Lemelson Bar Code Patents Too Late, Too Little and Now Unenforceable
By Paul Devinsky
In the appeal from the remand decision of the Nevada district court on the issue of prosecution laches, the U.S. Court of Appeals for the Federal Circuit has upheld the district court’s decision, holding the Lemelson patents unenforceable under the doctrine of prosecution laches. Symbol Technologies, Inc. v. Lemelson Foundation, LP, Case No. 04-1451 (Fed. Cir. Sept. 9, 2005) (Lourie, J.). This case, involving 14 patents relating to machine vision and automatic bar code identification technology, has been the subject of years of litigation and has generated more than $1 billion dollars in royalties and settlements. Its implications are likely to be far-reaching.
Symbol and its co-plaintiffs design, manufacture and sell bar code scanners and related machine vision products, including laser and charged coupled device (CCD) bar code readers. In 1998, Symbol’s customers began receiving letters from Lemelson stating that the use of the plaintiff’s products infringed various Lemelson patents. Symbol filed a declaratory judgment action against Lemelson seeking, among other things, a judgment that the patents were unenforceable for prosecution laches.
After the district court dismissed Symbol’s prosecution laches claim, Symbol filed an interlocutory appeal, and the Federal Circuit reversed the district court, rejecting Lemelson’s arguments that the defense of prosecution laches was limited to claims arising out of interference proceedings and that the passage of the 1952 Patent Act, with its provisions for filing continuation and continuation-in-part applications, foreclosed the application of laches. Rather, the Federal Circuit held Symbol’s defense of prosecution laches was legally viable and remanded the case to the district court (Symbol I).
On remand, the district court, applying the totality of the circumstances test announced in Symbol I, held Lemelson’s patents were unenforceable due to prosecution laches noting “unreasonable delay alone is sufficient to apply prosecution laches, without the requirement that Lemelson intended to gain some advantage by the delay.” However, in applying the doctrine of prosecution laches, the district court also found Symbol had presented “strong evidence . . . of intervening private and public rights” and that “Lemelson’s 18 to 39 year delay in filing and prosecuting the asserted claims under the fourteen patents-in-suit . . . was unreasonable and unjustified and that the doctrine of prosecution laches renders the asserted claims unenforceable.” Lemelson appealed.
The Federal Circuit, explaining the doctrine of prosecution laches is an equitable defense reviewed under the abuse of discretion standard, held the district court did not abuse its discretion in holding Lemelson’s patents unenforceable under the doctrine of prosecution laches.
The Federal Circuit distanced itself from the district court’s “unreasonable delay alone” is enough statements, noting:
[T]here are legitimate grounds for refiling a patent application which should not normally be grounds for a holding of laches, and the doctrine should be used sparingly lest statutory provisions be unjustifiably vitiated. The doctrine should be applied only in egregious cases of misuse of the statutory patent system.
However, applying the “totality of the circumstances test” and considering the prosecution history of Lemelson’s related patents and the accumulated delay, Judge Lourie explained that Lemelson went astray by “refiling an application solely containing previously allowed claims for the business purpose of delaying their issuance.” The Court found the “multiple examples of repetitive refilings . . . demonstrate a pattern of unjustifiably delayed prosecution [that] may be held to constitute laches.”
Referring to the 18- to 39-year time period between the filing and issuance of the patents in suit, the Court noted “[t]hat period of time is not what is contemplated by the patent statute when it provides for continuation and continuation-in-part applications. Patent applications should normally be permitted to issue when they have been allowed and the statutory requirements complied with.”
The Federal Circuit also noted the supportive findings of the district court that Lemelson “recognized the adverse effect on businesses that were unable to determine what was patented from what was not”, and that “the Lemelson patents occupied the ‘top thirteen positions’ for the longest prosecutions from 1914 to 2001.” Thus, the Federal Circuit echoed the district court’s conclusion that “[i]f the defense of prosecution laches does not apply under the totality of circumstances here, the Court can envision very few circumstances under which it would.”
Practice Note: Based on this ruling, the travails of the Lemelson Foundation appear to be just beginning. Over the years, it is estimated that the Lemelson Foundation has signed up 1,000 licensees, many of whom may now file suit attempting to cancel agreements or to recover previously paid royalties.
Claimed ESTs Unpatentable for Failure to Satisfy Utility Requirement
Contact Paul Devinsky
Settling an unresolved issue in biotechnology patent law, the U.S. Court of Appeals for the Federal Circuit affirmed the decision of the U.S. Patent and Trademark Office Board of Patent Appeals and Interferences (the Board) and denied a patent to expressed sequence tags (ESTs) for failure to meet the statutory requirements of utility and enablement. In re Fisher, Case No. 04-1465 (Fed. Cir. Sept. 9, 2005) (Michel, J.) (Rader, J., dissenting).
Fisher appealed a U.S. Patent and Trademark Office (UPSTO) final rejection based on lack of utility and lack of enablement of a claim directed to ESTs (which are short nucleotide sequences representing a cloned DNA fragment) to the Board. The claim at issue recites five ESTs, each corresponding to a maize gene for which neither the precise structure, the function nor the encoded proteins were known at the time of filing. Citing Brenner v. Mason, a U.S. Supreme Court case that affirmed the utility rejection for a claimed process of making a compound having no known use, the Board found a lack of either a specific or a substantial utility for each of the asserted uses and affirmed the final rejection.
Noting that Brenner v. Mason does not define the terms “specific” and “substantial,” the Federal Circuit took the opportunity to clarify the two-pronged test for utility under 35 U.S.C. §101. The Court indicated that, to satisfy the “substantial” utility requirement, an asserted use must show that the claimed invention has a significant and presently available public benefit. Turning to the “specific” utility requirement, the Court explained an application must disclose a use which is not so vague as to be meaningless. Thus, in addition to providing a “substantial” utility, an asserted use must also show the claimed invention can provide a well-defined and particular benefit to the public. Applying these principles, the Court found the asserted utilities for ESTs met neither the substantial nor the specific test but were merely a starting point for further research, providing no presently available benefit. With regard to the “specific” utility requirement, the Court found Fisher had failed to assert any utilities distinguishing the claimed ESTs from the more than 32,000 ESTs disclosed in the application or any EST derived from any organism. The Court held that, absent identification of a function for the underlying protein-encoding genes, the claimed ESTs had not been researched and understood to the point of providing an immediate, well-defined, real-world benefit to the public meriting the grant of a patent.
In dissent, Judge Rader indicated ESTs are research tools that provide a cognizable benefit to society and “only the final step of a lengthy incremental research inquiry gets protection” under the majority holding.
Substantial Post-Sale Technical Support Is Sufficient to Establish an Intent to Induce Patent Infringement
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The U.S. Court of Appeals for the Federal Circuit reversed a district court’s grant of summary judgment of non-infringement, stating a reasonable jury could find the requisite intent to show inducement of patent infringement based on evidence of an accused infringer’s substantial post-sale technical support. MEMC Elec. Materials v. Mitsubishi Materials Silicon Corp., Case Nos. 04-1396, -1513 (Fed. Cir. Aug. 22, 2005) (Schall, J.).
MEMC Electronic Materials (MEM) is the owner of U.S. Patent No. 5,919,302 (the `302 patent) related to silicon wafers used in the manufacture of electronic components such as integrated circuits. MEM sued Mitsubishi Materials Silicon Corporation (MMS) alleging direct infringement of the `302 patent and inducement of infringement.
MMS, like MEM, is a supplier of silicon wafers to the semiconductor industry. MMS’s silicon wafers are manufactured exclusively outside of the United States at MMS’s manufacturing plant in Japan. MMS sells silicon wafers to Samsung, Japan, which then sells the wafers to Samsung, Austin (Texas). MEM asserted that MMS encouraged and enabled Samsung, Austin to use the accused wafers by manufacturing wafers according to Samsung, Austin’s specifications and then providing substantial technical support to the Samsung, Austin facility.
The district court granted summary judgment in favor of the defendants on the ground that, finding as a matter of law, they could not be liable for either direct infringement or inducement of infringement under 35 U.S.C. §271. MEM appealed.
The Federal Circuit affirmed the district court’s grant of summary judgment with respect to direct infringement. However, the Federal Circuit reversed the district court with respect to inducement and stated a reasonable jury could find MMS had the requisite intent to induce infringement.
The law provides that whoever actively induces infringement of a patent is liable as an infringer (see §271(b)). Citing Minn. Mining & Mfg. Co. v. Chemque, Inc., the Court instructed that, to succeed on a claim of inducement, the patentee must show first, there has been direct infringement and second, the alleged infringer knowingly induced infringement and possessed specific intent to encourage another’s infringement.
On the issue of intent, the Federal Circuit noted to the following evidence: (1) Samsung, Austin would not enter into an agreement to buy wafers from a wafer supplier unless the supplier would also provide them with technical support for the wafers; (2) MMS provides substantial technical support to Samsung, Austin in the form of e-mail communications; (3) MMS makes adjustments in the manufacturing process in order to address problems Samsung, Austin encounters with the wafers; (4) MMS sent a shipment of certain wafers directly to Samsung, Austin in order to address technical problems with previously supplied MMS wafers and (5) MMS personnel made several on-site visits to Samsung, Austin to make technical presentations. The Federal Circuit also noted that MEM had sent MMS a notice letter regarding the `302 patent. Thus, the Federal Circuit reasoned there was “sufficient circumstantial evidence for a reasonable jury to conclude MMS was not only aware of the potentially infringing activities in the United States by Samsung, Austin, but also . . . intended to encourage those activities.”
Lack of Specific Reference to Priority Application Is Not Fatal to Priority Claim
By Paul Devinsky
Reversing a district court finding of invalidity based on an intervening publication, the U.S. Court of Appeals for the Federal Circuit has now held that a patent may claim priority back to the filing date of a Patent Cooperation Treaty (PCT) application not specifically referenced in Broadcast Innovation, L.L.C. v. Charter Communications, Inc., Case No. 05-1008 (Fed. Cir. Aug. 19, 2005) (Rader, J.). The patent in issue does not include a specific reference to the initial foreign patent applications or the PCT application in its specification. However, during prosecution of the application the applicant filed a transmittal letter and an oath and declaration claiming priority to the foreign applications and the corresponding PCT application. The district court based its summary judgment of invalidity of the absence of any specific reference to the PCT application on the face of U.S. Patent No. 6,076,094 (the `094 patent) applying the intervening prior art. Broadcast appealed.
The Federal Circuit viewed the priority date as “purely a question of law” and one that presents significant questions “. . . which potentially impacts a large number of patents originating from foreign applications.” The Court noted the statute in question, 35 U.S.C. §120, states that in order to qualify for the filing date of a prior application, a patent application must contain a “specific reference” to the earlier filed application. The Court further noted that the corresponding U.S. Patent and Trademark Office (UPSTO) regulation in effect and the time the application was filed required specific reference to the prior application in the first sentence of the specification 37 C.F.R. §1.78(a)(2)(i) (1997) (a requirement later relaxed to “allow applicants to file an application data sheet (ADS) including priority information for an application instead of or along with providing reference in the specification itself”). Thus, both statute and the regulations “require some reference to earlier filed applications (i.e., in the specification or on the cover page) to qualify for priority based on those earlier filings.”
The Court noted in this case the applicant properly referenced the national stage of a PCT application, i.e., the prior U.S. filing, and therefore did not need to also reference the corresponding PCT application “because the national stage application effectively has the same U.S. filing date as the PCT application.” In other words, as the patent in issue cited to its earlier filed U.S. application, which was the “prior application” for purposes of §120, it was entitled to the same filing date as the effective filing date of the earlier cited U.S. application, not just the actual U.S. filing date of that application. The Court then reasoned that since, under 35 U.S.C. §363, the international filing date of a PCT application is also the U.S. filing date for the corresponding national stage application, the patent in suit, like the U.S. application it references, is entitled to the filing date of the original PCT application.
No Clear and Unmistakable Surrender Where USPTO May Have Had Alternate Grounds for Allowing Claim
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The U.S. Court of Appeals for the Federal Circuit has shed some additional light on the application of prosecution history estoppel under Festo to certain narrowing claim amendments. Specifically, the Court held that where a narrowing amendment is made to one feature in a claim and a distinguishing argument is presented with regard to another feature in the same claim, absent a clear and unmistakable surrender of subject matter within the substance of the distinguishing argument, prosecution history estoppel does not prevent the patentee from relying on the doctrine of equivalents for the second feature. AquaTex Industries, Inc. v. Techniche Solutions, Case No. 05-1088 (Fed. Cir. Aug. 19, 2005) (Mayer, J.).
The AquaTex patent disclosed a method of cooling a person involving the use of a “fiberfill batting material.” During prosecution, the U.S. Patent and Trademark Office (UPSTO) examiner rejected the claim in view of prior art that showed cooling using natural fibers. AquaTex distinguished its invention by arguing the applied reference failed “to disclose or suggest the fiberfill batting and polymeric fibers and/or particles of the composite material in the claimed method.” AquaTex also amended an independent claim to further recite that cooling occurs “by evaporation.” In light of the claim amendment and distinguishing argument, the examiner withdrew the rejection and issued the patent.
Techniche Solutions, who manufactured a product that used both natural and synthetic fibers, argued AquaTex’s statements disavowed the claim scope of natural fibers. The trial court agreed, holding AquaTex was barred from asserting that the claimed “fiberfill batting material” could be partially composed of natural fibers. Techniche appealed.
The Federal Circuit, citing Festo, emphasized that application of the doctrine of equivalents may be barred both in circumstances where narrowing amendments are made for the purposes of patentability, and where arguments are made to an examiner which clearly and unmistakably surrender subject matter. Noting the matter surrendered by the limiting claim amendment bore no relation to the composition of the fiberfill batting, the Court conducted a separate argument-based estoppel analysis. Concluding AquaTex’s argument merely stated how the prior art material retained moisture and reminded the examiner how the overall composition of the materials was used, the Court reasoned these representations “are not a clear disavowal of claim scope” and reversed the district court’s grant of summary judgment as to availability of equivalents as it related to the claimed fiberfill batting material.
Board Must Consider Rebuttal Evidence to New Ground of Rejection
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Addressing the issue of whether the Board of Patent Appeals and Interferences (the Board) must consider evidence submitted by the applicant during the appeal to rebut a position taken by the Board that was not presented during prosecution, the U.S. Court of Appeals for the Federal Circuit held the applicant “was entitled to respond to the evidence adduced sua sponte by the Board.” In re Kumar, Case No. 04-1074 (Fed. Cir. Aug. 15, 2005) (Newman, J.).
The claims of Kumar’s application are directed to aluminum oxide particles of submicron size. The product claims recited particles having a specified size range and size distribution. Kumar appealed the final rejection of his product claims to the Board. After engaging in calculations not continued in the prior art or examination record, the Board held the claims unpatentable on the ground of obviousness in view of the Rostoker patent, concluding Rostoker disclosed a range which overlapped the claimed range. On appeal to the Federal Circuit, Kumar conceded the Rostoker particles overlapped the claimed particles in average particle size but argued they did not overlap the claimed particle-size distribution.
The issue on appeal related to the Board’s procedure of engaging in calculations that were not made by the examiner and relying on those calculations to assert the Rostoker particle parameters overlapped the claimed particle parameters. In response to the evidence adduced sua sponte by the Board, Kumar requested reconsideration in view of a declaration by Dr. Singh in which Dr. Singh opined that the claimed particle parameters could not be obtained based on the Rostoker disclosure. The Board refused to consider Dr. Singh’s declaration, ruling Kumar had not given a sufficient reason why it was not presented earlier.
The Federal Circuit held the Board’s calculations, which resulted in values not contained in the prior art or examination record, were effectively a new ground of rejection. The Federal Circuit, citing Dickinson v. Zurko, held the Board failed to abide by its own rules (37 C.F.R. §1.196(b)) in not providing Kumar an opportunity to respond to these calculations and offer whatever evidence if felt appropriate in rebuttal.
The U.S. Patent and Trademark Office (UPSTO) argued that, procedural error aside, the Singh declaration was insufficient to obviate the obviousness determination. The Federal Circuit responded that the merits of the Singh declaration were not properly debated in the first instance on appeal and such determination on the merits is a question of fact to be determined on the record. In this regard, the Federal Circuit held that all evidence, including previously submitted declarations found to be insufficient, must be reconsidered in light of the new ground of rejection and the Singh declaration.
Rotating Seat Slides Away From Patent Holder
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In another narrow application of the doctrine of claim element vitiation, the U.S. Court of Appeals for the Federal Circuit held that an accused product having a “rotatably mounted” movable end did not infringe patent claims reciting a “slidably mounted” element under the doctrine of equivalents. Freedman Seating Co. v. American Seating Co., Case Nos. 04-1216, -1248 (Fed. Cir. Aug. 11, 2005) (Schall, J.).
In a patent infringement case involving a cantilevered stowable seat for public transportation vehicles (the seat can be folded away to create more interior space for accommodating passengers with wheelchairs), the district court granted summary judgment finding the accused infringer, American Seating, infringed Freedman’s patent under the doctrine of equivalents. In its infringement analysis, the district court found the rotatably mounted movable end of the accused seats was equivalent to the “slidably mounted” movable end of the claimed seats and thus infringed under the doctrine of equivalents.
The Federal Circuit reversed, finding the district court’s decision violated the Warner-Jenkinson “all limitations” rule, which requires that “an element of an accused product or process is not . . . equivalent to a limitation of the claimed invention if such a finding would entirely vitiate the limitation.” Acknowledging there is no “set formula” for determining when a finding of equivalence would vitiate a claim limitation, the Court instructed that, to make the determination, “courts must consider the totality of the circumstances of each case and determine whether the alleged equivalent can be fairly characterized as an insubstantial change from the claimed subject matter without rendering the pertinent limitation meaningless.”
The Court took the opportunity to present a useful survey of its prior “all elements rule” cases. After noting the movable end of the accused product can only rotate but cannot slide or move along the base of the seat, the Federal Circuit concluded that this structural difference was not an “insubstantial change” and held that allowing the slidably mounted limitation to cover the accused product would read the limitation completely out of the claims and vitiate the limitation. Thus, the Court found the accused product’s rotatably mounted movable end was not equivalent to the slidably mounted limitation, and there was no infringement under the doctrine of equivalents.
Failure to Provide a Reason for a Narrowing Amendment Leads to Forfeiture of Equivalents Only Tangentially Related to Patentability
By Bernard P. Codd
The U.S. Court of Appeals for the Federal Circuit, affirming a summary judgment decision, found that the accused fertilizer did not infringe either directly or under the doctrine of equivalents as the aggregate amount of its phosphorus compounds exceeded the claimed range. Biagro Western Sales, Inc. v. Grow More, Inc., Case No. 04-1414 (Fed. Cir. Sept. 13, 2005) (Plager, J.).
Biagro is the exclusive licensee of the patent in issue, which is directed to a fertilizer consisting of at least one phosphorous-containing acid or salt present in an amount of about 30 to about 40 weight percent. Grow More’s fertilizer is a solution containing two phosphorous acid salts, a potassium phosphite and a dipotassium phosphite. The concentration of the potassium phosphate is at least 40.3 percent and the concentration of the dipotassium phosphite is at least 19 percent. Thus, the aggregate phosphite concentration is at least 59.3 percent.
Asserting the phrase “at least one” allows for but does not require aggregation of acids or salts, Biagro contended the trial court erred in construing the amount of “phosphorous-containing acid or salt” as an aggregate amount. Biagro averred that this limitation is met so long as one acid or salt is present in the claimed amount. Holding the correct claim construction requires the aggregate amount of phosphites be within the claimed range, the Federal Circuit concluded Grow More’s fertilizer did not literally infringe U.S. Patent No. 5,830,255 (the `255 patent) because the aggregate phosphite content was clearly outside the claimed range.
Next, applying the Supreme Court precedent of Festo II,the Federal Circuit found Biagro was barred from reliance on the doctrine of equivalents. During a reexamination of the `255 patent, the claim limitation “wherein the phosphorous containing acid of salt thereof is present in an amount of about 30 to about 40 weight percent” was added to overcome a prior art rejection. The patentee explained the fertilizer must be concentrated, and the amendment specified a concentration range. The Federal Circuit determined the amendment was clearly made for a reason substantially related to patentability, and Biagro had presumptively surrendered any equivalents with respect to the amounts of phosphorous-containing acid or salt falling outside of the claimed range.
Biagro argued that because only the lower limit of the claimed range was necessary to distinguish over the prior art, the reason for the amendment is merely tangential to an accused equivalent at the upper end of the range. Distinguishing this case from Insituform Technologies, Inc. v. Cat Contracting, Inc., the Court noted that though the Insituform patentee amended the claims to overcome prior art, the reason for the amendment involved aspects of the invention different from the alleged equivalent process. In contrast, here the reason for the amendment and the accused equivalent both related to the concentration of the fertilizer. Thus, even though the prosecution history revealed no reason for the upper range limit, the Court ruled Biagro could not claim the rationale for the amendment was merely tangential to patentability.
Practice Note: When making a narrowing amendment, explain why the amendment is being made to preserve equivalents of subject matter only tangentially related to patentability.
Patents / Claim Construction
After Phillips, Panel Decision Pits Dictionary Definitions and Plain Meaning Against the Intrinsic Evidence
By Matthew F. Weil and Paul Devinsky
Illustrating the extent to which the Phillips decision is likely to alter claim construction in the future, a panel of the U.S. Court of Appeals for the Federal Circuit, on reconsideration, reversed its earlier decision on several claim construction issues, essentially adopting the positions urged by the dissent (Gajarsa, J.) in the original Federal Circuit opinion. Nystrom v. Trex Co., Case No. 03-1092 (Fed. Cir. Sept. 14, 2005) (Linn, J.).Nystrom involved a patent dispute over material used in flooring surfaces in which a number of claim terms were in dispute. In its earlier opinion, the Court, applying the plain meaning rule, construed one of the most prosaic of claim terms, "board," to not be limited to a board cut from a log. In its new post-Phillips decision, the Court, after examining the term "in the context of the written description and prosecution history" and agreed with the district court that the term "must be limited to wood cut from a log." Declining Nystrom’s dictionary offerings (which only required a rigid member of a similar shape to a piece of cut wood), the Court noted, "Nystrom is not entitled to a claim construction divorced from the context of the written description and prosecution history."
However, the Court did use the dictionary for a definition of the claim term "convex" as applied to the top surface of the board in refusing to impart any radius of curvature limitation onto that term. After considering positions taken by Nystrom during the prosecution, the Court determined the arguments made regarding what was and was not an acceptable range of curvature were directed to a specific pending claim reciting a range of curvatures and not to the meaning of the term "convex top surface" as it appeared in the broadest claim. Thus, the Court reversed the district court’s construction, which limited the broad claims to boards having a specific range of radii of curvatures.
The Court also faulted the district court for its reliance on computer models of so-called prior art board, made based on illustrations in the prior art, as anticipating the claims. Citing Hockerson–Halberstadt, the Court instructed that it is error to rely on non-dimensioned drawings or illustrations without a written disclosure of dimensions to anticipate a claim: "…the speculative modeling premised on unstated assumptions in prior art patent drawings cannot be the basis for challenging the validity of claims reciting specific dimensions not disclosed directly in such prior art."
Patents / Claim Construction
Phillips Decision Is Applied in Construing “Downloadable Component”
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The U.S. Court of Appeals for the Federal Circuit upheld a claim construction and summary judgment grant of non-infringement by Windows Media Player of a patent directed to a method and system for purchasing electronic information, such as software or audio files, over a computer network. Network Commerce, Inc. v. Microsoft Corp. Case No. 04-1445 (Fed. Cir. Sept. 8, 2005) (Dyk, J.). According to the claimed invention, a customer’s computer makes a request for data to a merchant's computer which then sends the customer’s computer a “download component.” Applying its definition of “download component,” the district court held Windows Media Player did not infringe, either literally or under the doctrine of equivalents, as it only downloads meta files capable of playing audio and video files from a web site—it does not download the audio and video files. Network appealed arguing that, since the Windows Media Player meta files arrange for transfer of electronic data, it satisfies the claim.
The Federal Circuit rejected Network’s claim construction and essentially agreed with the district court’s interpretation. In construing the claims, the Federal Circuit methodically followed its recent en banc opinion in Phillips v. AWH Corp., looking first to ascertain if the disputed claim term had an “ordinary and customary meaning . . . to a person of ordinary skill in the art in question at the time of the invention.” In some cases, the court instructed, it is possible to construe a claim term by applying “the widely accepted meaning of commonly understood words.” Finding the term “download component” did not have any such commonly understood meaning as evidenced by general dictionaries or similar sources, the Court next looked to see if the term had a “particular meaning in a field of art.” The Court rejected Network’s invitation to use dictionary definitions of the separate words “download” and “components” as not “tenable . . . in light of the specification.” Rather, the Court noted, in light of the specification (which did not contain the term “download component”), the term required the “download component” to contain “at least the boot program”; something not found in the Windows Media Player utility. Network relied on expert testimony for its broader construction, which the Court found to be at odds with the intrinsic evidence and unsupported by any references to industry publications or other independent sources (as required by Phillips). Thus, the Federal Circuit discounted that evidence, reiterating “conclusory, unsupported assertions by experts as to the definition of a claim term are not useful to a court.”
The Federal Circuit made quick work of Network’s doctrine of equivalents argument, noting Network had failed to provide the “particularized testimony and linking argument as to the ‘insubstantiality of the differences’ between the claimed invention and the accused device or process” required under Tex. Instruments v. Cypress Semiconductor.
Admitted Prior Art May Limit Claim Construction
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The U.S. Court of Appeals for the Federal Circuit, applying the recent Phillips decision, upheld summary judgment of non-infringement of Terlep’s patent for omni-directional light-emitting diode (LED) lamps based on the Court’s construction of the claim term “clear.” Terlep v. The Brinkmann Corp., Case No. 04-1337 (Fed. Cir. Aug. 16, 2005) (Linn, J.).
The district court construed the term “clear” to mean transparent, but Terlep argued the term could also cover translucent. The Federal Circuit, quoting language from its record en banc Phillips decision that “the specification is always highly relevant to the claim construction analysis. Usually, it is dispositive; it is the single best guide to the meaning of a disputed term,” upheld the district court construction.
The Federal Circuit embarked on a Phillips analysis that involved first looking to the claim language itself. There, the Court concluded the language of the claims provided little guidance on the meaning of the term “clear.” Then the Court turned to the written description, including the background and prior art sections, that described unsuccessful attempts used in the past for applying diffusion directly to LED surfaces. The Court specifically noted the discussion of an omni-directional LED lamp that did not use diffusion. The Federal Circuit concluded these passages read together implicitly draw a distinction between holders that diffuse light and those that transmit light without obstruction. Thus, the Court reasoned the specification supported a construction of the term “clear” that, consistent with the district court’s construction of “transparent,” transmitts light without appreciable scattering and does not include holders that diffuse light.
The Federal Circuit also reviewed the prosecution history, concluding that like the admitted prior art, it supported the district court’s claim construction. Specifically, Terlep amended the claim to add the language “a clear plastic tubular holder” and then relied on that language to distinguish the invention from the prior art, stating the prior disclosed LED’s to diffuse the light.
The Federal Circuit also concluded the district court attached the appropriate weight to dictionary definitions as permitted under Phillips.
As Terlep did not dispute that the defendant’s products lacked a clear plastic holder and failed to rebut the Festo presumption by establishing its patent was entitled to cover, as equivalents, LED lamps having diffuse holders, the Court affirmed the district court’s grant of summary judgment of non-infringement under the doctrine of equivalents.
Patents / Claim Construction
Addressing the issues of claim construction, the U.S. Court of Appeals for the Federal Circuit upheld a summary judgment of non-infringement against Tivo Inc. based on limitations to a claim element imposed by the claim considered as a whole. Pause Technology LLC v. TiVo Inc., Case No. 04-1263 (Fed. Cir. Aug. 16, 2005) (Linn, J.).
Pause sued TiVo for infringement of its U.S. Reissue Patent No. 36,801 directed to digital video records. Following the district court’s construction of the disputed claim term “circular storage buffer,” TiVo filed a motion for summary judgment of non-infringement. The district court granted the motion, finding no infringement based on its interpretation of the disputed claim language and entered judgment in favor of TiVo. Pause Technology appealed.
As noted in the March 2005 issue of IP Update (Vo. 8, No. 3), that appeal was dismissed by the Federal Circuit for lack of jurisdiction since TiVo’s counterclaim for declaratory judgment of invalidity was still pending. Now (after a district court finding of no invalidity), the Federal Circuit addressed the interpretation of the claim terms “circular storage buffer” and “time interval of predetermined duration.”
Pause argued the district court improperly limited the “circular storage buffer” element by the “write over” language that appeared later in the claim, noting that “[r]egardless of what claim language appears in a later portion of the claim, that language should not be read into the interpretation of a separate claim element.” The Federal Circuit rejected this argument, quoting Hockerson-Halberstadt, Inc. v. Converse Inc., the principle that the appropriate claim interpretation is based on the “entire claim in context, not a single element in isolation” and its en banc Phillips decision. (“[T]he context in which a claim term is used in the asserted claim can be highly instructive.”) The Federal Circuit interpreted the “write over” (and other) language appearing later in the claim as limiting the “circular storage buffer” element by how the circular storage buffer was addressed. In essence, the Federal Circuit found Pause’s interpretation conflicted with the plain meaning of the term, which required the circular storage buffer to operate by writing over old data with new data.
Pause also argued the district court’s claim construction improperly contained language (“physical address,” “same repeating” and “last address/next address”) that did not appear in the claim itself. The Federal Circuit rejected this argument, noting courts are free to use words that do not appear in a claim so long as these words “stayed true” to the claim language used in the claim itself (also noting, in this case, it was consistent with the prosecution history and written description).
Patents / Claim Construction
The U.S. Court of Appeals for the Federal Circuit, in an appeal involving multiple summary judgment motions, vacated the district court’s claim construction of the term “rear end” as recited in connection with a caulking tube and remanded the case for further proceedings. Research Plastics, Inc. v. Federal Packaging Corp., Case No. 04-1605 (Fed. Cir. Aug. 18, 2005) (Gajarsa, J.).
Research is the owner of U.S. Patent No. 5,628,433 (the `433 patent) directed at the “placement of ribs on the interior surface of a [caulking] tube” that “permit air to escape when a plunger is inserted into the bottom” of the tube filled with caulk or other material. The problem of trapped air in the tube was previously solved by using an air tap or bleed wire. That solution was considered “unduly complicated” and led to the specific ribs disclosed by the `433 patent that are used to “burp” the tube during the filling process.
Federal’s accused product included “a rear edge of the tube’s interior wall [that] tapers towards the outer wall forming a beveled edge. The exterior wall is longer than the interior wall, and so the diameter of the tube widens towards the back edge.” The tube has ribs that are positioned “some distance” from the rear edge of the tube but in the rear half of the tube.
Both asserted claims include the term “rear end.” The district court, after considering the claim language as well as the supporting specification, construed the term to mean “the edge of the tube as opposed to merely the rear portion of the tube.” The edge, as interpreted by the lower court, meant the outermost edge of the tube. Based on this construction the district court granted Federal’s motion for summary judgment of non-infringement. Research appealed.
The Federal Circuit vacated the summary judgment of non-infringement, holding the term “rear end” was misconstrued by the district court. The Court held that properly construed, the claim term “rear end” referred to the entire rear edge of the tube, including the points at the rear end of the tube both inside and outside and the area in between, not just the point on the outside of the rear edge.
The Federal Circuit relied on the intrinsic claim construction evidence, first considering the claim language itself. The Court reasoned using the language of one claim may help interpret the other claim, applying a principle enunciated in the recent en banc Phillips decision: “the usage of a term in one claim can often be used to illuminate the meaning of the same term in another claim.” The written description and the prosecution history were also cited as supporting the Court’s interpretation. The Court remanded to the district court to reconsider the issue of literal infringement under the new construction, while noting Research is precluded from relying on the doctrine of equivalents as it had narrowed the claims during prosecution with regard to the location of the ribs.
Patents / Claim Construction
In this patent infringement case spawned by an application to market a new generic drug, the U.S. Court of Appeals for the Federal Circuit upheld the district court’s reliance on extrinsic evidence for claim construction. The Court also upheld its rejection of prosecution disclaimer based on arguments made in the prosecution of a corresponding European patent application. TAP Pharmaceutical Products, Inc., et al. v. OWL Pharmaceuticals, LLC, et al., Case Nos. 03-1634, 1635 (Fed. Cir. Aug. 18, 2005) (Bryson, J.).
TAP sued OWL, claiming OWL infringed five patents on the drug leuprolide. The district court granted summary judgment of infringement on the asserted claims of two patents.
OWL argued that, as the claim recited to “a copolymer . . . of lactic acid and . . .glycolic acid,” it was limited to copolymers made from lactic acid and glycolic acid as starting materials and excluded the use of lactide and glycolide. OWL relied on examples of copolymer preparation in the prosecution history and on a statement made in prosecution of a corresponding European patent that lactide and glycolide are not part of the invention. The Federal Circuit rejected this argument, relying on treatises and expert testimony that lactic and glycolic acid were interchangeable terms with lactide and glycolide. Noting the statement made during prosecution of the European application was rejected by the European patent examiner and was not repeated in the prosecution of the U.S. patents, the Court accorded it little weight in claim construction.
The Court also affirmed consideration of expert testimony concerning construction of the non-technical word “containing” in the phrase “particles containing a water-soluble drug.” The Court reasoned the term, while not technical, must be considered in context and from the perspective of one of ordinary skill in the art.
Non-Physical Differences Can Be Material in Gray Market Cases
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Following up on its ruling in Gamut, the U.S. Court of Appeals for the Federal Circuit clarified that “material differences” that are a predicate to a gray market trademark infringement case do not need to be physical. However, the trademark owner must establish that “all or substantially all” of its goods meet the claimed material differences to prevail. SKF USA Inc. v. U.S. International Trade Commission, Case No. 04-1460, 2005 U.S. App. LEXIS 19750 (Fed. Cir. Sept. 14, 2005) (Lourie, J.).
SKF manufactures ball bearings in the United States and imports other bearings manufactured by its overseas affiliates. It sells approximately 87 percent of these SKF-marked bearings to authorized distributors and provides post-sale support for them. It sells the remaining approximately 13 percent through alternate channels and does not support them post sale.
SKF brought a complaint against several companies before the U.S. International Trade Commission (ITC) alleging they had violated §337 of the Tariff Act of 1930 by importing SKF-marked bearings manufactured by SKF’s overseas affiliates. The respondents argued that because the bearings were physically identical to SKF’s, there was no violation. SKF countered the imported bearings were not entitled to post-sale support from SKF, making them materially different. The administrative law judge initially ruled in SKF’s favor, but on appeal, the full commission, in what was a case of first impression, reversed noting a significant portion of SKF’s bearings did come with the claimed material difference—post-sale support. SKF appealed.
The Federal Circuit noted the fundamental issue in a gray market goods case is whether there are material differences between the foreign goods and the domestic goods of the trademark owner. The threshold of materiality is low, requiring only that consumers would be likely to consider the differences significant when purchasing the goods. The Court said this standard supports the dual goals of trademark law: protecting the consumer and safeguarding the trademark owner’s goodwill. The Court, citing its 1999 Gamut decision, agreed with the commission and SKF that the material differences do not have to be physical to establish trademark infringement. The fact the imported bearings did not come with SKF support constituted a sufficient material difference.
However, the Court also adopted the commission’s holding that in order to prevail in a gray market goods case, a trademark owner must show “all or substantially all of its authorized goods are accompanied by each of the claimed material differences.” Because SKF sold almost 13 percent of its own bearings without accompanying support, it could not show the material difference between its goods and the gray market goods accompanied “all or substantially all of its domestic marked goods.” Therefore, the Court found there was no violation of §337.
Falwell Critic Permitted to Keep “fallwell.com” Gripe Site Domain Name
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In a victory for free speech advocates and operators of internet “gripe sites,” the U.S. Court of Appeals for the Fourth Circuit reversed a summary judgment ordering domain name registrant Christopher Lamparello to cease using the name “fallwell.com” and to transfer it to the controversial televangelist and political commentator Jerry Falwell. In its decision, the Fourth Circuit rejected Falwell’s trademark infringement and cybersquatting claims because there was no likelihood of confusion between Falwell’s web site and trademarks and Lamparello’s use of the domain name “fallwell.com” to criticize Falwell’s views on homosexuality. Lamparello v. Falwell, Case No. 04-2011, 2005 U.S. App. LEXIS 18156 (4th Cir. Aug. 24, 2005) (Motz, J.).
In 1999, after hearing Falwell express opinions about homosexuality that Lamparello found objectionable, Lamparello registered the domain name “fallwell.com” to respond with opposing views. Although Lamparello’s domain name bears a similarity to the “falwell.com” domain name used by the Reverend Falwell and his organization, Lamparello’s “gripe site” looks dissimilar to that of Falwell, features a prominent disclaimer of any affiliation with Falwell and provides links to Falwell’s web site. After Falwell threatened Lamparello with a suit for trademark infringement, Lamparello sued Falwell for a declaratory judgment of non-infringement. Falwell counterclaimed for trademark infringement, cybersquatting and related claims.
Focusing on an application of the Fourth Circuit’s seven-factor likelihood-of-confusion test, the Court found the content of the web sites offered by the parties was completely different in appearance and content and no likelihood of confusion between the sites existed. Specifically, where Falwell’s web site “identifies his spiritual and political views; the website at www.fallwell.com criticizes those very views. After even a quick glance at the content of the website at www.fallwell.com, no one seeking Reverend Falwell’s guidance would be misled by the domain name—www.fallwell.com—into believing Falwell authorized the content of that website.” The fact that people complained to Falwell’s ministry about Lamparello’s site evidenced that consumers were aware that Falwell was not the source of the content on fallwell.com.
In reversing the district court’s summary judgment of trademark infringement, the Fourth Circuit rejected Falwell’s argument that he was entitled to prevail under the “initial confusion doctrine.” According to Falwell, internet users who erroneously spelled his name when searching for his web site would deceptively be directed to Lamparello’s site. The Court rejected this argument because the Fourth Circuit has never adopted the “initial interest” theory of confusion. Moreover, even in jurisdictions which have adopted the doctrine, the plaintiff still must prove the defendant used the mark for commercial gain, which does not exist here because Lamparello used his site solely to criticize the plaintiff. Similarly, the Court noted Falwell’s cybersquatting claim failed because Lamparello had no bad faith intent to profit from his registration of the “fallwell.com” domain name.
Copyright Safe Harbor Protects Company Monitoring Fault Codes to Maintain Machine
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In a case involving attempted use of the Digital Millennium Copyright Act (DMCA) to prevent repair and refurbishment of machinery, the U.S. Court of Appeals for the Federal Circuit (applying First Circuit law) recently held that accessing and using password-protected diagnostic software to maintain a machine does not constitute copyright infringement or improper circumvention under the DMCA. Storage Technology Corp. v. Custom Hardware Engineering & Consulting, Case No. 04-1462 (Fed. Cir. Aug. 24, 2005) (Bryson, J.) (Rader, J., dissenting).
Storage Technology (StorageTek) manufactures automated tape cartridge libraries that include both “functional” software, necessary to run the machine, and “maintenance” software, used by StorageTek to identify faults in the operation of the machine. These two sets of software are intertwined. Both are loaded into memory when the machine is booted up and both are copyrighted. StorageTek licenses only the “functional” code to owners of the libraries, not the maintenance code.
Custom Hardware Engineering & Consulting (CHE) maintains and repairs StorageTek machines. To do so, CHE uses a “code cracking” system to bypass the password protection of the maintenance code and access fault information as it is generated by the maintenance software during normal operation of the machine. StorageTek sued, alleging CHE’s practice constituted copyright infringement and violated the anti-circumvention provisions of the DMCA. The district court issued a preliminary injunction in favor of StorageTek. CHE appealed.
Applying First Circuit law, the Federal Circuit held CHE did not violate the DMCA because it uses the maintenance code for the “purposes only of maintenance or repair” of the machine and, therefore, comes within the safe harbor of section 117(c) of the Copyright Act (17 U.S.C. §117(c)), which allows unlicensed persons to activate machines to maintain and repair them. The safe harbor was designed to protect service providers from liability for copyright infringement for turning on a machine in order to repair its hardware.
The Court also held CHE was likely to prevail on its contention that StorageTek’s license agreement with its customers allows CHE, as the customers’ agent, to copy StorageTek’s software into RAM during the activation of the customers’ tape libraries. The machine fault information CHE thereafter intercepts and uses is not a protected trade secret.
Judge Rader’s dissent charged the majority’s decision “destroys copyright protection for software that continually monitors computing machine behavior.” Judge Rader pointed out the maintenance code could be disabled without affecting the operating system and, accordingly, CHE’s use of the maintenance code falls outside of the protections of the DMCA repair safe harbor. Judge Rader also disagreed with the majority’s analysis of StorageTek’s trade secret claim, saying the secret consisted not only of the error codes but the information they conveyed in a given instance about the fault with a particular machine.
Reverse Engineering/Internet Gaming Software Held to Breach Shrink-Wrap Contract
By Matthew F. Weil
The U.S. Court of Appeals for the Eighth Circuit held that reverse engineering copyrighted software to allow multi-user gaming on an unauthorized server using unauthorized copies of games violated the Digital Millennium Copyright Act (DMCA). Davidson & Associates, et al. v. Tim Jung, Case No. 04-3654 (8th Cir. Sept. 1, 2005) (Smith, J.). The Court also held that the plaintiffs’ state law breach-of-contract claims were not preempted because those claims neither conflict with the “interoperability exception” to the DMCA nor otherwise restrict rights given under federal law.
Blizzard sued and the district court granted summary judgment in its favor. On appeal, the appellants argued their conduct was permissible under the “interoperability exception” to the DMCA (which allows reverse engineering under certain circumstances) and that any attempt to enforce the no-reverse-engineering clause of the EULA under state contract laws would be preempted.
On the DMCA claim, the Eighth Circuit sided with Blizzard, holding the appellants’ activities did not come within the “interoperability exemption” because their circumvention in this case constituted infringement.
The Court also held there was no preemption because the appellants “freely negotiated” a contract restricting their right to reverse engineer, and the Copyright Act allows a party to contract that right away. The EULA and TOU are not visible on Blizzard’s packaging; they appear only during the installation process. A user can access a game only by accepting the “I Agree” pop-up that appears after the TOU is displayed, and the TOU includes a statement providing users with an opportunity to return the software to Blizzard for a full refund of the purchase price within thirty days. On these facts, the Court concluded the EULA and TOU were “freely negotiated” and properly enforceable contracts, obliging the end user, among other things, not to reverse engineer the product.
State Secrets Privilege Does Not Necessarily Preclude Inquiry into Alleged Trade Secret Misappropriation by Contractor Working on Secret Project
By Matthew F. Weil
The U.S. Court of Appeals for the Federal Circuit has held the United States’ invocation of the state-secret privilege does not automatically preclude a trade-secrets misappropriation claim involving some of the same secret work. Crater Corp. v. Lucent Tech., Inc., Case No. 04-1349 (Fed. Cir. Sept. 7, 2005) (Schall, J.) (Newman, J., concurring in part, dissenting in part).
Crater sued Lucent for infringing a patent directed to an underwater coupling device. Crater also asserted state law claims against Lucent for misappropriation of trade secrets and breach of contract. The record established that, at Lucent’s request and under a confidential disclosure agreement, Crater disclosed to Lucent technical data, drawings and other information relating to its coupler. However, no license authorizing Lucent to make the Crater coupler was ever consummated.
In an earlier decision, the Federal Circuit affirmed the district court’s dismissal of Crater’s patent infringement claim (ruling it was a matter for the Court of Federal Claims), but vacated the court’s dismissal of Crater’s state law claims and remanded the case for further consideration. On remand, the United States intervened for the purpose of asserting the Military and State Secrets Privilege against the disclosure of information sought in discovery by Carter. The district court permitted the assertion of the privilege, granting the government a protective order. After reviewing thousands of classified documents in camera, the district court concluded it would be impossible for Crater to engage in discovery or to make out a prima facie case of misappropriation of trade secrets or breach of contract or for Lucent to properly defend itself. Accordingly, it dismissed Carter’s claims. Crater appealed, arguing the district court erred in allowing the government to assert the state secrets privilege and misapplied the privilege in its discovery ruling and in its decision to dismiss the case.
The Court disagreed with Carter that the government’s assertion of the privilege was improper, holding, among other things, that the secretary of the Navy was not required to personally review each and every one of the 26,000 documents at issue in order for the government to properly invoke the state secrets privilege. The Court concluded, however, the district court did err in dismissing Crater’s state law claims. According to the Court, the question of whether any of Crater’s claims can be adjudicated without privileged information turns on an analysis of the claims in light of the state secret that forms the basis for the government’s assertion of the privilege. That analysis, the Court held, had not been sufficiently developed in the district court and, accordingly, the Court did not have a sufficient basis upon which to review the district court decision. The Court remanded the case to determine precisely what, if any, trade secrets exist in connection with Crater’s coupler and whether there was any enforceable contract between Crater and Lucent.
Stay tuned for Crater III.
ACRA Fails to Prove State Law False Advertising Claim
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The U.S. Court of Appeals for the Ninth Circuit upheld a district court’s grant of summary judgment in a shrink-wrap license case, finding the plaintiff had not produced sufficient evidence to raise a triable issue of fact. Arizona Cartridge Remanufacturers Ass’n. v. Lexmark Int’l. Inc., Case No. 03-16987, 2005 U.S. App. LEXIS 18753 (9th Cir. Aug. 30, 2005) (Fisher, J.).
The Arizona Cartridge Remanufacturers Association (ACRA) represents wholesalers that sell remanufactured printer toner cartridges. ACRA members compete against Lexmark in the market for remanufactured toner cartridges for Lexmark printers. Lexmark offers to sell toner cartridges under a “prebate” program whereby Lexmark discounts the cartridge price and asks the purchaser to return the empty cartridge to Lexmark (and no one else) for remanufacturing. The terms of the prebate “shrink-wrap license” are printed on the cartridge box. ACRA claimed Lexmark’s promotion of its prebate program violates California state false advertising and unfair competition laws. ACRA argued Lexmark misleads consumers when it claims the license is an enforceable agreement and when it promises consumers they will pay less for the cartridge when Lexmark cannot control retail prices charged by resellers. Lexmark was granted summary judgment, and ACRA appealed.
The Ninth Circuit first addressed the issue of whether Lexmark could enforce post-sale conditions on use of the cartridges. The Court agreed with the district court that ACRA had failed to show Lexmark had no legal basis for the restriction. The lower court applied the Federal Circuit’s holding in Mallinkrodt v. Medipart that a post-sale restriction on a patented good may be permissible if it is within the scope of the patent grant and does not stray into behavior having an unreasonable anticompetitive effect. ACRA did not challenge either the Mallinkrodt holding or that the use of a patented good can be constrained but contended the prebate terms did not create a valid contract with the consumer. However, the Court found Lexmark presented sufficient unrebutted evidence showing the prebate license was facially valid under California law. In light of unrebutted evidence that competition compelled resellers to pass discounts from Lexmark to consumers, the Court also agreed Lexmark’s representations were not false. Because the Court found ACRA had not produced sufficient evidence to present a triable issue of fact on either issue, the Court affirmed.