FEDERAL CIRCUIT DECISIONS FOR WEEK ENDING February 19, 2016

Transcription

1 P+S FEDERAL CIRCUIT SUMMARIES VOL. 8, ISSUE 8 FEDERAL CIRCUIT DECISIONS FOR WEEK ENDING February 19, 2016 Lismont v. Alexander Binzel Corporation, No , (February 16, 2016) (Precedential) (3-0); Patent No. US 6,429,406 Mere initiation of patent litigation in a foreign jurisdiction and the existence of a counterpart U.S. patent is not sufficient notice to a defendant to rebut a presumption of laches barring litigation over inventorship. Facts/Background: Binzel-Germany is the owner of U.S. Patent No. 6,429,406, which is a PCT national phase application claiming priority to German Patent No , and is directed to the field of welding. Mr. Lismont asserted he developed the welding technology disclosed in the patents in response to Binzel-Germany s request for assistance in developing a lower-cost manufacturing process. Binzel-Germany filed the German application in August 1997, and the PCT application in August 1998, none of which name Mr. Lismont as an inventor. In October 2000, Lismont initiated litigation against Binzel-Germany in German, seeking change of inventorship on the German patent. In June 2002, Lismont sent a letter to the named inventor of the Germany patent and the Binzel- Germany, demanding damages for the false inventorship. In December 2002, Lismont filed a second suit seeking damages related to his inventorship claim. German courts ultimately ruled against Lismont, holding that he had failed to prove he had an inventorship interest in the German patent. On October 2012 (twelve years after the first German litigation was commenced), Lismont filed suit in federal district court seeking to correct inventorship of the 406 Patent. The district court granted summary judgment against him that the inventorship claim was barred by laches. Lismont appealed. Holding: Affirmed. Lismont argued that the district court should not have applied the laches presumption against his inventorship claim, and alternatively, that his litigation in German courts served as notice to Binzel-Germany that an inventorship suit in the U.S. was likely forthcoming, rebutting the laches presumption. Laches is an equitable defense that may bar an inventorship claim. A rebuttable presumption of laches attaches whenever more than six years passes from the time a purportedly omitted inventor knew or should have known of the issuance of the relevant patent. Based on Lismont s own statements, the Federal Circuit agreed that the laches clock started to run when the 406 Patent issued in As such, the rebuttal resumption was triggered since the present litigation did not start until 2012, ten years later. In some prior cases, the Federal Circuit had recognized that evidence that a party was engaged in other litigation could rebut the laches presumption. However, for other litigation to excuse a plaintiff s delay, the defendant must have adequate notice of the other proceedings as well as of the plaintiff s intention to pursue its U.S. patent rights upon completion of the proceedings in the foreign jurisdiction. The Federal Circuit addressed but rejected possible sources of the requisite notice. Thus, statements made during the German litigation made no explicit mention of a possibility of a U.S. lawsuit. Moreover, Lismont s June 2002 letter, while noting the filing of the U.S. application, failed to indicate that Lismont intended to commence legal proceedings to correct inventorship in the United States. The Federal Circuit concluded that Lismont failed to provide any notice to the defendants in a foreign patent dispute that he would pursue litigation in the courts of the U.S. against the same defendants upon termination of the foreign litigation.

2 Page 2 Secure Web Conference Corp. v. Microsoft Corp., No , (February 17, 2016) (Nonprecedential); U.S. Patent Nos. 6,856,686 and 6,856,687 Claim construction that a device was a stand-alone device which was external to and separate from other devices was supported by a specification that never contemplated an embedded device. Facts/Background: Secure Web owns the 686 and 687 patents directed to secured communications between two microprocessor devices through the use of a security device, which has encryption capabilities and interfaces with each of the microprocessor devices. Claim 1 of the 686 patent recites providing a plurality of security devices each being associated with microprocessor based devices. The 687 patent recites selecting a configuration... dependent upon the presence of a network communication device and an input/output device in communication with said selected ports. Secure Web sued Microsoft, accusing Skype and Lync products of infringing the 686 and 687 patents. The district court entered a claim construction largely in Microsoft s favor, at which point the parties stipulated to a judgement of noninfringement. The district court construed the claim term security device as a stand-alone telecommunications device, external to and separate from the associated microprocessor-based or electronic device, capable of encrypting and decrypting data. Secure Web appealed the claim construction. Holding: Affirmed. The Federal Circuit held that all descriptions of the security device in the intrinsic record (specification) were limited to a stand-alone device. The specification touted the separate and stand-alone feature of the security device as an advantage. For example, the Background section characterized the security device as an add-on component to existing microprocessor-based devices. Figure 1 of the 686 patent illustrated the security device separate from and external to the microprocessor-based devices connecting to it. The appellate court was mindful not to limit claims to preferred embodiments, but held that the district court did not err in concluding that Figure 1 depicted an essence of the claimed invention rather than a preferred embodiment. The Federal Circuit noted that the specification describes Figure 1 as depicting a communication system according to the present invention. As such, the appellate court concluded that based on intrinsic evidence, one of ordinary skill in the art reading the specification would have understood a security device to be a stand-alone device external to and separate from the associated microprocessor devices.

3 Page 3 High Point Sarl v. T-Mobile USA, Inc., No , (February 18, 2016) (Non-precedential); U.S. Patent No. 5,195,090, 5,305,308, and 5,184,347 A cross-licensing agreement covering any or all products of the kinds which were furnished or used by the licensing parties applies to new products even if those products were not specifically sold at the effective date of the cross-licensing agreement for purposes of patent exhaustion. Facts/Background: High Point acquired a number of patents relating to the transmission of packetized cellular telephone traffic through a series of transactions, which began with the original owner AT&T. In 1996, AT&T (which had a subsidiary, Lucent, that eventually merged with Alcatel in 2006) granted a nonexclusive license to Alcatel (including to current and future subsidiaries of Alcatel), for products and services of the kinds which [were] furnished or used by AT&T and Alcatel. In 1988, AT&T entered into a non-exclusive patent cross-licensing agreement with Siemens AG. In 1995, AT&T underwent a major corporate restructuring, and to ensure that the new entities had the same licenses and rights with Siemens, signed a divestment rider in 1995 that granted a sublicense to the divested business by the divesting company. In 1996, Lucent entered into a cross-licensing agreement with LM Ericsson which afforded LM Ericsson the right to grant sub-licenses to its subsidiaries and other related companies. High Point asserted the patents against T-Mobile. The district court permitted two of T- Mobile s suppliers, Nokia Siemens and Ericsson, to intervene as defendants. The defendants then filed for summary judgment, contending that High Point s patent rights were exhausted by the sale of licensed articles that substantially embodied the asserted claims of High Point s patents. The court agreed, holding that the doctrine of patent exhaustion barred all of High Point s infringement claims because the accused products were sold under valid licenses and sublicenses. High Point appealed. Holding: Affirmed. The Federal Circuit rejected High Point s argument that the devices T-Mobile purchased from Alcatel were not licensed because they were not the same kind of product that Alcatel sold when it entered into its 1995 cross-licensing agreement. The appellate court held that even if Alcatel was not in the business of selling such devices in 1996, the license broadly covered any or all products of the kinds sold by Alcatel in Since it was undisputed that Alcatel manufactured switching systems, and that the accused devices are a type of switching system component, they were effectively products of the kinds that Alcatel sold on the effective date of the licensing agreement. The Federal Circuit also rejected High Point s argument that Siemens could not license Nokia Siemens Networks B.V. because it did not qualify as a separately identifiable business under the 1995 divestment rider. The reviewing court held that Nokia Siemens Networks B.V. was a joint venture between a carrier division divested from Siemens and a network business divested from Nokia, which was a separately operating company with its own board of directors and management structure, with autonomy to carry on its own independent business. Lastly, the Federal Circuit rejected High Point s argument that the sublicense that LM Ericsson granted to its U.S. subsidiary was invalid because it was conveyed in January 2013, and the terms of the asserted patents expired in July The court held that the cross-licensing agreement did not have a termination date, and that Ericsson had a right to grant a retroactive license.

4 Page 4 Ohio Willow Wood Co. v. Alps South, LLC, No and -1133, (February 19, 2016) (Precedential) (3-0); U.S. Patent No. 5,830,237 Evidence that a party withheld corroborating evidence, while knowing the question of validity turned in substantial part on uncorroborated testimony regarding prior art, meets the Therasense standard for inequitable conduct. Facts/Background: Ohio Willow Wood (OWW) sued Alps South alleging infringement of a group of patents for a cushioned sock with a gel coating that fits over an amputee s stump. In 2004, OWW sued Alps for infringing the 237 patent. Alps challenged the validity of the 237 patent in two successive ex parte reexams. The BPAI reversed the examiner s rejection. On lifting the stay of litigation, the district court granted summary judgment to Alps on invalidity on grounds of obviousness and collateral estoppel, but rejected an argument that OWW had engaged in inequitable conduct. Both sides appealed. In 2013, the Federal Circuit affirmed the finding that the patent was invalid, but remanded the case on the issue of inequitable conduct for additional fact finding. On remand, the district court held a bench trial, and found inequitable conduct in the second reexam arising from the conduct of a director of research and development at OWW, who was responsible for overseeing the Alps litigation for the company. OWW used the same law firm for both the litigation and the reexam proceedings. That law firm established an ethical screen to separate the attorneys handling each proceeding, and the individual became the connection in the middle and only sent information to each team he thought was appropriate. The trial judge found that Mr. Colvin withheld information from the USPTO during the second reexam. Specifically, the court found (1) Colvin was aware that OWW s reexam counsel had represented to the BPAI that a key declarant s prior invention testimony was entirely uncorroborated; (2) that Colvin was aware of materials that corroborated that declarant s testimony; and (3) that Colvin failed to correct his counsel s misrepresentation. Based on its inequitable conduct finding, the trial judge ruled the 237 patent unenforceable, found the case to be exceptional, and imposed a fee award against OWW. OWW appealed. Holding: Affirmed. Even with the raised standard for inequitable conduct created by the 2011 Therasense decision, the Federal Circuit held the evidence supported a finding of inequitable conduct. Alps had argued during the second reexam that the 237 patent was invalid based on a product from a competitor (Silipos), and presented testimony from a Silipos employee. OWW had convinced the BPAI that the testimony was unreliable because it was uncorroborated, and the BPAI had agreed. The trial judge found (and the Federal Circuit agreed) that the individual knew of letters that corroborated the evidence, but failed to present them or share them with his reexam counsel. The Federal Circuit found that evidence supported the district court s finding that the individual s withholding was the product of deceptive intent. His testimony indicated that he understood that the second reexam turned in substantial part on the question of corroboration, and that he could have given his reexam counsel the letters, but chose not to. The court also found that OWW offered no reasonable explanation for Colvin s conduct.

5 Page 5 White v. H.J. Heinz Co., No , (February 19, 2016) (Non-precedential); U.S. Patent No. 8,231,026 Inherent anticipation requires that the prior art necessarily include the unstated limitation. Facts/Background: White and Heinz were involved in an infringement action over the 026 patent covering a type of ketchup packet. Claim 1 of the 026 patent recited a cover for covering a container portion, the cover is totally removable from the deep end of the container and the cover is removable from the shallow end of the container to squirt the condiment. Heinz requested inter partes reexam of the 026 patent, asserting that the claims were anticipated by US Publication No. 2001/ ( Selker ). See Figure 3. The Examiner held the claims invalid as anticipated. White appealed to the PTAB, arguing that Selker would have necessarily included a stop that would prevent total removal of the cover, but the PTAB affirmed the Examiner s rejection. White appealed to the Federal Circuit. Holding: Affirmed. White argued that the PTAB erred in finding Selker does not disclose an inherent stop limitation preventing complete removal of the container cover, and the PTAB erred in its applying the law of inherent anticipation. The Federal Circuit found that substantial evidence supported the PTAB s determination that Selker does not inherently disclose a stop. Selker neither depicted in any drawings nor described in any textual disclosure, structure that might prevent the cover from being removed from both end of Selker s package. Rather, Selker specifically discloses reliance upon the user to refrain from peeling the cover back any more than necessary to make the condiment available for use as the user desires. The Federal Circuit dismissed expert testimony that analyzed Figure 3 and calculated that 57% of the lid was intended to remain attached, because patent drawings are not to be relied upon for specific size or precise proportion if the specification is silent on the issue. The Federal Circuit held that the PTAB did not err in its analysis of inherent anticipation. Inherent anticipation requires that the prior art necessarily includes the unstated limitation. In this case, the PTAB found Selker did not disclose a stop, which was supported by express disclosures in Selker that caution the user to refrain from peeling the cover back more than necessary.

6 Page 6 Zoltek Corp. v. US, No , (February 19, 2016) (Precedential) (3-0); U.S. Reissue Patent No. RE 34,162 or U.S. 4,728,395 It is not an improper broadening amendment when a reissue applicant, with the considered agreement of the reissue Examiner, substitutes a preparatory step known to those skilled in the art at the time of the invention with a requirement to start with the product of that known preparatory step (e.g., previously oxidized and stabilized fiber starting material ). Testimony that an expert witness was able to reproduce a discovery underpinning a patented method using data from the prior art record is not dispositive evidence of obviousness. Facts/Background: Zoltek sought compensation from the United States, alleging that the process used to produce carbon fiber sheet materials in the B-2 Bomber and the F-22 Fighter Plane infringed the 162 patent. The process in the 162 patent covers the manufacture of carbon fiber sheet material whose electrical resistance is pre-selected and value-controlled based on the inventor s discovery of a nonlinear relationship among the heat treatment conditions, partial carbonization, and surface resistance. This is the third appeal in this action. On remand from the last appeal, the Court of Federal Claims ( CFC ) separated trial of the issues of validity and infringement (due to state secret privilege). The government challenged the 162 patent under inadequate written description and obviousness. The CFC agreed on both grounds, holding that the original patent did not support the elimination of several steps from the reissued claims and that this rendered the claims invalid for lack of written description. Reissued claim 1 had replaced the step of oxidizing and stabilizing a carbonizable fiber with recitation of a previously oxidized and stabilized fiber starting material. The CFC also held the claims invalid as obvious, relying on the government s expert Dr. Sullivan, who developed a graph duplicating the non-linear relationship disclosed in the 162 patent using data from the 162 patent record, and various references and articles. Zoltek appealed. Holding: Reversed. On the issue of the inadequate written description, the Federal Circuit held that it was not an improper broadening amendment when a reissue applicant, with the considered agreement of the reissue Examiner, substitutes the preparatory oxidizing and stabilizing step known to those skilled in the art at the time of the invention with a requirement to start with the product of that known preparatory step ( previously oxidized and stabilized fiber starting material ). The specification plainly and without dispute describes that the starting material is an oxidized and stabilized fiber, cites references showing this known material, and describes its preparation. The appellate court rejected the government s argument that the asserted claims were not supported by the specification because the specification does not state that these steps need not be performed by the same entity. The Federal Circuit reasoned that the question of who performs the steps of a fully described invention, including preparation of the known starting material, was not a matter of the written description requirement, but rather an issue of infringement. On the issue of obviousness, the Federal Circuit found error in the government s argument that since Dr. Sullivan is a renowned scientist in this field, and since Dr. Sullivan was able to reproduce the Figure 4 graph, it was obvious to do so. The appellate court found that there was no teaching or suggestion in the prior art to select the data that Sullivan selected, and to plug the selected data into the mathematical equation that Sullivan devised. Consequently, the selection of the data and its use in the devised equation was not evidence of obviousness. The Federal Circuit further noted errors in the expert s calculations and that the expert s inability to accurately duplicate the discovery due to lack of complete information was powerful evidence of non-obviousness.