Contents

SPOTLIGHT INFO:

In Tafas v. Doll, No. 08-1352 (Fed. Cir. Mar. 20, 2009), the Federal Circuit reviewed the district court's decision invalidating several Final Rules issued by the PTO in August 2007. The Federal Circuit considered Final Rules 78 and 114, requiring an applicant to file a petition if pursuing more than two continuation applications or more than one request for continued reexamination ("RCE"), respectively. Additionally, the Federal Circuit considered Final Rules 75 and 265, requiring applicants to conduct a preexamination prior art search and submit an examination support document ("ESD") when an application contains more than five independent claims or twenty-five total claims.

The Federal Circuit first held that each of the Final Rules under consideration was procedural in nature rather than substantive. The Court then affirmed the determination that Final Rule 78 was invalid because it added an additional requirement that applicants could only claim the benefit of an earlier filing date if the application contained no amendments, arguments, or evidence that could have been submitted earlier. The Court stated that such a requirement conflicted with the statutory language of 35 U.S.C. § 120, which provides that qualifying applications "shall have" the benefit of the earlier priority date. The Federal Circuit also reversed the district court's ruling that Final Rule 114 was invalid because the Patent Act did not unambiguously require the PTO to grant unlimited RCEs. And the Federal Circuit held that Final Rules 75 and 265 did not conflict with the Patent Act or existing precedent because the Final Rules do not alter the ultimate burden on the PTO to prove claims unpatentable. Accordingly, the Court reversed the district court's decision that Final Rules 75 and 265 were invalid.

Judge Bryson authored a concurring opinion and Judge Rader dissented. See full summary below.

District Court Does Not Abuse Its Discretion on Expert Witness Appointment When Confronted by an Unusually Complex and Conflicting Case
 Hsuanyeh Chang

Judges: Rader (author), Plager, Gajarsa

[Appealed from N.D. Cal., Judge Wilken]

In Monolithic Power Systems, Inc. v. O2 Micro International Ltd., Nos. 08-1128, -1136 (Fed. Cir. Mar. 5, 2009), the Federal Circuit held that the district court did not abuse its discretion in appointing an independent expert witness under Fed. R. Evid. 706, and affirmed the district court's denial of O2 Micro International Limited's ("O2 Micro") JMOL that U.S. Patent No. 6,396,722 ("the '722 patent") is not obvious under 35 U.S.C. § 103.

The '722 patent relates to power inverter circuitry for laptop computers. In May 2004, Monolithic Power Systems, Inc. ("Monolithic") filed suit against O2 Micro in the Northern District of California, seeking a DJ finding O2 Micro's '722 patent invalid, not infringed, and unenforceable. O2 Micro counterclaimed for infringement and joined Advanced Semiconductor Manufacturing Corporation, Ltd. ("ASMC"), Monolithic's foundry, as a counterdefendant.

In September 2004, O2 Micro fi led suit against Monolithic in the Eastern District of Texas, accusing Monolithic of infringing U.S. Patent No. 6,804,129 ("the '129 patent"). Later, O2 Micro amended the complaint to also accuse ASMC of infringing the '129 patent and to accuse ASUSTeK Computer Inc. ("ASUS") of infringing U.S. Patent No. 6,259,615 ("the '615 patent"), the '722 patent, and the '129 patent. In March 2006, the Eastern District of Texas transferred O2 Micro's case to the Northern District of California, which then consolidated the two cases.

The district court then dismissed O2 Micro's claims regarding the '129 patent and granted SJ of noninfringement of the '615 patent in favor of ASUS. Before trial, the district court, in a case management conference, expressed its frustration with the technical complexities of the '722 patent and entertained the idea of appointing an independent expert under Fed. R. Evid. 706. After a series of disagreements, the parties ultimately agreed upon an expert, Dr. Enrico Santi. At trial, the defendants presented evidence that the '722 patent was invalid, and Dr. Santi offered testimony largely consistent with Monolithic's theory of the case. The jury found that the asserted claims of the '722 patent were invalid under both Monolithic's obviousness and on-sale bar theories. O2 Micro appealed.

On appeal, O2 Micro argued that the district court's appointment of Dr. Santi unduly burdened its Seventh Amendment right to a jury trial and violated established Ninth Circuit precedent that there is no "complexity exception" to the Seventh Amendment right. Upon review of the record, the Federal Circuit found no denial or encumbrance of O2 Micro's jury demand or Seventh Amendment rights. Rather, the district court allowed the parties to show cause why an expert witness should not be appointed. The district court also instructed the parties to nominate candidates and confer upon a mutually agreeable expert. In addition, the district court instructed the parties to share Dr. Santi's reasonable fees and expenses. Furthermore, the district court did not limit the parties' ability to call their own experts and allowed these experts to attack, support, or supplement the testimony of Dr. Santi. At trial, the district court instructed the jury not to give Dr. Santi's opinion greater inherent weight due to his independent status. Moreover, the Federal Circuit noted that the Supreme Court has long recognized the constitutionality of court-appointed experts. Accordingly, although it recognized that Rule 706 should be invoked only in rare and compelling circumstances, the Federal Circuit found no abuse of discretion in appointing an independent expert in this case where the district court was confronted by what it viewed as an unusually complex case with starkly conflicting expert testimony.

O2 Micro also disputed the underlying factual findings implicit in the jury's obviousness verdict. O2 Micro argued that substantial evidence does not support the jury's finding that U.S. Patent No. 5,923,129 ("the Henry patent") discloses various features of the '722 patent's claims. Specifically, O2 Micro argued that the Henry patent does not teach the "fl ow-through switch" of claims 2 and 9; the "second state" limitation of claims 1, 2, 9, and 18; and the "only if" limitation of claims 12 and 14.

Claims 2 and 9 of the '722 patent require a fl ow-through switch. Monolithic's expert, Dr. Horenstein, testified that comparator 740 in Figure 8B of the Henry patent teaches "a fl ow-through switch." O2 Micro did not cross-examine Dr. Horenstein on this point, and O2 Micro's own expert did not testify on this subject. Accordingly, the Federal Circuit held that the record stands unrebutted with evidence showing that the Henry patent includes a flow-through switch and that O2 Micro's attorneys' argument on appeal cannot create an evidentiary gap.

Claims 1, 2, 9, and 18 of the '722 patent require an inverter with a second pulse signal having a first state and "a second state which overlaps the first signal with a predetermined minimum overlap to deliver a predetermined minimum power to the load." Slip op. at 13. O2 Micro challenged that the Henry patent does not disclose this second state. However, Monolithic's expert, Dr. Horenstein, testified that the "sawtooth generator" of the Henry patent teaches the second state. Although O2 Micro's expert, Dr. Rhyne, provided confl icting testimony, the Federal Circuit found that Dr. Horenstein embraced Dr. Rhyne's characterization of the Henry patent's sawtooth generator as consistent with the claimed second state. Accordingly, the Federal Circuit held that there is no reason to disturb that implicit factual finding.

Claims 12 and 14 of the '722 patent require a feedback circuit that delivers power "only if said feedback signal is above a predetermined threshold." Id. at 15 (emphasis added). Drs. Santi and Horenstein concurred that the Henry patent teaches this limitation because it teaches disengaging feedback and going into a fixed minimal voltage output state when the feedback signal drops below a predefi ned threshold. Accordingly, the Federal Circuit held that substantial evidence supports the Henry patent's teaching of this "only if" limitation.

O2 Micro also argued that even if substantial evidence supports the finding that every element of the asserted claims was in the prior art, the verdict must fail because Drs. Santi and Horenstein articulated no reasons for combining the cited references. On the contrary, the Federal Circuit found that Dr. Horenstein testified that a skilled artisan would have been motivated to combine the full bridge inverter in Figure 2 of the Henry patent with the sawtooth generator in Figure 8 of the Henry patent. Accordingly, the Federal Circuit concluded that the asserted claims of the '722 patent were obvious as a matter of law.

Joint Inventor Must Make a Qualitatively Significant Contribution When Measured Against the Dimension of the Full Invention
Susan Y. Tull

Judges: Lourie (author), Dyk, Prost

[Appealed from E.D. Mich., Senior Judge Zatkoff]

In Nartron Corp. v. Schukra U.S.A., Inc., No. 08-1363 (Fed. Cir. Mar. 5, 2009), the Federal Circuit reversed and remanded the district court's grant of SJ of dismissal for nonjoinder, which concluded that an extender element of a dependent claim had been invented by a third party not named on the patent or joined as a plaintiff to the infringement suit.

Nartron Corporation ("Nartron") owns U.S. Patent No. 6,049,748 ("the '748 patent"), which is directed to a vehicle control system that provides massage capability to a vehicle seat with lumbar support. Defendant Schukra U.S.A., Incorporated ("Schukra") supplies automobile manufacturers with lumbar support systems for automobile seats. Defendant Borg Indak, Incorporated ("Borg Indak") supplies electronic components to Schukra. Borg Indak moved for SJ of dismissal, alleging that Benson, a Schukra employee, was a coinventor of claim 11 of the '748 patent and therefore had to have been joined in the suit. Because the district court found that Benson conceived of the key additional limitation in dependent claim 11, an extender for a lumbar support adjustor, it held that Benson was a coinventor. As a coinventor, Benson was required to have been joined as a plaintiff to the infringement suit. Accordingly, the district court dismissed the suit.

On appeal, Nartron argued that the extender recited in claim 11 was in the prior art and therefore could not have supported a claim of coinventorship. Nartron further argued that the inventive aspect of the claimed invention is the controller, which Benson did not conceive. Thus, Nartron argued, irrespective of whether the extender was in the prior art, Benson's alleged contribution is insignificant to the invention of the '748 patent.

The Federal Circuit agreed with Nartron that Benson was not, as a result of suggesting an extender, a coinventor of claim 11 of the '748 patent as a matter of law. The Court concluded that any contribution Benson made to the invention was insignificant and therefore prevented Benson from attaining the status of coinventor. The Court reminded that "a joint inventor must 'contribute in some signifi cant manner to the conception or reduction to practice of the invention [and] make a contribution to the claimed invention that is not insignificant in quality, when that contribution is measured against the dimension of the full invention.'" Slip op. at 7-8 (alteration in original) (quoting Pannu v. Iolab Corp., 155 F.3d 1344, 1351 (Fed. Cir. 1998)).

In concluding that the contribution of the extender for a lumbar support adjustor was insignificant when measured against the full dimension of the invention of claim 11, the Court found that extenders were not only known in the art but also were part of existing automobile seats. Benson's contribution of supplying the extender to the patented invention therefore was merely the exercise of ordinary skill in the art. To support its view, the Court looked to the specification of the '748 patent, which makes clear that the automobile seat, including its lumbar support adjustor and extender, comprises the existing object on which the invention (i.e., the control module) operates. The Court also found that the specification and claims do not focus on the structure of the seat itself, but rather on the structure and function of the control module that operated the seat. The '748 patent, for example, mentions the extender only once and contains no description of the physical characteristics of the extender or any drawing of the extender.

In holding that Benson's contribution to the '748 patent did not rise to the level of coinventorship, the Court applied its reasoning from a factually similar case, Hess v. Advanced Cardiovascular Systems, Inc., 106 F.3d 976 (Fed. Cir. 1997). In Hess, the Court held that Hess was not a coinventor when he had explained the state of the art to the inventors and had suggested that the inventors use a particular material in their product. The Court also noted that Benson "does not necessarily attain the status of coinventor by providing the sole feature of a dependent claim." Slip op. at 11. The Court reminded that "a dependent claim adding one claim limitation to a parent claim is still a claim to the invention of the parent claim, albeit with the added feature; it is not a claim to the added feature alone." Id.

The Court also rejected the argument that Benson must be a coinventor of the module because he suggested a control module to the named inventor and detailed the ultimate functions of that module. The Court reminded that "[o ]ne who merely suggests an idea of a result to be accomplished, rather than means of accomplishing it, is not a joint inventor." Id. at 12 (alteration in original) (quoting Garrett Corp. v. United States, 422 F.2d 874, 881 (Ct. Cl. 1970)). Accordingly, the Court concluded that Benson was not entitled to coinventorship by simply posing the result, leaving the named inventors to fi gure out how to achieve it.

Machine-or-Transformation Test Is the Singular Test for Evaluating Process Claims Under 35 U.S.C. § 101
Darrell D. Kinder

Judges: Newman (concurring), Mayer, Gajarsa (author)

[Appealed from Board]

In In re Ferguson, No. 07-1232 (Fed. Cir. Mar. 6, 2009), the Federal Circuit affirmed the Board's decision that all sixty-eight claims of U.S. Patent Application No. 09/387,823 ("the '823 application") were not directed to patent-eligible subject matter under 35 U.S.C. § 101.

Applicants filed the '823 application on September 1, 1999. The '823 application included claims 1-23 and 36-68 that were directed to a method of marketing a product ("method claims") and claims 24-35 that were directed to a paradigm for marketing software ("paradigm claims"). All sixty-eight claims were rejected by the examiner under 35 U.S.C. §§ 102, 103, and/or 112. On appeal, the Board reversed the examiner's rejections of claims 1-68 under 35 U.S.C. §§ 102, 103, and/or 112, but entered a new rejection, rejecting claims 1-68 under 35 U.S.C. § 101 as not being directed to statutory subject matter.

Applicants requested a rehearing of the Board's decision, wherein the Board responded by entering a new rejection of claims 1-68 under 35 U.S.C. § 101 based on the PTO's Interim Guidelines for Examination of Patent Applications for Patent Subject Matter Eligibility, which the PTO issued after the Board's original decision. Regarding the method claims, the Board acknowledged that these claims were analogous to a "process," one of the four enumerated categories of statutory subject matter set forth in the text of 35 U.S.C. § 101, but concluded that the method was directed to an "abstract idea" and thus not patent eligible. With respect to the paradigm claims, the Board concluded that claims directed to a paradigm did not fall within one of the four enumerated categories of statutory subject matter and therefore were not patentable subject matter. Applicants requested a rehearing, but the Board declined to modify its ruling. Applicants appealed to the Federal Circuit.

On appeal, in light of its recent opinion in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc), the Court considered whether Applicants' claims were directed to patent-eligible subject matter. The Court fi rst considered Applicants' method claims and determined that, although the method claims nominally fall into the category of process claims, the decision in Bilski established that the method claims were not directed to patent-eligible subject matter. The Court relied on its statement in Bilski that the Supreme Court's machine-or-transformation test is the "definitive test to determine whether a process claim is tailored narrowly enough to encompass only a particular application of a fundamental principle rather than to pre-empt the principle itself." Slip op. at 6 (quoting Bilski, 545 F.3d at 954). Using this test, the Court first concluded that Applicants' method claims are not tied to any particular machine or apparatus and thus do not satisfy the machine-or-transformation test set forth in Bilski.

Applicants argued that the method claims are tied to the use of a shared marketing force. The Court, however, concluded that a shared marketing force is not a machine or apparatus. The Court reminded that a machine or apparatus is a "concrete thing, consisting of parts, or of certain devices and combination of devices." Id. (quoting In re Nuijten, 500 F.3d 1346, 1355 (Fed. Cir. 2007)). The Court held that a shared marketing force did not meet the defi nition of a machine or apparatus as set forth in Nuijten. Thus, the Court determined that Applicants' method claims were not tied to a machine or apparatus.

The Court then reviewed Applicants' method claims to determine if they satisf ed the transformation prong of the machine-or-transformation test. The Court stated that "[a]t best it can be said that Applicants' methods are directed to organizing business or legal relationships in the structuring of a sales force (or marketing company)." Id. at 7. The Court reiterated its statement in Bilski that for transformations to satisfy the machine-or-transformation test, they must be transformations of a physical object or substance or representative of a physical object or substance. Consequently, because the method claims failed to meet either prong of the machine-or-transformation test, the Court affirmed the Board's rejection of the method claims under 35 U.S.C. § 101 as not being directed to statutory subject matter.

The Court proceeded to address Applicants' argument that, according to the Court's earlier decision in State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1373 (1998), the method claims satisfi ed the "useful, concrete, and tangible result test" set forth by the Court in that decision. The Applicants also argued that the method claims are directed to business methods and should therefore be treated as statutory subject matter in view of the Court's holding in State Street. The Court noted, however, that although the Bilski decision did not overturn the decision in State Street, the Court did reject the viability of the "useful, concrete, and tangible result test" because, although such an inquiry may provide an initial indication as to whether the claim is drawn to a fundamental principle or practical application of such a principle, it focuses on the result of the claimed invention rather than on the claimed invention itself. The Court also noted that State Street did not provide patent eligibility to business methods per se, because the claims at issue in State Street were drawn to a patent-eligible machine implementation of what otherwise may have been an ineligible abstract idea and thus were patentable even under the machine-or-transformation test.

The Court further considered Applicants' request to consider a new test for patentability: "Does the claimed subject matter require that the product or process ha[ve] more than a scintilla of interaction with the real world in a specific way?" Slip op. at 8. The Court reasoned that in Bilski, the machine-or-transformation test was held as being the definitive test for determining if a process claim is patent eligible under 35 U.S.C. § 101. Further, the Court found that Applicants' proposed "'scintilla of interaction' test begs the question whether even the most abstract of ideas and natural of phenomena interact with the real world" and would lead to ambiguity and conflict with the machine-or-transformation test. Id. Accordingly, the Court refused to adopt Applicants' proposed "scintilla of interaction" test and reaffirmed that the machine-or-transformation test is the singular test for a process claim under 35 U.S.C. § 101. The Court concluded that Applicants' method claims, when analyzed using the machine-or-transformation test, are not patentable.

Next, the Court proceeded to determine whether Applicants' paradigm claims were directed to statutory subject matter. The Court first considered whether the paradigm claims were directed to subject matter that fit into any of the four enumerated categories of statutory subject matter. The Court noted that the claims were clearly not directed to processes, a manufacture, or a composition of matter. The Court further noted that the paradigm claims were not directed to a machine, because the paradigm claims "do not recite 'a concrete thing, consisting of parts, or of certain devices and combination of devices,'" and therefore are no more than an abstract idea. Id. at 10 (quoting Nuijten, 500 F.3d at 1355). The Court concluded that because the paradigm claims were directed to no more than an abstract idea, they were unpatentable as not directed to statutory subject matter. In particular, the Court remarked, "Indeed, it can be said that Applicants' paradigm claims are drawn quite literally to the paradigmatic abstract idea." Id. at 11 (internal quotation marks omitted).

Judge Newman concurred with the judgment that the claims of the '823 application were not patentable because they do not pass the test of nonobviousness set forth in 35 U.S.C. § 103. However, Judge Newman did not agree with the majority's determination that the claims of the '823 application were not directed to statutory subject matter under 35 U.S.C. § 101. Judge Newman asserted that the majority redefined the Bilski opinion, adding dicta that was more than necessary given the facts in this particular case, and casting doubt on thousands of previously granted patents. Specifi cally, Judge Newman stated that the majority not only erroneously asserted that the machine-or-transformation test is the test for patentability of the Supreme Court, but also that Bilski overturned the tests for patentability set forth in State Street and in the Freeman-Walter-Abele series of cases. Judge Newman noted that the majority defines an abstract idea as anything that does not meet the machine-or-transformation test, even if the claim itself is directed to something that is not an abstraction. Judge Newman warned that the majority in this case, and in previous cases such as Bilski, was not supporting innovation and investment in new ideas and new technologies by analyzing patentability using old tests such as the machine-or-transformation test.

Mandate Recalled for Failure to Instruct District Court on Postjudgment Interest
Raymond M. Gabriel

Judges: Linn (author), Clevenger, Prost

[Appealed from D.N.J., Senior Judge Lifl and]

In Mars, Inc. v. Coin Acceptors, Inc., Nos. 07-1409, -1436 (Fed. Cir. Mar. 9, 2009), the Federal Circuit recalled its mandate issued in Mars, Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1374 (Fed. Cir. 2008). The original mandate failed to instruct the district court to award postjudgment interest, to which Mars, Inc. ("Mars") was entitled under Fed. R. App. P. 37(b).

Mars requested recall of the mandate, alleging that it was deficient under Rule 37(b), which requires a mandate to contain instructions about the allowance of interest if the appellate court modifies or reverses a judgment. Here, the Federal Circuit reduced the amount of the district court's damages award by holding that Mars lacked standing to recover damages from 1996 to 2003. It affirmed-in-part and reversed-in-part the judgment of the district court and remanded "for recalculation of damages for the period prior to 1996 and for further proceedings." Slip op. at 1 (quoting Mars, 527 F.3d at 1374). While recognizing that the power to recall a mandate should be exercised sparingly, the Federal Circuit nonetheless found it appropriate here. Because the Court's decision modifi ed the district court's judgment within the meaning of Rule 37(b), only it had the power to award postjudgment interest. The mandate erroneously did not contain any instruction concerning an award of interest, so the Court recalled the mandate to determine whether Mars was entitled to such an award.

To determine whether Mars was entitled to postjudgment interest, the Federal Circuit applied the law of the Third Circuit. In the Third Circuit, "determining whether post-judgment interest should run from the original judgment . . . turns on the degree to which the original judgment was upheld or invalidated." Id. at 3-4 (alteration in original) (quoting Loughman v. Consol-Pennsylvania Coal Co., 6 F.3d 88, 97 (3d Cir. 1993)). Plaintiffs are generally entitled to postjudgment interest under Third Circuit law when a decision is closer to an affirmance than a reversal.

Here, the parties did not dispute that the Federal Circuit's decision was closer to an affirmance. Thus, under Third Circuit law, postjudgment interest was appropriate from the date of the district court's judgment—May 22, 2007. Coin Acceptors, Inc. ("Coinco"), however, offered two arguments against any award of postjudgment interest.

First, Coinco argued Mars unsuccessfully appealed an award of damages in its favor. In support of this argument, Coinco relied on various cases applying an old common law rule under which, "if a party takes an appeal from an award in his favor and is unsuccessful, he is not allowed interest pending the appeal upon what he got under the decree of the district court" because, by his appeal, he has made it impossible for the appellee to discharge the debt. Id. at 4 (citing Lauro v. United States, 168 F.2d 714, 716 (2d Cir. 1948)). The Federal Circuit rejected the argument, agreeing with the Second Circuit's decision in Kotsopoulos v. Asturia Shipping Co., 467 F.2d 91, 94 (2d Cir. 1972), that Rule 37 supplanted the Lauro rule. The Federal Circuit concluded that, if the Third Circuit were confronted with Coinco's argument, it would, like the Second Circuit, hold that Rule 37 abrogated the old common law rule.

Coinco next pointed out Mars's six-month delay in filing its motion to recall as a basis to deny postjudgment interest. Although the Federal Circuit recognized that other circuits have cautioned that motions to recall a mandate for noncompliance with Rule 37(b) must be made "expeditiously," it reminded that the Federal Circuit has taken a more lenient view and allowed an argument based on Rule 37(b) to go forward on appeal even when neither side pointed out the oversight when it occurred. The Court also found that Mars was not solely at fault for the delay because it was at least in part due to ongoing negotiations between the parties while Coinco unsuccessfully petitioned for certiorari. Accordingly, the Federal Circuit concluded that Mars's motion to recall the mandate was timely and should be granted.

Federal Circuit Affi rms Award of Attorneys' Fees for Litigation Misconduct
Jae I. Park

Judges: Michel, Prost, Moore (author)

[Appealed from C.D. Cal., Senior Judge Pfaelzer]

In ICU Medical, Inc. v. Alaris Medical Systems, Inc., No. 08-1077 (Fed. Cir. Mar. 13, 2009), the Federal Circuit held that the district court correctly granted SJ of noninfringement and SJ of invalidity, did not commit clear error in awarding attorneys' fees, and did not abuse its discretion in granting Rule 11 sanctions—all in favor of Alaris Medical Systems, Inc. ("Alaris").

The technology in this case concerns medical valves used in the transmission of fluids to or from a medical patient, such as when using an IV. Prior techniques involved the insertion of an external needle into a side port that connected to the main IV line, but this technique had several problems. ICU Medical, Inc. ("ICU") attempted to overcome these problems by inventing a medical valve that receives fluid from a medical implement (e.g., a syringe) without the use of an external needle. The medical implement compresses a seal on the valve to create a fluid pathway from the medical implement through the valve and into a patient's IV line.

Initially, ICU sued Alaris for patent infringement, asserting only one patent and its so-called "spikeless" claims. ICU then fi led for a temporary restraining order ("TRO"), which the district court denied because Alaris presented substantial questions of invalidity for the asserted spikeless claims. Subsequently, ICU amended its complaint to assert claims from three other patents. The asserted claims fall into three groups: the spike claims, the spikeless claims, and the tube claims. After a series of detailed orders and fi ndings, the district court granted SJ of noninfringement of the spike claims, SJ of invalidity of the spikeless and tube claims, and attorneys' fees and Rule 11 sanctions. ICU appealed all three judgments.

First, the Federal Circuit affirmed the district court's grant of SJ of noninfringement of the spike claims, finding that the district court properly adopted Alaris's proposed construction of the term "spike" to mean "an elongated structure having a pointed tip for piercing the seal, which tip may be sharp or slightly rounded" over ICU's broader proposal of "an upward projection." In doing so, the Court noted that the district court correctly relied on the written description for guidance and observed that the specification "repeatedly and uniformly describes the spike as a pointed instrument for the purpose of piercing a seal inside the valve." Slip op. at 6. Although the functional limitation of piercing is not recited in the claim, the Court explained that it is "entirely proper to consider the functions of an invention in seeking to determine the meaning of particular claim language." Id. at 7 (quoting Medrad, Inc. v. MRI Devices Corp., 401 F.3d 1313, 1319 (Fed. Cir. 2005)). Here, the Court found that the functional language of "for piercing the seal" is appropriate because it defi nes the degree to which the spike must be pointed. Lastly, the Court rejected ICU's contention that a construction of spike that requires "a pointed tip for piercing the seal" would render a dependent claim reciting "wherein said end of said spike is pointed" superfl uous, noting that the "doctrine [of claim differentiation] is not a rigid rule but rather is one of several claim construction tools." Id. at 8.

Second, the Court affi rmed the district court's grant of SJ of invalidity of the spikeless and tube claims for lack of written description under 35 U.S.C. § 112, ¶ 1. The spikeless claims recite a needleless connector valve comprising a body and a seal; it does not recite any spike limitation. Originally, the patents-in-suit did not include the spikeless claims. The spikeless claims were added years after the patents were fi led without any change to the specifi cation.

Alaris challenged the validity of the spikeless claims on the basis that they lack written description in the specification. ICU responded that these claims are spike-optional—i.e., because the claims contain no spike limitation, they cover valves with a spike and valves without a spike. Rejecting ICU's argument that figures and descriptions that include spikes somehow demonstrate that the inventor possessed a medical valve that operated without a spike, the Court found that a person of skill in the art would not understand the inventor of the asserted patents to have invented a spikeless medical valve.

The tube claims recite a needleless connector valve comprising a body and a resilient seal, as well as "a tube seated in the distal end of said cavity for permitting fluid to flow through the distal end of said cavity, said tube sized such that a portion of said seal fi ts snugly around the distal end of said tube." ICU argued that spikes are a species of tubes and that the specification's disclosure of spikes with one or more holes at the tip support claims to the genus of tubes. Alaris responded by pointing out that the specification discloses only tubes that are hollow or cylindrical with holes at both ends, and as part of the valve body rather than as located within the seal or distal end of the body. Considering ICU's failure to identify any disclosure in the specification to support its species-genus argument, the Court agreed with Alaris and found that the specification draws a clear distinction between a spike and a tube.

Third, applying Federal Circuit law, the Court affirmed the district court's award of attorneys' fees under 35 U.S.C. § 285 only for that portion of the litigation relating to (1) the TRO/preliminary injunction ("PI"); (2) ICU's assertion of the "spike" claims; and (3) ICU's construction of the term "spike" at claim construction. Noting that "[a]ttorney fees may be warranted for litigation misconduct or 'if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless,'" id. at 14-15 (quoting Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005)), the Court found that the district court applied the appropriate legal standard and articulated several bases in support of the award, none of which ICU has shown to be clearly erroneous. For example, the district court found that ICU made multiple, repeated misrepresentations to the district court regarding its own patents in an effort to conceal what are now characterized as errors in order to rescue the TRO/PI from denial. These misrepresentations related to (1) ICU's assertion of double-patented claims; (2) ICU's assertion of more double-patented claims even after Alaris and the district court warned ICU of the double-patenting issue; (3) ICU's misrepresentation of Federal Circuit authority; and (4) ICU's representation that certain figures of the common specification "clearly" disclosed a spikeless embodiment, only to later acknowledge that these figures do not disclose such an embodiment and state that its representation was an "honest mistake." Furthermore, the Court held the district court appropriately exercised its discretion in holding that ICU's misconduct warranted Rule 11 sanctions, and that some of the misconduct warranted an award of attorneys' fees.

Lastly, under Supreme Court and Ninth Circuit precedent, the Court affirmed the district court's award of Rule 11 sanctions. The Court began by noting that when reviewing an award of Rule 11 sanctions, the Supreme Court has advised all appellate courts to "apply an abuse-of-discretion standard in reviewing all aspects of a district court's Rule 11 determination." Id. at 17 (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990)). Under this standard, "[a] district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Id. (alteration in original) (quoting Cooter, 496 U.S. at 405). And under Ninth Circuit law, before awarding Rule 11 sanctions, "a district court must conduct a two-prong inquiry to determine (1) whether the complaint [or relevant document] is legally or factually 'baseless' from an objective perspective, and (2) if the attorney has conducted 'a reasonable and competent inquiry' before signing and filing it." Id. (quoting Christian v. Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002)). Applying these laws, the Court found that the district court properly determined that ICU's frivolous construction and assertion of the "spike" claims in the amended complaint concurrently justified sanctions under Rule 11. Id. The Court also noted the district court's decision not to award monetary sanctions for the violations of Rule 11, because the amount of the award of Rule 11 sanctions was "subsumed" by the amount of attorneys' fees awarded under § 285, which "ha[d] suffi ciently admonished ICU and its counsel for any improper conduct under Rule 11." Id. at 18 (alteration in original) (quoting Fee Determination Order at 9).

Marking Requirement of 35 U.S.C. § 287(a) Does Not Apply When Only Method Claims Asserted
Jared D. Schuettenhelm

Judges: Bryson, Gajarsa, Moore (author)

[Appealed from D. Del., Magistrate Judge Thynge]

In Crown Packaging Technology, Inc. v. Rexam Beverage Can Co., Nos. 08-1284, -1340 (Fed. Cir. Mar. 17, 2009), the Federal Circuit reversed and remanded the district court's grant of SJ of noninfringement of Crown Packaging Technology, Incorporated's ("Crown") U.S. Patent No. 6,935,826 ("the '826 patent"). The Federal Circuit also reversed the district court's grant of SJ dismissing Rexam Beverage Can Company's ("Rexam") counterclaim for infringement of U.S. Patent No. 4,774,839 ("the '839 patent").

Crown and Rexam both sell beverage can ends and bodies to beverage fillers. The beverage fillers first fill the can bodies with the desired beverage and then seal the can ends to the can bodies. Crown's "Superend" can end was the commercial embodiment of the '826 patent. Crown contended that the Superend revolutionized the low-margin beverage can market by requiring less metal than a conventional can end. Rexam designed its own can end, the "Rexam End," to compete with the Superend.

Crown filed suit against Rexam, alleging that the Rexam End infringed claim 14 of the '826 patent under the DOE. In response, Rexam filed counterclaims alleging that Crown infringed the '839 patent. The district court granted Crown's motion for partial SJ under 35 U.S.C. § 287(a), dismissing one of Rexam's counterclaims for failure to mark. The district court also granted Rexam's SJ motion of noninfringement of claim 14 of the '826 patent. Both parties appealed the district court's decision.

On appeal, the Court first addressed whether it had jurisdiction to hear the appeals. The Court noted that the district court had issued an amended order granting Crown's SJ motion to dismiss Rexam's first counterclaim. Several months later, the district court issued a final judgment resolving the remaining claims and counterclaims, but the final judgment did not mention the earlier dismissal of Rexam's first counterclaim. Thus, the Court stated that it was obligated to consider whether the final judgment ended the litigation on the merits. The Court recognized that an earlier, nonappealable order may merge into a subsequent final judgment, and concluded that the district court clearly intended the final judgment to dispose of all the claims and counterclaims.

Turning to the merits, the Court first reviewed the district court's grant of Rexam's SJ motion of noninfringement under the DOE. Specifically, the Court analyzed the parties' arguments regarding whether the "fold" in the Rexam End was equivalent to the "annular reinforcing bead" in claim 14 of the '826 patent using the function-way-result test. Crown's expert opined that the function of the annular reinforcing bead in the '826 patent was to increase the pressure resistance of a sealed-on can end and that the function of the Rexam End fold was identical. After analyzing the way and result prongs of the test, Crown's expert concluded that the Rexam End is not substantially different from its corresponding elements in the '826 patent.

In his report, Rexam's expert conceded that a function of the annular reinforcing bead is to increase pressure resistance. Rexam's expert argued, however, that there was no infringement based on his analysis of the way prong of the test. Nevertheless, in its brief for SJ, Rexam suggested that the annular reinforcing bead performed two additional functions. First, it argued that the annular reinforcing bead functioned to support the central panel of the can. Second, it argued that the annular reinforcing bead provided an opening into which a portion of the sealing machine could enter during the filling and sealing process. Crown addressed these arguments in its opposition brief by simply stating that the declaration of its expert confirmed that there was a genuine issue of material fact as to infringement under the DOE. While Crown asserted that its expert's report precluded SJ, it did not provide a detailed argument for this statement or present any additional evidence. Based on Rexam's argument regarding the two additional functions, together with Crown's failure to counter this evidence, the district court concluded there was no genuine issue of material fact and granted SJ of noninfringement.

The Court noted that Rexam offered only attorney argument to support the two additional functions, not actual evidence. Second, the Court interpreted Crown's response, which pointed to its expert report, as sufficient to create a material issue of fact. The Court distinguished this from a case where Crown failed to respond to an argument or failed to respond with any evidence, noting that Crown's expert reviewed the claim in light of the specification and determined that there was only one function. The Court concluded that while Crown could have made this clearer by specifically addressing the issue or restating its expert's analysis, its failure to refer to evidence already before the district court should not be fatal. Since Crown had provided evidence to support its position, and since any reasonable factual inference must be resolved in favor of the nonmoving party, the Court reversed the grant of SJ and remanded.

Turning to Rexam's cross-appeal, the Court considered the district court's grant of SJ dismissing Rexam's counterclaim for infringement of the '839 patent for failure to mark the machines that perform the patented method. The '839 patent contains both apparatus and method claims. The Court stated that "[t]he law is clear that the notice provisions of § 287 do not apply where the patent is directed to a process or method." Slip op. at 12. The Court concluded that this case was factually identical to Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075 (Fed. Cir. 1983), which held that 35 U.S.C. § 287(a) did not apply where a patentee only asserted the method claims of a patent that included both method and apparatus claims. Thus, since Rexam only asserted the method claims, § 287 did not apply, and the Court reversed the district court's grant of SJ dismissing Rexam's counterclaim for infringement of the '839 patent.

Factual Findings Supporting Award of Priority Reviewed for Substantial Evidence
Jenna M. Morrison

Judges: Linn (author), Prost, Moore

[Appealed from Board]

In Henkel Corp. v. Proctor & Gamble Co., No. 08-1447 (Fed. Cir. Mar. 18, 2009), the Federal Circuit affirmed the Board's award of priority of invention to The Proctor & Gamble Company ("P&G") because the Board's underlying factual determinations supporting the award were reasonable.

Claim 1 of U.S. Patent No. 6,399,564 ("the '564 patent"), owned by P&G, is representative of the count at issue in an interference between P&G and Henkel Corporation ("Henkel") concerning two-region dishwasher detergent tablets. Specifically, claim 1 calls for a detergent tablet having a compressed portion that dissolves at a faster rate than a noncompressed portion.

In a previous appeal, the Court determined that the reduction to practice of the invention required a demonstration that the inventors appreciated that the dissolution rate of the compressed region was greater than the dissolution rate of the noncompressed region. The Court concluded that Henkel had demonstrated such an appreciation no later than May 1997.

On remand, the Board held that P&G had made, and at least one inventor appreciated, an embodiment within the scope of the count before Henkel's earliest reduction to practice, specifically in February 1997. Consequently, the Board awarded priority of invention to P&G.

In the present appeal, the Court reviewed the Board's underlying factual findings supporting the award of priority for substantial evidence. Specifically, the Court reviewed whether substantial evidence supports the Board's determination that P&G's inventors appreciated, before Henkel, that the compressed region of the tablet dissolved at a greater rate than a noncompressed region.

In its determination, the Board concluded that the testimony of a P&G inventor (McGregor) concerning when he appreciated the dissolution rates was corroborated by a P&G monthly report (the "Metzger-Groom report"). The Metzger-Groom report described a loss of performance of a two-region "dimple" tablet, which contained a compressed region and a noncompressed region. Slip op. at 6. The Metzger-Groom report further noted that the loss of performance could have been the result of "slower release of [the noncompressed region] from the dimple vs. regular [compressed] tablets." Id. The Board interpreted this passage of the Metzger-Groom report as an appreciation by McGregor (and P&G) of the comparative dissolution rates before Henkel.

P&G and Henkel offered competing interpretations of that portion of the Metzger-Groom report and the Court acknowledged that interpretation of that portion could reasonably go either way. The Federal Circuit noted that its inquiry was not how to interpret the portion of the Metzger-Groom report in the first instance, but whether the Board's interpretation was supported by substantial evidence. Id. at 7. Pointing to the Metzger-Groom report's focus on testing the two-region dimple tablet and its general reference to dissolution rates, the Court determined that the Board's interpretation was reasonable. Accordingly, the substantial evidence standard of review compelled affirmance of the Board's interpretation.

Finally, the Court noted that Henkel's challenge was limited to the Board's interpretation of the Metzger-Groom report and not the Board's conclusion of corroboration based on that interpretation. Since the interpretation was reasonable, the Court affirmed the Board's award of priority of invention to P&G.

To view the full version of Last Month At The Federal Circuit - April 2009 please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.