The Patent Year in Review *

Transcription

1 The Patent Year in Review * Harold C. Wegner ** DECISIONS NOT REACHED WHEN 2 THIS PAPER WAS COMPLTED DETAILED TABLE OF CONTENTS 3 I. THE NEW PROST COURT, WHAT WILL HAPPEN 4 II. THE TOP TEN PATENT CASES THIS PAST YEAR 11 III. CASES BEYOND THE TOP TEN 40 ABOUT THE AUTHOR 53 * Paper prepared for the Los Angeles Intellectual Property Law Association Spring Seminar, Ojai Valley Inn, California, June 6-8, This paper represents the personal views of the author and does not necessarily reflect the views of any colleague, organization or client thereof. This version: May 26, ** Partner, Foley & Lardner LLP. Biographical information is found on the last page. 1

2 DECISIONS NOT REACHED WHEN THIS PAPER WAS COMPLTED When this paper was prepared there were four important cases that are expected to be decided at any time: Top Ten No. (1) Nautilus v. Biosig: A Supreme Court merits decision is expected before the end of June 2014; see p. 18 Top Ten No. (4) Limelight: A Supreme Court merits decision is expected before the end of June 2014; see p.22 Top Ten No. (9) Commil v. Cisco. A Supreme Court decision whether certiorari has been granted is expected May 27, 2014; see p.27. Consumer Watchdog v. WARF, a decision by the Federal Circuit remains outstanding;; see p

3 DETAILED TABLE OF CONTENTS I. THE NEW PROST COURT, WHAT WILL HAPPEN 4 II. THE TOP TEN PATENT CASES THIS PAST YEAR 11 (1) Dolly the Sheep Case (Roslin Institute) Patent Eligibility (2) Nautilus v. Biosig 112(b) Indefiniteness (3) Teva v. Sandoz: Cybor de novo Appellate Claim Construction (4) Limelight All Elements Rule (5) Alice v. CLS Bank: 101 Patent-Eligibility (6) Octane Fitness Exceptional Case (7) Highmark Appellate Deference (8) Commil v. Cisco (b) Scienter (9) Fresenius: PTO Post-Grant Proceeding Trumps Infringement Victory (10) In re Packard: Piecemeal Examination for Claim Definiteness III. CASES BEYOND THE TOP TEN 40 Medtronic v. Boston Scientific: MedImmune, Burden of Proof Petrella v. MGM: Is Laches a defense to Patent Infringement? Gilead Sciences Double Patenting Transocean Offshore 271(a) Extraterritoriality Consumer Watchdog v. WARF Post-Grant Standing Lighting Ballast, a Footnote A Fractured Ivory Tower ABOUT THE AUTHOR 53 3

4 I. THE NEW PROST COURT, WHAT WILL HAPPEN The Hon. Sharon R. Prost is now in her first week as Chief Judge of the Federal Circuit. The new Chief Judge comes to her position with an appropriate blend of talents well suited to leadership of the Court both in terms of knowledge of the patent law and the administrative skills to run an appellate tribunal. From a standpoint of knowledge of patent law, Judge Prost has now had thirteen years experience on the bench. She has developed a well earned reputation for being at the center of the Court. While respectful of the rights of inventors, she also has carefully respected the rights of competitors as established under KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007). The Chief Judge has had several open differences of opinion with the jurist who has set the record for the largest number of dissenting opinions of any federal appellate jurist in the history of the United States, perhaps most colorfully in Top Ten No. (8) Commil USA, LLC v. Cisco Sys., 720 F.3d 1361 (Fed. Cir. 2013)(Prost, J.), further proceedings, 737 F.3d 699, 700 (Fed. Cir. 2013)((Reyna, J., joined by Rader, C.J., Newman, Lourie, Wallach, JJ., dissenting from den. rh g en banc); id., 737 F.3d at (Newman, J., joined by Rader, C.J., Reyna, Wallach, JJ, dissenting from den reh g en banc). 4

5 At the panel level the Chief Judge stood her ground and bluntly dismissed the dissenting voice: In dissent, Judge Newman does little more than construct a straw man and set him ablaze. Commil, 720 F.3d at 1368 n.1. At the level of a decision on rehearing en banc by a badly divided court, the Chief Judge manifested the maturity of a senior jurist: She merely voted to deny rehearing en banc without feeling the need to issue a concurring opinion. Given that every Federal Circuit judge has an equal voice, insofar the most recent Chief Judge remains in active service there should be a net zero change in the outcome of Federal Circuit decisions. (The one significant difference in positions is that the Chief Judge, if in the majority, always appoints the author of an opinion where she sits on the panel.) More important from a standpoint of the position of Chief Judge, the new leader of the Court has administrative responsibilities that require dealing with the dozen active and six senior members of the Court to help forge a more unified consensus on issues before the Court. The new Chief Judge has an excellent background for such duties; prior to joining the Federal Circuit she had key roles in the United States Senate; forging coalitions and working smoothly with colleagues and the public sector were imperatives. In that eight year period working for the United States Senate she was first of all Chief Labor Counsel (Minority), Senate Committee on Labor and Human Resources and thereafter served on the Committee on the Judiciary as Minority Chief Counsel, Deputy Chief Counsel ultimately Chief Counsel. 5

6 It may be expected that the new Chief Judge will direct the energies and resources of the Court to its primary function of deciding appellate cases. In this regard, the international series of Federal Circuit ventures to Asia will play a diminished role. This is despite the fact that the new Chief Judge has been an active participant and has been a good diplomat for the United States in these activities. Forging international relationships through overseas destinations by en banc Federal Circuit panels in the international series will not be a priority under her Administration. * * * 6

7 Beyond the ascendancy of Chief Judge Prost to her new position, the big story for patent law this year is the state of the Federal Circuit as the once Supreme Court of Patent Law that was the reality in the Markey Years as Chief Judge of the Court but today has the Federal Circuit under the watchful eye of the Supreme Court: Markey Era. ( ) none none none none none none none none. Eli Lilly v. Medtronic (1990). Post-Markey Era. ( ) 1991 none none. Cardinal v. Morton (1993) 1994 none. Asgrow v. Winterboer (1995). Markman v. Westview (1996) Warner-Jenkinson (1997). Pfaff v. Wells (1998) Zurko (1999) Florida Prepaid (1999) 2000 none. J.E.M. Ag Supply (2001) Festo (2002). Holmes v. Vornado (2002) Post-Festo Era (2002- ) None None Merck v. Integra (2005). ebay Inc. (2006). Unitherm (2006). MedImmune (2007). KSR v. Teleflex (2007). Quanta (2008).. Carlsbad (2009). Bilski (2010). Global-Tech (2011). Stanford v. Roche (2011). Microsoft v. i4i (2011). Kappos v. Hyatt (2012). Caraco v. Novo (2012). Mayo. v. Prometheus (2012). Gunn v. Minton (2013) c. Bowman v. Monsanto (2013). Myriad (2013). FTC v. Actavis (2013) c. Medtronic v. Boston Sci. (2014). Highmark v. Allcare (2014). Octane Fitness (2014). Alice v. CLS Bank (2014). Nautilus v. Biosig (2014). Limelight (2014). 7

8 Why has the Supreme Court taken an unprecedented interest in the Federal Circuit patent jurisprudence? For one thing, patents do play an ever increasingly important role in the American economy. But, there are other factors involving the Federal Circuit itself: The situation is made complex by the existing large turnover of active members on the Court; half the Court has joined since 2010; furthermore, half the current court is retirement-eligible or will be within two years: Federal Circuit Years to Retirement Eligibility Fed. Cir. prior to 2010 Fed Cir. since 2010 Circuit Judge Years until Retirement Eligibility Prost, J. *+ Newman, J. Currently eligible. Lourie, J. Currently eligible. Rader, J. Currently eligible. Dyk, J. Currently eligible. Moore, J. *+ + O Malley, J. * Reyna, J. * Wallach, J. eligible November 11. Taranto, J. * + Chen, J. * + Hughes, J. * + * Retirement eligibility: Prost, J. (2016); Moore, J. (2033); O Malley, J. (2021); Reyna, J. (2022); Taranto, J. (2025); Chen, J. (2033); Hughes, J. (2031). + Chief Judge Prost is eligible to remain as Chief Judge until 2021 on the earlier of the seventh anniversary as Chief Judge or her 70th birthday; Circuit Judge Moore automatically becomes her successor whenever the next vacancy in the position occurs as the senior-most active judge under age 65. 8

9 Herding Cats: Disharmony within the Court on Public Display A major contributing factor to the heightened Supreme Court scrutiny of the Federal Circuit is seen from the large number of dissents in en banc patent cases. There is an unprecedented number of en banc cases today in contrast to the Markey era. In just the past two years there have been eight major en banc splits with more than two dissenting voices, whereas in the entire seven-plus years that Chief Judge Markey presided over the Federal Circuit there were only five such published decisions. * The dissents of the past two years have also generally been marked by extensive commentary to pinpoint to the Supreme Court the fact of an openly divided Federal Circuit: Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301(Fed. Cir. 2012)(en banc)(per curiam)(newman, J., dissenting; Linn, J., joined by Dyk, Prost, O Malley, JJ., dissenting), further proceedings, Limelight Networks, Inc. v. Akamai Techs., Inc., Supreme Court No (awaiting merits decision) Highmark, Inc. v. Allcare Health Mgmt. Sys., 701 F.3d 1351(Fed. Cir. 2012)(en banc)(den. pet. reh g en banc)(per curiam)( Moore, J., joined by Rader, C.J., O Malley, Reyna, Wallach, JJ., dissenting from the denial of the petition for rehearing en banc; Reyna, J., joined by Moore, O Malley, Wallach, JJ., and joined in part by Rader, C.J.), rev d, U.S. (2014)(Sotomayor, J.) * Paulik v. Rizkalla, 760 F.2d 1270 (Fed. Cir.1985)(en banc) (Markey, J., joined 7-5 majority); In re Bennett, 766 F.2d 524 (Fed. Cir. 1985)(en banc)(markey, J., joined 6-3 majority); SRI Int'l v. Matsushita Elec. Corp., 775 F.2d 1107 (Fed. Cir. 1985)(en banc) (Markey, C.J.)(6-5 vote); Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931 (Fed. Cir. 1987) (en banc)(markey, C.J., joined 8-4 majority); In re Roberts, 846 F.2d 1360 (Fed. Cir. 1988) (en banc)(order)(markey, C.J.)(8-4 vote). 9

10 NSK Corp. v. United States ITC, 542 Fed. Appx. 950 (Fed. Cir. 2013)(en banc)(order den. reh g en banc)(wallach, J., joined by Rader, C.J., Reyna, J., dissenting) CLS Bank Int'l v. Alice Corp. Pty, 717 F.3d 1269 (Fed. Cir. 2013)(en banc)(per curiam)(rader, C.J., dissenting-in-part, joined by Linn, Moore, O Malley, JJ.; Moore, J., joined by Rader, C.J., dissenting-in-part; Newman, J., dissenting-in-part; Linn, O Malley, JJ., dissenting), further proceedings, Alice Corp. Pty. Ltd v. CLS Bank Intern., Supreme Court No (awaiting merits decision) Robert Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305 (Fed. Cir. 2013)(en banc)(prost, J.)(Rader, C.J., joined the majority; Moore, J., dissenting-in-part; Reyna, J., dissenting-in-part; O Malley, J., joined by Reyna, J., dissenting-in-part) Fresenius USA, Inc. v. Baxter Int'l, Inc., 733 F.3d 1369 (Fed. Cir. 2013)(den. pet. reh g en banc)(per curiam)(o Malley, J., joined by Rader, C.J., Wallach, JJ, dissenting; Newman, J., dissenting) Commil USA, LLC v. Cisco Sys., Inc., 720 F.3d 1361(Fed. Cir. 2013)(Prost, J)(Newman, J., dissenting), further proceedings, 737 F.3d 699, 700 (Fed. Cir. 2013)((Reyna, J., joined by Rader, C.J., Newman, Lourie, Wallach, JJ., dissenting from den. rh g en banc); id., 737 F.3d at (Newman, J., joined by Rader, C.J., Reyna, Wallach, JJ, dissenting from den reh g en banc); a petition for certiorari was set for a decision to be announced May 27, Lighting Ballast Control LLC v. Philips Elecs. North Am. Corp., 744 F.3d 1272 (Fed. Cir. 2013)(en banc)(newman, J.)(6-4 vote)(o Malley, J., joined by Rader, C.J., Reyna, Wallach, JJ., dissenting) 10

11 II. THE TOP TEN PATENT CASES THIS PAST YEAR (1) Dolly the Sheep Case Patent-Eligibility In the Dolly the Sheep case, more formally In re Roslin Institute (Edinburgh), F.3d (Fed. Cir. May 8, 2014)(Dyk, J.), the Federal Circuit builds upon the Supreme Court denial of patent-eligibility in the decision from a year ago in the Myriad case: In Myriad, the Court concluded that "isolated," naturally occurring DNA strands are not eligible for patent protection. Association for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013)(citations to internal quotations to Myriad deleted). Here, as in Myriad, Roslin "did not create or alter any of the genetic information" of its claimed clones, "[n]or did [Roslin] create or alter the genetic structure of [the] DNA" used to make its clones. Id. The Dolly the Sheep case presents a snapshot view of a Court in difficulty and precisely why the Supreme Court gives so much attention to the appellate tribunal tasked with crafting a uniform body of patent case law. As new precedent from the standpoint of shaping the patent law, the Dolly the Sheep case is of minor importance. As new precedent from the standpoint of creating a negative public opinion of patentability, the Dolly the Sheep case is a very important and notorious case. The Dolly the Sheep case shows that the Court had a very easy way to affirm denial of product claims to the patent applicant based upon garden variety anticipation that is free from any doubt; yet, the Court chose to go into the realm of patent-eligibility under 35 USC 101 which is sure to keep the spotlight of 11

12 attention on this Court including attention from the Supreme Court. Even worse, however, an unnecessary and incorrect characterization of the case law is perpetuated. The current court could take a page from the 1970 s when the CCPA refrained from unnecessarily raising red flags and better stayed under the Supreme Court radar screen. Claims to the Clone, Dolly the Sheep The key claim in question is to a live sheep (or other barnyard animal), provided it has been cloned. The claim is not to a cloning method, but to the live animal, per se. There is no limitation to the main claim other than that the sheep has been cloned: A live-born clone of a pre-existing, non-embryonic, donor mammal wherein the mammal is selected from cattle sheep, pigs, and goats. The Patent Office quite properly denied patentability on the basis of anticipation as the claim covered any barnyard animal from the named Markush group without any distinguishing characteristic. The author of the opinion in Roslin Institute was quite well aware of the fact that the claims to Dolly the Sheep and other barnyard animals were anticipated by the prior art under 35 USC 102 and that it was of no moment to patentability how the animals were created: In determining validity of a product-by-process claim, the focus is on the product and not the process of making it. Greenliant Sys., Inc. v. Xicor LLC, 692 F.3d 1261, 1268 (Fed. Cir. 2012)(Dyk, J.)(citation omitted). 12

13 (The law of product-by-product-by-process patentability is explained in In re Thorpe, 777 F.2d 695, (Fed. Cir. 1985)(Newman, J.)) Even if the claims defined an animal with bare novelty, the cloned animal would be expected to share common properties and thus, the invention as a whole would be obvious under 35 USC 103: The burden in such a case of prima facie obviousness is in any event upon the patent applicant under the Papesch line of case law: [I]f an examiner considers that he has found prior art close enough to the claimed invention to give one skilled in the relevant chemical art the motivation to make close relatives of the prior art compound(s), then there arises what has been called a presumption of obviousness or a prima facie case of obviousness. In re Henze, 181 F.2d 196 (CCPA 1950); In re Hass, 141 F.2d 122, 127, 130 (CCPA 1944). The burden then shifts to the applicant, who then can present arguments and/or data to show that what appears to be obvious, is not in fact that, when the invention is looked at as a whole. In re Papesch, 315 F.2d 381 (CCPA 1963). In re Dillon, 919 F.2d 688, 696 (Fed. Cir. 1990)(en banc)(lourie, J.) What s Wrong with the Dolly the Sheep case: Part (I) Roslin Institute is hardly unique in terms of exploring areas of the law totally unnecessary to reach the correct holding. Here, it should have been a simple matter to produce a one or two paragraph opinion affirming the Patent Office denial of the Roslin Institute claims based upon anticipation under 35 USC 102. But, the panel refrained from touching anticipation as basis for affirmance but instead created it own analysis on the patenting of animals under patenteligibility under 35 USC

14 To be sure, in recent cases the Supreme Court has said that patent-eligibility under 35 USC 101 should be considered even before patentability. Yet, to simply follow guidance in the face of facts that deserve summary treatment and reach the same outcome minimizes the role of the Federal Circuit in its task of creating a uniform body of patent law. What s Wrong with the Dolly the Sheep case: Part (II) The Court also took the opportunity to provide a scholarly analysis of Supreme Court case law. Without citation to any authority and thus presumably the panel s own scholarship, the panel stated that: [T]he Court's opinion[ ] in Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127 (1948), made clear that naturally occurring organisms are not patentable. In Funk Bros., the Supreme Court considered a patent that claimed a mixture of naturally occurring strains of bacteria that helped leguminous plants extract nitrogen from the air and fix it in soil. 333 U.S. at The Court concluded that this mixture of bacteria strains was not patent eligible because the patentee did not alter the bacteria in any way. Id. at 132 ("[T]here is no invention here unless the discovery that certain strains of the several species of these bacteria are noninhibitive and may thus be safely mixed is invention. But we cannot so hold without allowing a patent to issue on one of the ancient secrets of nature now disclosed."). Critically, in Funk Bros., the Court explained: [w]e do not have presented the question whether the methods of selecting and testing the non-inhibitive strains are patentable. We have here only product claims. [The patentee] does not create a state of inhibition or of non-inhibition in the 14

15 bacteria. Their qualities are the work of nature. Those qualities are of course not patentable. For patents cannot issue for the discovery of the phenomena of nature. The qualities of these bacteria, like the heat of the sun, electricity, or the qualities of metals, are part of the storehouse of knowledge of all men. They are manifestations of laws of nature, free to all men and reserved exclusively to none. Id. at 130 (citation omitted). Thus, while the method of selecting the strains of bacteria might have been patent eligible, the natural organism itself the mixture of bacteria was unpatentable because its "qualities are the work of nature" unaltered by the hand of man. Id. Unfortunately, the scholarship does not comport with the reality of the case law. Funk v. Kalo is explained by Professor Shine Tu, Funk Brothers an Exercise in Obviousness, 80 UMKC L. Rev. 637, (2012). If the Supreme Court is to be criticized for faulty analysis of its own case law, blame must be shared by others who provide the same faulty analysis. (To be sure, the panel cites to Chakrabarty and characterization of Funk v Kalo in that case. But, the statements in Chakrabarty represent dictum unnecessary to the holding of patent-eligibility in that case.) What s Wrong with the Dolly the Sheep case: Part (III) Issuing an opinion on the patent-eligibility of a mammal is highly controversial, no matter what the outcome. Why, precisely, did the Court find it necessary to reach this issue in the face of a black and white case of unpatentability for anticipation? 15

16 There were opportunities in the early 1970 s when the predecessor CCPA had the opportunity to reach the issue but wisely refrained from doing so. Instead of dealing with patent-eligibility of mammals or even chickens the Court gingerly dealt with microorganisms. American courts of that era were reluctant to deal with patent-eligibility of anything in the animal kingdom above a microorganism. (In contrast, the German Supreme Court, the Bundesgerichtshof, had no trouble addressing the patent-eligibility of red doves and baker s yeast. Rote Taube ( Red Dove )(BGH 1969), 1 IIC 136 (1970); Bäckerhefe ( Baker s Yeast ), 6 IIC 382 (1975); see also Wegner, Patenting Nature s Secrets Microorganisms, 7 IIC 235 (1976); Wegner, Patent Protection for Novel Microorganisms Useful for the Preparation of Known Products, 5 Int'l Rev. Indus. Prop. & Copyright L. 285 (1974).) The issue of patenting a barnyard animal as in the Dolly the Sheep case was raised forty years ago in In re Merat, 519 F.2d 1390 (CCPA 1975)(Rich, J.), where instead of sheep claim 2 was a product by process claim to a heavy meat chicken. Written in independent form, claim 2 reads: [The product obtained by the controlled] process for production of normal chickens from dwarf hens and normal cocks which includes passing through a dwarf breed and a heavy breed into which an nr sex-linked recessive dwarfism gene has been introduced, comprising crossing females of a cooking breed of poultry having good growth and fattening characteristics with cocks of small size which carry the nr gene, causing the animals obtained by this first crossing to reproduce with one another retaining all the subjects of small size which carry the nr gene so as to constitute a basic breed, and coupling the dwarf hens of this breed with any desired breed of normal heavy meat cocks, thereby obtaining, as an industrial product, a chick to be raised as a cooking chicken of normal heavy meat size. 16

17 The Court in Merat wisely took the cautious approach of denying claim 2 on a basis other than lack of Section 101 patent-eligibility. See In re Bergy, 563 F.2d 1031, 1035 (CCPA 1977)(Rich, J.)(discussing Merat), vacated and superseded by new decision, 596 F.2d 952 (CCPA 1979)(Rich, J.), aff d sub nom Diamond v. Chakrabarty, 447 U.S. 303 (1980). * * * The Dolly the Sheep case is not an isolated example of the Federal Circuit forging ahead with the creation of case law where none was needed at the time. Creating unnecessary controversy through opinions reaching out into areas unnecessary for the holding that result in fractured panels represent a root cause for the greater attention focused on the Federal Circuit today, and for the increased watchfulness of the Supreme Court. Judicial restraint has gone out the window at Madison Place. 17

18 (2) Nautilus v. Biosig Datamize Déjà vu [The Supreme Court had not decided this case when this paper was prepared] In Nautilus, Inc. v. Biosig Instruments, Inc., Supreme Court No , opinion below, Biosig Instruments, Inc. v. Nautilus, Inc., 715 F.3d 891 (Fed. Cir. 2013)(Wallach, J.), petitioner reawakens the ghost of United Carbon Co. v. Binney & Smith Co., 317 U.S. 228 (1942), the last major Supreme Court case where claims were invalidated for indefiniteness under what today is 35 USC 112(b). The key first Question Presented focuses upon the Federal Circuit s Datamize test that sustains the validity of claims under 35 USC 112(b) unless they are insolubly ambiguous. Thus, the petition asks [whether] the Federal Circuit s acceptance of ambiguous patent claims with multiple reasonable interpretations so long as the ambiguity is not insoluble by a court defeat the statutory requirement of particular and distinct patent claiming? The opinion below bluntly restates the Datamize test: A claim is indefinite only when it is not amenable to construction or insolubly ambiguous. Biosig v. Nautilus, 715 F.3d at 898, quoting Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1347 (Fed. Cir. 2005)(Prost, J.). Some would say that the Datamize test merely follows Exxon Research & Eng'g Co. v. United States, 265 F.3d 1371 (Fed. Cir. 2001). Datamize created a more liberal test for maintaining the validity of claims against an indefiniteness charge under 35 USC 112(b) than Exxon Research. While it is true that there is 18

19 reference in Exxon Research to invalidity where a claim is insolubly ambiguous, the reference is dictum because the holding in Exxon Research is that where there are two different interpretations possible for a claim, one broader and one narrower, then the narrower interpretation governs. In turn, this test did not originate with Exxon Research but may be traced back further to Athletic Alternatives, Inc. v. Prince Mfg., Inc., 73 F.3d 1573, 1581 (Fed. Cir. 1996). As explained in Exxon Research: If a claim is insolubly ambiguous, and no narrowing construction can properly be adopted, we have held the claim indefinite. If the meaning of the claim is discernible, even though the task may be formidable and the conclusion may be one over which reasonable persons will disagree, we have held the claim sufficiently clear to avoid invalidity on indefiniteness grounds. See, e.g., Modine Mfg. Co. v. U.S. Int'l Trade Comm'n, 75 F.3d 1545, 1557 (Fed. Cir. 1996) (rejecting indefiniteness argument after construing claims; stating that "when claims are amenable to more than one construction, they should when reasonably possible be interpreted to preserve their validity"); Athletic Alternatives, Inc. v. Prince Mfg., Inc., 73 F.3d 1573, 1581 (Fed. Cir. 1996) (court chose the narrower of two equally plausible claim constructions in order to avoid invalidating the claim). By finding claims indefinite only if reasonable efforts at claim construction prove futile, we accord respect to the statutory presumption of patent validity, see N. Am. Vaccine, Inc. v. Am. Cyanamid Co., 7 F.3d 1571, 1579 (Fed. Cir. 1993), and we protect the inventive contribution of patentees, even when the drafting of their patents has been less than ideal. Exxon Research, 265 F.3d at 1375 (emphasis added). 19

20 Post-Nautilus Options for the Federal Circuit If the Supreme Court remands the Nautilus case with instructions for the Federal Circuit to devise a new test, an apparent trial balloon has been floated in a decision of the Federal Circuit subsequent to the grant of certiorari in Nautilus: We long ago established that [w]here there is an equal choice between a broader and a narrower meaning of a claim, and there is an enabling disclosure that indicates that the applicant is at least entitled to a claim having the narrower meaning, we consider the notice function of the claim to be best served by adopting the narrower meaning. Takeda Pharm. Co., Ltd. v. Zydus Pharms. USA, Inc., 743 F.3d 1359, 1365 (Fed. Cir. 2014)(Prost, J.) (quoting Athletic Alternatives, Inc. v. Prince Mfg., Inc., 73 F.3d 1573, 1581 (Fed. Cir. 1996), and also citing Halliburton Energy Servs. v. M-I LLC, 514 F.3d 1244, 1254 (Fed. Cir. 2008); Acumed LLC v. Stryker Corp., 483 F.3d 800, 817 (Fed. Cir. 2007)(Moore, J., dissenting)) The test quoted in Takeda v. Zydus has the advantage of serving the notice function by giving a claim for purposes of infringement the narrower of alternative interpretations, while for purposes of validity the broader interpretation may be used. The Lord Loreborn Approach used in the Commonwealth The Commonwealth approach of Lord Loreborn has been used in Canada which provides a three part avoidably ambiguous test: [1] [L]anguage which is avoidably obscure or ambiguous [invalidates the claim] whether the defect be due to design, or to carelessness or to want of skill. [2] Where the invention is difficult to explain, due allowance will, of course, be made, for any resulting difficulty in the language. [3] But nothing can excuse the use of ambiguous language when simple language can easily be employed, and the only safe way is for the patentee to do his best to be clear and intelligible." 20

21 Pfizer Canada Inc. v. Canada (Minister of Health), [2005] F.C.J. No (Federal Court of Canada 2005)(Hughes, J.)(quoting Natural Colour Kinematograph Company Limited v Bioschemes Limited (1915) 32 RPC 256, 266 (1915)(Loreborn, J.))(emphasis added; rephrased as shown in brackets and reformatted with paragraph numbers added).. (3) Teva v. Sandoz: Cybor de novo Appellate Claim Construction Just thirty-eight (38) days after Lighting Ballast Control LLC v. Philips Elecs. N. Am., 744 F.3d 1272 (Fed. Cir. 2014) (en banc), sustained de novo appellate claim construction under Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), the Court granted certiorari to review the same issue in Teva Pharms. USA, Inc. v. Sandoz, Inc., 134 S. Ct (2014), in a petition keyed to Lighting Ballast. Lighting Ballast thus today stands as a mere footnote to patent history and provides a permanent reminder of the tremendous isolation of the Federal Circuit, divorced from the realities of what goes on in the world beyond the top two floors on Madison Place above Lafayette Square. An argument is expected in Teva v. Sandoz this Fall; a decision is expected in 2015 before the Court commences its summer recess at the end of June. 21

22 The only Question Presented squarely raises the Cybor issue: [Should] a district court's factual finding in support of its construction of a patent claim term [ ] be reviewed de novo, as the Federal Circuit requires (and as the panel explicitly did in this case), or only for clear error, as Rule 52(a) requires. (4) Limelight All Elements Rule [The Supreme Court had not decided this case when this paper was prepared] In Limelight Networks, Inc. v. Akamai Techs., Inc., Supreme Court No , opinion below, Akamai Techs., Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012)(en banc)(per curiam), active inducement infringement of a combination claim was found under 35 USC 271(b) despite the fact that no single party performed each and every element of the combination so that there was no direct infringer under 35 USC 271(a). The Question Presented is [w]hether the Federal Circuit erred in holding that a defendant may be held liable for inducing patent infringement under 35 U.S.C. 271(b) even though no one has committed direct infringement under 271(a). 22

23 (5) Alice v. CLS Bank: 101 Patent-Eligibility [The Supreme Court had not decided this case when this paper was prepared] In Alice Corp. Pty. Ltd v. CLS Bank Intern., Supreme Court Docket No , opinion below, CLS Bank Intern. v. Alice Corp. Pty. Ltd., 717 F.3d 1269 (Fed. Cir. 2013)(en banc)(per curiam), replacing the vacated panel opinion, 685 F.3d 1341 (Fed. Cir. 2011)(Linn, J.), Petitioner challenges denial of patent-eligibility under 35 USC 101. The Question Presented at the Supreme Court is [w]hether claims to computer-implemented inventions including claims to systems and machines, processes, and items of manufacture are directed to patent-eligible subject matter within the meaning of 35 U.S.C. 101 as interpreted by this Court? A Badly Fractured Federal Circuit (per Lourie, J.) The Federal Circuit has left no doubt that it is irreconcilably fractured. The uncertainty that now plagues and will, absent [Supreme Court] intervention, continue to plague the patent system will cause severe harm and waste for innovators and litigants, as well as lower courts and the Patent and Trademark Office. Moreover, neither the judgment nor the analysis offered in the plurality opinion can be reconciled with this Court s precedents. What makes the current state of legal disarray completely intolerable is that patented inventions are the engine of much of the nation s and the world s economic growth, which will be needlessly stifled unless the standards for patentability are much clearer than they are today. The Court should grant certiorari in order to bring much-needed clarity to the application of section 101 to computer-implemented inventions. CLS Bank (Lourie, J., plurality opinion) 23

24 (6) Octane Fitness Exceptional Case In Octane Fitness, LLC v. Icon Health and Fitness, Inc., U.S. (2014)(Sotomayor, J.), opinion below, Icon Health & Fitness, Inc. v. Octane Fitness, LLC, 496 Fed. Appx. 57 (Fed. Cir. 2013)(Lourie, J.), the Court held that an exceptional case is simply one that stands out from others with respect to the substantive strength of a party s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is exceptional in the caseby-case exercise of their discretion, considering the totality of the circumstances. (footnote deleted). Brooks Furniture Violation of the Rule of Precedent The Federal Circuit has too often permitted a renegade panel to create new law which then is followed in violation of the rule of precedent. Octane Fitness provides a textbook example of a rogue Federal Circuit panel disregarding precedent without endorsement of the en banc court; then, subsequent panels treat this rogue precedent as if it had precedential value. The Federal Circuit until 2005 had had a reasonable rule for fee shifting until the radical departure by a panel in Brooks Furniture Mfg., Inc. v. Dutailier Int l, Inc., 393 F. 3d 1378 (Fed. Cir. 2005)(Newman, J.), that created an aberrant standard for determining when a case is exceptional under 35 USC 285. That Brooks Furniture was indeed an aberration by a rogue panel is explained by Justice Sotomayor: 24

25 In 1982, Congress created the Federal Circuit and vested it with exclusive appellate jurisdiction in patent cases. 28 U. S. C In the two decades that followed, the Federal Circuit, like the regional circuits before it, instructed district courts to consider the totality of the circumstances when making fee determinations under 285. See, e.g., Rohm & Haas Co. v. Crystal Chemical Co., 736 F. 2d 688, 691 (1984) ( Cases decided under 285 have noted that the substitution of the phrase in exceptional cases has not done away with the discretionary feature ); Yamanouchi Pharmaceutical Co., Ltd. v. Danbury Pharmacal, Inc., 231 F. 3d 1339, 1347 (2000) ( In assessing whether a case qualifies as exceptional, the district court must look at the totality of the circumstances ). In 2005, however, the Federal Circuit abandoned that holistic, equitable approach in favor of a more rigid and mechanical formulation. In Brooks Furniture Mfg., Inc. v. Dutailier Int l, Inc., 393 F. 3d 1378 (2005), the court held that a case is exceptional under 285 only when there has been some material inappropriate conduct related to the matter in litigation, such as willful infringement, fraud or inequitable conduct in procuring the patent, misconduct during litigation, vexatious or unjustified litigation, conduct that violates Fed. R. Civ. P. 11, or like infractions. Id., at Absent misconduct in conduct of the litigation or in securing the patent, the Federal Circuit continued, fees may be imposed against the patentee only if both (1) the litigation is brought in subjective bad faith, and (2) the litigation is objectively baseless. Ibid. The Supreme Court in Octane Fitness noted that only after our grant of certiorari but before we heard oral argument in this case that the Chief Judge wrote a concurring opinion [in Kilopass Technology, Inc. v. Sidense Corp., 738 F. 3d 1302, (Fed. Cir. 2013)(Rader, C.J.)] that sharply criticized[ ] the court[; that] he said, should have remained true to its original reading of 285, id., at Octane Fitness, U.S. at n.4. More fully, the concurring opinion in Kilopass belatedly acknowledged the aberrant nature of Brooks Furniture which the court should never have followed in the first place: 25

26 Our earlier jurisprudence governs over the subsequent case of Brooks Furniture. See Newell Cos., Inc. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988) ( [P]rior decisions of a panel of the court are binding precedent on subsequent panels unless and until overturned in banc. ). Before Brooks Furniture, district courts enjoyed broad discretion to shift fees under 35 U.S.C In my view, this court should return to the rule that a district court may shift fees when, based on the totality of the circumstances, it is necessary to prevent a gross injustice. See Eltech Sys. Corp. v. PPG Indus., Inc., 903 F.2d 805, (Fed. Cir. 1990). Kilopass, 738 F.3d 1302 at 1318(Rader, C.J., concurring) (7) Highmark Appellate Deference In Highmark Inc. v. Allcare Health Mgmt. Sys., Inc.,., U.S. (2014)(Sotomayor, J.), proceedings below, 701 F.3d 1351 (Fed. Cir. 2012)(Order den. pet. for reh g en banc), panel opinion, 687 F.3d 1300 (Fed. Cir. 2012), the Court following the more important and concurrently decided Octane Fitness held that an appellate court should apply an abuse-of-discretion standard in reviewing all aspects of a district court s 285 determination. Although questions of law may in some cases be relevant to the 285 inquiry, that inquiry generally is, at heart, rooted in factual determinations, Cooter [& Gell v. Hartmarx Corp., 496 U.S. 384, 401 (1990)]. 26

27 (8) Commil v. Cisco (b) Scienter One of the most controversial opinions of the past year is Commil USA, LLC v. Cisco Sys., Inc., 720 F.3d 1361(Fed. Cir. 2013)(Prost, J)(Newman, J., dissenting), further proceedings, 737 F.3d 699, 700 (Fed. Cir. 2013)((Reyna, J., joined by Rader, C.J., Newman, Lourie, Wallach, JJ., dissenting from den. rh g en banc); id., 737 F.3d at (Newman, J., joined by Rader, C.J., Reyna, Wallach, JJ, dissenting from den reh g en banc). A vote on certiorari was scheduled to be announced on May 27, 2014 (after this paper was completed). * The Court reached a conclusion that active inducement under 35 USC 271(b) can be negated where the accused infringer had knowledge of the patent and knew that it would be liable for active inducement except for a belief that the patent was invalid. Under the panel opinion evidence of an accused infringer s good-faith belief of invalidity may negate the requisite intent for [ 271(b)] induced infringement. Commil v. Cisco, 720 F.3d at The majority holding in Commil is stated in two sentences: * The first Question Presented asks [w]hether the Federal Circuit erred in holding that a defendant s belief that a patent is invalid is a defense to induced infringement under 35 U.S.C. 271(b). Standing alone, without more, the petition should be granted. If the petition is denied a major contributing factor will have been the fact that the Question Presented includes a 175 word predicate with extraneous, incendiary arguments, e.g., Cisco s counsel invoked stereotypes about Commil s Jewish owner and inventors during trial[.] 27

28 We now hold that evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement. This is, of course, not to say that such evidence precludes a finding of induced infringement. Rather, it is evidence that should be considered by the fact-finder in determining whether an accused party knew "that the induced acts constitute patent infringement. Commil, 720 F.3d at (quoting Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011)) (footnote omitted) The third member of the panel characterizes the majority as follows: A good-faith belief of patent invalidity may be raised as a defense to willfulness of the infringement, but it is not a defense to the fact of infringement. Patent invalidity, if proved, eliminates an invalid patent and thus is a total defense to infringement. However, a "good-faith belief" in invalidity does not avoid liability for infringement when the patent is valid. Commil, 720 F.3d at 1373 (Newman, J., dissenting in part)(footnote omitted). The majority in uncharacteristically strong language answers the dissent: In dissent, Judge Newman does little more than construct a straw man and set him ablaze. We certainly do not hold "that if the inducer of infringement believes in good faith that the patent is invalid, there can be no liability for induced infringement.". Nor do we "include a belief in patent validity as a criterion of infringement." Commil, 720 F.3d at 1368 n.1 (quoting the dissent; citations omitted) The Denial of Rehearing En Banc As part of the denial of rehearing en banc there were two separate dissents with four of the five dissenters writing or joining both opinions. In the dissent for five members of the Court, a junior member of the Court explained: 28

29 The Commil majority established a substantive, precedential change in patent law by expressly "hold[ing] that evidence of an accused inducer's good-faith belief of invalidity may negate the requisite intent for induced infringement." Commil USA, LLC v. Cisco Sys., Inc., 720 F.3d 1361, 1368 (Fed. Cir. 2013). Its analysis may be summed by its expressed view that because "[i]t is axiomatic that one cannot infringe an invalid patent" there is "no principled distinction between a good-faith belief of invalidity and a good-faith belief of non-infringement for the purpose of whether a defendant possessed the specific intent to induce infringement of a patent." Id. By holding that a good faith belief in the invalidity of a patent may negate the requisite intent for induced infringement, the two-judge Commil majority created a new noninfringement defense to induced infringement that is premised on the accused infringer's belief of invalidity. As Judge Newman aptly points out in her dissent, "This absolution applies, according to the panel majority, although the patent receives the presumption of validity, and validity is sustained in litigations." (Newman, J., dissenting from the denial of the petition for rehearing en banc, at 1.) Commil, 737 F.3d at 700 (Fed. Cir. 2013)((Reyna, J., joined by Rader, C.J., Newman, Lourie, Wallach, JJ., dissenting from den. rh g en banc). The dissenting panel member reiterated her dissent at the petition stage, joined by three of the four members who were part of the Reyna dissent: 29

30 [The] split panel announced a change in the law of induced infringement, creating a new rule of law whereby an adjudged inducer of infringement is absolved of liability for infringement if the infringer had a "good faith belief" that the patent it infringed was invalid. This absolution applies, according to the panel majority, although the patent has a statutory presumption of validity, and validity of the patent is litigated and sustained. I explained, in my dissenting opinion, why this position is contrary to law and precedent. And I took some comfort from the protocol that a panel cannot change the law established by decisions of the court; only the en banc court can do so. Indeed, it is not "axiomatic that one cannot infringe an invalid patent" as the majority opinion states. Precedent is contrary. See Medtronic, Inc. v. Cardiac Pacemakers, Inc., 721 F.2d 1563, 1583 (Fed. Cir. 1983) ("Though an invalid claim cannot give rise to liability for infringement, whether it is infringed is an entirely separate question capable of determination without regard to its validity."); Spectra-Physics, Inc. v. Coherent, Inc., 827 F. 2d 1524, 1535 (Fed. Cir. 1987) ("The single instruction to the jury that invalid claims cannot be infringed (a nonsense statement), one of many on supposed general principles of patent law, does not operate to convert the interrogatories on infringement into general verdicts which subsumed all of Spectra's invalidity defenses, including best mode."). *** Commil, 737 F.3d at 703 (Newman, J., joined by Rader, C.J., Reyna, Wallach, JJ, dissenting from den reh g en banc) 30

31 (9) Fresenius: PTO Post-Grant Proceeding Trumps Infringement Victory Has Congress created a patent monster in the Leahy Smith America Invents Act with a much tougher administrative roe for the patentee to hoe when challenged in a post-grant proceeding at the Patent Trial and Appeal Board? The former Chief Judge has labeled the PTAB panels dealing with the new Inter Partes Review procedures as patent death squads because of what he perceives to be a too high rate of invalidity of patents coming out of the PTAB. Clearly, the new Inter Partes Review and Post Grant Review proceedings are far more favorable to patent challengers than the old ex parte and inter partes reexamination systems. Yet, even under the old law we are finding patents held invalid by the Patent Office even after successful patent infringement actions resulting in millions of dollars of damage awards. The extreme example is Fresenius USA, Inc. v. Baxter Int l, Inc., 733 F.3d 1369 (Fed. Cir. 2013)(Order), panel opinion, 721 F.3d 1330 (Fed. Cir. 2013)(Dyk, J.). Fresenius illustrates the power of a Patent Office invalidity proceeding such as the new Post Grant Review or Inter Partes Review which, years after the filing of a patent infringement suit, may result in a PTO invalidity determination that trumps the District Court proceeding. In Fresenius a $ 14 million infringement verdict was wiped clean by a patentee s loss of a reexamination proceeding where the District Court action was not final in all respects. The challenge for patentees is summarized in the unsuccessful petition for certiorari in the predicate discussion of the Question Presented: 31

32 Fresenius brought a declaratory judgment action challenging the validity of patents owned by Baxter, and Baxter counterclaimed for infringement. The district court held that Baxter s patents were valid and infringed, and entered judgment awarding past damages, an injunction, and a transitional royalty. The U.S. Court of Appeals for the Federal Circuit affirmed in part and reversed in part. The Federal Circuit held that claims are not invalid. But because it invalidated other claims of Baxter s patents, the court remanded solely for recalculation of the transitional royalty and reconsideration of the injunction. On remand, the district court recalculated the transitional royalty and again entered judgment for Baxter. While Fresenius s second appeal was pending, the U.S. Patent and Trademark Office cancelled claims 2631 of the 434 patent based on an ex parte reexamination requested by Fresenius. Over the dissent of four judges who would have granted rehearing en banc, the Federal Circuit held that the PTO s decision required reversal of the judgments against Fresenius. The only member of the Federal Circuit to have been elevated to that Court from a District Court explains the practical significance of the decision of the Federal Circuit in her dissent from the denial of the petition for rehearing en banc: The majority opinion here, coupled with [Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, 1313 (Fed. Cir. 2013)(en banc)], will interfere with litigants ability to access the courts to redress their grievances in a meaningful way and will drastically limit the case management options available to district court judges. Bosch created an incentive for district courts to bifurcate liability determinations from damages and willfulness trials and all other remedial determinations. Courts will be tempted to try to limit the time and resources spent on patent cases by seeking an interlocutory review of their claim construction and liability determinations. In all but those cases where liability determinations in favor of an alleged infringer are affirmed, however, such bifurcations will drag out the litigation, causing multiple appeals and probably multiple remands. 32

33 Where that occurs, after the panel opinion in this case, even years of litigated decisions, which may be affirmed piecemeal, could be rendered meaningless by much later PTO decisions. And, when trial courts come to understand the fragility of their judgments, stays in the face of reexaminations which the PTO grants over 92% of the time will become inevitable. Fresenius Order, 733 F.3d at 1381 (O Malley, J., joined by Rader, C.J., Wallach, J., dissenting from den. of pet. for reh g en banc)(footnote omitted). (10) In Packard: Piecemeal Examination for Claim Definiteness In In re Packard, F.3d (Fed. Cir. 2014)(per curiam), the three member panel deviates from historic precedent that requires an examination on the merits of claim definiteness under 35 USC 112(b) based upon the entire record presented to the examiner. Instead, the panel dictates that the initial Office Action need only look to indefinite language in the claims: If, standing alone, the language is indefinite, a prima facie case against the applicant is established which must be rebutted. Packard represents a serious deviation from practice and precedent dating back more than a century to the great detriment particularly of unsophisticated inventors as well as practitioners not steeped in legal training (which is not required for a practitioner to be licensed). Packard establishes a remarkable new and inefficient examination mechanism which departs from more than a century of case law. Under classic principles of patent examination that have been in effect until Packard it is incumbent upon the examiner in his initial Office Action to weigh all available, relevant information to make a patentability determination whether that determination is for a substantive issue of nonobviousness under 35 USC 103 or a formal matter such as claim particularity under 35 USC 112(b). 33

34 Out of the blue, sua sponte, the panel in Packard establishes a brand new routine for the Examiner and the applicant in considering issues of claim particularity under 35 USC 112(b): We conclude that, when the USPTO has initially issued a well-grounded rejection that identifies ways in which language in a claim is ambiguous, vague, incoherent, opaque, or otherwise unclear in describing and defining the claimed invention, and thereafter the applicant fails to provide a satisfactory response, the USPTO can properly reject the claim as failing to meet the statutory requirements of 112(b). In other words, the examiner looks to the wording of the claim to see if he finds the language indefinite and, based upon his evaluation of the wording of the claim, his task in putting together a first Office Action is completed: He simply rejects the claim language as indefinite under 35 USC 112(b). This puts the ball in the applicant s court. Unless the applicant amends the claim wording or provides a definition in the specification, it is now incumbent upon the applicant to make a persuasive explanation for the record of why the language at issue is not actually unclear. Packard: The two part examination is explained by the per curiam majority in It makes good sense, for definiteness and clarity as for other validity requirements, for the USPTO initially to reject claims based on a well-founded prima facie case of lack of clarity (in its several forms) based on the perspective of one of ordinary skill in the art in view of the entire written description and developing prosecution history. * * * We conclude that, when the USPTO has initially issued a well-grounded rejection that identifies ways in which language in a claim is ambiguous, vague, incoherent, opaque, or otherwise unclear in describing and defining the claimed invention, and thereafter the applicant fails to provide a satisfactory response, the USPTO can properly reject the claim as failing to meet the statutory requirements of 112(b). 34

35 Piecemeal Examination Discriminates against Unsophisticated Applicants The patent system must work not merely for the sophisticated corporation and top, experienced patent attorneys, but rather must be available to the entire inventive community, including individual inventors, startups, universities and those without a sophisticated legal training. An open system of this nature is dictated by the needs of the inventive community at large, and not merely the needs of the largest and most sophisticated applicants. An open system of this nature is dictated by patent practitioner licensure regulations which do not require a sophisticated legal training but which permit licensure with a B.S. degree in science or engineering without sophisticated legal training: All that is necessary for such a scientist or engineer to be fully licensed to practice at the Patent Office is to pass a multiple choice examination that has the lowest level of legal sophistication. Historically, patent Examiners are required to perform a complete examination on the merits which includes a study of all available evidence for and against the patent applicant to determine whether the statutory predicates for grant of a patent under Title 35 are met. The Patent Examiner is thus more of a judge and clearly not an advocate against the patent applicant. Individual inventors and small and emerging technology companies deserve a complete and fair examination on the merits in the most expeditious manner possible. This means that the Patent Office should look to all available evidence to consider the claimed invention as a whole. The Patent Office should thus look to evidence favorable to the patent applicant that is available and not merely seek out evidence that it can use to deny a patent. 35

36 After all, the ex parte examination procedure places the examiner more in the position of a judge to determine patentability and not as an advocate against granting a patent. A complete examination on the merits is an essential integer of patent examination. The policy proscribing piecemeal examination is deeply rooted in the Code of Federal Regulations: The examination shall be complete with respect both to compliance of the application with the applicable statutes and rules and to the patentability of the invention as claimed. 37 CFR 1.104(b)(emphasis added). For more than 100 years the need for a full examination on the merits has been recognized by the Courts. Early on in Steinmetz v. Allen at the beginning of the twentieth century the courts recognized the policy of the law in making full and complete examinations as to the novelty and priority of every claim that is presented for a patent. This is a matter in which the public is greatly interested. United States ex rel. Steinmetz v. Allen, 22 App. D.C. 56 (D.C. Cir. 1903), rev d, 192 U.S. 543 (1904). Thus, [t]he examiner's action will be complete as to all matters * * *. Watson v. Bruns, 239 F.2d 948, 951 (D.C. Cir. 1956) (quoting Rule 105); see also National Rolled Thread Die Co. v. E. W. Ferry Screw Products, Inc., 541 F.2d 593, 598 (6th Cir. 1976)(citing 37 C.F.R (1967)) ( [I]t was the examiner's obligation under the Patent Office rules to make a complete [examination] as to all matters. ). 36

37 The Manual of Patent Examining Procedure emphasizes that piecemeal examination should be avoided: Piecemeal examination should be avoided as much as possible. The examiner ordinarily should reject each claim on all valid grounds available Rejections on grounds such as lack of proper disclosure, lack of enablement, indefiniteness and res judicata should be applied where appropriate even though there may be a seemingly sufficient rejection on the basis of prior art. Where a non-prior art ground of rejection is proper, it should be stated with a full development of reasons rather than by a mere conclusion coupled with a boiler plate expression. MPEP (g). Faux Basis for Packard in In re Piasecki The majority opinion cites the Piasecki case as precedent for piecemeal examination. We earlier approved a procedural mechanism for the USPTO to use in doing this, which we refer to as the prima facie case. See In re Piasecki, 745 F.2d 1468 (Fed. Cir. 1984). If anything, the Piasecki line of case law goes strongly against piecemeal examination by showing a rational basis for an exception to the general rule that the examiner should consider all evidence that is properly raised and of record. Thus, Piasecki is merely one in a long line of case law dating back to In re Papesch, 315 F.2d 381 (CCPA 1963), where obviousness is determined in the first instance by the examiner considering all available evidence in the prosecution history. Only if the Examiner is able to conclude insofar as the available evidence is concerned that the invention is obvious, then and only then does the burden shift to the applicant to present rebuttal evidence. 37

38 Papesch arose in the setting of obviousness of chemical compounds which had previously been examined solely based upon the obviousness of their structural formulae without consideration of their properties (because examiners, of course, do not have access to laboratories to determine whether the compounds as a whole have unexpected properties). Because of this unusual situation, the doctrine of prima facie obviousness emerged, based upon the paper record at the Patent Office. Whereas prior to Papesch a conclusion of obviousness based upon the paper record was a final conclusion of obviousness, under Papesch this conclusion of obviousness was changed to being a conclusion of prima facie obviousness which could be rebutted by affidavit evidence under 37 CFR Nearly thirty years after Papesch in the case of In re Jones, 958 F.2d 347 (Fed. Cir. 1992)(Rich, J.), the author of Papesch explained the law of structural obviousness : The question of structural similarity in chemical patent cases has generated a body of patent law unto itself. [See generally Helmuth A. Wegner, Prima Facie Obviousness of Chemical Compounds, 6 Am. Pat. L. Assoc. Q. J. 271 (1978).] Particular types or categories of structural similarity without more have, in past cases, given rise to prima facie obviousness, see, e.g., In re Dillon, 919 F.2d 688, (Fed. Cir. 1990) (en banc)(tri-orthoesters and tetra-orthoesters)[ ]; In re May, 574 F.2d 1082 (CCPA 1978) (stereoisomers); In re Wilder, 563 F.2d 457 (CCPA 1977) (adjacent homologs and structural isomers); In re Hoch, 428 F.2d 1341 (CCPA 1970) (acid and ethyl ester). Jones, 958 F.2d at (footnote integrated into text in brackets). 38

39 Indeed, the law of structural obviousness has roots dating back to the nineteenth century. H.A. Wegner, supra, at 272 (citing Bender v. Hoffmann 1898 Comm r dec. 262 (1898))( The development of our modern concept of inquiry into prima facie obviousness arising from structural considerations and rebuttal by a showing of a difference in properties can be traced to early cases[.] ). As explained by Circuit Judge Lourie: [I]f an examiner considers that he has found prior art close enough to the claimed invention to give one skilled in the relevant chemical art the motivation to make close relatives (homologs, analogs, isomers, etc.) of the prior art compound(s), then there arises what has been called a presumption of obviousness or a prima facie case of obviousness. In re Henze, 181 F.2d 196 (CCPA 1950); In re Hass, 141 F.2d 122, 127, 130 (CCPA 1944). The burden then shifts to the applicant, who then can present arguments and/or data to show that what appears to be obvious, is not in fact that, when the invention is looked at as a whole. In re Papesch, 315 F.2d 381 (CCPA 1963). In re Dillon, 919 F.2d 688, 696 (Fed. Cir. 1990)(en banc)(lourie, J.) Papesch has stood the test of more than fifty years of practice and been generalized in that period beyond the field of chemical compound nonobviousness to embrace all issues of nonobviousness, particularly in the wake of KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398 (2007). 39

40 III. CASES BEYOND THE TOP TEN Medtronic v. Boston Scientific: MedImmune Challenge, Burden of Proof In Medtronic Inc. v. Boston Scientific Corp., U.S. (2014)(Breyer, J.), opinion below, 695 F.3d 1266 (Fed. Cir. 2012)(Linn, J.), a unanimous 9-0 Supreme Court reversed the Federal Circuit in the context of a licensee patent validity challenge under MedImmune, Inc. v. Genentech, Inc., 549 U. S. 118, 128 (2007), to hold that, when a licensee seeks a declaratory judgment against a patentee to establish that there is no infringement, the burden of proving infringement remains with the patentee. An Anti-Patentee Philosophy at the Supreme Court The Court concludes with a patent policy statement emphasizing the importance of the rights of industry versus the patentee: The public interest, of course, favors the maintenance of a well-functioning patent system. But the public also has a paramount interest in seeing that patent monopolies... are kept within their legitimate scope. Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806, 816 (1945). A patentee should not be... allowed to exact royalties for the use of an idea... that is beyond the scope of the patent monopoly granted. Blonder-Tongue Laboratories, Inc. v. University of Ill. Foundation, 402 U. S. 313, (1971). And [l]icensees may often be the only individuals with enough economic incentive to litigate questions of a patent s scope. Lear, Inc. v. Adkins, 395 U. S. 653, 670 (1969). The general public interest considerations are, at most, in balance. They do not favor a change in the ordinary rule imposing the burden of proving infringement upon the patentee. 40

41 Petrella v. MGM: Is Laches a defense to Patent Infringement? Petrella v. Metro-Goldwyn-Mayer Inc., U.S. (May 19, 2014), opinion below, 695 F.3d 946 (9th Cir. 2012), does not directly address the question of laches in bringing a patent infringement suit; instead Petrella reaches a conclusion that if a copyright holder files an infringement suit within the three year statute of limitations for copyright actions a defense of laches is not available to the accused infringer for acts of accused infringement within that three year window. The Federal Circuit in A. C. Aukerman Co. v. R. L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc), has reached the opposite conclusion for patent infringement, namely, that a defense of laches is available for conduct within the six year period of the patent statute of limitations. The reach of Petrella is discussed in one succinct paragraph: The Copyright Act provides that [n]o civil action shall be maintained under the [Act] unless it is commenced within three years after the claim accrued. 17 U. S. C. 507(b). This case presents the question whether the equitable defense of laches (unreasonable, prejudicial delay in commencing suit) may bar relief on a copyright infringement claim brought within 507(b) s three-year limitations period. Section 507(b) bars relief of any kind for conduct occurring prior to the three-year limitations period. To the extent that an infringement suit seeks relief solely for conduct occurring within the limitations period, however, courts are not at liberty to jettison Congress judgment on the timeliness of suit. Laches, we hold, cannot be invoked to preclude adjudication of a claim for damages brought within the three-year window. As to equitable relief, in extraordinary circumstances, laches may bar at the very threshold the particular relief requested by the plaintiff. And a plaintiff s delay can always be brought to bear at the remedial stage, in determining appropriate injunctive relief, and in assessing the profits of the infringer... attributable to the infringement. 504(b). Petrella, U.S. at (holding emphasized by this writer; footnote omitted). 41

42 Federal Circuit Case Law Relied Upon in the Dissent: The dissent cites case law from several courts, including the Federal Circuit, for the proposition that [l]ower courts have come to holdings [invoking laches] in a wide array of circumstances often approving not only of the availability of the laches defense, but of its application to the case at hand. Petrella, U.S. at (Breyer, J., dissenting, joined by Roberts, C.J., Kennedy, J.)(citing, inter alia, A. C. Aukerman Co. v. R. L. Chaides Constr. Co., 960 F.2d 1020, , (Fed. Cir. 1992) (en banc) (laches available in patent suit claiming damages, and remanding for whether the defense was successful); Cornetta v. United States, 851 F.2d 1372, (Fed. Cir.1988) (en banc) (same, in suit seeking backpay) ). We have not had occasion to review [Aukerman] Responsive to the dissent s citation of Federal Circuit case law, the majority first quotes 35 USC 286 that no recovery shall be had for any infringement committed more than six years prior to the filing of the complaint and then 35 USC 282(b) that [n]oninfringement, absence of liability for infringement or unenforceability may be raised in any action involving the validity or infringement of a patent. Petrella, U.S. at n. 15. good law: The majority expressly keeps open the issue of whether Aukerman remains Based in part on [35 USC] 282 and commentary thereon, legislative history, and historical practice, the Federal Circuit has held that laches can bar damages incurred prior to the commencement of suit, but not injunctive relief. A. C. Aukerman Co. v. R. L. Chaides Constr. Co., 960 F.2d 1020, , (Fed. Cir. 1992)(en banc). We have not had occasion to review the Federal Circuit s position. Petrella, U.S. at n

43 Is Patent Laches Distinguishable from Copyright Laches? The Petrella decision does not take into account patent laches as interpreted in A. C. Aukerman Co. v. R. L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (en banc). There, Chief Judge Nies explains: We are unpersuaded that [35 USC 286] should be interpreted to preclude the defense of laches and provide, in effect, a guarantee of six years damages regardless of equitable considerations arising from delay in assertion of one's rights. Without exception, all circuits recognized laches as a defense to a charge of patent infringement despite the reenactment of the damages limitation in the 1952 statute. See 5 D. S. Chisum, Patents 19.05[2] (and cases cited therein); Jean F. Rydstrom, Annotation, Laches as Defense in Patent Infringement Suit, 35 A.L.R. Fed. 551 (1977). This is not remarkable inasmuch as the statutory language of [35 USC 286] was virtually identical to a predecessor provision under which laches was also recognized. Dwight & Lloyd Sintering Co. v. Greenawalt, 27 F.2d 823, 827 (2d Cir. 1928) (L. Hand, J.) (recovery barred by thirteen-year delay for even the earliest of the six years to which recovery is in any event limited. ) Even looked at afresh, we have no difficulty in reading [35 USC 286] harmoniously with the recognition under [35 USC 282] of the laches defense. By[35 USC 286], Congress imposed an arbitrary limitation on the period for which damages may be awarded on any claim for patent infringement. Laches, on the other hand, invokes the discretionary power of the district court to limit the defendant's liability for infringement by reason of the equities between the particular parties. See J.P. Stevens [& Co. v. Lex Tex Ltd. Inc., 747 F.2d 1553, 1561 (Fed. Cir. 1984)]. Recognition of laches as a defense, thus, does not affect the general enforceability of the patent against others or the presumption of its validity under section 282. Nothing in section 286 suggests that Congress intended by reenactment of this damage limitation to eliminate the long recognized defense of laches or to take away a district court's equitable powers in connection with patent cases. An equitable defense under section 282 and the arbitrary limitation of section 286 do not conflict. A. C. Aukerman, 960 F.2d at

44 Gilead Sciences Double Patenting In Gilead Sciences, Inc. v. Natco Pharma Ltd., F.3d (Fed. Cir. 2014)(Chen, J.), in a case of first impression under the Uruguay Round Agreements Act, a divided court affirmatively answered a narrow question: Can a patent that issues after but expires before another patent qualify as a double patenting reference for that other patent? Patentee Gilead s same inventive entity has two patents with an obvious subject matter overlap but with a unique twist of an earlier-to-expire but latergranted 375 patent which was held by the trial court to serve as a double patenting reference against the later-to-expire, earlier-granted 483 patent. On appeal, in a case of first impression dealing with the unusual sequence of grant and expiration dates possible under the Uruguay Round Agreements Act, the divided panel 44

45 h[e]ld that an earlier-expiring patent can qualify as an obviousness-type double patenting reference for a later-expiring patent under the circumstances here. In cases where such obviousness-type double patenting is present, a terminal disclaimer can preserve the validity of the later-expiring patent by aligning its expiration date with that of the earlier-expiring patent. That disclaimer will most effectively enforce the fundamental right of the public to use the invention claimed in the earlier-expiring patent and all obvious modifications of it after that patent's term expires. The majority explained its reasoning: Because the obviousness-type double patenting doctrine prohibits an inventor from extending his right to exclude through claims in a later-expiring patent that are not patentably distinct from the claims of the inventor's earlier-expiring patent, we agree with [the patent challenger] that the [earlier-granted later-expiring] patent qualifies as an obviousness-type double patenting reference for the [instant latergranted '483 patent. In a tour de force journey to the origins of double patenting in Odiorne v. Amesbury Nail Factory, 18 Fed. Cas. 578, 579 (F. Cas. No )(C.C.D. Mass. 1819)(Story, J.), and other more recent precedent the majority and quoting Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169, 185 (1896), the majority sums up the essence of the body of double patenting case law: The prohibition against double patenting is a longstanding doctrine of patent law. It is based on the core principle that, in exchange for a patent, an inventor must fully disclose his invention and promise to permit free use of it at the end of his patent term. As the Supreme Court has explained, [i]t is self-evident that on the expiration of a patent the monopoly created by it ceases to exist, and the right to make the thing formerly covered by the patent becomes public property. It is upon this condition that the patent is granted. 45

46 The majority took care to note the limited scope of its holding: This appeal presents a narrow question: Can a patent that issues after but expires before another patent qualify as a double patenting reference for that other patent? We conclude under the circumstances of this case that it can. The Dissent Urges Judicial Restraint The dissent recognizes that the case is one of first impression under the Uruguay Round Agreements Act. Nevertheless, the dissent argues against the decision reached by the majority as creat[ing] or expand[ing] judge-made exceptions. : F.3d at (Rader, C.J., dissenting). More fully: I would proceed more cautiously before articulating a new rule to address this novel situation. In my opinion, courts should be reluctant to create or expand judge-made exceptions to statutory grants. Id. This jurist would view the question through the lens of judicial restraint. Id. The Double Patenting Trend Against Patentees As a case of first impression, the panel had to choose whether to sustain an additional term length for patentees or curtail the patent right in favor of the public. Since this was a case of first impression the policy choices could play a role independent of binding precedent. The latter choice was made, here, following judicial precedent which has deviated from prior law to rein in the scope of patent grants to the first to expire term. 46

47 Transocean Offshore 271(a) Extraterritoriality Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340 (Fed. Cir. 2012)(Moore, J.), is a Top Ten case from last year, but remained of great interest because of a petition for certiorari in Maersk Drilling USA, Inc. v. Transocean Offshore Deepwater Drilling, Inc., Supreme Court No In Transocean the Federal Circuit reached a conclusion of direct infringement under 35 USC 271(a) where there was no infringing activity within the United States. The case has now settled. Until the petition was dismissed on May 21, 2014, the case had been pending at the Supreme Court as Maersk Drilling, where the Question Presented is [w]hether offering, negotiating, and entering into a contract in Scandinavia to provide services using a potentially patented device constitutes an offer to sell or sale of an actually patented device within the United States, under 35 U.S.C. 271(a). Maersk Drilling had been sidetracked by a decision of the Supreme Court to ask the Justice Department for its recommendation whether to grant certiorari through an Order issued last October. The answer from Justice Department never came; the case is now finished, but the issue is certainly alive for a future case. 47

48 Extra-Territorial Expansion of the Scope of Infringement As explained in briefing at the Supreme Court: [T]he Federal Circuit considerably expanded the extraterritorial reach of th[e 271(a) offer to sell] provision: there can be infringement if negotiations take place anywhere in the world, so long as the potential sale may be in the United States, even if that sale is never consummated. As a result, there can now be liability in circumstances where no activity has ever taken place within the United States. Such an approach is squarely contrary to the Supreme Court s articulation of a presumption against the extraterritorial application of U.S. law. Brief of Intellectual Property Law Professors (original emphasis). The provision interpreted in Transocean was taken from the Uruguay Round Agreements Act which in turn borrowed from the WIPO Draft Harmonization Treaty; that draft treaty was in reality a set of documents with new iterations over a series of sessions from 1985 to See generally Wegner, PATENT HARMONIZATION (London: Sweet & Maxwell 1993). In its final iteration before a Diplomatic Conference the WIPO Draft Treaty on Patent Harmonization defines infringement of a product patent as including the right of the patentee to prevent third parties from the offering of the product for such offering on the market. See id., 2000 p. 248 (quoting Art. 19(1)(ii) of the Draft Treaty). At none of the sessions of the Committee of Experts dating back to the First Session in 1985 did any of the governmental delegates or NGO participants advance the notion that an extraterritorial offer of sale could constitute an act of infringement under the quoted provision. It was also clearly recognized that the United States would have to make the changes that found their way into the Uruguay Round Agreements Act. Id. 2051, pp

49 A leading American comparative patent law scholar has dealt with the subject of extraterritoriality that explains precisely why the result in Transocean is contrary to the history of the Uruguay Round Agreements Act. See Timothy R. Holbrook, Territoriality and Tangibility After Transocean, 61 EMORY L.J. 1087, 1121 (2012). See also Timothy R. Holbrook, Liability for the "Threat of Sale": Assessing Patent Infringement for Offering to Sell an Invention and Implications for the On-Sale Patentability Bar and Other Forms of Infringement, 43 SANTA CLARA L. REV. 751, (2002); Timothy R. Holbrook, Territoriality Waning? Patent Infringement for Offering in the United States to Sell an Invention Abroad, 37 U.C. Davis L. Rev. 701, 743 (2004); Timothy R. Holbrook, Extraterritoriality in U.S. Patent Law, 49 WM. & MARY L. REV (2008) (discussing importance of the use of the presumption in Microsoft); Timothy R. Holbrook, The Potential Extraterritorial Consequences of Akamai, 26 Emory Int'l L. Rev. 499 (2012) Consumer Watchdog v. WARF Post-Grant Standing Still awaiting a decision as of this writing is Consumer Watchdog v. Wisconsin Alumni Research Foundation, Fed. Cir. App. No In the proceedings below, the Board in an inter partes reexamination had confirmed the patentability of WARF s disputed claims; a key issue raised sua sponte by the Court during oral argument is whether the patent challenger lacks appellate standing under Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). After the argument the Court requested [the parties] to file brief(s) concerning whether Consumer Watchdog has standing to pursue this appeal.. Thereafter a second argument was held on March 13, 2014 limited to standing before the panel of Rader, C.J., Prost, Hughes, JJ. 49

50 It is clear that patent challenger Consumer Watchdog has a procedural right to appeal to the Federal Circuit in an inter partes reexamination defeat at the PTAB, but, given that Consumer Watchdog has no direct stake in the outcome such as by way of use of the invention, the issue is whether Consumer Watchdog has standing to take an appeal to the Federal Circuit. Implications for AIA Post Grant Proceedings: Post grant proceedings under the Leahy Smith America Invents Act Inter Partes Review and Post Grant Review permit public interest groups to challenge patents. If the public interest group loses at the PTAB there is a statutory procedural right to appeal to the Federal Circuit just as there is for inter partes review that is the subject of the Consumer Watchdog case. 50

51 Lighting Ballast, a Footnote A Fractured Ivory Tower Lighting Ballast is now a mere footnote to history, as noted earlier where the case will now be forever remembered as a trigger for grant of certiorari in Teva v. Sandoz. Lighting Ballast will forever serve as a pointed reminder of a tremendous isolation of the Federal Circuit, divorced from the realities of what goes on in the world beyond the top two floors on Madison Place overlooking Lafayette Square. The holding in Lighting Ballast completely ducked the propriety of the Cybor standard of review that was basis for the en banc review. Sua sponte, the Court sustained Cybor on the basis of stare decisis: [W]e apply the principles of stare decisis, and confirm the Cybor standard of de novo review of claim construction, whereby the scope of the patent grant is reviewed as a matter of law. After fifteen years of experience with Cybor, we conclude that the court should retain plenary review of claim construction, thereby providing national uniformity, consistency, and finality to the meaning and scope of patent claims. The totality of experience has confirmed that Cybor is an effective implementation of Markman [ ], and that the criteria for departure from stare decisis are not met. Lighting Ballast, 744 F.3d at (Newman, J., joined by Lourie, Dyk, Prost, Moore, Taranto, JJ.) The second senior-most member of the panel added that he write[s] separately to note what [he] believe[s] are additional reasons why retaining Cybor is wise. Lighting Ballast, 744 F.3d at 1292 (Lourie, J., concurring). The jurist adds an interesting legal analysis: 51

52 First and foremost [as a reason to retain Cybor] is that the Supreme Court has held that claim construction is a question for the court rather than the jury. Thus, for us to appear to be cutting back from that holding by giving formal deference on socalled fact-like questions, which normally would go to the jury, to the district court judge, would seem to me to be an attempt to partially retreat from the Court's holding, which is unwise. Id. The only member of the Federal Circuit with experience as a District Court judge added a sobering note of reality to the discussion, giving a hint of what was to come in Teva v. Sandoz: District judges, both parties in this case, and the majority of intellectual property lawyers and academics around the country will no doubt be surprised by today's majority opinion and for good reason. The majority opinion is surprising because it refuses to acknowledge what experience has shown us and what even a cursory reading of the Supreme Court's decision in Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), confirms: construing the claims of a patent at times requires district courts to resolve questions of fact. And, it puts itself at odds with binding congressional and Supreme Court authority when it refuses to abide by the requirements of Rule 52(a)(6) of the Federal Rules of Civil Procedure, which expressly instructs that, on appeal, all "findings of fact... must not be set aside unless clearly erroneous." It is also surprising because, having, for the third time, invited a broad swath of the intellectual property community to express opinions regarding the merits of Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448 (Fed. Cir. 1998) (en banc), we now premise our refusal to change its holding on principles of stare decisis that, and a professed inability to come up with a workable alternative to de novo review. Lighting Ballast, 744 F.3d at 1296 (O Malley, J. dissenting, joined by Rader, C.J., Reyna, Wallach, JJ.) (original emphasis; footnote omitted). 52

53 About the Author This was followed by studies as a Kenshuin at the Kyoto University Law Faculty in collaboration with the late Dr. Zentaro Kitagawa. HAROLD C. WEGNER is a partner in the international law firm of Foley & Lardner LLP where he focuses upon business counseling and patent appellate and opinion practice. Prof. Wegner s patent career commenced with service at the U.S. Department of Commerce as a Patent Examiner. His academic involvement started with a three year period in Munich and Kyoto first as a Wissenschaftliche Mitarbeiter at what is today the Max Planck Institute for Innovation and Competition. After eight years on the adjunct faculty at the Georgetown University Law Center, Prof. Wegner commenced a twenty year affiliation with the George Washington University Law School; at GW he was Director of the Intellectual Property Law Program and Professor of Law. His involvement with other academic institutions has included service as a Visiting Professor at Tokyo University. Prof. Wegner holds degrees from Northwestern University (B.A.) and the Georgetown University Law Center (J.D.). Prof. Wegner continues to participate in academic patent conferences both domestically and internationally. hwegner@foley.com 53