whole do not teach, suggest or motivate that combination, then they may not be combined. The mere fact that the prior art can be modified does not make the modification obvious unless the prior art suggests the desirability of the modification.”

For purposes of appellate review, the Federal Circuit explained that the instruction either constituted “invited error” that is not reviewable at all or at most is subject to review under the “plain error” standard. Applying Third Circuit law (as it applies to instructional errors) the Court also found that even applying the “plain error” standard, AVE “must show, at a minimum, that any error in the obviousness instruction was ‘fundamental and highly prejudicial’ or that ‘the instructions are such that the jury [was] without adequate guidance on a fundamental question and our failure to consider the error would result in a miscarriage of justice.’”

As to invited error, AVE argued that it should not be penalized for requesting an instruction based on the state of the law before KSR, because KSR resulted in a significant change in the law. However, the Federal Circuit applying the plain error standard, noted that KSR states “[t]here is no necessary inconsistency between the idea underlying the TSM test and the Graham analysis.” Rather, the Court explained that the Federal Circuit error in KSR, was to “transform[] the general principle into a rigid rule that limit[ed] the obviousness inquiry.” The Federal Circuit concluded that AVE had not demonstrated that it was entitled to a new trial on obviousness.

Prosecution History Estoppel

In its appeal, Boston Scientific argued that it was entitled to a new trial on infringement arguing that the district court should have ruled that prosecution history estoppel bars orders from capturing equivalents of the “wall surface” limitation under the doctrine of equivalents.

Specifically, relying on Omega Engineering v. Raytek (see IP Update, Vol. 6, No. 7) limiting both claim scope and the scope of permissible equivalents based on statements made by the patentee in prosecution, Boston Scientific argued that Cordis narrowed both the claim scope and permissive equivalents with statements made during the reexamination of the patent in suit in response to a prior art rejection. Citing Cybor v. FAS Technologies, the Federal Circuit disagreed, noting that “for prosecution disclaimer to attach, our precedent requires that alleged disavowing actions or statements made during prosecution be both clear and unmistakable” and that “the same standard applies to the doctrine of argument-based estoppel.”

The Court also reminded us that in order to constitute a binding surrender of claim scope, “the statements in question must be such that ‘competitor would reasonable believe that the applicant had surrendered the relevant subject matter.’” Here, the Court found no broad disclaimer of claim scope, characterizing the statements made by Cordis as making “explicit the meaning of the term wall surface that was already implicit in the patent.”

As to Cordis’ prosecution argument as to why a particular reference (Ersek) did not satisfy the “wall surface” limitation, the Federal Circuit found that Cordis only disavowed devices such as the Ersek sleeve, but not devices like the Boston Scientific device that was found to be an equivalent for a different reason.

Adding Claims in Re-examinations

In its cross appeal, Cordis challenged the district court’s invalidation of claims under 35 U.S.C.§ 305, which provides that the owner of a patent that is in reexamination may “propose any amendment to his patent and a new claim or claims thereto, in order to distinguish the invention as claimed from the prior art cited under the provisions of § 301 of this title, or in response to a decision adverse to the patentability of a claim of a patent.” Section 305 is subject to the provision that “[n]o proposed amended or new claim enlarging the scope of a claim of the patent will be permitted in a reexamination proceeding.”

During the re-examination, Cordis added claims intended to capture competitor’s stents but stated in its response that the amendments were “[r]esponsive to the Office Action” and that the new claims were “narrower in scope than the original claims, and provide specific protection for aspects of the disclosed invention which have been incorporated into competitive products and methods.”

The district court found the new claims invalid because they were not added “to distinguish the invention as claimed from the prior art” or “in response to a decision adverse to the patentability of a claim of a patent” but “solely to cover competitors’ stents,” which is not permissible reason under § 305.

The Federal Circuit reversed, noting that “Cordis was free to include the new claims even apart from the office action if they were added to distinguish the invention from prior art cited under § 301,” so long as the new claims do not broaden the scope of coverage.