IP Update, Vol. 10, No. 5, May 2007
May 2007
Patents / Obviousness - Supreme Court Reverses Federal Circuit, This Time on Obviousness
Patents / Obviousness - Federal Circuit Enters the Post-KSR Obviousness Era
Patents / Litigation - Claim Construction and Estoppel Cut a Wide Path
Patents / Litigation - Final Does Not Always Mean Final
Supreme Court Reverses Federal Circuit, This Time on Obviousness
By Paul Devinsky and Amanda E. Koenig
A unanimous U.S. Supreme Court criticized application of the Federal Circuit’s “teaching, suggestion or motivation” (TSM) test for obviousness. While describing the TSM test, originally articulated by the Court of Customs and Patent Appeals (the Federal Circuit’s predecessor) as a “[h]elpful insight[],” the Supreme Court sharply criticized the Federal Circuit for its “narrow conception of the obviousness inquiry reflected in its application of the TSM test.” KSR International Co. v. Teleflex Inc., 2007 Wl 1237837 (Supreme Ct., Apr. 30, 2007) (Kennedy, J.).
Background
The patent at issue relates to an adjustable gas (throttle) pedal assembly in combination with an electronic control. Instead of mounting certain electronic sensors for engine control on the gas pedal, the patent placed the sensors mounted on the vehicle body adjacent to the pedal. The issue was whether the claimed invention was obvious under 35 U.S.C. § 103.
The district court granted summary judgment in favor of KSR on the basis that the claim at issue was invalid for obviousness. On appeal, the Federal Circuit reversed, holding that the district court had applied the TSM test too broadly by failing to make “finding[s] as to the specific understanding or principle within the knowledge of a skilled artisan that would have motivated one with no knowledge of [the] invention … to attach an electronic control to the support bracket of the [prior art] assembly.” To support motivation, the Federal Circuit said the prior art references must address “the precise problem that the patentee was trying to solve.”
In the alternative, the Federal Circuit reversed the grant of summary judgment on the basis that there existed a genuine dispute over an issue of material fact, the only evidence of which was expert testimony in the form of an affidavit.
The Supreme Court Decision
The Supreme Court’s overarching theme was a criticism of the Federal Court’s application of the TSM test in light of previous jurisprudence, not a criticism of the test itself: “The flaws in the analysis of the Court of Appeals relate for the most part to the court’s narrow conception of the obviousness inquiry reflected in its application of the TSM test.” Specifically, the Supreme Court concluded that the Federal Circuit’s analysis in this case had improperly focused on the motivation and avowed purpose of the patentee. Instead, it held, “[w]hat matters is the objective reach of the claim.”
Combination of Elements / Analogous Art
In reviewing its own precedent, the Supreme Court reminded us that in its view “[t]he combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” Thus, evidence of unexpected results is likely to become a more important bellwether of non-obviousness when a case of prima facie obviousness is present. Moreover, in a passage likely to be oft quoted by those challenging patentability, the Supreme Court observed that “[w]hen a work is available in one field of invention, design incentives and other market forces can prompt variations of it, either in the same field or a different one. If a person of ordinary skill can implement a predictable variation, section 103 likely bars patentability.” This may open the door to new and broader “analogous art” arguments in an area that had been thought to be well settled.
Presumption of Validity
The Supreme Court also called into question the strength of the presumption of validity in cases where prior art was not before the U.S. Patent and Trademark Office (USPTO) , noting that “[w]e need not reach the question whether the failure to disclose [a prior art reference] during the prosecution ... voids the presumption of validity given to issued patents, for [the] claim [in issue here] is obvious despite the presumption. We nevertheless think it appropriate to note that the rationale underlying the presumption—that the PTO, in its expertise, has approved the claim—seems much diminished here.”
TSM Test
The Supreme Court then went on to analyze the Federal Circuit’s application of the TSM test under the fact pattern at issue in the case, i.e., where the alleged infringer alleges obviousness by arguing that “there existed at the time of invention a known problem for which there was an obvious solution” and that that obvious solution is “encompassed by the patent’s claims.” The Supreme Court identified four principle flaws in the Federal Circuit’s analysis:
- First, it held that the “obvious solution” analysis should focus not on the problem the patentee was trying to solve but on the more general needs or problems facing the field of art. (“Under the correct analysis, any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.”)
- Second, in determining what prior art a person of ordinary skill in the art who is attempting to solve a problem will seek out, the analysis should not be limited to prior art directed only to that very same problem. In other words, as the Supreme Court noted, “[a] person of ordinary skill is also a person of ordinary creativity, not an automaton.”
- Third, contrary to a long line of Federal Circuit cases, obviousness may, in a context where the possible combinations and permutations are limited, be established by “showing that the combination of elements was ‘obvious to try.’”
- Finally, the Supreme Court criticized the Federal Circuit for exhibiting an almost obsessive concern to avoid falling prey to hindsight, a concern that led it to improperly “deny factfinders recourse to common sense.”
Obviousness as a Legal Determination
In the final section of the decision, the Supreme Court also addressed the Federal Circuit’s alternate ground for reversing the district court’s ruling on summary judgment: “…the existence of a dispute over an issue of material fact.” The Federal Circuit had based its finding on expert testimony proffered in an affidavit. While noting the propriety of taking expert testimony into account when considering summary judgment, the Supreme Court highlighted the fact that obviousness is a legal determination based on specific factors: “…the content of the prior art, the scope of the patent claim, and the level of ordinary skill in the art.” Where those factors are not in dispute, summary judgment is appropriate. “Conclusory” statements by experts to the contrary should not dictate otherwise.
Conclusion
While the impact of the Supreme Court’s decision is bound to be widespread, its anticipated severity is uncertain. In its decision, the Court itself noted that two subsequent (2006) Federal Circuit cases, DyStar Textilfarben GmbH & Co. Deutschland KG v. C. H. Patrick Co. (IP Update, Vol. 9, No. 10) and Alza Corp. v. Mylan Labs., Inc. (IP Update, Vol. 9, No. 9), have applied the TSM test much more broadly and flexibly than in the KSR case and perhaps in a manner more consistent with Supreme Court precedent. However, the Supreme Court noted that these cases were “not before [it] and do not correct errors of law … in this [KSR] case.”
In the future, patents are likely to be subject to more rigorous challenges under the obviousness statute. The immediate sequela to the KSR decision came on May 3, 2007, when the deputy commissioner for patent operations, Margaret Focarino, issued an instruction to examiners telling them that when formulating an obvious rejection based on a combination of prior art references, examiners should “identify the reason why a person of ordinary skill in the art would have combined the prior art elements in the manner claimed.”
The Legend of the Golden Master Lives On—Supreme Court Limits the Reach of § 271 (f)
By Paul Devinsky and Anish R. Desai
Continuing a string of reversals of Federal Circuit decisions, the U.S. Supreme Court once again reversed the Federal Circuit in holding that under 35 U.S.C. § 271 (f) software per se does not qualify as a “component” and that software copies created outside the United States from a master disk exported from the United States are not “supplied” from the United States. Microsoft Corp. v. AT&T Corp., Case No. 04-1350 (Supreme Ct., Apr. 30, 2007) (Ginsburg, J.; Alito, J., joined by Thomas, J. and Breyer, J., concurring in part; Stevens, J., dissenting).
Background
In 1984, Congress enacted § 271 (f) in direct response to the Supreme Court’s decision in Deepsouth Packing Co. v. Laitram Corp. (1972). In Deepsouth, the defendant, Deepsouth, conceded that the Patent Act barred it from making and selling its shrimp deveining machines in the United States. However, Deepsouth argued that no U.S. law prohibited it from making parts of the deveining machine in the United States and selling the parts to foreign customers for assembly abroad. The Supreme Court agreed with Deepsouth. The congressional response, § 271 (f), makes anyone who “supplies ... from the United States … components of a patented invention ... in such a manner as to actively induce the combination of such components outside the United States ... liable as an infringer.”
AT&T sued Microsoft alleging that its Windows application infringed AT&T’s patent directed toward digitally encoding and compressing recorded speech. AT&T conceded that its apparatus claims were only infringed when the Windows software was loaded onto a computer (i.e., to create the claimed apparatus—a speech processing computer). Microsoft conceded that its Windows operating system incorporates software that when installed, enables a computer to process speech in the manner claimed in the AT&T patent. The master disk Microsoft sends abroad (from the United States) (a.k.a. Golden Master) is never installed on any computer. Rather copies are made of the master (overseas), which are installed in foreign-made computers.
In the proceedings below, the Federal Circuit determined that for purposes of § 271 (f), software code can be a “component” of a patented invention and that software replicated abroad from a master copy exported from the United States can be deemed “supplied” from the United States.
The Supreme Court: What Is a “Component”?
The Supreme Court held that software detached from a medium, such as a CD-ROM, cannot be a “component” under § 271 (f). It found the plain and ordinary meaning of “component” as used in the statute means “a constituent part,” “element” or “ingredient,” i.e., something that was combinable. The court concluded that “[a]bstract software code is an idea without physical embodiment, and as such, it does not match § 271 (f)’s categorizations: ‘components’ amenable to ‘combinations.’”
Declining AT&T’s argument based on the often used “blueprint” analogy (to software), the Supreme Court noted that “before software can be contained in and continuously performed by a computer … an actual physical copy of the software must be delivered by CD-ROM or some other means capable of interfacing with the computer.”
The Supreme Court invited Congress to remedy the situation if it thought § 271 (f) as enacted was too narrow. “Congress … might have included … not only combinable ‘components … but also information, instruction or tools from which those components readily may be generated.’ It did not.” Continuing on the this-is-a-matter-for-Congress theme, the Court later noted that any “alteration [in § 271 (f)] should be made after focused legislative consideration, not by the Judiciary forecasting Congress’ likely disposition.”
When Is a “Component” “Supplied” from the United States?
The Supreme Court concluded the “foreign-made” copies of Windows were “supplied” from “places outside the United States” and that this conclusion logically followed from its holding that software is only a “component” once wedded to a physical medium. Even conceding the correctness of the Federal Circuit’s finding that a “master sent abroad … differs not at all from the exact copies, easily, inexpensively and swiftly generated from the master,” the Court determined that such copies are not “supplied” from the United States. Citing with approval Judge Rader’s dissent (in the Federal Circuit), the majority reasoned that supplying and copying are separate activities with wholly different consequences and that there is nothing in § 271(f) that “renders ease of copying a relevant, no less decisive, factor in triggering liability for infringement.”
Like the majority of the Federal Circuit, Justice Stevens (in dissent) viewed the subject software application no less a component simply because a CD-ROM or electronic transmission is used for distribution purposes.
Extraterritoriality
The sine qua non of the Supreme Court’s decision appears to lie in its strict construction of § 271 (f) on the basis that any extraterritorial application of U.S. patent law ought to be narrowly construed. As it stated: “The absence of anything addressing copying in the statutory text weights against a judicial determination that replication abroad of a master dispatched from the United States ‘supplies’ the foreign-made copies from the United States.”
In inviting AT&T to pursue its rights in jurisdictions where the copying occurred, the Court noted the U.S. patent law “governs domestically but does not rule the world.” Citing Deepsouth, the Court reiterated that “our legislation ‘does not, and was not intended to operate beyond the limits of the United States.’” Rather, to the extent § 271 (f) addressed an issue of extraterritorial application, it must be construed narrowly: “… foreign law alone, not United States law, currently governs the manufacture and sale of components of patented inventions in foreign countries. If AT&T desires to prevent copying in foreign countries, its remedy today lies in obtaining and enforcing foreign patents.”
Footnote 14
Justice Ginsberg’s opinion of the Court includes a footnote that prompted the concurring opinion of Justice Alito (joined by Justice Thomas and Justice Breyer). In that footnote, the Court noted that its decision did not reach the issue of whether the master disc (shipped from the United States), if installed directly into a foreign computer, would create liability under § 271 (f). As Justice Alito pointed out (in his concurring opinion), “no physical aspect of a Windows CD-ROM—original disk or copy—is ever incorporated into the computer itself.” Justice Alito (citing to Websters), took the position that in order to be a “component of a machine” there “must be something physical,” else there is nothing to be “combined” with other components. From that perspective, Justice Alito takes the position that code, disembodied from a media (e.g., CD-ROM) can never be a “component” under § 271 (f). Left for another day is the issue raised by the Court in oral argument but side-stepped here, of whether software code, aside from some physical embodiment containing it, can even be patented.
Federal Circuit Enters the Post-KSR Obviousness Era
By Paul Devinsky
With the Supreme Court decision in KSR v. Teleflex barely ten days old, the U.S. Court of Appeals for the Federal Circuit, looked to the “goal” of a claimed invention and held that the invention would have been obvious over a combination of references and the knowledge of one of skill in the art. Leapfrog Enterprises, Inc. v. Fisher-Price and Mattel, Inc., Case No 06-1402 (Fed. Cir., May 9, 2007) (Laurie, J.)
In the district court, the claimed invention, directed to a processor-based phonics device to teach reading skills to children, was found to be obvious over prior art that consisted of a prior art reference describing an electro-mechanical toy (Bevan) that was designed to teach children to read based on the association of letters with their phonetic sounds, a prior act electronic, processor-based Texas Instruments (TI) device known as Super Speak & Read (SSR) and the knowledge of one of skill in the art. Leapfrog appealed.
On appeal, Leapfrog argued that the district court engaged in improper hindsight in reaching its conclusion of obviousness by concluding that all of the limitations of the claim are found in the prior art (since the claimed “reader” was not found in either reference and that since Bevan’s device is mechanical (and thus different in structure and interrelation from the electronic components recited in the claim) it lacked the claimed functionality and that “there was inadequate evidence in the record to support a motivation to combine Bevan, the TI SSR, and a reader to arrive at the invention.” Finally, Leapfrog argued that the district court did not properly consider the strong evidence of secondary considerations of non-obviousness.
Fisher-Price countered that the claimed invention was simply a Bevan-type device updated with modern electronics that were common by the time of the alleged invention, and “that particularized and specific motivations to combine need not be found in the prior art references themselves in the context of an improvement that arises from a desire to generally improve a known device (e.g., to make the product smaller, lighter, or less expensive) using newer technology.”
The Federal Circuit opened its analysis citing to its own authority (not KSR), noting that “[o]bviousness is a question of law, reviewed de novo, based upon underlying factual questions which are reviewed for clear error following a bench trial.” The Court then affirmed the district court on obviousness, citing to the newly minted KSR decision: “An obviousness determination is not the result of a rigid formula disassociated from the consideration of the facts of a case. Indeed, the common sense of those skilled in the art demonstrates why some combinations would have been obvious where others would not.” See KSR Int’l Co. v. Teleflex Inc.: “The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.”
Bowing to the KSR methodology, the Court noted that “the goal of the [claimed] device was to allow a child to press a switch associated with a single letter in a word and hear the sound of the letter as it is used in the word. In this way, the child would both associate the sound of the letter with the letter itself and be able to sound out the word one letter at a time to learn to read phonetically. Accommodating a prior art mechanical device that accomplishes that goal to modern electronics would have been reasonably obvious to one of ordinary skill in designing children’s learning devices. Applying modern electronics to older mechanical devices has been commonplace in recent years.”
In lieu of even mentioning the TSM (“teaching, suggestion, motivation”) test that was at the heart of the KSR appeal, the Court noted that “one of ordinary skill in the art of children’s learning toys would have found it obvious to combine the Bevan device with the SSR to update it using modern electronic components in order to gain the commonly understood benefits of such adaptation, such as decreased size, increased reliability, simplified operation, and reduced cost. … The combination is thus the adaptation of an old idea or invention (Bevan) using newer technology that is commonly available and understood in the art (the SSR).”
Missing Element
Acknowledging that the combination of Bevan and the SSR did not include an element of claim, i.e. “reader,” the Court agreed with the district court that “readers were well-known in the art at the time of the invention” and, “ that the reasons for adding a reader to the Bevan/SSR combination are the same as those for using readers in other children’s toys—namely, providing an added benefit and simplified use of the toy for the child in order to increase its marketability.” In a burden shifting some might find ominous, the Court then noted that the patent owner presented “no evidence that the inclusion of a reader in this type of device was uniquely challenging or difficult for one of ordinary skill in the art” or that the inclusion of a device commonly used in the field of electronics (a reader), and even in the narrower art of electronic children’s toys, represented an unobvious step over the prior art.”
Secondary Considerations
Noting that the district court explicitly stated “… that Leapfrog had provided substantial evidence of commercial success, praise, and long-felt need, but that, given the strength of the prima facie obviousness showing, the evidence on secondary considerations was inadequate to overcome a final conclusion that [the] claim … would have been obvious,” the Court concluded “we have no basis to disagree with the district court’s conclusion.”
Practice Note: Perhaps going beyond the KSR decision, the Federal Circuit, in requiring that the patent owner show that the missing element of the claim (the reader) was an “unobvious step over the prior art” may have now signaled it will impose an E. P. O. type “inventive step” hurdle for patent owners to overcome.
Product Inherently Anticipates Process Despite Lack of Disclosure on Necessary Conditions
By Astrid R. Spain
Over a vigorous dissent that shed light on the Court’s divergent inherent anticipation jurisprudence, a panel majority of the U.S. Court of Appeals for the Federal Circuit affirmed a finding of invalidity based on anticipation by inherency. In re Omeprazole Patent Litigation, Case Nos. 04-1562, -1563, -1589 (Fed. Cir., Apr. 23, 2007) (Rader J.; Newman, J., dissenting).
Omeprazole is sold by AstraZeneca under brand name Prilosec®, a drug that inhibits the production of gastric acid when administered within an enteric coating and an additional separating layer. AstraZeneca’s Patent No. 6,013,281 (the ’281 patent) claims the process of forming the pharmaceutical formulation that is composed of a core containing an active alkaline reacting compound (ARC), a water-soluble separating layer and an enteric coating layer. The separating layer is created by an in situ reaction between the enteric coating material and the ARC. Andrx sought to market a generic version of AstraZeneca’s drug, arguing that its product did not infringe the ’281 patent because the separating layer in Andrx’s generic version contained talc and was not water soluble. After a lengthy trial, the district court entered a final judgment finding that Andrx literally infringed the asserted claims of the ’281 patent, but also found the claims anticipated or obvious.
On appeal, Andrx argued that the district court erred in finding that its product infringes the ’281 patent because it does not have a water-soluble separating layer, but instead a layer composed of almost 50 percent talc. The Federal Circuit agreed with the district court, finding that the claim phrase “a water soluble salt,” permits the inclusion of talc. The Court pointed to evidence produced at trial with regard to related patents that also recite a water-soluble salt product despite the presence of a talc and to the ’281 patent’s five preferred embodiments, which state that they contain talc.
Turning to anticipation, the prior art at issue was a Korean patent application published two years before AstraZeneca’s earliest priority date. The patent issuing from that application had been the basis for a lawsuit in Korea between AstraZeneca and the Korean applicant, Chong Kun Dan Corp. (CKD). CKD’s Korean patent publications described compositions with no enteric coating processes. CKD maintained its enteric coating process—its “know how”—as a trade secret under Korean patent law. The CKD patent application purports to disclose an omeprazole formulation whose stability relies on the zwitterionic amino acids in the core. The CKD patent publication does not disclose any enteric coating process conditions or the basic details concerning enteric coatings. However, in the Korean action AstraZeneca relied on test results and argued that the formation of a separating layer naturally results from the CKD process. CKD’s scientists steadfastly maintained throughout that their formulation did not contain a separating layer. The Federal Circuit pointed to the trial record, which showed that the ingredients and protocols CKD provided in the Korean action necessarily resulted in in situ formation of a separating layer and concluded that the trial court correctly found inherent anticipation.
In a stern dissent, Judge Newman accused the panel majority of contravening a vast body of precedent and pointed to the undisputed fact that no reference explicitly or inherently teaches AstraZeneca’s claimed process.
Patents / Claim Construction / Willful Infringement
Exculpatory Opinion of Counsel Not Always a Defense to Willfulness
By Shamita D. Etienne-Cummings
In determining that the claims were entitled to broad, plain meaning interpretation and that an opinion of counsel did not serve as an automatic “good faith” shield, the U. S. Court of Appeals for the Federal Circuit deferred to a jury’s finding of willful infringement. Acumed LLC v. Stryker Corp. et al.. Case Nos. 06-1260, -1437 (Fed. Cir., Apr. 12, 2007) (Garjasa, J.).
In August of 2002, Stryker was in the process of developing an orthopedic nail having a curved shank. Orthopedic surgeons use shaped nails of this type to treat shoulder fractures by inserting the nail into a hole that is drilled into and down the shaft of the bone. Before offering its nail commercially, Stryker sought advice from its counsel to determine whether its orthopedic nail would infringe claims of Acumed’s patent. Both Stryker’s German and American counsel expressed concern that any curved nail would fall within the broad scope of Acumed’s patent claims. However, when asked for a formal opinion, Stryker’s American counsel opined that both the claims were not infringed and invalid and provided this opinion to Stryker in November of 2003. By the time Stryker received this favorable opinion, it had already sought FDA approval but had not yet made the nail available for sale commercially. In contrast to the opinion, a jury found that the nail infringed Acumed’s patent and that Stryker’s infringement was willful.
On appeal, Stryker argued improper claim construction for multiple patent terms to obviate the jury’s finding of infringement. In what has become a relative rarity in the post-Phillips world, the Court rejected each claim-narrowing argument, issuing a warning (honored more in the breach) that importing features of a preferred embodiment or from other dependant claims is improper when construing claim terms.
After rejecting Stryker’s claim construction arguments (and maintaining a relatively broad, plain meaning claim construction), the Court focused on whether Stryker’s opinion of counsel protected it against willful infringement. The Court noted that “[w]illfulness is not an all or nothing trait, but one of degree.” Because two independent attorneys expressed the same concern regarding inevitable infringement by any curved orthopedic nail and because, despite this advice, Stryker pushed forward and filed an FDA application months before obtaining the favorable non-infringement and invalidity opinion, Stryker’s opinion of counsel did not serve as an absolute shield against a finding of willful infringement.
Practice Note: Obtaining a favorable opinion of counsel is not an absolute defense against a claim of willful infringement. A timely competent opinion and actual reliance on that opinion is needed to provide a good-faith defense against a claim of willful infringement.
A Limitation in the Dependent Claim May Imply a Broad Meaning of a Claim Term in the Independent Claim
By Firasat M. Ali
The U.S. Court of Appeals for the Federal Circuit, in a claim-construction decision based on imposition of the often cited but seldom successful principle of claim differentiation, held that the claim term “intermediary” in the independent claim should be given broader interpretation than in a narrower, dependent claim. Intamin, Ltd. v. Magnetar Techs., Corp., Case Nos. 05-1546, -1579 (Fed. Cir., Apr. 18, 2007) (Rader, J.).
Intamin is the owner of a patent that relates to a magnetic braking system for an amusement park rides such as drop towers and roller coasters. Intamin’s patent discloses one embodiment of the braking system in which two magnets are separated by a gap allowing the creation of eddy currents. A conductor, attached to the amusement park ride, passes in the gap between the magnets (and therefore the eddy currents) to create magnetic “friction” that slows and ultimately stops the ride. Magnetar’s accused product has magnets joined with rows of epoxy, with one magnet abutting another, i.e., where the intermediary material is magnetic. The rows of magnets are positioned in a metal tube or track that is attached to a movable car.
The dispute involves claim interpretation of the term “intermediary” between the magnets. The district court, citing to the prosecution history and the non-magnetic embodiment in the specification, held that the term “intermediary” had to mean something other than a magnet. Since Magnetar’s intermediary was magnetic, the district court held (on summary judgment) that it did not infringe. Intamin appealed.
The Federal Circuit reversed, looking to a dependent claim that added a limitation specifying that the “intermediary is non-magnetic.” Basing its decision on claim differentiation, the Federal Circuit reasoned that the drafter perceived a distinction between non-magnetic and magnetic intermediaries and that the term “intermediary,” in the independent claim, was intended to embrace magnetic substances subject to the alternating polarity. The Federal Circuit also noted that the single embodiment referring to the intermediary being non-magnetic did not limit the entire invention, but rather that the term “intermediary” embraced more than the limited disclosure in the specification.
A second issue in the case related to the sufficiency of the Rule 11 analysis performed by Intamin. Magnetar argued that Intamin filed a frivolous claim since it did not obtain Magnetar’s magnetic braking product and physically cut it open to analyze whether the product infringed. The record showed that since Magnetar’s magnets were inside tubes, a visual inspection would not disclose the orientation of magnets within the tubes. The district court held that there was no blanket rule requiring a patentee to obtain and thoroughly deconstruct a sample of defendant’s product to satisfy its Rule 11 obligation. The court stated that although there have been instances where the patentee could have easily obtained a sample of the accused device for a nominal cost and should have done so, the accused product in this case was not easy to obtain and the technology involved was sufficiently complex to preclude a requirement that the casing be obtained, opened and deconstructed. The Federal Circuit agreed.
Claim Construction and Estoppel Cut a Wide Path
By Eric Hinkes
The U.S. Court of Appeals for the Federal Circuit reversed a finding of literal infringement, finding an erroneous claim construction and that there could not be infringement under the doctrine of equivalents because of prosecution history estoppel. PODS, Inc. v. Porta Stor, Inc., Case No. 06-1504 (Fed Cir., Apr. 27, 2007) (Dyk, J.)
PODS initially brought suit against Porta Stor alleging infringement of a patent relating to an apparatus and method for lifting and lowering a storage container in and out of a truck. The district court granted PODS a judgment (of infringement) as a matter of law (JMOL) at the close of evidence on the patent claims, on the grounds that one claim of the patent was literally infringed and that other claims were infringed under the doctrine of equivalents.
On appeal, Porta Stor argued that the district court erred in not construing the phrase “carrier frame” in one claim to have the same meaning as it did in other claims. The Federal Circuit, applying a “presumption that the same terms appearing in different portions of the claims should be given the same meaning unless it is clear from the specification and prosecution history that the terms have different meanings at different portions of the claims,” held that the term “carrier frame” should be defined as having four sides because of the parties’ earlier agreement that at least one claim containing that term required a four-sided carrier frame and that the only embodiments disclosed in the specification were four-sided. Based on this construction, the Court concluded that the accused device, which embodied a U-shaped or open-ended carrier frame, did not literally infringe.
The Court also denied resort to the doctrine of equivalents because of the patentee’s arguments, urged against a rejection of one claim, that it required a rectangular frame. The Federal Circuit maintained that prosecution history estoppel applied to all claims for a term which an argument was made to overcome prior art and that “PODS’s arguments during prosecution bar it from asserting that Porta Stor’s device infringed [a] claim … under the doctrine of equivalents.” The Court thus held that a competitor would reasonably believe that PODS had surrendered any claim to a frame that was not rectangular or four-sided in shape, including Porta Stor’s three-sided, U-shaped device. As to later added claims, the Court noted that “once an argument is made regarding a claim term so as to create an estoppel, the estoppel will apply to that term in other claims.”
Final Does Not Always Mean Final
By Anish R. Desai
The U. S. Court of Appeals for the Federal Circuit denied Philips’ petition for rehearing and affirmed its decision to issue a writ of mandamus directing a district court to stay its proceedings pursuant to 28 U.S.C. § 1659 until the parallel U.S. International Trade Commission (ITC) proceedings were no longer subject to judicial review. In re Princo Corp., Misc. Docket No. 841 (Fed. Cir., May 4, 2007) (Dyk, J.).
On March 1, 2007, the Court granted Princo’s petition for a writ of mandamus asking the Court to vacate the district court’s grant of summary judgment and stay the case pursuant to § 1659 until the related ITC proceedings were complete. (See “Exercising Authority to Issue Writs of Mandamus,” IP Update, Vol. 10, No. 3) In its petition for rehearing, Philips contended that the Court erred in construing the “becomes final” language of § 1659 to require finality on appeal. Philips argued that the language of 19 U.S.C. § 1337 (§ 337) which uses “becomes final” to mean finality at the Commission level required a similar interpretation of § 1659.
The Court quickly dispensed with Philips’ contention that “becomes final” should be interpreted similarly across the board, citing Clay v. United States, in which the Supreme Court held that the precise meaning of “finality” in a statute depends on context. The Court explained that § 337 and § 1659 were enacted at different times and for quite different purposes. The purpose of the provision in § 337 is to allow judicial review after final Commission action, while the purpose of § 1659 is to avoid duplicative proceedings. Unable to find an explicit connection between the two statutes, the Court denied rehearing and affirmed its construction of § 1659 set forth in the original opinion.
District Court Denies All Challenges to FDA Decision Concerning Rights to Market and Sell Generic Versions of Pfizer’s Norvasc®
By Philip Canelli
In a case involving generic versions of Pfizer’s high blood pressure drug Norvasc® (amlodipine besylate) and the availability and applicability of both 180-day generic drug exclusivity and pediatric exclusivity the United States District Court for the District of Columbia denied all requests for preliminary injunction related to amlodipine besylate tablets and supported the U.S. Food and Drug Administration’s (FDA) position concerning Mylan’s current status as holder of the only approved Abbreviated New Drug Application (ANDA) for all strengths of this product. In the decision, the district court confirmed the position taken by the FDA that all of the unapproved amlodipine besylate ANDAs are currently blocked from approval by pediatric exclusivity. Mylan Labs. et al. v. Leavitt et al., Case No. 07-579 (D.C. D.C., Apr. 30, 2007) (Urbina, J.)
Under the Federal Food, Drug, and Cosmetic Act , 21 U.S.C. § 301 et seq. (1994), a brand manufacturer (here Pfizer) is entitled to a period of pediatric exclusivity if, among other things, “in the patent infringement litigation resulting from the certification the court determines that the patent is valid and would be infringed.” In addressing the parties’ arguments, Judge Urbina held that since 21 USC § 355 a (c) (2) (B) is silent “as to the particular court which may determine the patent dispute,” the earlier order from the District Court for the Northern District of Illinois, in Pfizer v. Apotex, triggered Pfizer’s pediatric exclusivity and “is effective and remains so during the pendency of the appeal unless the district court’s judgment is stayed or until the Federal Circuit issues its mandate.”
The parties disputed whether Apotex is subjected to Pfizer’s period of pediatric exclusivity. Judge Urbina reasoned that § 355 a manifests a clear Congressional intent that pediatric exclusivity not block the approval of an ANDA where the ANDA applicant has prevailed in the Hatch-Waxman ANDA-triggered litigation under paragraph IV (where the generic drug manufacturer certifies that any applicable listed patent is invalid or not infringed). He concluded that the “FDA’s decision to exempt Apotex in light of its status as a prevailing party in challenging Pfizer’s patent is reasonable and is not contrary to the language in Hatch-Waxman.”
The court then turned to the FDA’s ruling that Apotex is the sole beneficiary of the Federal Circuit’s invalidity ruling regarding Pfizer’s Norvasc patent. Here, the court concurred with the FDA that because the Federal Circuit invalidated only three claims of Pfizer’s patent and left several claims untouched, Pfizer’s patent remains valid as to the remaining claims and is presumed to be properly listed in the Orange Book. Judge Urbina further agreed, that “[u]ntil Teva succeeds in its own patent litigation with Pfizer or until administrative or legal action completely de-lists Pfizer's patent from the Orange Book”, the FDA’s decision to withhold market approval for Teva’s generic drug remains in effect.
Finally, Mylan challenged the FDA’s ruling that its 180-day market exclusivity does not extend beyond the expiration of Pfizer’s patent. Mylan argued that “nothing in the text or legislative history of the Hatch-Waxman Act indicates that generic exclusivity is forfeited upon patent expiration.” Judge Urbina, however, held that under Hatch-Waxman, a paragraph IV certification is no longer valid upon patent expiration and must be converted to a certification under paragraph II, the portion of the statute relating to certification of a generic drug where the applicant asserts the proposed generic drug would not infringe as a result of patent expiration. At that time, a submitted ANDA becomes eligible for immediate approval.
Copyright / Copyrightable Subject Matter
Court Rejects Copyright Protection for Computer Program Found Lacking Originality
By Paul E. Poirot and Melise R. Blakeslee
A recent decision from the United States District Court for the Eastern District of Kentucky provides important guidance about the amount of creativity required to support copyright in a computer program and the nature of fair use in the context of interoperability. The court held that certain Lexmark software programs were not protected by copyright and that the use of those programs to achieve interoperability between devices was a protected “fair use.” Static Control Components, Inc. et al v. Lexmark International Inc., Case No. 5:04-cv-00084-GFVT (E. D. Ky., Apr. 18, 2007) (Van Tatenhove, J.).
Lexmark obtained copyrights on small programs that were used to measure toner in certain Lexmark printer cartridges. The binary code of these programs served as a lock-out code for the intended printers (i.e., if the printer could not read the specific combination of binary numbers from the inserted printer cartridge, the printer would not function).
When Static Control reverse-engineered the binary code to achieve interoperability between remanufactured cartridges and Lexmark printers, it unwittingly copied verbatim the executable aspects of the programs. Lexmark sued claiming copyright infringement. Static Control maintained that the programs embodied no creative expression and therefore, could not be protected by copyright.
Lexmark argued that its programs were sufficiently creative because it had made a series of design choices when writing the programs. Static Control contended, however, that the mere existence of alternatives cannot endow the Lexmark code with originality it otherwise did not possess.
The court determined that the programs did not have sufficient originality to warrant copyright protection. The district court observed that whether functional alternatives exist in the abstract is not the issue; rather, the issue is whether the programmers actually expressed sufficient originality when creating the programs. The court held that the Lexmark programmers did not.
Further, the district court found that Static Control’s use of the entire program was “fair” as a matter of law because “the purpose and character” of Static Control’s use of the programs did not result in Static Control profiting from exploiting the copyrighted work. There were actually two different purposes for the same computer code—as executable programs per se and as lock-out codes. Static Control only needed the string of binary numbers in their lock-out functionality in order to permit interoperability; it did not care about the toner measuring functions. As for any “creative” energy that may have been expended in writing the programs related to the measuring functions, Static Control was not seeking to benefit from it.
The Patent Reform Act of 2007: Patent Reform Legislation Aims to Harmonize the United States Patent System
By Rita Weeks and Paul Devinsky
On May 16, 2007, Congress took a significant step towards revamping the United States patent system when a House subcommittee approved the latest patent reform bill for further review by the full Judiciary committee.
In April 2007, Senators Patrick Leahy (D.-Vermont) and Orrin Hatch (R.-Utah), joined Representatives Howard Berman (D.-California) and Lamar Smith (R.-Texas) in introducing identical bills, H.R. 1908 and S. 1145, titled the “Patent Reform Act of 2007” (Act). The act would amend current law relating to patent procurement, enforcement and validity all intended (to address perceived inequities in patent infringement lawsuits as well as improving the quality of issued patents) as follows:
- Converting to a First-to-File System. The Act would bring the United States in international conformity by converting from a first-to-invent system to a first-to-file regime. The critical date for prior art would become the “effective filing date” of a patent application.
- Inventor’s Oath. The Act would allow the submission of a substitute statement in lieu of the inventor’s oath in circumstances in which the inventor is unable or unwilling to do so. Also, an assignee of an invention may file a patent application in its own name.
- Third-Party Prior Art Submissions. The Act would expand the ability of third parties to submit pertinent information to the United States Patent and Trademark Office (USPTO) regarding pending patent applications. Submission of prior art materials would be permitted prior to the earlier of the mailing date of a notice of allowance or either six months after pre-grant publication or the date of the first rejection of any claim by the examiner, whichever occurs later.
- Willful Infringement. Aiming to encourage engineers and others to review existing patents (without fear of later facing accusations of willful infringement), the legislation would limit willfulness to situations where there was a showing of “clear and convincing evidence” that either: the infringer had been put on specific notice of infringement by the patent owner; the infringer intentionally copied a patented technology; or a previous infringer repeats infringement. Willfulness would only be tried after there had been an adjudication of liability.
- Post-Grant Review. One of the most controversial proposals in the Act is the enactment of a post-grant review proceeding, expanding the ability of third parties to challenge an issued patent. The Act would allow any person to oppose a patent within 12 months after it is granted. Additionally, a party may challenge a patent at any time by showing a “substantial reason” that the continuing existence of the patent causes or may cause that party “significant economic harm.” The USPTO would establish rules and standards for post-grant review, including protections against misuse.
No statutory presumption of validity (as enjoyed by a patent during litigation) would apply during post-grant review at the USPTO. Rather, a “preponderance of the evidence” standard would be applied to make it easier to invalidate poor-quality patents. A party losing a post-grant challenge would be precluded from asserting the invalidity of the patent claim in subsequent litigation “on any ground which the cancellation petitioner raised during the post-grant review proceeding.”
- Damages Apportionment. The Act would significantly change the apportionment of patent damages. The court would be required to apply a reasonable royalty only to that economic value attributable to the patent’s specific contribution over the prior art. Damages would not be based upon the entire market value of a infringing product unless the claimant was able to establish that the patent’s specific contribution over the prior art was the predominant basis for market demand for the infringing product.
- Prior User Rights. The prior user defense, currently available to accused infringers of patents involving a “method of doing or conducting business,” would be expanded to apply to all patents. To take advantage of the defense, an accused infringer must have commercially used (or made substantial preparations to commercially use) the subject matter prior to the patent’s effective filing date.
- Venue and Jurisdiction. To discourage forum shopping, the Act would limit jurisdiction in patent cases to either the judicial district where either party has its principal place of business, the state in which either is incorporated or the district where the defendant has committed acts of infringement “and has a regular and established place of business.” Declaratory judgment actions brought by an alleged infringer are exempt from these restrictions (and remain subject to the jurisdictional pre-requisites of the Declaratory Judgment Act).
It is widely believed that the Patent Reform Act is likely to be signed into law during the present congressional session, although many changes may be made to some or all of the key provisions discussed above. While the bill received almost unanimous approval from the House subcommittee, several members raised various amendments that they would like to see instituted when the full committee meets. McDermott Will & Emery will continue to monitor the progress of the legislation and provide ongoing updates.
