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Resorting to Extrinsic Evidence Is Necessary When Intrinsic Evidence Is Muddied

by Benjamin Ediger, Ph.D. | Nov 16, 2023 | Patents

The US Court of Appeals for the Federal Circuit determined that the limitation “a pH of 13 or higher” could not be construed using the asserted patents’ intrinsic evidence and therefore remanded to the district court with instructions to consider the extrinsic evidence and its impact on claim construction. Actelion Pharms. Ltd v. Mylan Pharms. Inc., Case No. 22-1889 (Fed. Cir. Nov. 6, 2023) (Reyna, Stoll, Stark, JJ.)

Mylan Pharmaceuticals sought market entry for its generic epoprostenol—a small molecule hypertension drug—via an abbreviated new drug application (ANDA). Mylan certified under Paragraph IV with respect to two Orange Book-listed patents that Actelion Pharmaceuticals owned. Actelion timely asserted both patents and achieved a favorable claim construction for the term “a pH of 13 or higher.” This limitation is central to the pharmaceutical breakthrough that the asserted patents disclose, which is stably solubilizing the otherwise unstable epoprostenol. The asserted patents teach that epoprostenol bulk solutions’ pH should preferably be adjusted to about 12.5 to 13.5. Mylan contended that this language meant the claim should not encompass anything below pH 13 (i.e., leaving only a fraction of the disclosure’s preferred range within the scope of the issued claims). The district court disagreed, adopting Actelion’s position that the limitation encompassed values that “rounded” to pH 13 (i.e., pH 12.5 and above). This prompted a stipulated infringement judgment. Mylan appealed.

The Federal Circuit reviewed the district court’s construction de novo, explaining that the district court’s construction was a ruling as a matter of law because no extrinsic evidence was considered. The Court then examined the claim language, specifications and prosecution histories in turn.

Regarding the claim language, the Federal Circuit rejected the parties’ invitations to acknowledge certain prior decisions as articulating bright-line rules. Instead, the Court appeared to endorse analyzing the intrinsic evidence on a case-by-case basis when construing similar range limitations. For example, the Court explained that “there is no blanket rule that ranges, or specifically open-ended ranges, must foreclose rounding.” The Court also rejected the following rules concerning range precision:

Avoiding rounding requires terms of precision, such as “precisely” or “exactly.”
The absence of approximation language dictates a precise value.

In contrast, the Federal Circuit signaled that district courts should properly account for a range’s technical implications (or at least ranges concerning the pH scale) even if that means looking to extrinsic evidence.

Regarding the specifications and prosecution histories, the Federal Circuit disagreed with the district court’s finding that both were inconsistent with Mylan’s position that the disputed limitation reflected a higher degree of precision. The Court concluded that there was little to glean from either, finding that the specifications were as clear as “muddied water” and the prosecution histories provided no insight into the relevant pH range—between pH 12 and pH 13.

The Federal Circuit ultimately concluded that this was an instance in which properly construing a claim limitation required the aid of extrinsic evidence, invoking the Supreme Court of the United States’ guidance from Teva v. Sandoz that extrinsic evidence [...]

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See Here: No Standing Based on Vague Future Plans or Adverse Priority Findings

by Sarah J. Fischer | Nov 16, 2023 | Patents

The US Court of Appeals for the Federal Circuit dismissed an appeal from a final written decision in an inter partes review (IPR) proceeding, finding that the petitioner lacked standing because it suffered no injury in fact. Allgenesis Biotherapeutics Inc. v. Cloudbreak Therapeutics, LLC, Case No. 22-1706 (Fed. Cir. Nov. 7, 2023) (Moore, Stoll, Cunningham, JJ.)

Allgenesis Biotherapeutics filed an IPR petition challenging a patent owned by Cloudbreak Therapeutics. The challenged patent discloses compositions and methods for treating the eye condition pterygium. During the IPR proceeding, Cloudbreak disclaimed all but two of the claims. The Patent Trial & Appeal Board issued a final written decision finding that Allgenesis failed to show that the remaining two claims were unpatentable. As part of its decision, the Board made a priority decision that a Patent Cooperation Treaty (PCT) application belonging to Allgenesis was not prior art to Cloudbreak’s patent. Allgenesis appealed.

Article III of the US Constitution limits the Federal Circuit’s jurisdiction to adjudication of “cases” or “controversies,” which means the appellant must have (1) suffered an injury in fact (2) that is fairly traceable to the challenged conduct of the defendant and (3) likely to be redressed by a favorable judicial decision.

Allgenesis attempted to establish Article III standing based on two separate arguments. First, Allgenesis argued that it had standing based on potential infringement liability. To support that argument, Allgenesis offered a declaration by its vice president of finance that included information about a Phase II trial completed three years prior and a related 2020 publication. That declaration, however, did not identify any specific plan to conduct a Phase III trial or to seek US Food and Drug Administration (FDA) approval, and instead only contained generic statements that the project was not abandoned. While Allgenesis’s briefing and oral argument included statements that it planned to engage in a Phase III trial, the Federal Circuit determined that there was no record support for this claim. The Court found that the evidence before it did not constitute the necessary concrete plans to convey standing to appeal the final written decision. Allgenesis also attempted to rely on its own failed attempts at seeking a settlement from Cloudbreak, but the Court concluded that this was insufficient to show a substantial risk of infringement.

Allgenesis’s second argument was that the Board’s priority decision created an injury in fact. Allgenesis argued that the Board’s determination about the priority date of Cloudbreak’s patent affected Allgenesis’s patent rights because it would have a preclusive effect on Allgenesis’s pending applications. The Federal Circuit was unpersuaded and explained that collateral estoppel does not attach to a non-appeal priority decision from an IPR decision. To the extent that an examiner did reach the same conclusion as the Board, Allgenesis would be free to appeal that decision.

Practice Note: For Board petitioners seeking to establish standing to appeal unfavorable final written decisions, it is necessary to develop sufficient support to show standing in fact. For life sciences companies working in drug development, declarations [...]

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No Money, Mo’ Problems: Speculative Damages Award Cannot Stand

by Kathleen Lynch | Oct 26, 2023 | Patents

The US Court of Appeals for the Federal Circuit upheld a district court’s claim construction and jury instructions but reversed a premature judgment as a matter of law (JMOL) on obviousness and an imprecise damages award. Cyntec Company, Ltd. v. Chilisin Electronics. Corp., Case No. 22-1873 (Fed. Cir. Oct. 16, 2023) (Moore, Stoll, Cunningham, JJ)

Cyntec sued Chilisin for willful infringement of two patents related to molded chokes, which are component parts in batteries and power supplies. Four events at trial led to this appeal. First, the district court construed the disputed “by means of” term by its plain meaning but also instructed the jury that when a result occurs “by means of” a factor, that factor “has an impact on”—but may not be the “only potential cause” of—the result. Second, Chilisin presented invalidity evidence, arguing that the asserted claims were obvious by one prior art reference in light of another.

Before Chilisin could cross-examine Cyntec’s rebuttal expert, the district court granted Cyntec’s JMOL, finding the patents not obvious. In the third event that led to the appeal, Cyntec presented a market-share lost profits theory of damages based on expert testimony. Chilisin unsuccessfully moved to exclude the testimony as being speculative and unreliable. The jury awarded more than $1.8 million in damages and the district court subsequently granted enhanced damages totaling more than $5.5 million. As for the fourth event, Chilisin unsuccessfully moved for JMOL and a new trial on multiple issues. Chilisin then appealed.

The Federal Circuit reviewed three issues on appeal:

The nonobviousness JMOL
The infringement findings
The damages award.

Starting with nonobviousness, the Federal Circuit reversed the JMOL and remanded. While obviousness is ultimately a legal question, it relies on “numerous underlying factual findings,” including the scope/content/differences of prior art, the skill level of a person of ordinary skill in the art and objective indicia of nonobviousness such as commercial success. The Court found Chilisin had presented enough evidence to allow a jury to find the asserted claims obvious in light of the two prior art references presented. The Federal Circuit also analyzed the district court’s reasoning regarding the prior art and found that its “conclusions are either insufficient to support JMOL or unsupported by the evidence.” Thus, it was improper to withhold a partial fact issue from the jury.

Next, the Federal Circuit analyzed the infringement issue, dividing the analysis into the district court’s claim construction and jury instructions, and the jury’s infringement finding. Chilisin argued that the disputed term “by means of” should signal but-for causation, meaning the factor must cause the result. The Court agreed that this was one possible reading, but because the claim language did not read “by exclusive/primary means” or something similar, the disputed term could also encompass “mere contribution.” The Federal Circuit cited to the specification in support of its claim interpretation and ultimately upheld the district court’s claim construction and the consistent jury instructions. The Court rejected Chilisin’s argument that there was insufficient evidence of infringement, concluding [...]

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Here’s a Great Concept: Fraud After Registration Is Not a Basis for Cancellation

by Paul Devinsky | Oct 26, 2023 | Trademarks

In a split panel decision, the US Court of Appeals for the Federal Circuit overturned the Trademark Trial & Appeal Board and ruled that a fraudulent declaration under Section 15 of the Lanham Act is not a basis for cancellation of an otherwise incontestable registered mark. Great Concepts, LLC v. Chutter, Inc., Case No. 22-1212 (Fed. Cir. Oct. 18, 2023) (Dyk, Stark, JJ) (Renya, J., dissenting).

Great Concepts applied to register “DANTANNA’S” as a mark for a “steak and seafood restaurant” in 2003, which resulted in a registration in 2005.

In 2006, Chutter’s predecessor-in-interest, Dan Tana, petitioned the Board to cancel the registration based on an alleged likelihood of confusion with Tana’s common law “DAN TANA” mark for restaurant services. That cancellation proceeding was suspended during a pending civil action in which Tana successfully sued Great Concepts for trademark infringement.

Afterward, the Board dismissed Tana’s cancellation proceeding “based on petitioner’s apparent loss of interest” after he failed to respond to the Board’s order to show cause.

Meanwhile, prior to the finality of the infringement action, Great Concepts’ former attorney, Frederick Taylor, filed a combined declaration of use (pursuant to Section 8 of the Lanham Act) and a declaration of incontestability (pursuant to Section 15). In the Section 15 portion of the declaration, in relation to Great Concepts’ effort to obtain incontestable status for its already registered mark, Taylor falsely declared “there is no proceeding involving said rights pending and not disposed of either in the U.S. Patent and Trademark Office [PTO] or in the courts.”

Chutter then petitioned the PTO for cancellation of the registration based on Taylor’s false Section 15 affidavit. The Board found that Taylor’s Section 15 declaration was fraudulent and cancelled the registration under Section 14 of the Lanham Act. Great Concepts appealed.

The Federal Circuit was confronted with the issue of whether Section 14, which allows a third party to seek cancellation of a registration when the “registration was obtained fraudulently,” permits the Board to cancel a trademark’s registration based on a fraudulent Section 15 declaration, filed for the purpose of acquiring incontestability status for its already registered mark. Reversing the Board’s decision, the Court held that Section 14 does not permit the Board to cancel a registration in these circumstances.

Focusing on the statutory language, the Federal Circuit noted that Section 14 permits a third party to file “[a] petition to cancel a registration of a mark” … “[a]t any time if” the registered mark’s “registration was obtained fraudulently.” Explaining that the word “‘obtaining’ has a plain and ordinary meaning,” i.e., “[t]o get hold of by effort; to gain possession of; to procure…,” the Court then noted that, by contrast, Taylor’s fraudulent Section 15 declaration only sought incontestable status for its already registered trademark—a different right from registration.

Since “fraud committed in connection with obtaining incontestable status is distinctly not fraud committed in connection with obtaining the registration itself” and since fraud committed in connection with an incontestability declaration is not found among the “numerous bases [...]

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Downloaded: No Relief From Stipulated Claim Construction

by Ian J. Howard | Oct 26, 2023 | Patents

The US Court of Appeals for the Federal Circuit ruled that a claim interpretation that flows naturally from the parties’ stipulated claim construction is binding on the parties even if the interpretation reads preferred embodiments out of the claims. Finjan LLC v. SonicWall, Inc., Case No. 22-1048 (Fed. Cir. Oct. 13, 2023) (Reyna, Cunningham, JJ.) (Bryson, J., dissenting).

In 2017, Finjan sued SonicWall for infringing several of Finjan’s patents related to cybersecurity technology systems that identify malicious material in downloadable content and programming code. The asserted patents included claims directed to ways to protect network-connectable devices from undesirable downloadable operations. During claim construction, the parties stipulated that a “downloadable” should be construed as “an executable application program, which is downloaded from a source computer and run on the destination computer.”

SonicWall moved for summary judgment, arguing that it did not infringe the patents because the accused devices received and inspected supposed “downloadables” as unextracted packets, which do not constitute executable files under the stipulated claim construction. The district court granted partial summary judgment in favor of SonicWall, finding that Finjan failed to offer evidence that “the accused […] products ‘ever possess a reassembled file or executable application.’” Finjan appealed.

Finjan argued that the district court’s ruling was incorrect because it impermissibly grafted additional requirements onto the stipulated claim construction, and that the district court’s interpretation was inconsistent with claim language found in other parts of the asserted patents. The Federal Circuit rejected these arguments, noting that the district court’s infringement ruling followed directly from the parties’ stipulated definition of the term “downloadables.” Under the stipulated claim construction and in accordance with Finjan’s own expert’s interpretation of the meaning of “executable,” a device “that merely receives and forwards packets without reassembling their contents does not receive a downloadable . . . because that device does not receive an executable application program.” The Court emphasized that Finjan could not challenge its earlier claim construction stipulation. Further, the Court noted that the stipulated definition of “downloadables” was derived verbatim from the specifications of two of the asserted patents.

Judge Bryson dissented for two reasons. First, he noted that the district court’s interpretation of the claims would read preferred embodiments out of the patent and effectively eviscerate from the patent’s scope any device that screens content from the internet. Second, Judge Bryson found that elsewhere in the asserted patents’ specifications it was clear that the meaning of “downloadables” used by the district court was incorrect. Contrary to the majority, Judge Bryson did not find the stipulated claim construction dispositive because Finjan merely challenged the meaning of the word “executable” within the stipulated claim construction, rather than the contents of the stipulation itself.

Practice Note: This decision offers a few helpful lessons for practitioners. First, it is important to write claims in language that is both expansive enough to encompass all intended embodiments but precise enough to survive invalidity challenges. By carefully selecting specific but broad language, and writing claims more accurately, patentees may avoid semantic noninfringement arguments. [...]

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Beware Enablement of Genus Antibody Claims

by Jayita Guhaniyogi, PhD | Oct 5, 2023 | Patents

The US Court of Appeals for the Federal Circuit invalidated yet another set of antibody genus claims, finding the case “materially indistinguishable” from those in the 2023 Supreme Court of the United States case, Amgen v. Sanofi. The Federal Circuit concluded that patent claims covering a class of antibodies targeting functions of blood clotting factors were invalid for lack of enablement, echoing the reasoning followed by fellow Circuit Judge Dyk, who sat by designation in the district court. Baxalta Inc. and Baxalta GMBH v. Genentech, Inc., Case No. 2022-1461 (Fed. Cir. Sept. 20, 2023) (Moore, Clevenger, Chen, JJ.)

This case involves Baxalta’s patent covering antibody preparations that bind to blood clotting Factors IX/IXa and thereby increase the procoagulant activity of Factor IXa. This in turn activates another blood clotting factor, Factor X, that is useful to treat hemophilia, particularly in patients who develop inhibitors to blood clotting Factor VIII. The claim at issue recited “[a]n isolated antibody or antibody fragment thereof that binds Factor IX or Factor IXa and increases procoagulant activity of Factor IXa.”

Baxalta sued Genentech for infringement. In a prior appeal involving claim construction, the Federal Circuit vacated the district court’s grant of summary judgment of noninfringement and remanded for further proceedings. On remand, the district court granted Genentech’s motion for summary judgment for lack of enablement. Baxalta appealed.

Baxalta challenged the summary judgment of invalidity on enablement. Baxalta argued that a skilled artisan could make the full scope of the claimed antibodies without undue experimentation. With reference to the subject patent’s disclosure of using a prior art method known as the hybridoma technique for generating Factors IX/IXa antibodies, Baxalta argued that using routine screenings to find the antibodies exhibiting the claimed functions (i.e., those that bind Factors IX/IXa and increase procoagulant activity of Factor IXa) was within the skill of a skilled artisan without undue experimentation.

The Federal Circuit, citing Amgen, explained that the enablement standard under Section 112(a) requires that “the specification [] enable the full scope of the invention as defined by its claims,” allowing for “a reasonable amount of experimentation.” The Court explained that in Amgen, the patents at issue generically claimed all antibodies that bind to specific amino acid residues on a protein and blocked the protein from binding to LDL receptors. The Court observed that while the Amgen patent disclosed amino acid sequences of 26 antibodies, the claim scope could cover millions. Similarly, the Amgen patent disclosed a roadmap and another conservative substitution method for generating new antibodies and testing them for the claimed functions. In Amgen, the Supreme Court held that such methods were nothing more than “trial-and-error experimentation,” which, in the absence of “some general quality . . . running through the class that gives it a peculiar fitness for the particular purpose,” failed to enable the full scope in that case.

The Federal Circuit found the facts in this case “materially indistinguishable” from Amgen. Like the claims at issue in Amgen, Baxalta’s patent claims all [...]

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Grubhub Relishes Victory Against Trademark Preliminary Injunction

by Tessa Kroll | Sep 28, 2023 | Trademarks

Upholding the denial of a preliminary injunction motion in a trademark infringement dispute, the US Court of Appeals for the Seventh Circuit concluded that the district court did not err in finding that the trademark owner failed to show a likelihood of success on its reverse confusion theory. Grubhub Inc. v. Relish Labs LLC, Case No. 22-1950 (7th Cir. Sept. 12, 2023) (Lee, Jackson-Akiwumi, Wood, JJ.)

Relish Labs and the Kroger Company (Home Chef) create and deliver meal kits with pre-portioned ingredients that customers can cook at home. Home Chef began using its “HC Home Mark,” which is protected by five federal trademark registrations, in 2014. Home Chef has spent more than $450 million on advertising and reached $1 billion in annual sales in October 2021.

Grubhub is an online food ordering and delivery service that provides on-demand order management, dispatching and procurement. In June 2021, Grubhub was acquired by Netherlands-based Just Eat Takeaway (JET), an international food delivery company that typically combines its “JET House Mark” with the marks of its local brands.

Before finalizing its acquisition of Grubhub, JET filed an international trademark application for the JET House Mark. However, the US Patent & Trademark Office (PTO) examiner preliminarily rejected the mark, finding it to be “confusingly similar” to the HC Home Mark. JET did not respond and withdrew the application. After acquiring Grubhub, JET adopted the “Grubhub House Logo,” which combined the Grubhub logo with the JET House Mark. Grubhub introduced the new logo in July 2021 and has spent millions of dollars rebranding.

After receiving a cease-and-desist letter from Home Chef, Grubhub sued, seeking a declaratory judgment that its logo did not infringe Home Chef’s marks. Home Chef countered with a motion for preliminary injunction, which was referred to a magistrate judge. The magistrate judge recommended that the court grant Home Chef preliminary injunctive relief, but the district court rejected the recommendation and denied Home Chef’s motion, finding that it had not shown a likelihood of success on the merits. Home Chef appealed.

On appeal, the Seventh Circuit began by addressing which Grubhub mark was at issue: the JET House Mark alone or the Grubhub House Logo (which incorporated the logo portion of the JET House Mark). The Court noted that Grubhub had not used the JET House Mark without the Grubhub brand name in the United States and thus agreed with the district court that the accused mark was the Grubhub House Logo:

Turning next to Home Chef’s reverse confusion theory, the Seventh Circuit addressed the relevant four factors [...]

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Tune to the Right Channel: Disclosure Lacking Fraud Information Isn’t an FCA Qui Tam Bar

by Cecilia Choy, PhD | Aug 17, 2023 | Patents

The US Court of Appeals for the Ninth Circuit reversed a district court’s decision to dismiss a qui tam action brought under the False Claims Act (FCA) after analyzing the public disclosure bar channels. The case required the Ninth Circuit to examine Congress’s 2010 amendments to the FCA public disclosure bar to determine whether the claims were substantially the same as information publicly disclosed in any one of three enumerated channels. Silbersher v. Valeant Pharm. Int’l, Inc., No. 20-16176 (9th Cir. Aug. 3, 2023) (Schroeder, Sanchez, Antoon, JJ.)

The FCA imposes civil liability on anyone who knowingly presents a fraudulent claim for payment to the federal government. The FCA includes a qui tam provision that allows private citizens (or “relators”) to bring fraud claims on behalf of the government. In 2010, Congress’s public disclosure bar precluded qui tam actions if substantially the same allegations or transactions were publicly disclosed in one of three channels:

In a federal criminal, civil or administrative hearing in which the government or its agent is a party
In a congressional, Government Accountability Office (GAO) or other Federal Report hearing, audit or investigation
From the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

Valeant owns the “Otterbeck patents” for its drug Apriso’s delayed-release formula. Valeant initiated an infringement action against Lupin, a generic drug manufacturer that attested in an abbreviated new drug application (ANDA) that the Otterbeck patents were invalid because of prior art that described a similar delayed-release formula. Thereafter, Valeant extended its monopoly by applying for and being granted a new patent that claimed a recent discovery that Apriso was effective when taken without food. GeneriCo then challenged the new patent in an inter partes review (IPR) proceeding, arguing that it was obvious that Apriso would be effective without food. GeneriCo presented two medical studies as support. The Patent Trial & Appeal Board agreed and invalidated the claims in the new patent.

Zachary Silbersher, GeneriCo’s IPR lawyer and a relator in another FCA suit in the same court, discovered that Valeant failed to disclose certain information to the US Patent &Trademark Office (PTO) during the IPR proceeding. Specifically, he discovered that three years before applying for the new patent, Valeant applied for another patent where it claimed it made an unexpected finding that taking Apriso’s active ingredient with food made the drug more effective. This claim was the opposite of the claim made in the new application that had been invalidated in the IPR proceeding.

Silbersher brought an FCA case seeking damages from Valeant, alleging that Valeant fraudulently obtained the Otterbeck and new patent to prolong its monopoly and charge an artificially high price for Apriso. The district court dismissed Silbersher’s qui tam action as precluded by the public disclosure bar because the IPR qualified as an “other Federal hearing” under channel two of the bar, as described above. Silbersher appealed.

The Ninth Circuit analyzed whether [...]

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Should This Be an Alice Two-Step or a Section 112 Enablement Waltz?

by Katherine Pappas | Aug 10, 2023 | Patents

The US Court of Appeals for the Federal Circuit affirmed the dismissal of a lawsuit for lack of subject matter eligibility under 35 U.S.C. § 101 based on an Alice two-step analysis, with Judge Newman filing a sharp dissent focused on “the current law of § 101.” Realtime Data LLC v. Array Networks Inc., Case No. 2021-2251 (Fed. Cir. Aug. 2, 2023) (non-precedential) (Reyna, Taranto, JJ.) (Newman, J., dissenting).

From November 2017 through December 2018, Realtime brought suits against multiple defendant corporations asserting infringement of multiple Realtime patents related to methods and systems for digital data compression. In 2019, some defendants moved to dismiss for failure to state a claim, arguing that the asserted patent claims were patent ineligible under § 101. In an oral ruling from the bench, the district court granted the motion to dismiss. On appeal, the Federal Circuit found that the district court had provided too cursory a ruling to allow for meaningful appellate review, and therefore vacated and remanded for the district court to provide a more detailed § 101 analysis.

On remand in 2021, the district court issued a written opinion working through the two-step analysis laid down by the Supreme Court in Alice. Step 1 evaluates whether the asserted claims are directed to a patent-ineligible concept, such as an abstract idea, and Step 2 searches for an “inventive concept” by considering the claims to determine whether any elements “transform the nature of the claim” from ineligible subject matter into a patent-eligible application, which must amount to more than “well-understood, routine, or conventional activities.” The district court found the patents invalid under § 101 and granted the motions to dismiss Realtime’s complaints but gave Realtime the opportunity to file amended complaints. After Realtime did so, the defendants renewed their motions to dismiss. The district court again dismissed Realtime’s complaints based on § 101. In ruling so, the district court first found that there were no material differences between Realtime’s prior and amended complaints with respect to the § 101 analysis. Next, the court incorporated by reference its prior ruling’s legal analysis, reaffirmed its finding that the claims were invalid under § 101 and granted dismissal, this time without granting Realtime leave to file amended complaints. Realtime appealed.

This time the Federal Circuit affirmed the district court’s dismissal. In affirming, the Federal Circuit worked through the Alice two-step inquiry and agreed with the district court on each step. At Step 1, the Court agreed that “none of the claims at issue specifies any particular technique to carry out the compression of data” but instead were all “data manipulation claims that are recited at a high level of result-oriented generality and that lack sufficient recitation of how the purported inventions accomplish the results” (quoting Koninklijke). At Step 2, the Court agreed that the asserted patents “simply apply an abstract idea on generic computers with generic techniques,” thus failing to cross over into eligible subject matter. Accordingly, the Court held that the claims were directed to patent-ineligible subject matter and affirmed dismissal under § 101.

Judge [...]

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Don’t Ruin Today’s CNS with Yesterday’s Problems

by Benjamin Ediger, Ph.D. | Aug 10, 2023 | Trademarks

The US Court of Appeals for the Fifth Circuit reversed a district court’s trademark invalidity finding based on lack of subject matter jurisdiction because a covenant not to sue (CNS) issued by the trademark owner precluded any reasonably expected future injury that the alleged infringer might incur. Nursery Decals & More, Inc. v. Neat Print, Inc., Case No. 22-10065 (5th Cir. Aug. 1, 2023) (Haynes, Engelhardt, JJ.; deGravelles, Dist. J., sitting by designation) (per curiam).

Neat Print and Nursery Decals sold novelty t-shirts on online marketplaces. In 2018, Neat Print notified one of the online marketplaces that Nursery Decals’ products allegedly infringed Neat Print’s trademarks. In response, the online marketplace sent Nursery Decals a final warning threatening a site ban for any future violations. Nursery Decals complied with the warning and also preemptively pulled its products from other online marketplaces.

Nursery Decals sued Neat Print in the Northern District of Texas. Most of Nursery Decals’ claims were directed to invalidating Neat Print’s trademarks or obtaining a noninfringement judgment. Nursery Decal also included three claims seeking damages. One was a federal claim for fraud on the US Patent & Trademark Office (PTO). The other two claims were Texas law claims based on tortious interference with an existing business relationship and a prospective business relationship. The district court ultimately granted summary judgment on all of the trademark-related claims, ordering the PTO to cancel all of the disputed trademarks.

Prior to the district court’s summary judgment grant, Neat Print tried to avoid summary judgment by filing a CNS along with a motion to dismiss for lack of subject matter jurisdiction. The district court denied the motion to dismiss, concluding that the CNS did not moot the case. The district court explained that Neat Print’s CNS did not address Nursery Decals’ past and potential future injuries (i.e., Nursery Decals’ damages claims). The district court also found that Neat Print’s CNS did not meet the high standard set forth in the Supreme Court’s 2013 decision in Already, reasoning that Neat Print’s CNS left the door open for future take-down notices based on the disputed trademarks.

Neat Print amended its CNS to address take-down notices. It then filed a motion to reconsider its motion to dismiss in light of the modified CNS. The district court orally denied the motion at the pretrial conference and ordered that the case proceed to trial. The jury ultimately found no liability on both claims. After the trial, the district court issued a written opinion explaining that it rejected Neat Print’s motion for reconsideration because Nursery Decals had a legally cognizable injury that supported subject matter jurisdiction. While Neat Print had defeated all of Nursery Decals’ damages claims, Neat Print appealed the district court’s judgment with respect to the trademark claims, arguing that the district court failed to properly evaluate subject matter jurisdiction on a claim-by-claim basis in view of Neat Print’s CNS.

The Fifth Circuit agreed with Neat Print, finding that the district court committed two errors. First, the district [...]

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