United States: Considerations If Conceding Infringement Or Designing Around

A decision issued by the Federal Circuit earlier this year raises a few things to have in mind when considering whether to concede infringement and when planning to design around a patent.

In Proveris Scientific Corp. v. Innovasystems, Inc., 739 F.3d 1367, 109 U.S.P.Q.2d 1314 (Fed. Cir. 2014) Innovasystems, Inc. ("Innova") was sued by Proveris Scientific Corp. ("Proveris") for infringement of U.S. Patent No. 6,785,400 ("'400 patent"). The '400 patent is directed to "a mechanism for evaluating aerosol spray plumes" that "is used to observe the delivery of drugs that are administered through spray devices, such as inhalers or nasal sprays." Id. at 1315-1316. Specifically, Proveris accused Innova's Optical Spray Analyzer ("OSA") of infringing the '400 patent. While Innova conceded infringement of claims 3-10 of the patent, it challenged Proveris's allegations that it infringed claims 1 and 2 of the patent. Ultimately, a jury found that Innova did not infringe claims 1 and 2 of the patent. Nevertheless, in view of the fact that Innova conceded infringement of claims 3-10 of the '400 patent, the district court entered a permanent injunction that prohibited Innova from making, using, selling, offering for sale, or importing into the United States any Optical Spray Analyzer products. See id. at 1316.

Following entry of the injunction, Innova proceeded to redesign its Optical Spray Analyzer product and thereafter began to sell its Aerosol Drug Spray Analyzer. See id. Proveris, however, took issue with Innova's redesigned product and filed a motion to hold Innova in contempt for violation of the injunction that had been entered. Ruling in favor of Proveris, the district court entered an order finding that the Aerosol Drug Spray Analyzer was not "colorably different from the infringing OSA product and that it, too, infringed the '400 patent." Id.

Significantly, central to the infringement analysis was the meaning of the phrase "at a predetermined instant in time," which appeared in the preamble of claim 3 of the '400 patent. However, the district court reached its infringement ruling without first ruling on the meaning of this phrase. In particular, the district court explained that because Innova could have presented this disputed claim term during the claim construction phase of the case and chose not to, it would not interpret the phrase and it would not read the preamble as a limitation. Id.

Ultimately, the Federal Circuit ruled that the district court had failed to conduct the proper analysis. The Federal Circuit explained, "[i]n evaluating whether an injunction against continued infringement has been violated by a newly accused product, courts must follow the two-step test outlined in TiVo Inc. v. Echostar Corp., 646 F.3d 869 (Fed. Cir. 2011) (en banc)." Id. This analysis requires that "a party seeking to enforce an injunction must show that 'the newly accused product is not more than colorably different from the product found to infringe.'" Id. Additionally, "Where one or more of the elements previously found to infringe has been modified or removed, the court must determine whether that modification is significant." Id. If the product is more than colorably different, contempt is not the appropriate remedy, but instead, the patentee must bring a new action for infringement. See id. However, where the court concludes that the differences are not colorably different, the second step of the analysis is to determine whether the redesigned product infringes. See id. at 1316-17.

In this case, the Federal Circuit concluded that Innova's product was not colorably different and, accordingly, the second step of the analysis required the district court to determine infringement. However, in order for the court to rule on whether the product infringes, it must first construe disputed claim terms. Because the district court had refused to interpret the disputed claim term "at a predetermined instant in time" it had erred. While there is some support for holding that a district court ruling on a question of contempt is bound to follow its prior claim construction rulings, in this case, there was no previous determination made on this term because Innova had conceded infringement as to the particular claim. Accordingly, the Federal Circuit proceeded to remand to the district court to interpret the term and to rule on whether the new product infringed claim 3 of the '400 patent.

While there were a few additional aspects to this decision, the Court's discussion on the contempt issue was particularly interesting. The Federal Court's discussion brings to mind some of the things that should be thought about when contemplating a decision to introduce a newly designed product in the face of a prior infringement ruling and an injunction. In particular, where a design around is being introduced after an injunction is entered, one must think through whether the new product will be seen as "colorably" or significantly different. If it is not, the Court will go on to evaluate whether the new product infringes the asserted patent based on any previously entered claim constructions. Significantly, however, where a party is contemplating conceding infringement of certain claims and may seek to design around those claims, a party may, nonetheless want to consider pursuing claim constructions for disputed claim terms so that its design around will be more informed.

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.

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