United States: Patent & Trademark Bulletin: April-May 2009

Assistance in the preparation of this issue was provided by Ronald E. Cahill, Jaime L. Burke, Gabriella K. Eisner, Jonah M. Fecteau, Charlton Shen, and Rory Pheiffer.

PATENT

Robert Gentile v. Sun Products, Inc., Sun Hockey, Inc., and John M. Gill, C.A. No. 05-11885-NG, Findings of Fact & Conclusions of Law (D. Mass. April 20, 2009) (Gertner, D.J.) [Reasonable Royalty Rate; Willfulness].

Plaintiff Robert Gentile ("Gentile") brought this action against defendants Sun Products, Inc. and Sun Hockey, Inc. (collectively "Sun") as well as their principal, John M. Gill ("Gill"), for direct and contributory infringement of U.S. Patent No. 5,722,906 ("the '906 patent"). After a three-day bench trial on damages, the District Court (Gertner, D.J.) awarded plaintiff $1,897,650.84, which included treble damages for willful infringement.

The '906 patent, which issued on March 3, 1998, describes a street hockey ball consisting of a rigid hollow sphere, containing a "non-toxic liquid antifreeze" intended to give the ball more stability of motion during play and provide better performance during cold temperatures. The '906 patent is based on an application filed March 21, 1994. Shortly after that date, an application was filed by another inventor for a similar fluid-filled street hockey ball, which matured into U.S. Patent No. 5,516,098 ("the '098 patent"). The '098 patent, which issued almost two years before the '906 patent, was assigned to Sun.

In the late 1990s, Gentile alerted Gill that Sun's fluid-filled street hockey ball potentially infringed the forthcoming '906 patent and attempted to negotiate a license. Those negotiations failed. After the '906 patent issued, Gentile again notified Gill and Sun of their infringement.

The instant lawsuit was Gentile's second effort to enforce the '906 patent in this district. The target of his first effort was another marketer of fluid-filled street hockey balls, Franklin Sports ("Franklin"), who was a licensee of Sun under the '098 patent. On July 1, 2002, the court granted summary judgment of infringement for Gentile, finding that the fluid in Franklin's ball constituted "antifreeze" per the '906 patent. On September 23, 2003, the court granted summary judgment for Gentile on Franklin's validity challenge to the '906 patent.

Judge Gertner took the September 2003 ruling as a clear signal to Gill and Sun, given the licensing arrangement with Franklin and the identity of the products, that their street hockey ball also infringed the '906 patent. Prior to the damages trial, Judge Gertner ruled that the '906 patent is valid, that defendants infringed it directly, and that they infringed it indirectly via the license to Franklin. Default judgments were entered against the Sun defendants for lack of legal representation; Gill proceeded pro se.

Judge Gertner awarded plaintiffs a royalty of $0.34 per ball—the same royalty that Franklin paid Sun pursuant to its license. Plaintiff and defendants argued for different royalty rates based on numbers floated during prior negotiations, but the court determined that the royalty ultimately negotiated with Franklin was more reflective of a reasonable royalty than the parties' respective negotiation starting numbers.

The bulk of the decision focused on determining the number of infringing street hockey balls actually distributed by defendants during the relevant time period. Defendants provided an estimate, but could not corroborate it because they had destroyed their records when Sun folded in 2003. Judge Gertner noted that the destruction of records happened after notice of Gentile's potential lawsuit and therefore drew an inference that the destroyed records would have harmed defendants' case. As a result, she determined that the number of balls defendants should be held responsible for should be the same as that distributed by Franklin—930,221. Adding the balls actually distributed by Franklin to the estimated number distributed by defendants, the number of infringing balls came to 1,860,442 at $0.34 per ball, or $632,550.28 in royalties.

Judge Gertner then trebled that number for Gill's willful infringement. As evidence of willfulness, Judge Gertner cited the fact that defendants continued to manufacture infringing balls even after the September 2003 order in plaintiff's case against Franklin. She also noted that Gill tried to hide this fact by destroying Sun's sales records. And, she cited Gill's credibility on the stand and his overall litigation conduct, including not answering the complaint, misrepresenting that he would obtain corporate counsel for Sun and then failing to do so, and agreeing to mediation but not appearing for it.

Akamai Technologies, Inc. v. Limelight Networks, Inc., Civil Action No. 06-11109-RWZ, Memorandum & Order (D. Mass. April 24, 2009) (Zobel, D.J.) [Inequitable Conduct, Laches, Equitable Estoppel, Joint Infringement].

The District Court (Zobel, D.J.) denied the defendant's motions seeking relief from a jury finding of patent infringement and the court's earlier denial of judgment as a matter of law ("JMOL") on the basis of inequitable conduct, laches, and equitable estoppel. Judge Zobel, however, granted the defendant's motion with respect to the issue of joint infringement, reversing the jury's verdict in light of Federal Circuit precedent decided post-trial.

Plaintiffs Akamai Technologies, Inc. and the Massachusetts Institute of Technology ("Akamai") sued the defendant Limelight Networks, Inc. ("Limelight") for infringement of U.S. Patent No. 6,108,703 (the "'703 patent"), titled "Global Hosting System." The '703 patent is directed inter alia to content delivery services provided over a content delivery network ("CDN") to aid content providers in providing news/entertainment websites, among other content, to end users' web browsers over the Internet. The '703 patent describes, in part, particular "page splitting" techniques that modify a Domain Name System ("DNS") to redirect hostnames entered by an end user's web browser to alternate servers. The alternate servers store particular page objects (e.g., data intensive video or audio files) associated with a website, enhancing the speed by which an end user's web browser can access information.

On February 28, 2008, a jury found that Limelight infringed claims 19-21 of the '703 patent, awarding Akamai $41.5 million dollars in damages. Subsequently, a number of post-trial motions were filed. Selected issues are examined below.

Inequitable Conduct

Limelight alleged that the '703 patent was unenforceable because Akamai committed inequitable conduct by (1) intentionally failing to meet its duty to investigate the prior art of its competitor Sandpiper Networks, Inc. ("Sandpiper"); and (2) intentionally withholding material information regarding Sandpiper's Footprint 1.0 CDN from the U.S. Patent and Trademark Office ("PTO") during the prosecution of the '703 patent.

The court began by making a number of evidentiary rulings, which supported the notion that at least one of the inventors of the '703 patent knew of an alternative, patent pending, page splitting content delivery system known as the Footprint 1.0 system as early as September 1998.

Following the evidentiary rulings, Judge Zobel held that Sandpiper's Footprint 1.0 system was material to the prosecution of the '703 patent, and should have been disclosed to the PTO. While recognizing that the '598 patent and the Footprint 1.0 system utilized a different page splitting methodology for delivery of page objects requested by an end-user, the court concluded that the '598 patent's disclosure and Footprint 1.0 "attempted to solve the same synchronization problem that the '703 [patent] sought to solve in much the same way." Moreover, the inventors of the '703 patent viewed the Footprint 1.0 system as direct competition to their content delivery system and expended significant effort to investigate and reverse engineer the Footprint 1.0 system.

Despite the "material" nature of the withheld system, the court found that Limelight failed to show by clear and convincing evidence that Akamai made a deliberate decision to withhold information from the PTO. Judge Zobel appeared to credit the '703 inventor's testimony that though he was aware of the Footprint 1.0 system, the relevance of Footprint 1.0 to the '703 patent was lost because Footprint 1.0 used IP addresses instead of hostnames and he believed that Footprint 1.0, by not using DNS to distribute requests for page objects, would suffer from the same problems as other known systems.

With regard to Akamai's patent attorney, the court was unconvinced that intent could be inferred from his failures to disclose even though such failures were "troubling."

Laches And Equitable Estoppel

Defendant Limelight also argued that Akamai's infringement action should be barred under a laches defense because (i) Akamai delayed filing of the lawsuit for five years and reasonably should have known of its claim against Limelight and (ii) such delay prejudiced Limelight by preventing them from developing other business opportunities. Limelight further asserted an equitable estoppel defense, arguing that Akamai intentionally misled Limelight before the initiation of the infringement suit when negotiating a possible merger between the companies. The court denied both defenses.

With respect to the laches claim, the court found the delay between Akamai's learning of Limelight's infringing technology and the filing of suit was at most 14 months. Thus, no unreasonable delay in filing suit took place. Limelight argued that the delay was five years, stemming back to October 2001 when Akamai first learned of Limelight's competing service. The court found, however, that though the pre-2005 evidence suggested that Akamai viewed Limelight as a potential competitive threat, none of the evidence suggested that Akamai believed that Limelight infringed any of Akamai's patents. The court also found that Akamai did not have a duty to investigate Limelight's content delivery network in 2001 based on Limelight's mere announcement of a competing service. When Limelight and Akamai engaged in their first potential merger negotiations in 2004, Limelight described its content delivery service as allocating servers on a round robin basis. Without an indication that a modified DNS system was used, the court concluded that Akamai did not have a duty to investigate Limelight's system.

Furthermore, the court found that Limelight failed to show it was unduly prejudiced by Akamai's delay in bringing suit, even if the delay could be deemed unreasonable.

In a similar manner, the court dispatched Limelight's equitable estoppel defense. With regard to the 2004 negotiations, Akamai did not assert at trial that Limelight's earlier use of the round robin method of selecting a server violated the '703 patent. Accordingly, Akamai's silence could not be considered conduct to mislead Limelight. Also, even though Akamai concluded that Limelight's new system infringed the '703 patent before the 2006 negotiations, Akamai still had no obligation to warn Limelight before suit. The court reinforced its position by referring to statements made by Akamai to Limelight during the 2006 negotiations that Akamai had "a very hard patent portfolio, and that anyone operating its Content Delivery Network the way Limelight was operating its Content Delivery Network certainly came through that patent portfolio." Accordingly, the court concluded that Akamai did not deliberately mislead Limelight into believing if would not be sued for infringement.

Joint Infringement

Limelight moved for reconsideration of the court's earlier decision to deny defendant's motion for JMOL in light of the Federal Circuit's opinion in Muniauction, Inc. v. Thomson Corp. 532 F.3d 1318 (Fed. Cir. 2008), which was decided two weeks after the denial. In particular, Limelight argued that Akamai's proof of whether Limelight directs or controls every step of the asserted claims of the '703 patent was insufficient to support the jury's conclusion of infringement in light of Muniauction. Limelight did not itself perform every step of the claims of the '703 patent. Instead Limelight entered into a contractual relationship with its customers, providing them instructions of how to modify their webpages, or Internet address routing information, to utilize Limelight's content delivery service.

At trial, the parties relied on the Federal Circuit's opinion in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), to address the issue of direct infringement by multiple parties performing different steps of a single patented process. In BMC Resources, the Federal Circuit held that infringement requires a showing that a defendant has practiced each and every element of the claimed invention, though a party cannot avoid infringement by contracting out steps of a patented process to another entity if it directs or controls the actions of that entity. BMC Resources left open the possibility that direction or control sufficient for a finding of direct infringement might exist where an accused infringer provides data, along with instructions or directions for the use of that data, to another entity. In light of the Federal Circuit's decision in Muniauction, the court reversed its earlier holding of infringement based on Limelight's contractual relationships and the directions it provided to customers. The court found no material difference between Limelight's interaction with its customers and the defendant's actions in Muniauction, in which a bond issuer performed a majority of steps of an allegedly infringed patent claim, but relied on a separate entity to input data into its computer. Judge Zobel found that, like Limelight, the defendant in Muniauction entered into an arms-length contract negotiation in which it provided a service in exchange for payment. She distinguished this type of relationship from one in which a contract obligates performance of steps of a patented process on a mastermind's behalf. Accordingly, the court rejected Akamai's argument that Limelight's customers are under a contractual obligation to implement Limelight's content delivery method, stating that "the existence... of a contract for services does not give rise to direction or control, even if the customer must perform one or more steps of the patented process in order to receive the benefit of those services." Though Akamai argued that there was no other purpose for Limelight to provide a hostname to a customer other than to perform a step that led to infringement of the '703 patent, the court noted that the same argument was raised and rejected in Muniauction. The court held that a customer wishing to avail itself of a service is not under a contractual obligation for the purposes of finding direction or control.

Atlantic Research Marketing Sys., Inc. v. Troy, C.A. No. 07-11576-PBS, 2009 U.S. Dist. LEXIS 37822 (D. Mass. May 5, 2009) (Saris, D.J.) [Claim Construction].

The District Court (Saris, D.J.) construed several claim terms in the patents-in-suits, relating to handguards for weapons.

Two terms construed in U.S. Patent No. 7,216,451 (the "'451 patent) were "openings" and "holes." Looking to both the specification and The American Heritage Dictionary, the court distinguished these terms on the basis that an opening has both an entrance and an exit as opposed to a hole, which has an entrance but not necessarily an exit (i.e., it may have a bottom). Judge Saris found the specification, suggesting that a fastener could be inserted through an opening and then into a hole, telling.

With respect to U.S. Patent No. 6,499,245 (the "'245 patent"), the parties asked the court to interpret, among others, the phrases "upper handguard piece" and "U-shaped." The plain meaning of "upper handguard piece" was found to be controlling—that is, "the portion situated above the barrel." Defendants pressed the argument that the term required attachment to the upper receiver via a receiver sleeve. The court, however, rejected this limitation despite the patent's definition of the "present invention" as including this attachment means it did so based upon a review of the prosecution file history. It also noted that construing "upper hand guard piece" as not requiring attachment via a receiver sleeve also satisfies the doctrine of claim differentiation. As to "U-shaped," despite expert testimony, Judge Saris construed the term simply to mean "shaped like the letter U."

Inner-Tite Corp. v. Dewalch Technologies, Inc., C.A. No. 04-40219-FDS, Findings of Fact & Conclusions of Law (D. Mass. May 21, 2009) (Saylor, D.J.) [Infringement].

The District Court (Saylor, D.J.) addressed the issue of patent infringement in an action filed by plaintiff Inner-Tite Corp ("Inner-Tite") against defendant Dewalch Technologies, Inc. ("Dewalch"). The case was tried to a court without a jury, and the court entered judgment in favor of Dewalch and found no literal infringement or infringement under the doctrine of equivalents.

Inner-Tite brought suit against Dewalch alleging infringement of U.S. Patent No. 6,763,691 (the "'691 patent"), which generally discloses a locking device for securing electric utility meter boxes. The language at issue in claim 1 of the '691 patent involves a "clamping member" that moves between first and second flanges of the locking device. The court construed the language to require (1) mechanical parts that open and close to grip or crush something, (2) mechanically interengaged with and carried by a bracket, (3) for movement in the space separating the two flanges.

In analyzing both literal infringement and infringement under the doctrine of equivalents, Judge Saylor focused on the movement of the clamping member between the two flanges. He found that, while the Dewalch product does include mechanical parts that open and close, the clamping member of the ProLock product did not move between the first and second flanges of the device. In coming to this conclusion, the court looked to the preamble of claim 1 of the '691 patent, which required the locking device be used with a meter box. Thus, the fact that the clamping member of the ProLock could be made to move between the flanges when used on its own or placed improperly on a meter box was irrelevant as the device must be used with a meter box during its operation to infringe the claim. Accordingly, the court found no literal infringement.

Judge Saylor next analyzed whether or not infringement under the doctrine of equivalents was precluded by prosecution history estoppel or by claim vitiation. Prosecution history estoppel did not allow Dewalch to avoid infringement because, as the court explained, arguments made during prosecution must be viewed in context. The only statements at issue that were made during prosecution of the '691 patent involved an argument over a prior art reference, stating that movement of a component of the prior art between flanges was lacking. The court noted that this argument was made to explain the movement of the clamp member, not specifically that the movement occurs between the flanges. Thus, the court found this statement did not narrow the scope of claim 1 and prosecution history estoppel did not apply.

In looking at the issue of claim vitiation, the court applied the totality of the circumstances test and used the following list of factors in its analysis: the simplicity of the structure, the specificity and narrowness of the claim, the forseeability of variations at the time of filing, and whether differences between the claim and accused device are subtle difference of degree or clear substantial differences or differences in kind. The court found that many of the factors favored Dewalch. Specifically, the simplicity of the structure of the device made it easy to determine the location of the parts, the claims were specific and narrow as they included directional limitations regarding the movement between the flanges, and the forseeability of the narrow construction of the term "between" in describing the motion of the clamping member all favored the defendant. In addition, the movement around the flanges in the ProLock device is different in kind from movement between the flanges in claim 1 of the '691 patent, which also favors the defendant. The court found that claim vitiation bars the application of the doctrine of equivalents as its application to a device with a clamp member moving around flanges would render the language in claim 1 that requires the clamp member to move between the flanges meaningless.

FEDERAL CIRCUIT SPOTLIGHT

Ariad Pharms., Inc. v. Eli Lilly and Co., 2008-1248 (Fed. Cir. April 3, 2009) [Written Description; Inequitable Conduct].

This is an appeal from the United States District Court for the District of Massachusetts in case No. 02-CV-11280-RWZ. Reversing the jury's verdict and the lower court's denial of judgment as a matter of law, the Federal Circuit held certain claims of the patent-in-suit invalid for lack of written description under 35 U.S.C. § 112. It also upheld the court's finding of no inequitable conduct.

The patent-in-suit, U.S. Patent No. 6,410,516 (the "'516 patent"), concerns gene regulation and a specific transcription factor that assists cells in surviving harmful extracellular influences. While the transcription factor's activity is beneficial to the cell, it can be harmful in excess. The inventors of the '516 patent realized that by reducing activity of this factor that harmful symptoms caused by excessive activity could be ameliorated.

Defendant Eli Lilly and Co. ("Lilly") argued that the single step method of reducing the transcription factor's activity was not supported by written description because the specification of the '516 patent failed to adequately disclose just how the reduction could be achieved. The Federal Circuit held that merely reciting compounds to achieve reduction is insufficient. "To satisfy the written description requirement for the asserted claims, the specification must demonstrate that Ariad possessed the claimed methods by sufficiently disclosing molecules capable of reducing NF-kB activity. The specification must present evidence to "satisfy the inventor's obligation to disclose the technologic knowledge upon which the patent is based, and to demonstrate that the patentee was in possession of the invention that is claimed."

Moreover, the hypothesis that three classes of molecules may perform the method step is insufficient. The Federal Circuit found such hypothesis an "invitation for further research" and not a written disclosure of any specific activity inhibitor. It noted that because Ariad pursued such broad claims during the claim construction phase of the case, that it now had no reason to complain that the specification did not support these claims under § 112.

Lilly also appealed the district court's ruling that it failed to establish inequitable conduct. Focusing almost exclusively on the question of the quantum of evidence needed to prove intent, the Federal Circuit found that Lilly fell short. Notably, the court held that "Lilly cannot prove deceptive intent by clear and convincing evidence simply by relying on the materiality of errors. Echoing the holding in Star Scientific v R.J. Reynolds Tobacco Co., 537 F.3d 1357 (Fed. Cir. 2008), it warned that the finding of inequitable conduct should not be made lightly. Accordingly, Federal Circuit affirmed the lower court's finding of no inequitable conduct.

TRADEMARK

Steele v. Turner Broadcasting Sys., Inc., No. 08-11727-NMG, 2009 WL 1027458 (D. Mass. April 3, 2009) (Gorton, D.J.) [Origin of Goods].

The District Court (Gorton, D.J.) dismissed pro se Plaintiff Bartley Steele's Lanham Act claim alleging that defendants "palmed off" his creative work by not giving him credit as the song's true creator.

Steele, a songwriter and musician who wrote a "love anthem" about the Boston Red Sox titled "Man I Really Love This Team," received federal copyright registration for the song at issue. Defendant Turner Broadcasting System, Inc., ran a television advertisement during the 2007 Major League Baseball post-season that featured a song by the band Bon Jovi titled "I Love This Town." Steele claimed that the advertisement was unlawfully derived from his song and that defendants failed to give him credit as the true creator.

While Steele's copyright infringement claim survived, the court found Steele's Lanham Act claim meritless. It relied on the Supreme Court holding in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), explaining that the provision of the Lanham Act that prohibits conduct that could create confusion about the "origin of goods" only protects the "producer" of tangible goods and not the author or artist whose work is contained in the goods. Since Steele did not claim to be a producer of any tangible goods distributed by the defendants, he failed to state a claim under the Lanham Act.

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