IN THIS ISSUE
- Patent/Doctrine of Equivalents - En Banc Federal Circuit Bright Line Rule Precludes Application of Doctrine of Equivalents
- Patents/Biotech - Written Description Hurdle for Biotechnology Patents Raised to a New Level
- Patent/Litigation - Concession of Validity in Consent Judgment is Limited to Prior Infringing Product Only
- Copyrights/Ownership - Second Circuit Rethinks the Divisibility of Copyright Ownership
- Patent/Licenses - Bona Fide Purchaser Defense Does Not Apply to Non-Exclusive Licensees Not Receiving "All Substantial Rights" Under Patent
- Trademarks/Dilution - Don’t Gamble on Dilution Claim—Famous Building Façade Found to Be Protectable
- Patents/Litigation - Factual Dispute Created by Expert Testimony? No Summary Judgment
- Patents/Nonobviousness - Patentability Based on Numerical Differentiation Illustrative of Unexpected or Advantageous Results Will Hold Water
- Patents/Claim Construction - Federal Circuit Relies on Extrinsic Evidence in Adopting Broad Claim Construction
En Banc Federal Circuit Bright Line Rule Precludes Application of Doctrine of Equivalents
By Matthew Weil
The U.S. Court of Appeals for the Federal Circuit, in an en banc decision issued per curiam, has once again pruned back the doctrine of equivalents, ruling that a patentee cannot apply the doctrine of equivalents to cover unclaimed subject matter disclosed in the specification. Johnson & Johnston Associates Inc. v. R.E. Service Co., Case Nos. 99-1076, -1179, -1180 (March 28, 2002).
Johnson & Johnston Associate’s (JJA) patent claimed a component for the manufacture of printed circuit boards comprised of a tissue-like copper foil attached to an aluminum separator sheet. While the claims were explicitly limited to aluminum, the specification disclosed use of other metals, such as stainless steel. In the accused device, stainless steel was substituted for the aluminum. JJA sued for infringement under the doctrine of equivalents.
The JJA case required the district court to reconcile two Federal Circuit decisions arguably in some tension. In Maxwell v. J. Baker, Inc., the Federal Circuit relied on the "well-established rule that ‘subject matter disclosed but not claimed in a patent application is dedicated to the public’" to rule that the accused infringer could not, as a matter of law, infringe under the doctrine of equivalents by using a disclosed but unclaimed method. In a later decided case, YBM Magnex, Inc. v. Int’l Trade Comm’n, the Federal Circuit ruled that the doctrine of equivalents could be applied to reach a product with an ingredient present in a range allegedly disclosed, but not claimed. YBM Magnex distinguished Maxwell, pointing out that the patent specification at issue in Maxwell contained two "distinct . . . embodiments . . . fully described in the specification," whereas YBM’s patent specification did not. Agreeing with JJA that the case before it was more like YBM Magnex than Maxwell, the district court entered judgment on the jury’s verdict of willful infringement.
In a straightforward per curiam opinion, the Federal Circuit reversed the district court: "As stated in Maxwell, when a patent drafter discloses but declines to claim subject matter, as in this case, this action dedicates that unclaimed subject matter to the public. Application of the doctrine of equivalents to recapture subject matter deliberately left unclaimed would ‘conflict with the primacy of the claims in defining the scope of the patentee’s exclusive right.’... To the extent that YMB Magnex conflicts with this holding, this en banc court now overrules that case."
Practice Note: JJA complicates further still the patent prosecutor’s job. While a specification must still be written to be enabling, to disclose the best mode and to provide support for the claims, it must not go further and disclose subject matter not claimed. The patent drafter must scrutinize any language concerning possible alternate materials, configurations or approaches to make sure what is disclosed comes within the scope of at least one claim and, if it does not, either broaden the claims or strike the gratuitous language before submitting the application to the U.S. Patent and Trademark Office.
Written Description Hurdle for Biotechnology Patents Raised to a New Level
By Judith Toffenetti
A split panel of the U.S. Court of Appeals for the Federal Circuit recently issued an opinion that judicially legislates a new standard of written description compliance in biotechnology cases. Enzo Biochem, Inc. v. Gen-Probe, Inc., Case No. 01-1230 (Fed. Cir. April 2, 2002).
Enzo Biochem, Inc. (Enzo) is the assignee of U.S. Pat. No. 4,900,659 (the ‘659 patent), which discloses and claims nucleic acid probes for the detection of the microorganism that causes gonorrhea, Neisseria gonorrhea. Because of its high degree of sequence similarity to a related and commonly occurring microorganism, Neisseria meningitidis, detection of N. gonorrhea has proven extremely difficult. Enzo determined that a nucleic acid probe that preferentially recognizes six common strains of N. gonorrhea over six common strains of N. meningitidis at a ratio of greater than about five to one would be specific to N. gonorrhea and eliminate false positives in assays for gonorrhea. Enzo developed three probes that preferentially recognize six strains of N. gonorrhea over six strains of N. meningitidis at a ratio of greater than about 50 to one and deposited the probes with the American Type Culture Collection (ATCC). Each of the Neisseria strains was also deposited at the ATCC. The ‘659 patent, while incorporating the deposited probes by reference did not provide the nucleotide sequence of the probes; the description of the probes was limited to their preferential recognition of the six Neisseria strains and approximate size. The ‘659 patent did disclose the hybridization specificities of the claimed probes with DNA of six specified bacterial strains and provided sequence similarities between target molecules.
Enzo sued Gen-Probe for infringement of the ‘659 patent and defendants moved for summary judgment that the claims were invalid for failure to meet the written description requirement. The parties agreed that selective hybridization is indicative of probe structure. Nevertheless, the district court granted summary judgment, holding that mere reference to deposited biological materials coupled to a description of the materials’ biological activity or function, i.e., hybridization specificities, is insufficient to satisfy the written description requirement.
The Federal Circuit affirmed, finding that incorporation by reference of deposited biological materials that are referred to in the specification is insufficient to meet the written description requirement. The majority, citing Regents of the University of Cal. v. Eli Lilly & Co., held that further disclosure of some distinguishing characteristic, such as the structure of the deposited material was also required. Previously, under the terms of the Budapest Treaty, one could claim a biological material without specifying the composition in the original application if there was a specific reference to a biological deposit.
The majority also dismissed the hybridization specificity as merely functional, stating that Enzo’s written description of its reduction to practice "is a definition of biological activity and function . . . none of its inherent structure. That flaw is true of all of the claims, even those directed to the probes that Enzo actually made." The majority further stated that Enzo had failed to show a correlation between the claimed function (hybridization) and a specific structure, pointing out that the specification did not provide the sequence of the probe or its target, or the specific point on the target sequence that binds the probe.
The majority also disagreed with Enzo’s arguments that deposit of the probes satisfied the "possession" test for written description as set forth in Vas-Cath, Inc. v. Mahurkar, stating that "a showing of possession does not substitute for a written description in the specification, as required by statute." Although the majority acknowledged that Enzo had achieved more than a "wish" for obtaining the claimed nucleic acids, it found the description of the claimed probes insufficient to "allow one skilled in the art to visualize or recognize the identity of the claimed subject matter."
With regard to the U.S. Patent and Trademark Office (PTO) Guidelines for Examination of Patent Applications Under the 35 U.S.C. § 112, ¶ 1 "Written Description" Requirement, 66 Fed. Reg. 1,099 (Jan. 5, 2001) (which recognizes the description of an actual reduction of practice as a "safe haven," particularly in those cases where the inventor cannot provide an adequate description of the invention and a definition of function is insufficient to define the invention) the majority simply observed "[t]his is not a case in which the inventors could not have provided a description of the nucleotide sequences."
The dissent noted that the description provided by the hybridization studies in the ‘659 patent identified structural properties of the claimed probes, and that the disclosure of the degree of homology between the Neisseria target DNAs indicated that the structure of the targets was sufficiently known to those of skill in the art. The dissent also observed that the PTO had made clear that deposited material may be used for written description purposes and pointed out that the written description had been found adequate by the examiner, who had
specifically addressed the deposited materials.
Practice Note: Enzo Biochem represents a high watermark in terms of what is required to comply with the written description requirement for nucleic acid-based inventions. Complete or at least partial nucleotide sequence of claimed nucleic acid molecules should be provided whenever possible, and at the very least a combination of structural characteristics, e.g., size of the claimed molecule, target chromosomal location, restriction map of claimed nucleic acid molecules or their targets should be provided. As things now stand, reference to deposited materials coupled with description of hybridization between a nucleic acid molecule and its target may not be sufficient to satisfy the written description requirement.
Concession of Validity in Consent Judgment is Limited to Prior Infringing Product Only
By Paul Devinsky
In reversing the district court, the U.S. Court of Appeals for the Federal Circuit recently held that a consent judgment that included a concession of validity, did not preclude the defendant from asserting an invalidity defense where the product in issue is different from that which was subject to the consent judgment. Ecolab Inc. v. Paraclipse, Inc., Case Nos. 01-1204, - 1204 (Fed. Cir. April 3, 2002).
After two years of litigation and just prior to trial, an earlier case between Ecolab and Paraclipse was settled by entry of a consent judgment that provided, inter alia, that: "This Court finds and concludes, and Paraclipse agrees, that the ‘690 patent is a valid patent," that "Paraclipse has infringed the ‘690 patent by making, using and selling its [ ] product" and "the invention of the ‘690 patent is a pioneering invention." Shortly thereafter, Paraclipse introduced a different product and Ecolab sued Paraclipse a second time, again alleging infringement of the ‘690 patent. Based on the consent judgment of validity, the district court barred Paraclipse from challenging the validity of the ‘690 patent, despite its defense that the new product was simply practicing the prior art to the ‘690 patent.
The Federal Circuit reversed, noting that "provisions in a consent judgment asserted to preclude litigation of the issue of validity in connection with a new claim must be construed narrowly" and held that "a party does not waive its right to challenge the validity of a patent as to future accused products absent a clear intent to do so."
Relying on its 1991 decision in Foster v. Hallco Mfg. Co., the Court noted that "a future validity challenge is only precluded if the devices in the two suits are ‘essentially the same.’" The Court distinguished the present case from its 1999 decision in Diversey Level, Inc. v. Ecolab, Inc. "where the alleged infringer, in addition to agreeing that he patents were ‘valid and enforceable,’ further agreed that it would not ‘directly or indirectly aid, assign, or participate in any action contesting the validity’ of the patents."
Recognizing the tension occasioned in this case by the recently reinforced rule that "practicing the prior art" is not a defense to a claim of literal infringement (Tate Access Floors, Inc. v. Interface Architectural Res., Inc. (Fed. Cir. 2002)) but only goes to validity of the claims, the Court reasoned that "[g]reater [clarity the prior consent judgment that ‘the ‘690 patent is a valid patent’] is required to foreclose the validity defense in a new infringement suit involving a new product."
Practice Note: When representing a patentee in a settlement posture, always attempt to obtain a concession of validity in accordance with the Diversey Lever model. When representing an accused infringer, resist any attempt to concede validity of the patent in suit or negotiate only a limited concession in accordance with the Foster model.
Second Circuit Rethinks the Divisibility of Copyright Ownership
The U.S. Court of Appeals for the Second Circuit, on rehearing, reconsidered its earlier determination that the owner of one of the exclusive rights under copyright law, as opposed to the owner of the copyright itself, is not a copyright holder. Morris v. Business Concepts, Inc., Case No. 00-7509, 2002 U.S. App. LEXIS 4348 (2d Cir. 2002).
The plaintiff, a journalist, wrote a series of articles for a column in Allure magazine, a publication of The Conde Nast Publications, Inc. The plaintiff granted Conde Nast exclusive first worldwide publication rights for 90 days after the publication of the articles in Allure, and the plaintiff retained ownership of the copyrights in the articles. Conde Nast obtained certificates of registration from the Register of Copyrights for each issue of Allure in which the plaintiff’s articles were published, covering the issues as collective works. The plaintiff did not register her own copyrights in the articles. Upon discovering that defendants had copied essentially verbatim 24 of the plaintiff’s articles in a newsletter, the plaintiff brought suit against the defendants for copyright infringement.
The Second Circuit affirmed the district court’s grant of summary judgment to the defendants, finding that the court lacked subject matter jurisdiction over the plaintiff’s copyright claim because the plaintiff had not registered her copyrights in the articles. The court held that an exclusive licensee, i.e., Conde Nast, is not a copyright owner for purposes the registration requirement. The court reasoned that under the concept of divisibility of copyright, there can never be more than a single copyright in a work, notwithstanding the author’s exclusive license of certain rights. As a result, the court found that "an owner of a particular right —as opposed to the copyright itself—would not be a copyright owner." Because Conde Nast was not a copyright owner of plaintiff’s articles when it registered the issues of Allure as collective works, the plaintiff could not rely on Conde Nast’s registrations.
On rehearing, the Second Circuit clarified its discussion of the "divisibility of copyright ownership" issue by eliminating the portion of the opinion that concluded that an owner of one of the exclusive rights under copyright law is not a copyright owner. The Second Circuit recognized that the Supreme Court’s recent opinion in the case New York Times, Inc. v. Tasini, "cast serious doubt upon the question whether there may be only a single copyright in a work." The Second Circuit found, however, that this clarification did not alter the outcome of the case because unless the copyright owner of a collective work also owns all of the rights in a constituent part, a collective work registration does not extend to a constituent part. Therefore, regardless of whether Conde Nast was a copyright owner of the plaintiff’s articles, its collective works registration did not satisfy the registration requirement because Conde Nast owned only some of the rights to the plaintiff’s articles at the time of registration.
Bona Fide Purchaser Defense Does Not Apply to Non-Exclusive Licensees Not Receiving "All Substantial Rights" Under Patent
By George Hampton
If you first don’t succeed, try and try again. In an earlier, published panel opinion, the U.S. Court of Appeals for the Federal Circuit affirmed summary judgment in favor of a sublicensee on the grounds that the sublicensee was a bona fide purchaser (see, IP Update, Vol. 4 No. 12, (December 2001). Now, upon petition for rehearing en banc, the Federal Circuit vacated its own earlier opinion and reversed the lower court decision. Rhone Poulenc Agro, S.A. v. DeKalb Genetics Corp., Case No. 00-1266, -1352 (March 26, 2002).
The Court granted the petition for rehearing en banc for the limited purpose of deciding whether the Court’s decision in Heidelberg Harris, Inc. v. Loebach was binding authority on the question of whether the bona fide purchaser doctrine applies to patent licenses. The Court has now held that Heidelberg Harris is not a binding authority on the bona fide purchaser issue and reassigned the opinion to the panel for revision. Upon rehearing, the panel decided that a sublicensee (in this case Monsanto) who acquired a non-exclusive license from a licensee that had acquired the original license by fraud (in this case DeKalb) could not retain the sublicense, even though a bona fide purchaser for value. The patent in question relates to a genetically-engineered material used in growing herbicide-resistant corn.
While acknowledging that the interpretation of patent licenses and the consequences of fraud in the negotiation of patent license contracts are generally governed by state law, the Court held that the bona fide purchaser issue is a matter of federal law because §261 of the patent laws already partially addresses the issue where patent owners make inconsistent assignments, grants or conveyances to two entities and where the question is whether the later assignee should prevail. Citing the need for a uniform body of federal law on the bona fide purchaser defense, the Court stated: "It would be anomalous for federal law to govern the defense in part and for state law to govern in part." The decision opens the door for a lawsuit against Monsanto.
Don’t Gamble on Dilution Claim—Famous Building Façade Found to Be Protectable
By John Dabney
The U.S. Court of Appeals for the Second Circuit has held that the building façade of the famous New York Stock Exchange building may constitute a protectable mark under the federal Dilution Act and may be diluted by the defendant’s use of a replica façade for a gambling casino. New York Stock Exch., Inc. v. New York Hotel LLC, 2002 U.S. App. LEXIS 5370 (2nd Cir. April 1, 2002).
The plaintiff owns a federally registered trademark that embodies a picture of a famous landmark, the building which houses the New York Stock Exchange. The defendant uses a replica of the building façade in connection with a gambling casino in Las Vegas that features a "New York City" theme. The plaintiff sued the defendant alleging dilution by tarnishment, contending the use of the replica façade in connection with a casino tarnished the plaintiff’s reputation for honesty in securities trading and implied that the plaintiff’s business, like the casino business, is one where the odds are stacked against the customer.
The district court awarded summary judgment in favor of defendant, reasoning that in order for a trademark to be protectable under the federal Dilution Act, it must be inherently distinctive. Because many other well-known buildings, e.g., the U.S. Supreme Court, employed a design that was arguably similar to the design of the plaintiff’s building façade, the district court concluded that, as a matter of law, the plaintiff’s trademark was not inherently distinctive.
In reversing the district court, the Second Circuit agreed that a trademark must be inherently distinctive to be protectable under the federal Dilution Act. However, the Court held that even if other buildings employ a "similar design" to the New York Stock Exchange Building, the plaintiff’s design may still be inherently distinctive as a matter of law. "A mark is [inherently distinctive] … if there is no logical relationship whatsoever between the mark and the product on which it is used." The Court reasoned that because a stock exchange could be housed in any variety of differently designed buildings, plaintiff’s façade could be inherently distinctive and thus protectable under the Dilution Act. The Court also ruled that the defendant’s use of the plaintiff’s façade could tarnish the plaintiff’s reputation for integrity and honesty in stock trading. The Court noted in passing that the fact that the plaintiff listed casinos on its exchange, and thus had allegedly associated itself with casinos, was not pertinent, as those listings related "solely to [the plaintiff’s] role as a pricing and financial monitoring intermediary, not as an associate engaged in the underlying activity of listed firms."
Factual Dispute Created by Expert Testimony? No Summary Judgment
By Stephanie Nagel
In reversing-in-part the lower court decision, a panel of the U.S. Court of Appeals for the Federal Circuit has held the district court erred in granting summary judgment of non-infringement under the doctrine of equivalents where expert and inventor testimony raised an issue of material fact. Leggett & Platt, Inc. v. Hickory Springs Manufacturing Co., Case No. 01-1255 (Fed. Cir. Apr. 2, 2002).
Leggett & Platt, Inc. (L&P) is the assignee of U.S. Patent No. 5,052,064 (the ‘064 patent) directed to a stackable box spring assembly. Because the box spring assembly of the ‘064 patent is "nestably stackable," it eliminated the need to compress and tie the assembly in order to reduce the shipping space required for the box springs.
After a Markman hearing, where the district court construed the meaning of the claim term "support wires," the parties filed cross motions for summary judgment. The district court granted Hickory’s motion for summary judgment on non-infringement. L&P appealed.
The Federal Circuit first addressed the lower court’s construction of the claim term "support wires," concluding that the district court properly construed the term to require wires that are "generally corrugated along their lengths" and that is "a continuous strand of wire" having "only two ends." The Federal Circuit also agreed with the district court that the PowerStack assembly did not literally infringe the ‘064 patent because the accused device featured support cups in the form of wire baskets welded to longitudinal end-to-end wires, a combination having more than two ends.
However, the Federal Circuit took issue with the district court’s doctrine of equivalents analysis. Hickory cited to its own patent covering the PowerStack’s support cup assembly as evidence that Hickory’s product is substantially different from the prior art, but offered no further evidence or expert testimony. L&P, however, did offer testimony to the effect that the power cups performed substantially the same function in substantially the same way to achieve substantially the same result as the support wires claimed in the ‘064 patent. The Federal Circuit panel noted that the district court neither provided a legal reason to reject the factual allegations of L&P’s expert nor drew reasonable inferences in favor of L&P, the non-movant. Thus, the Federal Circuit determined that it was inappropriate for the district court to "summarily conclude that the support cups in the PowerStack achieved the ‘nestably stackable’ result in a substantially different way from the support wires in the ‘064 patent," and reversed the district court’s grant of summary judgment of non-infringement under the doctrine of equivalents.
Practice Note: This case seemingly adds to the controversy of the legal significance, in terms of the doctrine of equivalents, of whether the accused device has been patented. There exists a line of Federal Circuit cases that stand for the general proposition that the existence of a patent on the accused device is no defense to a charge of infringement. See Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.P.A; National Presto Industries, Inc. v. West Bend Co.; Hoechst Celanese Corp. v. B.P Chemicals, Ltd.; and Fiskars, Inc v. Hunt Manufacturing Co.
There also exists a line of cases in apparent tension with the above in that they stand for the proposition that the issuance of a patent on the accused device is relevant to the issue of whether the accused device is an equivalent; i.e. whether the change is "substantial." See Hoganas AB v. Dresser Industries, Inc. and Zygo Corp. v. Wyko Corp. [Editors]
Patentability Based on Numerical Differentiation Illustrative of Unexpected or Advantageous Results Will Hold Water
Contact Paul Devinsky
The U.S. Court of Appeals for the Federal Circuit, in reversing The Board of Patent Appeals and Interferences (Board), held an invention directed to a potty training pant having an elastic waist system with spaced adhesive zones nonobvious in view of numerical differentiating data. In Re Glaug et al., Case No. 00-1571 (Fed. Cir. March 15, 2002).
The invention was directed to a method of making disposable training pants having a more comfortable fit over a wider weight and size range as well as a longer useful life. Adhesive is placed to hold the waistband in "spaced zones" so that the elastic is unadhered to the pant between adhesive zones. As a result, there is a reduction in surface area of joinder between the elastic and the pant material and a reduction in the elastic’s loss of elasticity. Between the spaced zones of adhesion, the pant material, unadhered to the elastic, can bunch or stretch.
The Board reasoned that the invention was obvious in view of the prior art disclosing the application of adhesive to the pant edges in a continuous film or "in a plurality of dots, intermittent lines, or helical lines." Applicants argued based on comparative data of elastic decay contained in the specification, that the elastic in pants made by applicants’ process exhibited less than half the decay in elasticity, compared with the best of seven commercial brands of training pants. The Board rejected the data, noting that applicants did not describe how the elastic waist was constructed in these prior pants. The Board reasoned that "the numerical measure of elastic decay in Applicants’ claims is simply inherent in any improvement achieved by Applicants through the placement of his adhesive and does not impart patentability to the claims."
The Federal Circuit reversed, finding that the applicants’ numerical data evidenced a differentiation which on its face demonstrated an improvement over the prior art. The Court reasoned, "[W]hile the measurement of a physical property may not of itself impart patentability to otherwise unpatentable claims, when the measured property serves to point up the distinction from the prior art, or advantages over the prior art, that property is relevant to patentability, and its numerical parameters can not only add precision to the claims but also may be considered, along with all of the evidence, in determination of patentability."
Federal Circuit Relies on Extrinsic Evidence in Adopting Broad Claim Construction
Contact Paul Devinsky
The U.S. Court of Appeals for the Federal Court reversed a grant of summary judgment of non-infringement by opting to broadly interpret a key claim limitation "located in the computer" to mean a "computer system" that included at least some peripheral devices. Pickholtz v. Rainbow Technologies, Inc. et al, Case No. 01-1173 (Fed. Cir. Apr. 3, 2002).
The patent-in-suit describes an apparatus for preventing piracy of computer software. The claimed software protection apparatus enables execution of software from an external media (disk or CD) only if certain authorization codes are read from the external media and used to initiate a pseudorandom number (PRN) generator that can be verified by an electronic security device.
The patentee proffered extrinsic evidence, including technical literature and expert testimony, to support a broad construction of the term "computer" to mean "one or more processing units and the memory, peripherals and other devices connected electronically to and communicating with the processing units." The district court, however, opted to rely purely on intrinsic evidence to formulate its claim construction, which excluded peripherals. During prosecution of the patent, the claim in dispute was amended to specifically recite "a pseudorandom number generator device located in the computer" as an element of the claimed software protection apparatus. The district court relied on the patentee’s remarks during prosecution and the choice to recite "computer" rather than a "computer system" as its basis for narrowly construing the claim term to mean only "the CPU and main memory on the CPU’s circuit board."
The Federal Circuit reversed, finding that the terms "computer" and "computer system" were used synonymously by the patentee and that neither use excluded peripherals. The Court reasoned that while the patentee uses the terms "computer system" in the specification and "computer" in the claims nothing in the patent "explicates their relationship [n]or indicates any difference in meaning." The Court further reasoned that "although the [patentee] may have been casual and gratuitous in amending his claims and making arguments to distinguish over the [prior art] patent, nothing in the prosecution history convinces us that the terms ‘computer’ and ‘computer system’ in the patent have different meanings...." The Court noted that the written description includes "one peripheral, a disc ‘reading means’ as part of the ‘computer system’" and reasoned that "the synonymous term ‘computer’ [as used] in the claims must include at least some peripherals." In order to give meaning to the term "located in the computer" the Federal Circuit precluded peripheral devices that were "distantly connected" to the CPU, but ruled that the claim does "encompass peripherals that are within a reasonable proximity to the CPU and its, main memory and directly connected to the CPU… or CPU circuit board."