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Employment Agreement Assignment Provisions Don’t Reach Post-Employment Inventions

The US Court of Appeals for the Federal Circuit rejected a biotechnology company’s argument that assignment provisions in its employment agreements granted ownership rights in post-employment inventions. Bio-Rad Laboratories, Inc. v. Int’l Trade Comm’n, Case No. 20-1785 (Fed. Cir. Apr. 29, 2021) (Taranto, J.)

10X filed an International Trade Commission (ITC) complaint against Bio-Rad, alleging that Bio-Rad’s microfluidic systems infringed 10X’s gene sequencing patents. Bio-Rad raised an affirmative defense alleging that it co-owned the asserted patents because two of the named inventors, formerly employed by Bio-Rad and its predecessor QuantaLife before forming 10X, conceived the ideas embodied in the patents while they were still employed by Bio-Rad. The two inventors had executed employment agreements, including provisions requiring disclosure and assignment of intellectual property created during their employment with Bio-Rad. The two inventors left Bio-Rad and formed 10X several months before the earliest conception date of the asserted patents.

The ITC administrative law judge rejected Bio-Rad’s co-ownership defense, concluding that Bio-Rad had not shown the inventive concept of the asserted patents was conceived before the inventors left Bio-Rad. The administrative law judge also found that Bio-Rad infringed 10X’s patents and that 10X satisfied the technical domestic industry requirement by practicing the asserted patents. The ITC affirmed the administrative law judge’s determinations and also found that the asserted claims were not invalid for indefiniteness. Bio-Rad appealed.

Bio-Rad argued, among other things, that the ITC erred in not finding co-ownership of the asserted patents based on the assignment provisions. Bio-Rad also contended that during their employment at Bio-Rad, the two inventors had conceived the ideas that contributed to the inventions reflected in the 10X patents, and the invention assignment provisions of their employment agreement required assignment of their interest to Bio-Rad.

The Federal Circuit affirmed the ITC. On the co-inventorship issue, the Court adopted the ITC’s conclusion and found that Bio-Rad had no ownership interest in the asserted patents, explaining that the assignment provisions did not apply to ideas developed during employment solely because the ideas ended up contributing to a post-employment patentable invention. The Court found that the language was limited to a grant of actual intellectual property, i.e., subject matter protectable as a patent created during the term of employment with Bio-Rad. The Court reasoned that a person’s work that contributes, even significantly, to a later patentable invention does not create protectable intellectual property until a patentable invention is made, and that therefore, the assignment provisions did not reach the ideas that Bio-Rad alleged were conceived during the inventors’ Bio-Rad employment.

The Court also noted policy reasons for limiting the reach of the assignment provisions, including the difficult compliance issues raised by requiring assignment of rights in post-employment inventions. The Court explained that such provisions might deter a former employee from pursuing work related to their prior work, or deter a potential future employer from hiring that individual to work in an area similar to that in which they had prior experience. The Court also agreed with the ITC’s conclusion that [...]

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Corresponding Structure Necessary to Support ‘Module’ Claim Element

In determining whether a claim element invoked 35 USC § 112, ¶ 6, the US Court of Appeals for the Federal Circuit concluded that “module” was a nonce term and required sufficient corresponding structure in the patent specification to avoid indefiniteness under 35 USC § 112, ¶ 2. Rain Computing, Inc. v. Samsung Electronics Co., Ltd., Case Nos. 20-1646, -1656 (Fed. Cir. Mar. 2, 2021) (Moore, J.)

Rain sued Samsung for infringement of a patent directed to a method for delivering software application packages to user terminals over a network. The claims at issue included an element that recited a “user identification module configured to control access [to] software application packages.” The district court determined that the “user identification module” was a means-plus-function term subject to 35 USC § 112, ¶ 6, but that the specification disclosed sufficient corresponding structure such that the term was not indefinite. Rain appealed the judgment of non-infringement.

Reviewing de novo, the Federal Circuit first addressed whether the claim language invoked § 112, ¶ 6. While there is a rebuttable presumption that ¶ 6 does not apply to claims lacking “means” language, the Court noted that “module” does not provide any indication of structure and is a well-known substitute for “means.” No other claim language, including the “user identification” prefix, imparted any structure onto the term. For purposes of claim construction, the specification also did not impart any structure to the claimed user identification module. Rain argued that amendments and examiner arguments during prosecution were proof of sufficient structure, and that, as the examiner noted, a means-plus-function term cannot be nested within a method claim. The Federal Circuit disagreed, noting that the examiner’s statement that a means-plus-function claim element cannot be nested within a method step was simply incorrect as a matter of law. Thus the Court found that “user identification module” was a means-plus-function claim term.

Citing to its 2015 en banc ruling in Williamson v. Citrix Online, the Court turned to the term’s construction under §112, ¶ 6, applying the same two-step process it used just a few weeks earlier in Synchronoss Technologies v. Dropbox. In the first step, the Court simply used the district court’s undisputed finding that the function was “to control access to . . . software packages to which the user has a subscription.” In the second step, the Court attempted to identify corresponding structure in the specification. Here the Court noted that structure in a specification corresponds only if there is a clear link or association, and that the specification must also disclose an actual algorithm when the function is performed by a general-purpose computer.

The Federal Circuit concluded that the district court erred in finding that the disclosure of a storage device provided sufficient structure, explaining that such devices are nothing more than general purpose computers not capable of performing the access control function without specialized software—an algorithm. Rain’s patent specification disclosed no such algorithm, without which the “user identification module” lacked sufficient structure. Thus [...]

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Impossible; Cloud Storage Patent Claims Invalid for Indefiniteness or Not Infringed

The US Court of Appeals for the Federal Circuit affirmed a district court’s determination that three patents directed to data synchronization were indefinite as lacking sufficient disclosed structure to support a means plus function claim element, as impossible in terms of claim scope or not infringed. Synchronoss Technologies, Inc. v. Dropbox. Inc., Case Nos. 19-2196, -2199 (Fed. Cir. Feb. 12, 2021) (Reyna, J.)

Synchronoss filed suit against Dropbox for infringement of three patents relating to synchronizing data across multiple devices connected via internet, a synchronization agent management server, and transferring media data to a network coupled device. As to the first patent, the district court found that Dropbox did not infringe because the claims, as construed, required hardware, whereas Dropbox’s accused product existed entirely in software. The district court then found that all of the claims of the second patent were invalid as indefinite under § 112, paragraph 6, since various claim terms, including “user identifier module,” did not correspond to adequate structure in the specification. Finally, the district court found that the third patent was invalid under § 112 for including within its scope an impossibility, namely, “generating a [single] media file” that “compris[es] a directory of digital media files.” Synchronoss appealed all three findings.

The Federal Circuit first addressed the claim that the district court found to include impossible scope. The Court agreed with the district court, noting that Synchronoss’s expert admitted that it was impossible for a media file to contain a directory of media files. The Court rejected Synchronoss’s argument that a person of ordinary skill in the art would understand that the invention actually meant something different, and noted that Synchronoss’s proposal would result in re-writing the claims to preserve their validity.

The Federal Circuit next addressed the claim including the means plus function element found to contain terms lacking adequate structure antecedent in the specification. The Court applied a two-step process to construe the “user identifier module” term, first identifying the claimed function and then determining whether the specification disclosed sufficient structure for performing the claimed function. Adopting Synchronoss’s position that the claimed function was “identifying a user,” the Court found that the specification did not disclose sufficient structure corresponding to the claimed user identifier module. The Court noted that although Dropbox’s expert identified more than 20 different possible structures that could perform the claimed function, “it is not enough that a means-plus-function claim term correspond to every known way of achieving the claimed function; instead, the term must correspond to ‘adequate’ structure disclosed in the specification such that a person of ordinary skill in the art would be able to recognize and associate the structure with the claimed function.”

Finally, the Federal Circuit addressed the district court’s finding of non-infringement. At the district court, Synchronoss proposed a construction of the claim term “device” to include “software . . . residing on . . . hardware” and conceded that its claims could not cover “software completely detached from hardware.” The Court concluded that the [...]

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Stick to the Fax: Conflicting Statements Made During Prosecution Lead to Indefiniteness

In deciding whether use of the term “passive link” to define a connection between a computer terminal and a fax machine rendered a patent claim indefinite, the US Court of Appeals for the Federal Circuit affirmed the district court’s finding of invalidity based on conflicting statements made by the patent owner during prosecution. Infinity Computer Products, Inc. v. Oki Data Americas, Inc., Case No. 20-1189 (Fed. Cir. Feb. 10, 2021) (Prost, C.J.)

Infinity owns a patent directed to providing a circuit for interfacing a personal computer with a facsimile machine to enable the facsimile to be used as a scanner or a printer for a personal computer. The patent seeks to accomplish all of the objectives of a scanner or a printer in a simple, straightforward manner through the use of a circuit of highly simplified design and low cost. The patent claims recite that this functionality is accomplished “through a bi-directional direct connection via a passive link between the facsimile machine and the computer.” Infinity asserted the patent against Oki in district court.

The term “passive link” does not appear in the patent specification. Infinity introduced this term during prosecution to overcome rejections based on a prior art patent to Perkins. During prosecution, Infinity unsuccessfully argued that unlike Perkins, the claimed invention permits uninterrupted transfer of signals between the facsimile and the computer without the use of intervening circuitry. Infinity engaged in multiple rounds of amendment and response with the examiner before finally overcoming the rejections based on Perkins by arguing that the invention “creates a passive link between the facsimile machine and the computer [and] therefore does not require any intervening apparatus as does Perkins.” Perkins used a modem, characterized by Infinity as the “intervening apparatus,” internal to the computer. Infinity argued that the modem “should be regarded as a peripheral device to the computer which processes data before it is transmitted to the I/O bus of the computer,” effectively drawing the boundary of the “passive link” at the I/O bus of the computer.

After allowance, the patent was the subject of three ex parte re-examination proceedings. The patent was a continuation-in-part of a parent application, and in order to overcome a prior art reference asserted in the re-examination proceeding, Infinity argued that the claimed “passive link” element was entitled to the priority date of an earlier parent application. Infinity specifically noted that the patent’s description of “the RJ11 telephone cable and use thereof in communicating data between the fax machine 30 and the PC computer 40 meets the definition of ‘passive link.'” In doing so, Infinity pointed to certain figures in the parent application specification that disclosed fax modem circuitry internal to the computer, effectively drawing the boundary of the “passive link” at the computer’s external port—before the I/O bus.

The district court found that there was a discrepancy on the boundary of the “passive link” because during prosecution it was defined as at the I/O bus of the computer, but during the ex parte re-examination it [...]

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PTO: Board to Align Indefiniteness Approach in AIA and District Court Proceedings

On January 6, 2021, US Patent and Trademark Office (PTO) Director Andrei Iancu, Commissioner for Patents Andrew Hirshfeld and Chief Administrative Patent Judge Scott Boalick issued a memorandum to the members of the Patent Trial and Appeal Board to align the Board’s approach when deciding indefiniteness issues under 35 USC § 112 in America Invents Act (AIA) post-grant proceedings more closely with district court proceedings. The memo was issued under the PTO director’s authority to set forth binding agency guidance to govern the Board’s interpretation of statutory provisions. The memo cited to similar recent changes to the approach to claim construction in such proceedings, and stated that aligning “the indefiniteness approach [used] in AIA post-grant proceedings [to district court proceedings] will promote consistency and efficient decision making among coordinate branches of government that decide similar issues in co-pending proceedings.” The instructed approach, per the Supreme Court of the United States’ 2014 decision in Nautilus, applies to post grant review (PGR) and inter partes review (IPR) proceedings, but not to indefiniteness (or claim construction) issues decided outside the context of AIA reviews.

Post-AIA 35 USC § 112(b) (and pre-AIA § 112, second paragraph) require that “[t]he specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.” Claims not meeting this requirement are invalid for indefiniteness and may be determined indefinite during PTO examination, on appeal from examination and during AIA post-grant proceedings. In 2014 the US Court of Appeals for the Federal Circuit approved the PTO’s long-standing approach to assessing indefiniteness during patent prosecution in its per curiam In re Packard decision that “[a] claim is indefinite when it contains words or phrases whose meaning is unclear.” At the time, this approach was used agency-wide to analyze questions of indefiniteness, in complement with the office’s broadest reasonable interpretation approach to claim construction.

Despite the Supreme Court’s decision in Nautilus that a claim is unpatentable for indefiniteness if the claim, read in light of the specification delineating the patent and the prosecution history, fails to inform, with reasonable certainty, those skilled in the art about the scope of the invention, the PTO reaffirmed its intent to follow Packard in examination (whether original, appeals or reexamination). In 2018, in the interest of consistency and efficiency, the PTO changed its claim construction standard for post-grant trial proceedings to review a claim of a patent, or a claim proposed in a motion to amend, from the broadest reasonable interpretation to the same Phillips standard that would be used to construe the claim in a district court action.

The memorandum noted that there has been some confusion as to whether the Packard or Nautilus standard should apply in AIA proceedings. While parties to such proceedings argued for one or the other, neither the Board nor the Federal Circuit ruled as to which standard applied. Now, in the interest of clarity, consistency and efficiency, and to “lead to greater [...]

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Glass Half Empty: Patent Reciting “Half Liquid” Is Indefinite

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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Claims Need Only Inform a Skilled Artisan of the Metes and Bounds with Reasonable Certainty

In a case involving claims with functional language and means-plus-function limitations, the US Court of Appeals for the Federal Circuit found that the district court erred in its determination that three claim terms were indefinite, but agreed with the district court that a fourth term was not indefinite. Nevro Corp. v. Boston Sci. Corp., Case Nos. 18-2220; -2349 (Fed. Cir. Apr. 9, 2020) (Moore, J.).

Nevro owns patents for improved technologies for high-frequency spinal cord stimulation therapy to alleviate pain, while avoiding side effects associated with conventional stimulation therapies. Several of the asserted claims recite systems and devices in which the stimulation therapy signals are “paresthesia-free,” meaning they do not cause a tingling, pins-and-needles sensation. The district court found the claimed “paresthesia-free” systems and devices to be indefinite because infringement of the claim depends on the effect of the system on the patient, so a skilled person cannot understand the metes and bounds of the claim with reasonable certainty. Nevro appealed.

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En Banc Federal Circuit Leaves ‘Consisting Essentially Of’ High and Dry

In an 8–4 decision, the en banc US Court of Appeals for the Federal Circuit issued a per curiam order upholding its earlier panel decision finding a claim using the transitional phrase “consisting essentially of” to be indefinite because of inconsistences in the manner in which the patent specification explained the meaning of “better drying time” in connection with use of the claimed formulation. The Court denied plaintiff’s petition for panel rehearing and for rehearing en banc. HZNP Fin. Ltd. v. Actavis Labs. UT, Inc., Case No. 17-2149 (Fed. Cir. Feb. 25, 2020) (per curiam) (Lourie, J, joined by Newman, O’Malley and Stoll, JJ, dissenting). Judge Newman also dissented in the original panel decision. (more…)




PTAB May Not Cancel Indefinite Claims in IPR, No Matter What

The US Court of Appeals for the Federal Circuit imposed limits on what the Patent Trial and Appeal Board (PTAB) is authorized to do by statute when dealing with challenged claims in an inter partes review (IPR) that it finds to be too indefinite to apply prior art. Samsung Elecs. Am., Inc. v. Prisua Eng’g Corp., Case Nos. 19-1169, -1260 (Fed. Cir. Feb. 4, 2020) (Bryson, J).

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