IP UPDATE
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Exploring the latest in intellectual property law
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Glass Half Empty: Patent Reciting “Half Liquid” Is Indefinite

by | Aug 13, 2020 |

The US Court of Appeals for the Federal Circuit affirmed the district court’s finding that the asserted patent claims were invalid as indefinite because the meaning of the term “half-liquid” was not reasonably clear from the record. IBSA Institut Biochimique, S.A. v. Teva Pharms. USA, Inc., Case No. 19-2400 (Fed. Cir. July 31, 2020) (Prost, C.J.).

IBSA owns a patent directed to pharmaceutical formulations for thyroid hormones that enable a safe and stable oral administration. IBSA listed in the Orange Book the patent for Tirosint®, a soft gel capsule formulation containing the active ingredient levothyroxine sodium. Teva filed an abbreviated new drug application to market a generic version of Tirosint®, and IBSA responded by filing a lawsuit for patent infringement against Teva.

During claim construction, the parties disputed the construction of the term “half-liquid.” IBSA proposed that “half-liquid” should be construed to mean “semi-liquid,” while Teva argued that the term was indefinite or should be construed as “a non-solid, non-paste, non-gel, non-slurry, non-gas substance.” The district court began its analysis by acknowledging that the parties “agree that the intrinsic record does not define ‘half-liquid.’” IBSA argued that a priority Italian patent application’s use of the word “semiliquido” (translation: semi-liquid) in the same places where “half-liquid” was used in the patent at issue supported its position that the two terms were synonyms. The district court disagreed, noting several differences in the two patents that indicated that the different choice of terms was intentional. Further, the district court noted that the applicant originally used the term “semi-liquid” in a dependent claim during prosecution, but later removed this term, indicating that the applicant understood the terms to be different and intentionally chose not to use “semi-liquid” in the asserted claims. The district court also found IBSA’s extrinsic evidence (e.g., reliance on dictionary definitions, other patents and expert testimony) unpersuasive. The district court accordingly found the asserted patent claims invalid as indefinite because the meaning of “half-liquid” was not reasonably ascertainable from the record. IBSA appealed.

The Federal Circuit affirmed. The Court first found that the intrinsic record failed to establish the boundaries of the term “half-liquid.” The Court agreed with the district court’s analysis, finding that neither the claims nor the specification supported IBSA’s proposed construction. The Court also explained that the prosecution history reinforced the conclusion that the applicant understood “half-liquid” to be different from “semi-liquid,” because the applicant intentionally removed the term “semi-liquid” in a dependent claim during prosecution. The Court disagreed with IBSA’s suggestion that the district court refused to consider the foreign Italian priority document—rather, “when discrepancies between a foreign priority document and the U.S. filing exist, it may be proper to view the discrepancies as intentional.”

Turning to the extrinsic record, the Federal Circuit found that the district court did not clearly err in its analysis of the presented dictionary definitions, other patents and expert testimony. The Court noted that IBSA identified no scientific dictionaries containing the term despite IBSA’s argument that “half-liquid” would be a recognizable term [...]

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PTAB May Reject Substitute Claims Under Any Basis of Patentability

by | Aug 5, 2020 | ,

The US Court of Appeals for the Federal Circuit considered for the first time whether a district court’s invalidity determination, when made final after all appeals are exhausted, divests the Patent Trial and Appeal Board (PTAB) of jurisdiction in a co-pending inter partes review (IPR) proceeding involving the same claims, and held that it does not. The Court also held that in an IPR proceeding, the PTAB is free to reject proposed substitute claims for failing to meet the subject matter eligibility requirements of § 101. Uniloc 2017 LLC v. Hulu, LLC, Case No. 19-1686 (Fed. Cir. July 22, 2020) (Wallach, J.) (Dyk, J., dissenting).

Hulu filed an IPR petition challenging claims of Uniloc’s patent directed to adjustable software licensing for digital products. After the PTAB instituted review, Uniloc filed a motion for substitute claims, conditional on whether the PTAB found the original claims unpatentable. Before the PTAB issued its final determination and before it ruled on the motion for substitute claims, a district court, in a related proceeding, held Uniloc’s asserted claims invalid as directed to patent-ineligible subject matter. Shortly thereafter, the PTAB issued a final written decision finding the challenged claims unpatentable over the prior art, and it found the substitute claims unpatentable under § 101. Uniloc appealed the PTAB’s use of § 101 to invalidate its substitute claims.

While Uniloc’s appeal of the Hulu IPR was pending, the Federal Circuit affirmed the district court’s invalidity finding as to the original claims. With respect to the Hulu appeal, the Federal Circuit ordered the parties to address whether the appeal was moot in view of the ultimate finality with respect to invalidity of the original claims, thereby divesting the PTAB of jurisdiction over the IPR.

The majority held that the finality of the district court’s invalidity finding did not necessarily divest the PTAB of authority to consider substitute claims. It determined that the mootness issue was waivable, and that Hulu had waived the argument because it failed to raise mootness during the pendency of the IPR at the time the district court issued its decision. Even if Hulu had not waived the argument, the majority found that the PTAB’s authority to consider substitute claims does not depend on any live dispute about the original claims, as long as the motion to amend in the IPR was timely filed.

As to the PTAB’s rejection of the claims under § 101, the majority held that although the PTAB is restrained in an IPR proceeding to invalidating a patent’s original claims only under the anticipation and obviousness grounds raised in the petition, the PTAB may use other invalidity tools as a “new ground of rejection” for substitute claims, including for lack of patentable subject matter under § 101. The majority also suggested that other grounds of patentability would be within the scope of the PTAB’s authority, including rejections under the various subsections of § 112. The majority was concerned that limiting the PTAB’s review might force it to issue substitute claims that fail to meet all the statutory [...]

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Eighth Circuit Cools Off Antitrust Claims Based on Alleged Patent Fraud

by | Aug 5, 2020 |

The US Court of Appeals for the Eighth Circuit affirmed a grant of summary judgment dismissing antitrust and tortious interference claims based on fraudulent procurement of patents where the plaintiff failed to show a knowing and willful intent to deceive the US Patent and Trademark Office (PTO). Inline Packaging, LLC v. Graphic Packaging International, LLC, Case No. 18-3167 (8th Cir. June 18, 2020) (Smith, J.).

Inline Packaging and Graphic Packaging are manufacturers of susceptor packaging, a specialized food packaging used for microwaving frozen foods. Graphic developed the susceptor design in partnership with Nestlé in 2005. The packaging was redesigned from a prior patent obtained several years earlier. Although Graphic’s computer-aided design drafter was listed as the sole inventor of the redesigned packaging claimed in the asserted patent, Nestlé’s engineer provided feedback that was implemented into the design, including the addition and deletion of certain features of the packaging.

In 2014, Nestlé held an auction to select the next manufacturer of its susceptor packaging. Nestlé originally selected Inline as the supplier of its susceptor packaging, but later awarded 90% of the susceptor packaging business to Graphic after Graphic notified Nestlé that Inline would likely infringe on Graphic’s patents. In June 2015, Graphic initiated patent litigation against Inline. In July 2015, Inline brought an antitrust suit against Graphic alleging that Graphic monopolized the susceptor packaging market using anticompetitive practices in violation of federal and state antitrust laws. To support its antitrust claims, Inline alleged that Graphic fraudulently procured the asserted patents, made baseless litigation threats and engaged in predatory discount bundling through the use of multi-year supply agreements. At the time the lawsuit was initiated, Graphic was the dominant supplier of susceptor packaging, with an almost 95% share of the US market. The district court granted summary judgment in favor of Graphic, dismissing Inline’s claims. Inline appealed.

The Eighth Circuit reviews grants of summary judgment de novo to determine whether a genuine dispute of material fact exists and whether judgment is entitled as a matter of law. Here, all inferences were viewed in the light most favorable to Inline. Section 2 of the Sherman Act prohibits monopolizing, or attempting to monopolize, any part of the trade or commerce among the several states. To prove a violation of Section 2, a claimant must show that an entity possessed monopoly power in the relevant market and willfully acquired or maintained such monopoly power through anticompetitive conduct rather than as the result of fair competition (e.g., by means of a superior product or business acumen).

The Eighth Circuit first considered whether Graphic fraudulently procured the asserted patents. Patent fraud, also known as Walker Process fraud, can support a monopolization claim where the defendant procured the patent at issue by knowing and willful fraud on the PTO, or maintained and enforced the patent with knowledge of the fraudulent manner in which it was obtained. Knowing and willful fraud requires an intent to deceive or inequitable conduct. The Court reasoned that this standard requires clear and convincing [...]

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Technical Issues Affirm Patent Validity but Preclude Pre-Suit Damages

by | Jul 22, 2020 |

In a split decision, the US Court of Appeals for the Federal Circuit affirmed the subject matter eligibility of claims directed to collection, comparison and classification of information. The Court also unanimously found that the patent owner was not entitled to pre-suit or enhanced damages because it failed to prove pre-suit patent marking by its licensees. Packet Intelligence LLC v. Netscout Systems, Inc., Case No. 19-2041 (Fed. Cir. July 14, 2020) (Lourie, J.) (Reyna, J., dissenting in part).

This dispute began when Packet Intelligence sued Netscout for infringing three of its patents that were directed to a system and method for monitoring packets exchanged over a computer network. The case was tried before a jury, which found the patents-in-suit valid and infringed. The jury further determined that Packet Intelligence was entitled to pre-suit and post-suit damages, as well as enhanced damages. Netscout filed a motion for judgment as a matter of law that Packet Intelligence was not entitled to pre-suit damages, which the district court denied. Following a bench trial, the district court held that the claims of the patents-in-suit were not invalid under 35 USC § 101. Netscout appealed.

Netscout challenged the district court’s § 101 decision and the denial of Netscout’s motion for judgment as a matter of law on pre-suit damages. In a split panel decision, the Federal Circuit affirmed the district court’s determination on subject matter eligibility under § 101. Netscape specifically argued that the claims were directed to an abstract idea because the claims were merely directed to the collection, comparison and classification of information.

The majority reiterated that the Federal Circuit has recognized that software-based innovations may be deemed patent-eligible subject matter at Alice step 1. For example, in Enfish, the Court held that software claims were valid at step 1 because the claims were directed to a technical improvement over conventional systems. Similarly, in SRI International, the Court held that software claims were valid because the claims at issue were “necessarily rooted in computer technology in order to solve a specific problem in the realm of computer networks.” Applying these principles, the majority found that the claims were patent eligible because they presented a technical solution to a technical problem. Notably, the majority relied on the patent specification’s disclosures regarding the invention’s improvements over conventional systems.

Judge Reyna dissented. In his view, the claims were directed to an abstract idea because they lacked specific technological means for the collection, analysis and display of data. Because a concrete technical solution was absent, Reyna argued that the claims were distinguishable from the SRI International case on which the majority relied. He would have found the claims invalid under step 1 and remanded the case to the district court to fully address Alice step 2.

Regarding pre-suit damages, the Federal Circuit unanimously held that Packet Intelligence was not entitled to such damages. The primary issue was whether a Packet Intelligence licensee had properly complied with the marking requirements in order to provide the required constructive notice to [...]

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Patent Owners Beware: Serial Filings, Rent-Seeking May Be Grounds for Adverse Fee Award

by | Jul 15, 2020 |

The US Court of Appeals for the Federal Circuit vacated and remanded a district court’s denial of attorney’s fees to an accused infringer, finding the district court did not properly consider the Patent Owner’s manner of litigation, including the history of plaintiff’s actions in other jurisdictions and the broader context of its litigation practices. Elec. Commc’n Techs., LLC v. ShoppersChoice.com, LLC, Case No. 19-2087 (Fed. Cir. July 1, 2020) (Wallach, J.).

Following a finding by a Florida district court that a patent asserted by Electronic Communication Technologies (ECT) was ineligible under 35 U.S.C. § 101, ShoppersChoice filed a motion for attorney’s fees, citing ECT’s use of standardized demand letters and repeated infringement actions seeking nuisance-value settlements. ShoppersChoice also informed the district court of a recent award of attorney’s fees against ECT in the Central District of California (the True Grit decision) for conduct relating to the same asserted patent. The district court denied ShoppersChoice’s motion, finding that the case was not exceptional and that ECT’s litigation position was not so obviously weak. ShoppersChoice appealed.

The Federal Circuit reviewed the district court’s denial of attorney’s fees under the abuse of discretion standard, analyzing whether the district court made “a clear error of judgment in weighing relevant factors or in basing its decision on an error of law or on clearly erroneous factual findings” and whether it provided a “concise but clear explanation of its reason[ing].” The Court explained that “a pattern of litigation abuses characterized by the repeated filing of patent infringement actions for the sole purpose of forcing settlements, with no intention of testing the merits of one’s claims, is relevant to a district court’s exceptional case determination under § 285.” The Court found that the district court failed to conduct this analysis and erred by not considering ECT’s manner of litigation and the broader context of ECT’s litigation practices. Addressing the True Grit decision, the Federal Circuit noted that the California district court provided a detailed account of the nuisance value rent-seeking practices of ECT (and other affiliated shell companies), but ultimately found that the court failed to conduct an adequate inquiry into ECT’s litigation conduct.

The Federal Circuit thus vacated the attorney’s fee award and remanded the case, directing the district court to consider both ECT’s manner of litigation and the objective unreasonableness of its claims.

Practice note: While the California District Court’s decision is not binding in the Florida court, the Federal Circuit made clear that a court cannot ignore developments in other jurisdictions in connection with § 285 fee determinations.



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“All Substantial Rights” Test Informative in Obviousness-Type Double Patenting Context

by | Jul 15, 2020 |

The US Court of Appeals for the Federal Circuit endorsed for the first time the “all substantial rights” test to determine whether inventions are commonly owned for purposes of obviousness-type double patenting validity analysis of a later patent. Immunex Corp. v. Sandoz, Inc., Case No. 20-1037 (Fed. Cir. July 1, 2020) (O’Malley, J.) (Reyna, J., dissenting). The Court determined that patents were not commonly owned—and therefore a later patent was not invalid for obviousness-type double patenting—when the patentee retained a secondary right to sue for infringement and the right to “veto” further assignment of the patents by the grantee.

Roche licensed a family of patent applications to Immunex. Under the license agreement, Immunex agreed to pay a running royalty to Roche based on sales of products incorporating the patented technology. Non-party Amgen subsequently acquired Immunex. Amgen, Immunex and Roche entered into an agreement to eliminate the continuing royalties to Roche. The agreement granted to Immunex a paid-up, irrevocable, exclusive license to the US patent family for the patents-in-suit and gave Immunex the sole right to sublicense. It further granted Immunex the exclusive right to prosecute applications in the US patent family. Critically, Roche retained the secondary right to assert the patents if Immunex did not assert them in litigation after being informed of potential infringement, and the right to veto any downstream assignment by Immunex to a third party.

Immunex and Roche later sued Sandoz for infringing a patent included in the license agreement. At trial, Sandoz argued that the patents-in-suit were invalid for obviousness-type double patenting over several patents filed by Immunex.

The judicially created doctrine of obviousness-type double patenting prohibits claims in a second patent that, while not for the same invention, are so similar to the claims of a commonly owned earlier patent that granting both patents exclusive rights would “effectively extend the life of patent protection.” This doctrine rests primarily on two justifications: preventing unjustified extension of the time of the right to exclude, and preventing multiple infringement suits by different assignees. The doctrine applies to all commonly owned patents, including cases in which the obvious variant inventions have different inventors.

Urging a novel theory of common ownership, Sandoz argued that although the patents-in-suit were assigned to Roche, Immunex effectively owned both the Immunex patents and the patents-in-suit. Sandoz asserted that the agreement between Amgen, Immunex and Roche conveyed “all substantial rights” in the patents-in-suit, which was tantamount to an assignment of ownership. Thus, Sandoz argued that the “all substantial rights” test, which previously had only been used to determine who had standing to sue for infringement as a “patentee” under 35 USC § 281, should apply in the context of obviousness-type double patenting.

Immunex argued that the “common ownership” analysis should take into account ownership at the time of invention, such that common-ownership-based obviousness-type double patenting arises only where the relevant inventions were owned by the same entity.

The Federal Circuit agreed with Sandoz, endorsing for the first time the all substantial rights test to [...]

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Stick to Your Guns: PTAB Should Rarely Issue New Grounds of Unpatentability

by | Jul 15, 2020 |

The Patent Trial and Appeal Board (PTAB) Precedential Opinion Panel (POP) issued a precedential opinion in an inter partes review (IPR) to resolve two questions:

  • May the PTAB raise a ground of unpatentability not developed by the petitioner?
  • If it does so, must the PTAB provide the parties notice and an opportunity to respond to the new ground of unpatentability?

Hunting Titan, Inc. v. DynaEnergetics Europe GmbH, Case No. IPR2018-00600 (USPTO July 6, 2020) (Boalick, CAPJ) (granting request for POP rehearing). The POP held that while the PTAB may raise new grounds of unpatentability, it should refrain from doing so except in rare instances. If it does raise new grounds of unpatentability, the PTAB must provide the parties notice and an opportunity to respond to the new grounds.

Titan filed a petition requesting IPR of a patent owned by DynaEnergetics directed to a perforating gun assembly for wellbore tools. One of the grounds alleged anticipation by a prior art reference (Schacherer). The PTAB instituted review, and DynaEnergetics timely moved to amend the claims. Opposing the motion to amend, Titan argued that the substitute claims were obvious over various prior art references, including the Schacherer reference. Titan did not argue anticipation as to the substitute claims. In its final written decision, the PTAB held that the amended claims were unpatentable because they were anticipated by Schacherer. DynaEnergetics moved for reconsideration and POP review.

The POP granted review to provide precedential guidance on new grounds of unpatentability. Citing to the recent US Court of Appeals for the Federal Circuit decision in Nike, Inc. v. Adidas AG, the POP determined that the PTAB may raise new grounds of unpatentability in certain cases, but those cases should be exceedingly rare. The POP reasoned that the adversarial nature of an IPR proceeding puts the competing parties in a better position to identify and argue the strongest grounds. The POP rejected the notion that the PTAB should independently examine the patentability of every proposed substitute claim, as if it were a reexamination proceeding, by culling through the prior art to determine if better unpatentability arguments could have been presented. Only in rare cases that are no longer adversarial, such as when a petitioner does not oppose a motion to amend or when a petitioner ceases to participate in an instituted IPR that proceeds to a final judgment, would it be reasonable for the PTAB to consider new grounds of unpatentability. Although the POP did not articulate every exceptional scenario, it suggested that when the record “readily and persuasively” establishes that substitute claims are unpatentable, it would be reasonable for the PTAB to rely on a new ground of unpatentability. Titan’s IPR was not an exceptional case, so the POP reversed the panel’s decision as to the substitute claims.

The POP also explained that the parties must be given notice and an opportunity to respond to any new grounds the PTAB may raise. With respect to substitute claims, notice cannot come from the grounds [...]

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Lights Out for Light-Up Shoe Patent, Thanks to Non-Limiting Preamble

by | Jul 9, 2020 |

Finding that a patent’s preamble was not limiting and the patent owner’s secondary considerations of non-obviousness were weak, the US Court of Appeals for the Federal Circuit upheld a finding of obviousness by the Patent Trial and Appeal Board (PTAB). Shoes By Firebug LLC v. Stride Rite Children’s Grp., LLC, Case Nos. 19-1622, -1623 (Fed. Cir. June 25, 2020) (Lourie, J.).

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Verdict Delivered: Shipment Notification Claims are Patent Ineligible—Even with Security Flair

by | May 28, 2020 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s pleadings-stage determination that a patent claim directed to a delivery notification system was subject matter ineligible under 35 U.S.C. § 101. Elec. Commc’n Techs., LLC v. ShoppersChoice.com, LLC, Case No. 19-1587 (Fed. Cir. May 14, 2020) (Prost, C.J.).

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A Party May Have Standing Even with Incorrect Patent Assignment

by | May 27, 2020 |

The US Court of Appeals for the Federal Circuit affirmed a district court’s decision that a reformation of an incorrect assignment supports Article III standing and affirmed the court’s prejudgment interest award. Schwendimann v. Arkwright Advanced Coating, Inc., Case Nos. 18-2416, 19-1012 (Fed. Cir. May 13, 2020) (Wallach, J.) (Reyna, J. dissenting).

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